Exhibit 10.26
September 26, 2007
Rajesh Khera
5800 145th Avenue SE
Bellevue WA 98006
Dear Raj,
BSQUARE CORPORATION is pleased to extend to you an offer for employment as our
Vice President of Products. You will be paid bi-weekly at a rate equivalent to
an annual salary of $160,000.
In addition you will be eligible to participate in BSQUARE’s executive bonus
program. Your annual bonus potential will be up to 30% of your base salary. Your
bonus for 2007 will be pro-rated based on how many months you are actually
employed by BSQUARE in 2007. In 2008 and beyond you will have full participation
in the executive bonus program.
BSQUARE’s executive bonus plan is structured such that the company must achieve
certain profitability targets and you must achieve individual objectives that
you and I will agree upon before you earn any bonus. Bonuses are paid yearly, in
the first quarter following the close of our fiscal year (Q1-2008 will be our
next executive bonus payout). Bonuses are paid in a combination of cash and
restricted shares of BSQUARE stock. The cash portion of your bonus will be up to
25% of your base salary. Any bonus earned above 25% of your base salary will be
paid in restricted BSQUARE shares, 50% of which will vest at the end of the
first year after award, with the remaining 50% vesting at the end of the 2nd
year after award. BSQUARE’s executive bonus plan also allows for you to earn up
to 150% of your target bonus (45% of your base salary) should we exceed
profitability targets. The payout ratios between cash and restricted stock would
remain the same in either case.
Bonus payout is at the sole discretion of the CEO and Compensation Committee of
our Board of Directors. You must be employed by BSQUARE at the end of the
calendar year to be eligible to receive any bonus payout.
Your job classification is Executive. You will be hired as an exempt employee,
so you will not be entitled to overtime. You will be a Section 16 Executive,
subject to certain BSQUARE stock trading restrictions and reporting
requirements.
BSQUARE CORPORATION extends the following benefits:

  •   a medical, dental, vision, life and disability plan     •   a 401(k)
retirement plan, with company matching contributions     •   10 paid holidays
and 15 days of paid time off     •   Options to purchase 25,000 shares of
company common stock. Such shares shall be Incentive Stock Options (ISOs), which
vest 25% annually over four years in four equal installments. The strike price
shall be the closing price of BSQUARE stock on your first day of employment.
Stock options shall expire after 10 years.     •   Because we anticipate that
you will be a heavy wireless user in the course of conducting BSQUARE business,
you will be given use of a company mobile phone, and will be placed on the
company wireless plan.

Additionally, if after 90 days of employment in good-standing with BSQUARE, your
employment with BSQUARE is terminated when neither “cause” nor “long term
disability” exists, and provided that you release BSQUARE Corporation and its
agents from any and all employment-related claims in a signed, written release
satisfactory in form and substance to BSQUARE Corporation, BSQUARE Corporation
shall pay you a consideration payment as follows:

 

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BSQUARE Corporation shall pay to you severance equal to four months of your then
annual base salary from your termination date. If BSQUARE Corporation gives you
at least a full month’s advance notice of termination, however, the severance
payments shall be reduced by one month’s salary for each full month of advance
termination notice given. These severance payments shall be paid out at the rate
of your final base salary on regular payroll days post termination, subject to
legally required and any individually agreed upon payroll deductions. During the
period subsequent to your termination date in which you are being paid the
severance amounts defined previously, you would not be considered an employee
and would therefore receive no Paid Time Off accrual, nor would you be entitled
to benefits under BSQUARE’s health and welfare plans or retirement savings plan
as an active employee. Your stock options will continue to vest until 180
calendar days from our termination date. You will then have ninety days in which
to exercise any vested options, and any non-vested options would terminate.
For purposes of the severance provision indicated above, “cause” is defined on
attachment A hereto, and “long term disability” is defined in our sponsored Long
Term Disability group insurance plan.
BSQUARE CORPORATION is an established company with a promising outlook. Your
meaningful participation will greatly enhance our ability to retain our current
business relationships and, will enable BSQUARE CORPORATION to pursue and secure
business in the future. YOUR EMPLOYMENT IS AT-WILL AND ACCORDINGLY, YOU OR
BSQUARE CORPORATION MAY TERMINATE THIS EMPLOYMENT RELATIONSHIP AT ANY TIME WITH
OR WITHOUT NOTICE OR CAUSE.
This offer is contingent upon compliance with the Immigration Reform and Control
Act of 1986. The Act requires you to establish your identity and employment
eligibility. To do so, on your start date you will be required to complete
Section I of the Employment Eligibility Verification Form, I-9. This offer is
also contingent on your acceptance and return of the BSQUARE Proprietary Rights
Agreement provided herewith.
Please signify your acceptance of this offer by signing a copy of this letter
and the attached Proprietary Rights Agreement and returning both by
September 27th, 2007. As we have discussed, your start date is under discussion
and to be mutually agreed upon by both of us.
On behalf of BSQUARE CORPORATION, I am really excited to have you on board! If
you have any questions or concerns, please feel free to contact me.

                     
Sincerely,
          Accepted By:        
 
                   
/s/ Brian T. Crowley
  9/26/07       /s/ Rajesh Khera   9/27/07                  
Brian Crowley
  Date       Rajesh Khera   Date    
Chief Executive Officer
BSQUARE Corporation
                   

 

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ATTACHMENT A
     For purposes of this agreement “cause” means and is limited to dishonesty,
fraud, commission of a felony or of a crime involving moral turpitude,
destruction or theft of Company property, physical attack to a fellow employee,
intoxication at work, use of controlled substances or alcohol to an extent that
materially impairs Employee’s performance of his or her duties, willful
malfeasance or gross negligence in the performance of Employee’s duties,
violation of law in the course of employment that has a material adverse impact
on Company or its employees, Employee’s failure or refusal to perform Employee’s
duties, Employee’s failure or refusal to follow reasonable instructions or
directions, misconduct materially injurious to Company, neglect of duty, poor
job performance, or any material breach of Employee’s duties or obligations to
Company that results in material harm to Company.
     For purposes of this agreement, “neglect of duty” means and is limited to
the following circumstances: (i) Employee has, in one or more material respects,
failed or refused to perform Employee’s job duties in a reasonable and
appropriate manner (including failure to follow reasonable directives), (ii) the
supervisor, or a duly appointed representative of the supervisor, has counseled
Employee in writing about the neglect of duty and given Employee a reasonable
opportunity to improve, and (iii) Employee’s neglect of duty either has
continued at a material level after a reasonable opportunity to improve or has
reoccurred at a material level within one year after Employee was last
counseled.
     For purposes of this agreement, “poor job performance” means and is limited
to the following circumstances: (i) Employee has, in one or more material
respects, failed to perform Employee’s job duties in a reasonable and
appropriate manner, (ii) the supervisor, or a duly appointed representative of
the supervisor, has counseled Employee in writing about the performance problems
and given Employee a reasonable opportunity to improve, and (iii) Employee’s
performance problems either have continued at a material level after a
reasonable opportunity to improve or the same or similar performance problems
have reoccurred at a material level within one year after Employee was last
counseled.