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BSQUARE CORPORATION
THIRD AMENDED AND RESTATED
STOCK PLAN




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1.
    
    DEFINITIONS
    
    
    12.
    
    PURPOSES
    
    
    43.
    
    ADMINISTRATION
    
    
    4(a)
    Committee
    
    
    4(b)
    Appointment of Committee
    
    
    4(c)
    Powers; Regulations
    
    
    4(d)

    Delegation to Executive Officer
    
    
    54.
    
    ELIGIBILITY
    
    
    55.
    
    STOCK
    
    
    56.
    
    TERMS AND CONDITIONS OF OPTIONS
    
    
    5(a)
    Number of Shares and Type of Option
    
    
    6(b)

    Date of Grant
    
    
    6(c)

    Option Price
    
    
    6(d)

    Duration of Options
    
    
    6(e)

    Vesting Schedule and Exercisability of Options
    
    
    7(f)

    Acceleration of Vesting
    
    
    7(g)

    Term of Option
    
    
    8(h)

    Exercise of Options
    
    
    8(i)

    Payment upon Exercise of Option
    
    
    9(j)

    Rights as a Shareholder
    
    
    9(k)

    Transfer of Option
    
    
    10(l)

    Securities Regulation and Tax Withholding
    
    
    10(m)

    Stock Split, Reorganization or Liquidation
    
    
    12(n)

    Approved Transactions; Control Purchase
    
    
    137.
    
    TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
    
    
    13(a)

    Award of Stock Appreciation Rights
    
    
    13(b)

    Restrictions of Tandem SARs
    
    
    14(c)

    Amount of Payment Upon Exercise of SARs
    
    
    14(d)

    Form of Payment Upon Exercise of SARs
    
    
    148.
    
    RESTRICTED STOCK AWARDS
    
    
    14(a)
    Nature of Restricted Stock Awards
    
    
    14(b)

    Rights as a Shareholder
    
    
    15(c)

    Restrictions
    
    
    15(d)

    Vesting of Restricted Stock
    
    
    15(e)

    Waiver, Deferral and Reinvestment of Dividends
    
    
    159.
    
    UNRESTRICTED STOCK AWARDS
    
    
    15(a)

    Grant or Sale of Unrestricted Stock
    
    
    15(b)

    Elections to Receive Unrestricted Stock In Lieu of Compensation
    
    
    15(c)

    Restrictions on Transfers
    
    
    1610.
    
    TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS
    
    
    1611.
    
    SECURITIES REGULATION AND TAX WITHHOLDING
    
    
    1712.
    
    STOCK SPLIT, REORGANIZATION OR LIQUIDATION
    
    
    1813.
    
    APPROVED TRANSACTIONS; CONTROL PURCHASE
    
    
    1914.
    
    EFFECTIVE DATE; TERM
    
    
    20




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15.
    
    NO OBLIGATIONS TO EXERCISE AWARD
    
    
    2016.
    
    NO RIGHT TO AWARDS OR TO EMPLOYMENT
    
    
    2017.
    
    APPLICATION OF FUNDS
    
    
    2018.
    
    INDEMNIFICATION OF COMMITTEE
    
    
    2019.
    
    SHAREHOLDERS AGREEMENT
    
    
    2120.
    
    SEPARABILITY
    
    
    2121.
    
    NON-EXCLUSIVITY OF THE PLAN
    
    
    2122.
    
    EXCLUSION FROM PENSION AND PROFIT-SHARING COMPUTATION
    
    
    2123.
    
    AMENDMENT OF PLAN
    
    
    21




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BSQUARE CORPORATION
THIRD AMENDED AND RESTATED
STOCK PLAN
 1. DEFINITIONS.
  (a)
    
    Agreementmeans a written agreement approved by the Committee evidencing
Awards granted under the Plan.(b)
    
    Approved Transactionmeans
 (i)
    
    a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act covering the offer
and sale of Common Stock for the account of the Company to the public with
aggregate proceeds paid to the Company of not less than $10,000,000 (after the
deduction of underwriting commissions and offering expenses);(ii)
    
    the acquisition of the Company by another entity by means of
merger, consolidation or other transaction or series of related transactions
resulting in the exchange of the outstanding shares of the Company for
securities of, or consideration issued, or caused to be issued by, the
acquiring entity or any of its affiliates, provided, that after such event the
shareholders of the Company immediately prior to the event own less than a
majority of the outstanding voting equity securities of the surviving entity
immediately following the event;(iii)
    
    any liquidation or dissolution of the Company; and(iv)
    
    any sale, lease, exchange or other transfer not in the ordinary
course of business (in one transaction or a series of related transactions) of
all, or substantially all, of the assets of the Company.
 (c)
    
    Awardmeans any award granted under the Plan, including Options, Stock
Awards, Restricted Stock Units and SARs.(d)
    
    Awardeemeans any person to whom an Award is granted under the Plan (as well
as any permitted transferee of an Award).(e)
    
    Boardmeans the Board of Directors of the Company.(f)
    
    Codemeans the Internal Revenue Code of 1986, as amended from time to time,
or any successor statute or statutes thereto. Reference to any specific section of the
Code shall include any successor section.(g)
    
    Committeeshall mean the Board, or the committee appointed by the Board
pursuant to Section 3(b) of the Plan, if it is administering the Plan.(h)
    
    Common Stockmeans the Common Stock, no par value, of the Company.




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(i)
    
    Companymeans BSQUARE CORPORATION, a Washington corporation.(j)
    
    Control Purchasemeans any transaction (or series of related transactions) in
which any person, corporation or other entity (including any person as defined in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act, but excluding the Company and any
employee benefit plan sponsored by the Company):
 (i)
    
    purchases any Common Stock (or securities convertible into
Common Stock) for cash, securities or any other consideration pursuant to a
tender offer or exchange offer unless by the terms of such offer the offeror,
upon consummation thereof, would be the beneficial owner (as that term is
defined in Rule 13d-3 under the Exchange Act) of less than 30% of the shares of
Common Stock then outstanding; or(ii)
    
    becomes the beneficial owner, directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of the
combined voting power of the then outstanding securities of the Company
ordinarily (and apart from rights accruing under special circumstances) having
the right to vote in the election of directors (calculated as provided in Rule
13d-3(d) under the Exchange Act in the case of rights to acquire the Companys
securities);
 provided, however,that the foregoing shall not constitute a Control Purchase if the
transactions or related transactions received the prior approval of a majority of
all of the directors of the Company, excluding for such purpose the votes of
directors who are directors or officers of, or have a material financial interest in
any Person (other than the Company) who is a party to the event specified in either
clauses (i) or (ii).
 (k)
    
    Covered Employeehas the meaning given to it by Section 162(m)(3) of the
Code.(l)
    
    Date of Grantmeans that date the Committee has deemed to be the effective
date of the Award for purposes of the Plan.(m)
    
    Disabilitymeans any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be expected to last
for a continuous period of not less than twelve (12) months that renders the Awardee
unable to engage in any substantial gainful activity.(n)
    
    Effective Datemeans at the time specified in the resolutions of the Board
adopting the Plan.(o)
    
    Employeesmeans individuals employed by the Company or a Related Corporation.(p)
    
    Exchange Actmeans the Securities Exchange Act of 1934, as amended from time
to time, or any successor statute or statutes thereto. Reference to any specific
section of the Exchange Act shall include any successor section.(q)
    
    Executive Officershall be defined in Section 3(d).(r)
    
    Fair Market Valuemeans, if the Common Stock is publicly traded, the last
sales price (or, if no last sales price is reported, the average of the high bid and
low asked prices) for a share of Common Stock on that day (or, if that day is not a
trading day, on the next preceding trading day), as reported by the principal exchange on which the Common
Stock is listed, or, if the Common Stock is publicly traded but not listed on an
exchange, as
 2




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reported by The Nasdaq Stock Market, or if such prices or quotations
are not reported by The Nasdaq Stock Market, as reported by any other available
source of prices or quotations selected by the Committee. If the Common Stock is
not publicly traded or if the Fair Market Value is not determinable by any of the
foregoing means, the Fair Market Value on any day shall be determined in good faith
by the Committee on the basis of such considerations as the Committee deems
important.
 (s)
    
    Immediate Family Membermeans a spouse, children or grandchildren of the
Optionee.(t)
    
    Incentive Stock Optionmeans an Option that is an incentive stock option
within the meaning of Section 422 of the Code.(u)
    
    Non-Employee Directorhas the meaning given to it by Rule 16b-3 promulgated
under the Exchange Act of 1934.(v)
    
    Non-Insidershas the meaning given to by Section 162(m)(3) of the Code.(w)
    
    Non-Qualified Stock Optionmeans an Option that is not an Incentive Stock
Option.(x)
    
    Optionmeans an option with respect to shares of Common Stock awarded
pursuant to Section 6.(y)
    
    Optioneemeans any person to whom an Option is granted under the Plan (as
well as any permitted transferee of an Option).(z)
    
    Outside Directorhas the meaning given to it by the regulations promulgated
under Section 162(m) of the Code.(aa)
    
    Planmeans the BSQUARE CORPORATION Third Amended and Restated Stock Plan.(bb)
    
    Qualified Performance-Based Compensationhas the meaning given to it by the
regulations promulgated under Section 162(m) of the Code.(cc)
    
    Related Corporationmeans any corporation (other than the Company) that is a
parent corporation of the Company or subsidiary corporation of the Company, as
defined in Sections 424(e) and 424(f), respectively, of the Code.(dd)
    
    Restricted Stock Awardsmeans Awards granted pursuant to Section 8.(ee)
    
    Restricted Stock Unitmeans a bookkeeping entry representing the equivalent
of one share of Common Stock, as awarded under the Plan.(ff)
    
    SARsmeans Awards granted pursuant to Section 7.(gg)
    
    Section 16 Insidersmeans individuals who are subject to Section 16(b) of the
Exchange Act with respect to the Common Stock.(hh)
    
    Securities Actmeans the Securities Act of 1933, as amended from time to
time, or any successor statute or statutes thereto. References to any specific section
of the Securities Act shall include any successor section.
 3




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(ii)
    
    Stock Awardsmeans Restricted and Unrestricted Stock Awards granted pursuant
to Sections 8 and 9, respectively.(jj)
    
    Ten Percent Shareholdermeans a person who owns more than ten percent of the
total combined voting power of the Company or any related corporation as determined
with reference to Section 424(d) of the Code.(kk)
    
    Unrestricted Stock Awardsmeans Awards granted pursuant to Section 9.
 2. PURPOSES.
  3. ADMINISTRATION.
 (a)
    
    Committee.
  (b)
    
    Appointment of Committee.
  (c)
    
    Powers; Regulations.
  (i)
    
    construe and interpret the Plan;(ii)
    
    define the terms used in the Plan;(iii)
    
    prescribe, amend and rescind rules and regulations relating to
the Plan;(iv)
    
    correct any defect, supply any omission or reconcile any
inconsistency in the Plan;(v)
    
    grant Awards under the Plan;(vi)
    
    determine the individuals to whom Awards shall be granted under
the Plan and the type of Award;(vii)
    
    determine the time or times at which Awards shall be granted
under the Plan;
 4




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(viii)
    
    determine the number of shares of Common Stock subject to each Award, the
exercise price of each Award, the duration of each Award and the times at which
each Award shall become exercisable;(ix)
    
    determine all other terms and conditions of Awards; and(x)
    
    make all other determinations necessary or advisable for the
administration of the Plan.
  (d)
    
    Delegation to Executive Officer.
 provided however
 4. ELIGIBILITY.
  5. STOCK.
 provided,
however, provided,
however,
 6. TERMS AND CONDITIONS OF OPTIONS.
  5




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(a)
    
    Number of Shares and Type of Option.
  (i)
    
    an Optionee holds one or more Incentive Stock Options under the
Plan (and/or any incentive stock options under any other stock option plan of
the Company, any Related Corporation or any predecessor corporation), and(ii)
    
    the aggregate Fair Market Value of the shares of Common Stock
with respect to which, during any calendar year, such Options become
exercisable for the first time exceeds $100,000 (said value to be determined as
provided above),
 then such Option or Options are intended to qualify under Section 422 of the Code with respect to
the maximum number of such shares as can, in light of the foregoing limitation, be so qualified,
with the shares so qualified to be the shares subject to the Option or Options earliest granted to
the Optionee. If an Option that would otherwise qualify as an Incentive Stock Option becomes
exercisable for the first time in any calendar year for shares of Common Stock that would cause
such aggregate Fair Market Value to exceed $100,000, then the portion of the Option in respect of
such shares shall be deemed to be a Non-Qualified Stock Option.
 (b)
    
    Date of Grant.Each Agreement shall state the Date of Grant.(c)
    
    Option Price.
 provided, however, provided further provided further
 (d)
    
    Duration of Options.
 6




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provided, however,
 (e)
    
    Vesting Schedule and Exercisability of Options
 provided however
 Number of Years ofContinuous Employment
    
    Portion of TotalWith the Company Following
    
    Option Which Will BecomeGrant Date
    
    Vested1
    
    
    25
    %2
    
    
    50
    %3
    
    
    75
    %4
    
    
    100
    %
  (f) Acceleration of Vesting.
 7




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(g)
    
    Term of Option.
  (i)
    
    as designated by (x) the Board in accordance with Section 6(n)
hereof or (y) the Committee or the Executive Officer in accordance with Section
6(d) hereof;(ii)
    
    the date of the Optionees termination of employment or
contractual relationship with the Company or any Related Corporation for cause
(as determined in the sole discretion of the Committee);(iii)
    
    the expiration of ninety (90) days from the date of the
Optionees termination of employment or contractual relationship with the
Company or any Related Corporation for any reason whatsoever other than cause,
death or Disability unless the exercise period is extended by the Committee a
date not later than the expiration date of the Option;(iv)
    
    the expiration of one year from (A) the date of death of the
Optionee or (B) cessation of the Optionees employment or contractual
relationship by reason of Disability unless the exercise period is extended by
the Committee until a date not later than the expiration date of the Option; or(v)
    
    any other event specified by the Committee at the time of grant
of the Option.
   (h) Exercise of Options.
  8




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provided, however,
  (i)
    
    Payment upon Exercise of Option.
      (j)
    
    Rights as a Shareholder.
  9




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(k)
    
    Transfer of Option.
 provided, however
 (i)
    
    Immediate Family Members,(ii)
    
    a trust or trusts for the exclusive benefit of such Immediate
Family Members, or(iii)
    
    a partnership in which such Immediate Family Members are the
only partners, provided that:
 (x)
    
    there may be no consideration for any such
transfer,(y)
    
    the Agreement evidencing such Options must be
approved by Committee, and must expressly provide for transferability
in a manner consistent with this Section, and(z)
    
    subsequent transfers of transferred Options
shall be prohibited other than by will, by applicable laws of descent
and distribution or pursuant to a domestic relations order (as defined
in the Code or Title I of the Employment Retirement Income Security Act
of 1974 or the rules or regulations thereunder).
  (l)
    
    Securities Regulation and Tax Withholding.
 10




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11




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(m)
    
    Stock Split, Reorganization or Liquidation.
  (i)
    
    the Company shall at any time be involved in a
transaction described in Section 424(a) of the Code (or any successor
provision) or any corporate transaction described in the regulations
promulgated thereunder;(ii)
    
    the Company subdivides its outstanding shares
of Common Stock into a greater number of shares of Common Stock (by
stock dividend, stock split, reclassification or otherwise) or combines
its outstanding shares of Common Stock into a smaller number of shares
of Common Stock (by reverse stock split, reclassification or
otherwise); or(iii)
    
    any other event with substantially the same
effect shall occur.
  12




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(n)
    
    Approved Transactions; Control Purchase.
    7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.
 (a)
    
    Award of Stock Appreciation Rights.
  13




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.
 (b)
    
    Restrictions of Tandem SARs.
  (c)
    
    Amount of Payment Upon Exercise of SARs.
  (d)
    
    Form of Payment Upon Exercise of SARs.
  8. RESTRICTED STOCK AWARDS.
 (a)
    
    Nature of Restricted Stock Awards.
  14




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(b)
    
    Rights as a Shareholder.
  (c)
    
    Restrictions.
  (d)
    
    Vesting of Restricted Stock.
  (e)
    
    Waiver, Deferral and Reinvestment of Dividends.
  9. UNRESTRICTED STOCK AWARDS.
 (a)
    
    Grant or Sale of Unrestricted Stock.
  (b)
    
    Elections to Receive Unrestricted Stock In Lieu of Compensation.
  15




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(c)
    
    Restrictions on Transfers.
  10. TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS.
 (a)
    
    Restricted Stock Unit Agreement.
  (b)
    
    Number of Shares.
  (c)
    
    Payment for Awards.
  (d)
    
    Vesting of Restricted Stock Units.
  (e)
    
    Voting and Dividend Rights.
  (f)
    
    Form and Time of Settlement of Restricted Stock Units.
  16




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(g)
    
    Creditors Rights.
  11. SECURITIES REGULATION AND TAX WITHHOLDING.
     17




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12. STOCK SPLIT, REORGANIZATION OR LIQUIDATION.
      18




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13. APPROVED TRANSACTIONS; CONTROL PURCHASE.
    19




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14. EFFECTIVE DATE; TERM.
  15. NO OBLIGATIONS TO EXERCISE AWARD.
  16. NO RIGHT TO AWARDS OR TO EMPLOYMENT.
  17. APPLICATION OF FUNDS.
  18. INDEMNIFICATION OF COMMITTEE.
  20




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provided, however,
 19. SHAREHOLDERS AGREEMENT.
  20. SEPARABILITY.
 provided however
 21. NON-EXCLUSIVITY OF THE PLAN.
  22. EXCLUSION FROM PENSION AND PROFIT-SHARING COMPUTATION.
  23. AMENDMENT OF PLAN.
 provided,
however further
provided
 21




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Date Amended and Restated Plan was Approved by Board of Directors of Company:
    
    January 29, 1998Date Amended and Restated Plan was Approved by Shareholders of Company:
    
    January 29, 1998As Amended by the Board of Directors and Shareholders of the Company:
    
    August 31, 1999May 2, 2000April 29, 2003May 12, 2005As Amended and Restated by the Board of Directors of the Company:
    
    December 21, 2007
 22