Document:

exv10w4

 

Exhibit 10.4

Director Compensation Summary

Persons elected at our annual meetings as directors and who hold no executive office with us or any
of our affiliates are entitled to receive an annual retainer of $20,000 and a further retainer of
$10,000 if such director acts as Chairman of our Audit Committee or $7,500 if such director acts as
Chairman of our Compensation Committee or our Nominating & Corporate Governance Committee.
Effective September 12, 2006, the non-employee Co-Chairman of our board of directors is entitled to
receive an additional annual retainer of $30,000 (payable 50% in cash and 50% in our common
shares). Additionally, each non-executive director is entitled to receive an attendance fee of
$1,000 for each meeting of the directors or any committee thereof, and to be reimbursed for
reasonable fees and expenses incurred in connection with his or her service as a director. With
the exception of the $30,000 non-employee Co-Chairman retainer, such retainers and fees paid to
directors are provided, at the director’s election, 50% in cash compensation with the remaining 50%
payable in our common shares, or 100% payable in our common shares. Non-employee directors are
granted 12,500 restricted share units upon joining our board of directors. The restricted share
units vest over three years from the date of grant. As restricted share units vest, directors are
issued an equivalent number of our common shares.<PAGE>
                                                                               .
                                                                               .
                                                                               .

                                                                   Exhibit 10.18
<TABLE>
<S>                       <C>
COMPANY Name:             B SQUARE CORPORATION

MS Agreement Number:      ***

Effective Date:           OCTOBER 1, 2006

Expiration Date:          JUNE 30, 2007

COMPANY's MS ID Number:   ***

Territory:                UNITED STATES OF AMERICA, CANADA, CARIBBEAN (EXCLUDING
                          CUBA) AND MEXICO
</TABLE>

                    MICROSOFT OEM DISTRIBUTION AGREEMENT FOR
                     SOFTWARE PRODUCTS FOR EMBEDDED SYSTEMS

MICROSOFT LICENSING, GP ("MS"), and the undersigned company ("COMPANY") agree to
be bound by the terms of this MICROSOFT OEM DISTRIBUTION AGREEMENT FOR SOFTWARE
PRODUCTS FOR EMBEDDED SYSTEMS ("Agreement") effective as of the date above
("Effective Date").

This Agreement consists of the following:

-    this Signature Page

-    Address Schedule

-    General Terms and Conditions

-    OEM Volume Royalty Program Schedule

-    Use of MOO and ECE Schedule

-    Virtual Warehouses Schedule

MICROSOFT LICENSING, GP                 B SQUARE CORPORATION

A general partnership organized under   A company organized under the laws of:
the laws of: State of Nevada, U.S.A     Washington, USA

By:                                     By:
    ---------------------------------       ------------------------------------
    (signature)                             (signature)

Name:                                   Name: SCOTT MAHAN
      -------------------------------         ----------------------------------
      (printed)                               (printed)

Title:                                  Title: VICE PRESIDENT, FINANCE - CFO
       ------------------------------          ---------------------------------
       (printed)                               (printed)

Date:                                   Date:
      -------------------------------         ----------------------------------
      (printed)                               (printed)

                                  CONFIDENTIAL

08/02/06 59528v9 Microsoft OEM Distribution Agreement for Software Products for
Embedded Systems

***  CONFIDENTIAL TREATMENT REQUESTED
                                                                     Form 2.8.56
                                                   Document Tracking Number: ***

<PAGE>

                                ADDRESS SCHEDULE
                       SHIPPING, BILLING, REBATES, SUPPORT

COMPANY'S VAT NUMBER:

<TABLE>
<S>                                     <C>
COMPANY "SHIP TO" ADDRESS               COMPANY BILLING ADDRESS

***                                     ***
B SQUARE CORPORATION                    B SQUARE CORPORATION
110 110th AVE NE                        110 110th Ave NE
Suite 200                               Suite 200
Bellevue, WA  98004                     Bellevue, WA  98004
UNITED STATES                           UNITED STATES

Telephone: 425 519-5900                 Telephone: 425 519-5900
Fax: 425 519-5999                       Fax: 425 519-5999
E-mail: ***                             E-mail: ***
</TABLE>

COMPANY TECHNICAL SUPPORT NUMBER

***

                                     PAYMENT

COMPANY shall include applicable MS invoice numbers and its VAT number on all
Payments.

SEND PAYMENTS VIA WIRE TRANSFER ONLY TO:

Microsoft Licensing, GP
***
***
***
***
***
***
***

Or to such other address or account as MS may specify from time to time.

                                  CONFIDENTIAL

Microsoft OEM Distribution Agreement for Software Products for Embedded Systems,
# *** dated October 1, 2006 between MS and B SQUARE CORPORATION

***  CONFIDENTIAL TREATMENT REQUESTED

                                        2

<PAGE>

                        MOO AND ECE COMPANY ADMINISTRATOR

COMPANY designates as its ECE and MOO COMPANY Administrator the following
individuals.

***
B SQUARE CORPORATION
110 110th Ave. NE
Suite 200
Bellevue, WA 98004
UNITED STATES

Telephone: 425 519-5900
Fax: 425 519-5999
E-mail: ***

                                  CONFIDENTIAL

Microsoft OEM Distribution Agreement for Software Products for Embedded Systems,
# *** dated October 1, 2006 between MS and B SQUARE CORPORATION

***  CONFIDENTIAL TREATMENT REQUESTED

                                        3

<PAGE>

                                     NOTICES

Except as provided above in this Address Schedule, any written notices related
to this Agreement must be in the English language and addressed to the contacts
and locations listed below. Each party may change the contact or address below
by providing notice.

<TABLE>
<S>                                     <C>
COMPANY INFORMATION                     MS INFORMATION

***                                     Microsoft Licensing, GP
B SQUARE CORPORATION                    ***
110 110th Ave. NE                       ***
Suite 200                               ***
Bellevue, WA  98004                     ***
UNITED STATES                           ***
                                        ***
Telephone: 425 519-5900                 ***
Fax: 425 519-5999
E-mail: ***

WITH A COPY TO:
</TABLE>

                                  CONFIDENTIAL

Microsoft OEM Distribution Agreement for Software Products for Embedded Systems,
# *** dated October 1, 2006 between MS and B SQUARE CORPORATION

***  CONFIDENTIAL TREATMENT REQUESTED

                                        4

<PAGE>

                          GENERAL TERMS AND CONDITIONS

1. DEFINITIONS.

"APM" or "Associated Product Materials" means documentation, external software
media, and other materials related to the Licensed Product that MS may designate
from time to time as redistributable parts of a Licensed Product. APM does not
include COAs.

"ARA" or "Additional Rights Agreements" means the Microsoft OEM Customer License
Agreement for Use of Third Party Brand Names and Trademarks and the Microsoft
OEM Customer License Agreement for Field Upgrades.

"Authorized Replicator" or "AR" means an MS-authorized supplier of APM and COAs.

"Benefits" are defined in Section 14(i).

"CLA" means the pre-printed, serialized OEM Customer License Agreement for
Embedded Systems as made available by MS. For additional information on the CLA,
COMPANY should contact its MS account manager.

"Claim" is defined in Section 8(a).

"COA" or "Certificate of Authenticity" means a non-removable sticker designated
by MS as specific to the Licensed Product.

"COMPANY Parties" is defined in Section 14(i).

"CVC" means the customer value chain. The CVC is a customer relationship
management system that tracks the progress of prospective customers through a
structured sales lifecycle. COMPANY may access the CVC through the following
URL: ***.

"Distributor ALPs" means the licensing terms and conditions for a Licensed
Product on the Royalty Rate List.

"ECE" means the Mobile & Embedded Communications Extranet, which is the Internet
site located at ***. MS may designate a successor URL from time to time. The ECE
is made available to COMPANY as an informational resource.

"Embedded Application" means an industry- or task-specific software program
and/or functionality with all of the following attributes:

     (a) It provides the primary functionality of the Embedded System.

     (b) It is designed to meet the functionality requirements of the specific
industry into which the Embedded System is marketed.

     (c) It offers significant functionality in addition to the Licensed Product
software.

"Embedded System" means OEM Customer's computing system or device with an Image
that (i) is designed for and distributed with an Embedded Application, and (ii)
is not marketed or useable as a general purpose personal computing device (such
as a personal computer), a multi-function server or a commercially viable
substitute for one of these systems.

"Force Majeure Event" means fire, disaster caused by forces of nature, riot,
terrorist act, war, labor dispute, material changes in applicable law or
regulation, or decree of any court.

"Image" means the binaries for the Licensed Product included on an Embedded
System and the OEM Customer's binaries.

"Installer" means a third party entity approved by MS in writing to perform
certain activities for an OEM Customer.

"Licensed Products" means the MS products identified as licensed in the Product
Viewer Tool. Licensed Products are available from an AR or an MS Affiliate for
redistribution to OEM Customers. Licensed Products include MS software
(including Supplemental Code), COAs, and APM.

"Material Amount" means ***.

"MCCL" means Microsoft (China) Co. Limited, a company organized under the laws
of the People's Republic of China and a wholly-owned subsidiary of MSCORP.

"Minimum Requirements" means ***.

"MIOL" means Microsoft Ireland Operations Limited, a company organized under the
laws of Ireland and an indirect, wholly-owned subsidiary of MSCORP.

"Misappropriate" has the same meaning given in the Uniform Trade Secrets Act.

"MOO" means MS OEM Online, the Internet site located at ***. MS may designate a
successor URL from time to time. COMPANY will access and use MOO in connection
with certain aspects of its performance under this Agreement.

"MS Affiliate" means any entity that directly or indirectly controls is
controlled by, or is under common control with MS, including without limitation
MSCORP.

"MS Parties" means MS, Suppliers, and/or their respective officers, employees,
and agents.

"MSCORP" means Microsoft Corporation, a company organized under the laws of the
State of Washington, U.S.A.

"MSLI" means Microsoft Licensing, GP, a general partnership in which MSCORP is a
general partner.

"OEM ALPs" means licensing terms and conditions for the Licensed Product on the
"Additional Licensing Provisions" affixed to the Runtime License Envelope.
Courtesy copies of the ALPs are available on the ECE.

"OEM Customer" means an original equipment manufacturer of one or more Embedded
Systems that has signed a current CLA.

"OEM Volume Royalty Program" has the meaning specified in the OEM Volume Royalty
Program Schedule.

"Payments" is defined in Section 14(i).

"Prior Agreement" is defined in Section 13(c).

"Product Viewer Tool" means the Product Viewer in MOO. It is a search tool that
allows users to search for MS part numbers, and bills of materials for Licensed
Products.

"Recovery Image" means a copy of the Image as originally installed on the
Embedded System. A Recovery Image is used to reinstall the Image.

"Reporting Guidelines" means the Sales-Out and Royalty Reporting Guidelines
posted on the ECE. These guidelines provide for electronic submission to MS of
sales-out information as reasonably requested by MS.

"Resource Guide" means the Microsoft Embedded Distributor Resource Guide posted
on the ECE. It contains information about general licensing, operations, and
Licensed Product ordering. It does not contain licensing terms. MS reserves the
right to modify the Resource Guide with 60 days notice.

                                  CONFIDENTIAL

Microsoft OEM Distribution Agreement for Software Products for Embedded Systems,
# *** dated October 1, 2006 between MS and B SQUARE CORPORATION

***  CONFIDENTIAL TREATMENT REQUESTED

                                        5

<PAGE>

"Royalty Rate List" means the list of royalty-bearing Licensed Products and
royalty rates. This list also contains Distributor ALPs and other information.

"Runtime License" means a license to distribute a single Image on an Embedded
System.

"Runtime License Envelope" means the envelope that contains the ALPs for the
Licensed Product. A Runtime License Envelope may contain COAs.

"Successor Agreement" is defined is Section 13(b).

"Supplemental Code" means any additional or replacement code for any portion of
a Licensed Product MS may provide to COMPANY from time to time. If there are any
additional or different license terms and conditions that apply to that the
Supplemental Code, then MS will provide a notice with that code.

"Suppliers" means MSCORP and other licensors or suppliers of Licensed Product or
portions thereof.

"Territory" means the specific countries or regions of the world on the
Signature Page.

"Trade Secret" has the same meaning given in the Uniform Trade Secrets Act.

"Update Image" means an Image that consists of an updated version of the
Licensed Product binaries such as Supplemental Code and an updated version of
the OEM Customer binaries. An Update Image may include the previously
distributed version of the Licensed Product binaries or the OEM Customer
binaries, but not both.

"VAT Number" is defined in Section 3(f)(i).

"Virtual Warehouse" means an offsite warehouse for Licensed Products established
by COMPANY in accordance with the Virtual Warehouse Schedule.

2. LICENSE GRANT AND LIMITATIONS.

(a) License Grant. MS grants to COMPANY a non-exclusive, limited license to
distribute Licensed Products solely:

     (i) into or within the Territory, and

     (ii) to OEM Customers, Installers, and Virtual Warehouses.

(b) Ordering.

     (i) COMPANY shall only accept orders from OEM Customers or on behalf of OEM
Customers from:

          -    Installers, and

          -    third party procurement companies.

     (ii) COMPANY shall verify via the MOO tool that all orders are from parties
that have current OEM Customer status.

     (iii) COMPANY shall ship Licensed Product solely within the Territory.
Additional countries may be added to the Territory only after COMPANY's MS
regional channel manager approves the addition and it is added to MOO.

     (iv) COMPANY shall not execute a CLA. COMPANY is not permitted to act as an
OEM Customer.

     (v) DESIGN RESTRICTIONS ON HIGH RISK ACTIVITIES. The Licensed Products are
not fault-tolerant and are not designed, manufactured or intended for any use
requiring fail-safe performance in which the failure of a Licensed Product could
lead to death, serious personal injury, or severe physical or environmental
damage ("High Risk Activities"). This includes the operation of aircraft or
nuclear facilities. COMPANY agrees not to use, or license the use of, the
Licensed Product in connection with any High Risk Activities.

(c) ARs and Available Products.

     (i) COMPANY will obtain COAs and APM from an AR (or MS Party). A list of
ARs is available on the ECE. MS may update this list.

     (ii) COMPANY shall order and acquire from an AR (or MS Affiliate) only
Licensed Products listed on the Product Viewer Tool.

     (iii) If MS has removed a Licensed Product from the Product Viewer Tool,
COMPANY may only continue to distribute the Licensed Product until the earlier
of:

          (A)  The final shipment date from COMPANY to its OEM Customers that is
               set by MS; and

          (B)  Termination or expiration of this Agreement.

     (iv) COMPANY may order Recovery Images and Update Images (on behalf of an
OEM Customer) that are based on Licensed Products listed on the Product Viewer
Tool. Recovery Images and Update Images may only be distributed to OEM
Customers, or Installers on behalf of an of an OEM Customer.

(d) Packaging Intact.

     (i) COMPANY shall distribute the Licensed Product in the unopened
form/packaging as received from the AR and/or MS Party.

     (ii) COMPANY shall not modify or remove any part of the contents or
packaging of the Licensed Product.

(e) Inventory Control. COMPANY shall maintain a level of security sufficient to
prevent loss or unauthorized distribution of Licensed Product (including COAs
and APM).

(f) No Conflicts. COMPANY shall not provide to OEM Customer any non-MS
information that conflicts with or supersedes or purports to supersede the CLA,
any ARAs or the OEM ALPs.

(g) Product-Specific Terms. COMPANY shall comply with the Distributor ALPs.

(h) Potential OEM Customers. COMPANY shall perform the following steps for each
potential OEM Customer. COMPANY shall:

     (i) Ensure that it uses the most current CLA and ARA forms.

     (ii) Before any potential OEM Customer signs a CLA, ensure that the company
is within the Territory.

     (iii) Notify each potential OEM Customer that only an authorized signatory
of the prospective OEM Customer may execute the CLA or ARA.

     (iv) Provide the potential OEM Customer a courtesy copy of the applicable
OEM ALPs before the OEM Customer first licenses any Licensed Product.

     (v) Verify that:

          (A)  The information provided by the potential OEM Customer is
               complete and correct;

          (B)  No changes or alterations have been made to the CLA or ARA; and

          (C)  Each such agreement has been properly completed and executed by
               an authorized representative of the potential OEM Customer.

(i) New OEM Customers. COMPANY shall perform the following steps for each new
OEM Customer. COMPANY shall:

     (i) If the OEM Customer requests ARAs, comply with the instructions
described in the Resource Guide.

                                  CONFIDENTIAL

Microsoft OEM Distribution Agreement for Software Products for Embedded Systems,
# *** dated October 1, 2006 between MS and B SQUARE CORPORATION

***  CONFIDENTIAL TREATMENT REQUESTED

                                        6

<PAGE>

     (ii) Provide Recovery Images and Update Images to OEM Customers as received
from an AR and in accordance with the Resource Guide.

     (iii) Provide Supplemental Code on external media as received from an AR
and any related OEM ALPs for OEM Customer only in the manner set forth in the
applicable Supplemental Code letter from MS.

     (iv) On a weekly basis, express mail to MS both OEM Customer-signed
originals of any CLAs and ARAs returned to COMPANY during the previous week.

(j) Interim Shipments. MS agrees that between the time COMPANY obtains the OEM
Customer's signature on the CLA and the date MS countersigns:

     (i) COMPANY may distribute Licensed Products to the OEM Customer, and

     (ii) ***.

(k) OEM Customer Notices. COMPANY shall instruct each OEM Customer that:

     (i) DESIGN RESTRICTIONS ON HIGH RISK ACTIVITIES. The Licensed Products are
not fault-tolerant and are not designed, manufactured or intended for any use
requiring fail-safe performance in which the failure of a Licensed Product could
lead to death, serious personal injury, or severe physical or environmental
damage ("High Risk Activities"). This includes the operation of aircraft or
nuclear facilities. OEM Customer agrees not to use, or license the use of, the
Licensed Product in connection with any High Risk Activities.

     (ii) OEM Customer may only distribute Licensed Products (including COAs and
APM):

          (A)  As part of the OEM Customer's Embedded Systems;

          (B)  That were obtained by the OEM Customer directly from an
               MS-authorized distributor; and

          (C)  In accordance with the CLA, the OEM ALPs, and the ARAs.

     (iii) OEM Customer may only reproduce and distribute Update Images,
Supplemental Code, and Recovery Images in accordance with the CLA.

(l) IP Notices.

COMPANY shall not remove or obscure any copyright, trademark or patent notices
that appear on the Licensed Product as delivered to COMPANY.

(m) Logos.

     (i) MSCORP may designate one or more logos for use with the Licensed
Product. Use of these logos is optional. To obtain more information regarding
licensing and use of logos, COMPANY should contact its MS account manager.

     (ii) Use or display of any logo of MS or MSCORP shall be limited to the
terms of a separate logo license from MSCORP. Logo licenses and published
standard guidelines are posted at ***, if and as available from MSCORP.

(n) Unauthorized Distribution. Upon notice from MS, COMPANY shall promptly
discontinue distribution of Licensed Product to an OEM Customer or to a
potential OEM Customer. COMPANY shall cooperate with MS in investigating
instances of unauthorized distribution of Licensed Products. COMPANY shall make
commercially reasonable efforts to retrieve any Licensed Products previously
distributed to such OEM Customer or potential OEM Customer.

(o) No Reverse Engineering.

     (i) COMPANY shall not reverse engineer, decompile, or disassemble the
Licensed Product, except and only to the extent applicable law expressly permits
such actions.

(p) No Representations for MS.

COMPANY shall not make any representation or warranty (express or implied) to
OEM Customers, or any other third party, on behalf of MS. COMPANY shall defend,
indemnify, and hold MS and its Suppliers harmless from any claim or damages and
reasonable attorneys' fees arising out of any warranty or representation by
COMPANY.

(q) This Agreement does not give COMPANY title to any Licensed Product,
packaging, papers, materials, or other property of MS related to a Licensed
Product.

     (i) MS retains title to all APM and COAs (and related materials) from the
time that the Licensed Product is acquired by COMPANY until COMPANY distributes
the Licensed Products to or for the OEM Customer.

     (ii) In no circumstances will any receiver or trustee of COMPANY be
entitled to sell or distribute any Licensed Product obtained by COMPANY pursuant
to the Agreement.

(r) Unless otherwise provided in writing from MS, COMPANY may not deliver COAs
or APM to any other company that has an effective Microsoft OEM Distribution
Agreement for Software Products for Embedded Systems.

(s) COMPANY agrees that it has received and reviewed a courtesy copy of the
Minimum Requirements (if applicable in the Territory). COMPANY further agrees to
achieve compliance with the Minimum Requirements (if any) within *** days of the
Effective Date and to maintain such compliance after that.

3. REPORTS AND PAYMENTS.

(a) Royalty Rate List.

     (i) At least *** days prior to the first day of each month, MS will post
the Royalty Rate List for the upcoming month on the ECE.

     (ii) MS may modify the Royalty Rate List upon notice to COMPANY. Submission
of Licensed Product orders to ARs or distribution of Licensed Product after the
effective date of any modifications to the Royalty Rate List shall constitute
COMPANY's acceptance of such modifications. New royalty rates will be effective
on the date specified on the Royalty Rate List or, if no date is specified, upon
notice of the change.

     (iii) If COMPANY elects to participate in the OEM Volume Royalty Program,
COMPANY shall comply with the terms and conditions in the OEM Volume Royalty
Program Schedule.

     (iv) MS may offer a performance rebate program ("Rebate Program") to
encourage its distributors to promote and expand sales of Licensed Products.
COMPANY may qualify to participate in the Rebate Program and earn rebates for
achieving defined objectives as outlined on ECE. Company should contact its MS
account manager with any questions about the Rebate Program.

(b) Sales-Out Reports.

     (i) Within *** days after the end of each calendar month COMPANY shall
submit a sales-out report as described in the Reporting Guidelines. COMPANY
shall provide its final report within *** days after this Agreement terminates
or expires.

     If COMPANY fails to submit a sales-out report, COMPANY may receive daily
notices from MS to correct the problem. MS may

                                  CONFIDENTIAL

Microsoft OEM Distribution Agreement for Software Products for Embedded Systems,
# *** dated October 1, 2006 between MS and B SQUARE CORPORATION

***  CONFIDENTIAL TREATMENT REQUESTED

                                        7

<PAGE>

invoice COMPANY based on Licensed Product shipment reports submitted to MS by
the ARs.

     (ii) COMPANY shall ensure that all reports under this Agreement:

          (A)  are accurate and complete,

          (B)  are in compliance with the requirements in the Reporting
               Guidelines, and

          (C)  are in compliance with any Minimum Requirements applicable in the
               Territory.

     (iii) COMPANY shall take all steps needed to ensure that it complies with
all applicable local and national data protection laws when collecting and
providing data to MS.

(c) Monthly Payments. For each calendar month, COMPANY shall remit payment to MS
via wire transfer, as specified in the Payment section of the Address Schedule.

(d) Late Payments.

     (i) If COMPANY does not meet MS payment terms, MS may, without limiting its
remedies, do any of the following:

          (A)  require the AR to suspend all pending COMPANY orders; or

          (B)  terminate this Agreement.

     (ii) If COMPANY fails to pay any royalty or other payment due under this
Agreement by the applicable due date, then MS may apply a late charge on the
past due amount. To the extent permitted by applicable law, the late charge will
be assessed at an annual rate equal to ***%. The late charge will accrue monthly
(before and after any judgment) from the due date through the date of actual
payment (both dates inclusive). Late charges will be applied and without
prejudice to any other right or remedy available to MS.

(e) Currency.

All payments must be in U.S. dollars and amounts owed will not be satisfied by a
tender or any recovery pursuant to any judgment that is expressed in or
converted by MS to any currency other than U.S. dollars.

(f) Taxes.

     (i) If COMPANY is required to withhold taxes on payments to MS, then
COMPANY may deduct such taxes from the amount owed, and pay them to the
appropriate taxing authority. COMPANY agrees to deliver to MS (within *** days
of such payment) an official receipt for any such taxes withheld or other
documents necessary to enable MS to claim potential foreign tax credits. If MS
is defined as MSLI or MCCL, a foreign tax authority is a non-U.S. authority. If
MS is defined as MIOL, a foreign tax authority is a non-Irish authority. If
COMPANY is located in a jurisdiction that uses the Value Added Tax or sales tax
number ("VAT Number") for tax identification purpose, COMPANY's VAT Number shall
be provided in the Address Schedule.

     (ii) Tax Certificate. If COMPANY conducts business in the U.S.A. and
qualifies for a state resale tax exempt certificate, then COMPANY shall provide
MS with a copy of its U.S.A. state resale tax exempt certificate, if applicable,
with this Agreement when it is returned for signature by MS.

(g) Royalty Payments. For each unit of Licensed Product distributed by COMPANY,
COMPANY agrees to pay MS the royalty rate in the Royalty Rate List in effect
during the month in which Licensed Product is shipped by COMPANY. COMPANY shall
pay royalties within *** days after the end of each calendar month in which
Licensed Product was shipped. COMPANY shall pay royalties within *** days after
the termination or expiration date of this Agreement for all Licensed Product
distributed in the final full or partial month, as well as all inventory not
returned to MS, including inventory remaining in Virtual Warehouses.

(h) Credit Review. MS reserves the right to review COMPANY's financial
condition, payment history, and overall credit worthiness during the term of
this Agreement. By signing this Agreement COMPANY authorizes MS to access any
credit bureaus or agencies to inquire about COMPANY's financial condition. Upon
request, COMPANY shall provide its current audited financial statements. After
review of COMPANY's financial condition, payment history and overall credit
worthiness, MS may require any of the following payment assurances:

     (i) An initial payment equal to the estimated Licensed Product royalties
for the first calendar quarter of the Agreement (or the quarter following the
review). COMPANY may not recoup any of that payment against royalties due to MS
or apply it against payments to any AR. If COMPANY has complied with all
material terms of this Agreement when it expires, MS will refund the initial
payment amount (net of amounts due MS) within *** days of COMPANY's final
royalty report and payment for Licensed Products distributed during the term of
this Agreement.

     (ii) A third party guarantee, performance bond, letter of credit,
prepayment of royalties, or other security.

     (iii) Periodic updated financial statements.

     (iv) Written assurances of due performance.

Until the deposit amount and/or payment assurances is/are received and
acceptable to MS, MS may suspend COMPANY's license rights or require ARs to
refuse to fill COMPANY's orders.

(i) Error. If COMPANY discovers an over-reporting error, COMPANY shall report
the error to MS in writing within *** calendar months after the end of the
calendar month in which the Licensed Product was distributed.

(j) Order Limits. MS may require ARs to refuse or limit orders placed by COMPANY
in quantities greater than COMPANY will be able to make timely payment for or
distribute. MS will give COMPANY written notice if it takes this action.

(k) AR Charges. Royalties exclude any charges by the AR for COAs or APM.
Royalties also exclude any taxes, duties, fees, excises or tariffs imposed on
any of COMPANY's activities in connection with this Agreement. COMPANY shall pay
any such charges, taxes, duties, fees, excises or tariffs.

(l) Additional Royalty. If COMPANY distributes any Licensed Product in violation
of the terms of this Agreement or COMPANY is unable to account for missing
Licensed Product, then MS, without limiting its remedies, may demand and COMPANY
agrees to pay, an additional royalty equal to ***% of the royalty for those
Licensed Products. COMPANY shall pay such additional royalty within *** days of
MS' invoice date. The parties acknowledge that distribution in violation of the
terms of this Agreement would result in damages to MS that are impractical and
difficult to ascertain. The parties also acknowledge that the additional royalty
represents a reasonable and genuine estimate of the loss that will be suffered
by MS.

(m) CVC Leads. COMPANY shall enter data into the CVC as described on the ECE.
***

(n) Damaged Materials. For COAs and APM damaged irreparably during the ordinary
course of COMPANY's business, COMPANY shall:

     (i) Maintain a log of each damaged or destroyed COA. For each such COA, the
log must include the date damaged or destroyed,

                                  CONFIDENTIAL

Microsoft OEM Distribution Agreement for Software Products for Embedded Systems,
# *** dated October 1, 2006 between MS and B SQUARE CORPORATION

***  CONFIDENTIAL TREATMENT REQUESTED

                                        8

<PAGE>

Licensed Product name, COA number and cause of damage or destruction.

     (ii) Return each damaged COA to the AR and/or MS Affiliate from which the
COA was acquired.

(o) Materials in Transit. COMPANY is responsible for any loss or damage to COAs
and APM in transit between AR and COMPANY.

4. NO WARRANTIES. NO LIABILITY FOR LATE DELIVERY.

(A) EACH LICENSED PRODUCT IS LICENSED "AS-IS." THE OEM CUSTOMER AND ITS END
USERS BEARS THE RISK OF USING IT. MS GIVES NO EXPRESS WARRANTIES, GUARANTEES OR
CONDITIONS. TO THE EXTENT PERMITTED UNDER APPLICABLE LAWS, MS EXCLUDES THE
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT.

(b) Neither MS nor its Suppliers shall have any liability for failure to deliver
any Licensed Product by any particular date.

5. LICENSED PRODUCT DISCONTINUANCE AND RETURNS

(a) If MS or its Suppliers determine that a Licensed Product should not be
distributed in a market, COMPANY shall immediately stop distributing upon
written notice.

(b) Replacement Units. No royalty shall accrue to MS for Licensed Product
shipped to replace units defective in media or reproduction. COMPANY must
distribute such replacement copies directly to OEM Customers at no charge,
except for the reasonable costs COMPANY incurs for materials, shipping, and
handling.

(c) COMPANY shall defend, indemnify, and hold MS and its Suppliers harmless from
and against all damages, costs and expenses, including reasonable attorneys'
fees, incurred due to COMPANY's continued distribution of Licensed Product after
MS has notified COMPANY to stop distributing the Licensed Product.

(d) Returns. COMPANY shall manage any returns of Licensed Product in accordance
with the then-current Resource Guide.

6. LIMITATIONS OF LIABILITY.

(a) LIABILITY CAP.

     (i) MS Parties have limited liability under this Agreement.

          (A)  MS Parties' liability is limited for each Licensed Product.

          (B)  MS Parties' liability will not exceed ***% of the amount of
               actual payments by COMPANY for such Licensed Product. This amount
               is also limited to payments during the original term of this
               Agreement.

          (C)  This limit includes MS' duties arising under Section 8.

     (ii) The liability limit in this Section 6(a) does not apply to any
attorneys' fees and expenses incurred by MS under Section 8 only.

(b) EXCLUSION OF CERTAIN DAMAGES AND LIMITATION OF TYPES OF LIABILITY.

     (I) COMPANY AGREES THAT THE MS PARTIES SHALL NOT BE LIABLE TO COMPANY OR TO
ANY THIRD PARTY FOR ANY OF THE FOLLOWING.

          (A)  ECONOMIC DAMAGES (I.E., DAMAGES FROM LOSS OF PROFITS OR REVENUES,
               BUSINESS INTERRUPTION AND LOSS OF BUSINESS INFORMATION OR DATA).

          (B)  CONSEQUENTIAL DAMAGES.

          (C)  SPECIAL DAMAGES.

          (D)  INCIDENTAL DAMAGES.

          (E)  INDIRECT DAMAGES.

          (F)  PUNITIVE DAMAGES.

     (II) COMPANY AGREES THAT THE FOREGOING LIMITATIONS APPLY:

          (A)  EVEN IF MS PARTIES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH
               DAMAGES;

          (B)  EVEN IN THE EVENT OF ANY MS PARTIES' FAULT, TORT (INCLUDING
               NEGLIGENCE), MISREPRESENTATION, STRICT LIABILITY OR PRODUCT
               LIABILITY; AND

          (C)  EVEN IF ANY REMEDIES FAIL OF THEIR ESSENTIAL PURPOSE.

(c) RELEASE. COMPANY releases MS Parties from all liability in excess of the
limits in this Section 6. This release includes any claim for indemnification or
contribution even if such claims arise under local law.

7. LICENSED PRODUCT SUPPORT.

(a) This Agreement does not include technical support by MS to COMPANY, OEM
Customers or any end users. COMPANY may be able to purchase technical support
services from MS or a MS Party, under a separate agreement.

(b) COMPANY shall provide commercially reasonable support for the Licensed
Products to OEM Customers. COMPANY shall advise OEM Customers to contact COMPANY
for support.

(c) For the term of this Agreement, COMPANY shall maintain a valid technical
support services contract for the Licensed Products through Microsoft OEM
Services for Embedded Partners or with a third party for an equivalent level of
such services. Instead of such a contract, upon request, MS will verify that
COMPANY itself provides an equivalent level of such services. If COMPANY chooses
to acquire support through MSCORP, COMPANY agrees that MSCORP may charge
applicable support fees under such contract.

(d) Upon request, COMPANY shall provide a copy of its current OEM Customer
support policy for the Licensed Products. COMPANY shall provide MS with ***
days' prior written notice of any substantive change in COMPANY's support policy
for Licensed Products.

8. INTELLECTUAL PROPERTY INFRINGEMENT.

(a) Coverage.

     MS agrees to defend, at MS' expense, COMPANY in a lawsuit or other judicial
action, and pay the amount of any adverse final judgment (or settlement that MS
consents to) from such lawsuit or judicial action, for any third party claims
that the Licensed Products:

     (i) Infringe any copyright or trademark rights;

     (ii) Infringe any patents (except for patents that are alleged to be
infringed by or essential to an implementation of the VC-1 standard, for which
no defense or indemnity obligation from MS Parties applies); and

     (iii) Misappropriate any Trade Secrets.

Each of the foregoing are individually referred to in this Agreement as a
"Claim".

(b) Scope.

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     (i) Regarding a Trade Secret Claim, MS has no duty under this Agreement if
COMPANY acquired a Trade Secret:

          (A)  Through improper means;

          (B)  Under circumstances giving rise to an independent duty by COMPANY
               to maintain secrecy or limit the use of the Trade Secret; or

          (C)  From a person (other than MS or its Suppliers) who owed, to the
               party asserting the Trade Secret Claim, a duty to maintain the
               secrecy or limit the use of the Trade Secret.

     (ii) Regarding a patent Claim, MS' obligations under this Agreement shall
be limited to patent Claims where the Licensed Product software alone, without
combination or modification, constitutes direct or contributory infringement of
such patent Claim.

     (iii) Regarding any Claim, MS has no duties under this Agreement if any
manufacture, use, sale, offer for sale, importation or other disposition or
promotion of the Licensed Product or trademark by COMPANY violates this
Agreement or the Distributor ALPs, but only to the extent that such infringement
claim results from such violation.

     (iv) MS has no duties under this Agreement for any Claim unless the
following are satisfied:

          (A)  COMPANY must promptly notify MS in writing of the Claim;

          (B)  MS must have sole control over defense and/or settlement of the
               Claim; and

          (C)  COMPANY shall provide MS with reasonable assistance in the
               defense of the Claim.

(c) Other Claims.

     (i) Regarding any claim (other than a Claim), COMPANY shall promptly notify
MS in writing of such claim. MS has no duty to defend COMPANY or pay damages
arising out of such claim.

     (ii) COMPANY agrees that MS has the right, in its sole discretion, to
assume at any time the defense of any such claim. If MS assumes the defense of
any such claim:

          (A)  MS will notify COMPANY in writing of MS' election;

          (B)  MS must have sole control over the defense and/or settlement of
               the claim;

          (C)  COMPANY shall provide MS with reasonable assistance in the
               defense of the claim;

          (D)  MS will then defend COMPANY against that claim; and

          (E)  MS will pay any adverse final judgment (or settlement that MS
               consents to) resulting from defending such claim.

(d) Additional Options.

     In addition to the obligations in Section 8(a), if MS receives information
concerning a claim (including a Claim), MS may, at its expense, but without
obligation to do so, undertake further actions such as:

     (i) Procuring for COMPANY such copyright, patent, trademark, or Trade
Secret rights or licenses to address the claim; or

     (ii) Replacing or modifying the Licensed Product or trademark to make it
non-infringing or stop the misappropriation of the Trade Secret.

(e) Notices; Injunctions.

     (i) MS may provide COMPANY with written notice of a recommendation that
COMPANY stop the manufacture, use, sale, offer for sale, importation or other
disposition or promotion of Licensed Products or trademarks due to a claim
(including a Claim). COMPANY shall reimburse MS and MSCORP for all damages,
costs, and expenses (including reasonable attorneys' fees) they incur if COMPANY
conducts any activities contrary to such recommendation more than *** days after
the date of MS' notice.

     (ii) If in connection with a claim (including a Claim), a court enjoins
COMPANY from distributing Licensed Products in its inventory and within *** days
after issuance of such injunction:

          (A)  Such injunction is not lifted;

          (B)  MS has not procured a license that enables COMPANY to distribute
               the enjoined Licensed Products; or

          (C)  MS has not modified such Licensed Products to make them
               non-infringing;

then such Licensed Products will no longer be available for distribution under
this Agreement. COMPANY will return any corresponding Licensed Products in
accordance with this Agreement and the then-current Resource Guide. COMPANY will
receive a royalty credit for such returns.

9. RECORDS; AUDIT.

(a) Licensed Product Records. COMPANY will maintain accurate and complete
Licensed Product records (including COAs, APM and Runtime License envelopes).

(b) Licensed Product Returns. COMPANY may return Licensed Products. Each return
must comply with the returns policy and procedure in the then-current Resource
Guide.

(c) Licensed Product Reports. COMPANY will account for Licensed Products in
inventory on a monthly basis. Licensed Products in inventory include Licensed
Products at all COMPANY facilities and in Virtual Warehouses. COMPANY will make
this accounting available to MS upon request. The Licensed Product accounting
will reconcile beginning and ending Licensed Product inventory. It will also
include:

     (i) Licensed Product and APM acquisitions from ARs and MS Affiliates.

     (ii) COA serial number ranges on the Runtime License envelopes with
corresponding shipment dates.

     (iii) OEM Customer returns.

     (iv) COAs, Licensed Product and APM that cannot be distributed for any
reason.

(d) Payments. If COMPANY discovers a discrepancy resulting in an underpayment to
MS, COMPANY will pay MS if there is a difference between the number of Runtime
Licenses acquired by COMPANY from ARs and MS Affiliates and:

     (i) The number of Runtime Licenses distributed by COMPANY pursuant to this
Agreement; plus

     (ii) The number of Runtime Licenses that COMPANY can verify are in the
possession of COMPANY and the Virtual Warehouses; plus

     (iii) The number of Runtime Licenses properly returned to the AR (or MS
Affiliate, if applicable).

                                  CONFIDENTIAL

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# *** dated October 1, 2006 between MS and B SQUARE CORPORATION

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The payment amount will be the difference in units multiplied by the royalty
rates that apply for the units. COMPANY will submit a revised sales-out report
and pay in accordance with Section 3. If COMPANY can show (to the reasonable
satisfaction of MS) that Licensed Product was destroyed due to a Force Majeure
Event, then it will not pay for those units of Licensed Product.

(e) COMPANY Records; MS Inspection.

     (i) MS may inspect COMPANY' records related to compliance with this
Agreement. MS will provide written notice to COMPANY at least *** days before MS
inspects these records.

     (ii) COMPANY will keep these records for at least *** years after the term
of the Agreement.

     (iii) COMPANY will make the records available to MS at a single, readily
accessible location.

     (iv) MS may ask third parties to help inspect these records. These third
parties will be certified or chartered public accountants. They will be
independent from MS. The third parties will not be hired on a contingent fee
basis.

     (v) MS will inspect the records during regular business hours.

     (vi) MS may also inspect COMPANY's premises, and/or Virtual Warehouse
premises. COMPANY will grant access to MS with the following limits.

          (A)  MS will give COMPANY *** days' prior notice.

          (B)  MS' access shall be limited. MS may only access areas where:

               -    COAs and APM are stored and used;

               -    the Licensed Products are copied (if COMPANY is an
                    Installer), stored, installed (if COMPANY is an Installer),
                    used, and distributed; and

               -    COMPANY maintains its records.

          (C)  COMPANY personnel may escort MS and the third parties helping MS.
               MS agrees that it will not unreasonably interfere with COMPANY's
               normal course of business.

(f) Amounts Owed. MS will provide COMPANY with a summary of MS' findings and
conclusions of each audit.

     (i) MS may determine COMPANY did not report correctly. If so, COMPANY will
immediately pay the amount owed to MS.

     (ii) MS may determine COMPANY has intentionally breached this Agreement (or
a previous Microsoft OEM Distribution Agreement for Software Products for
Embedded Systems), or that the amount owed exceeds the Material Amount. If so,
COMPANY will also pay the costs of the audit plus an additional royalty of ***%
of the applicable product royalty for each unreported copy of Licensed Product.

(g) MS will not do an audit more than once a year. However, MS may audit more
than once a year if an audit finished during the preceding year revealed a
Material Amount or an intentional breach of this Agreement.

10. NONDISCLOSURE.

(a) COMPANY shall keep confidential:

     (i) the terms of this Agreement, including, without limitation, the Royalty
Rate Lists;

     (ii) information on the ECE, MOO and in the Resource Guide;

     (iii) information concerning current and potential OEM Customers;

     (iv) any of the following with regard to MS or any of its Suppliers:

          -    royalty rate information,

          -    the terms of agreements concerning products,

          -    license negotiations,

          -    any information relating to released or unreleased software
               products,

          -    the marketing or promotion of any product,

          -    and business policies or practices that MS or its Suppliers
               disclose to COMPANY that is non-public information, and

     (v) any other information that, in the circumstances surrounding the
disclosure or in the nature of the information, ought in good faith to be
treated as confidential.

11. ASSIGNMENT.

(a) COMPANY may not assign or sublicense this Agreement in whole or in part.
This limitation includes assignments or sublicenses by contract, merger, or
operation of law. Any attempted assignment or sublicense in violation of this
provision shall be void and of no effect.

(b) MS may assign any this Agreement to an MS Affiliate. MS will not assign an
agreement if that assignment constitutes an unreasonable and material impairment
of COMPANY to obtain the performance that it is entitled to under that
agreement. MS will provide COMPANY with prior notice of any assignment. Failure
to provide notice will not affect the effectiveness of any assignment.

12. MOO AND ECE.

COMPANY shall comply with the terms and conditions in the MOO and ECE Schedule.

13. TERM.

(a) This Agreement is effective from the Effective Date until the Expiration
Date. MS may extend the term of this Agreement for an additional one year period
upon notice to COMPANY. COMPANY's acquisition or distribution of Licensed
Product during an extension signifies COMPANY's agreement to the terms of the
extension. Both parties agree to be bound by the terms of any extension
notification, if accepted by COMPANY.

(b) If COMPANY enters into a new distribution agreement with MS that grants
substantially similar rights for Licensed Products licensed under this Agreement
(a "Successor Agreement"), COMPANY may retain Licensed Product, remaining COAs
and APM acquired under this Agreement if all the following are true.

     (i) The Licensed Products, remaining COAs and APM are used in accordance
with the terms and conditions of the Successor Agreement, including without
limitation applicable royalties.

     (ii) The Successor Agreement has an effective date no later than *** days
following the termination or expiration of this Agreement.

     (iii) MS has not objected in writing to such use within *** days following
the effective date of the Successor Agreement.

                                  CONFIDENTIAL

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# *** dated October 1, 2006 between MS and B SQUARE CORPORATION

***  CONFIDENTIAL TREATMENT REQUESTED

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(c) If COMPANY is currently licensed to distribute the Licensed Product under a
valid agreement with MS ("Prior Agreement"), then as of the Effective Date of
this Agreement:

     (i) COMPANY's license to order and distribute the Licensed Product under
the Prior Agreement shall cease; and

     (ii) COMPANY shall report and pay for the Licensed Product under the terms
and conditions of this Agreement.

(d) This Agreement does not create any express or implied obligation to renew or
extend the Agreement or to continue the parties' relationship on the same terms.
Regardless of the number of renewals, this Agreement will always be a fixed term
agreement and not an indefinite term agreement.

14. TERMINATION.

(a) Either party may terminate this Agreement at any time without cause by
giving the other *** days prior written notice.

(b) MS may, in its' sole discretion:

     (i) suspend any rights granted to COMPANY under this Agreement;

     (ii) require ARs to refuse to fulfill or to limit orders placed by COMPANY;
and/or

     (iii) terminate this Agreement in its entirety or as to any individual
Licensed Products.

(c) MS may terminate this Agreement if COMPANY submits "zero dollar" royalty
reports for *** calendar months.

(d) Notice for Bankruptcy. If COMPANY becomes insolvent, enters bankruptcy or
similar proceedings under applicable law; admits in writing its inability to pay
its debts; or makes or attempts to make an assignment for the benefit of
creditors, then:

     (i) COMPANY's distribution rights under this Agreement will be suspended as
of the date such event occurs; and

     (ii) Termination is effective upon notice to COMPANY or , if later, as soon
as permitted by applicable law.

(e) If either party has breached this Agreement, and the cause for termination
is curable, the non-breaching party will give *** days prior written notice and
opportunity to cure. If the cause for termination is not curable during that
time, termination will take effect promptly upon notice from the party who is
not in breach.

(f) Upon termination or expiration of this Agreement, all COMPANY's license
rights shall immediately cease.

     (i) COMPANY shall immediately cease distribution of all Licensed Product.

     (ii) Within *** business days from expiration or termination of the
Agreement, COMPANY shall return:

          (A)  All Licensed Products, COAs and APM in inventory (including all
               Virtual Warehouses) to an AR per the Resource Guide.

          (B)  All CLA and ARA forms to MS at the notices address indicated in
               the Address Schedule.

          (C)  Any other property of any MS Party that COMPANY possesses to MS
               at the notices address indicated in the Address Schedule.

MS, its Suppliers, and ARs are not required to refund, credit, or adjust amounts
paid for the Licensed Products returned to MS pursuant to this Section.

(g) Upon notice that this Agreement is expiring or to be terminated, each party
must assist the other to wind-down their respective obligations under this
Agreement in an orderly manner.

(h) When this Agreement terminates or if MS suspends COMPANY's distribution
rights, MS may take any actions that may be advisable to prevent unauthorized
distribution of Licensed Products then in COMPANY's inventory and to ensure
timely return or destruction of such Licensed Products.

(i) COMPANY agrees that the termination or expiration of this Agreement shall
not cause any MS Party to pay any indemnification, severance or termination
payment or benefit to COMPANY, or any of its subsidiaries or affiliates, or a
third party (together "Company Parties"). If any MS Party is required to pay
Company Parties any compensation, severance pay or benefit other than those in
this Agreement ("Benefits"), COMPANY shall indemnify the MS Party for the
payment as well as from any reasonable costs and expenses (including attorneys'
fees and expenses) incurred by it in connection with its involvement in any
judicial or administrative proceeding (the Benefits, together with any costs and
expenses indemnifiable by COMPANY in this Section are referred to collectively
as the "Payments"). COMPANY irrevocably authorizes MS:

     (i) To set off against the payment of any obligations of MS under this
Agreement, the amount of any and all Payments, and

     (ii) To hold, pending final determination of the amount of the Payments,
the payment of any obligations of MS under this Agreement as security for the
payment of all Payments by COMPANY to MS, if MS, in its sole discretion,
determines that there are reasonable grounds to believe that MS is or shall be
required to pay any Payments.

(j) The remedies available to MS under this Agreement are not exclusive. In
addition to such remedies, MS may exercise any and all legal, equitable or other
remedies available.

15. NOTICES.

(a) By MS. MS may give COMPANY notices, authorizations, and requests in
connection with this Agreement by:

     (i) Fax to the fax number listed in the Address Schedule; or

     (ii) In writing to the addresses indicated in Address Schedule.

In addition, only for updates or changes to information, instructions or forms
(but not license terms), MS may give COMPANY notices, authorizations and
requests by:

     -    Posting them to the ECE or MOO, or

     -    Email to the email address listed in the Address Schedule.

(b) By COMPANY. COMPANY may give MS notices, authorizations, and requests in
connection with this Agreement by:

     (i) Fax on COMPANY letterhead signed by an authorized representative of
COMPANY to the fax number listed in the Address Schedule;

     (ii) Email at the email address listed in the Address Schedule as a scanned
document on COMPANY letterhead signed by an authorized representative of
COMPANY; or

     (iii) In writing on COMPANY' letterhead signed by an authorized
representative of COMPANY to the addresses indicated in the Address Schedule.

(c) Deemed Received. Notices are deemed received *** business days after they
are:

     (i) Posted on the ECE or MOO by MS;

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***  CONFIDENTIAL TREATMENT REQUESTED

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     (ii) Transmitted by fax or email;

     (iii) Deposited in the U.S.A. mails, postage prepaid, certified or
registered, return receipt requested, provided COMPANY's address for notices is
located in the U.S.A.; deposited in the European Union (EU) or European Free
Trade Association (EFTA) mail, prepaid recorded delivery, provided COMPANY's
address for notices is located in the EU or EFTA; sent by same-day ground
express courier; or

     (iv) Sent by international air express courier, charges prepaid.

(d) Address Schedule. COMPANY shall keep all information in the Address Schedule
complete and current. Within *** days of any change of information required in
the Address Schedule, COMPANY shall notify MS of such change as set forth in
Section 15(b).

(e) If there has been a COMPANY ownership (by contract, merger, operation of law
or otherwise) or COMPANY name change, then MS may require COMPANY:

     (i) to provide MS with additional information and relevant documents
relating to the circumstances of the change; and

     (ii) to enter into a new Microsoft OEM Distribution Agreement for Software
Products for Embedded Systems.

(f) Information posted on the ECE and MOO may change without notice until the
effective date of such information. MS may correct errors in information posted
on the ECE and MOO or update posted documents after the Effective Date by
sending notice to COMPANY.

16. CHOICE OF LAW; JURISDICTION AND VENUE; ATTORNEYS' FEES.

(a) Washington state law governs this Agreement. Washington state law also
governs claims for any breach of this Agreement, regardless of conflict of laws
principles.

(b) The federal courts in the State of Washington are the exclusive venue for
all disputes about this Agreement. This includes any claims for breach of this
Agreement. The state courts in the State of Washington are the exclusive venue
if there is no federal subject matter jurisdiction. Each party consents to the
exercise of personal jurisdiction by these courts. Each party agrees that it
cannot revoke this consent.

(c) MS may pursue injunctive relief against COMPANY to protect MS' intellectual
property rights. MS may pursue this relief in any forum. MS will provide prior
notice to COMPANY if MS pursues injunctive relief. No notice shall be required
if MS reasonably determines that providing notice will prevent MS from
protecting its intellectual property.

(d) Either party may serve process as authorized by the applicable law or court
rule.

(e) The United Nations Convention on Contracts for the International Sale of
Goods does not apply to this Agreement.

(f) If either party employs attorneys to enforce any rights arising out of or
relating to this Agreement, the primarily prevailing party shall be entitled to
recover its reasonable attorneys' fees, costs, and other expenses.

(g) This Agreement shall be written and executed only in the English language,
which shall be controlling in all respects. If MS provides a translation or
summary of this Agreement in any other language to COMPANY, such translation or
summary shall be non-binding and for reference purposes only, and shall not
constitute an amendment, modification or interpretation of this Agreement.

17. GOVERNMENT REGULATIONS.

(a) The Licensed Products are subject to United States and European Union export
laws and regulations. COMPANY must comply with all domestic and international
export laws and regulations that apply to the Licensed Products. These laws
include restrictions on destinations, end users, and end use. For additional
information, see ***.

18. GENERAL.

(A) ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT BETWEEN
THE PARTIES WITH RESPECT TO ITS SUBJECT MATTER AND MAY BE AMENDED ONLY BY A
WRITING EXECUTED BY EACH OF THE PARTIES.

(b) Joint Venture. The parties agree that this Agreement shall not be construed
as:

     (i) to create a partnership, joint venture or agency relationship or as
granting a franchise, or

     (ii) to affect the surviving rights or obligations of either party under
previous versions of this Agreement.

(c) Severability. If any provision of this Agreement is found illegal, invalid
or unenforceable by a court of competent jurisdiction, the remaining provisions
and license for Licensed Products, as applicable, shall remain in full force and
effect.

(d) No Waiver. No waiver of any breach of this Agreement will be a waiver of any
other breach. Any waiver must be in writing and signed by an authorized
representative of the waiving party.

(e) Interpretation. As used in this Agreement, "writing" or "written" means a
non-electronic record, a scanned copy of a signed document or a fax of a signed
document. "Days" means calendar days unless provided otherwise in the applicable
provision. The headings and titles of the provisions of this Agreement are for
convenience only and shall not affect the interpretation of any provision.
Unless specifically provided otherwise, the plural shall include the singular.

(f) Force Majeure. Neither party will be liable for failure to perform any
obligations under this Agreement to the extent such failure is caused by a Force
Majeure Event. The party subject to the Force Majeure Event will provide notice
to the other party within a commercially reasonable time. As soon as the Force
Majeure Event stops, obligations that have not been performed due to a Force
Majeure Event shall be performed. Subject to Section 9(d), in no event shall the
damage to, destruction or disappearance of COAs on account of a Force Majeure
Event relieve COMPANY of its payment obligations.

(g) MS Affiliate. Some provisions in this Agreement include COMPANY's covenants
and obligations to MS and MS Affiliates. Some provisions are for the benefit of
MS and MS Affiliates. COMPANY acknowledges and agrees that each MS Affiliate is
entitled to its own right to require due performance by COMPANY. To the extent
necessary to establish an MS Affiliate's rights and benefits, MS enters into
this Agreement, not only in its own right, but also as an agent for each such MS
Affiliate.

                                  CONFIDENTIAL

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# *** dated October 1, 2006 between MS and B SQUARE CORPORATION

***  CONFIDENTIAL TREATMENT REQUESTED

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                       OEM VOLUME ROYALTY PROGRAM SCHEDULE

MS may offer an OEM Volume Royalty Program ("OVRP") that enables COMPANY to
offer a *** royalty to OEM Customers that commit to distributing a specified
high volume of Licensed Products ("OVRP Customer").

COMPANY may qualify to participate in the OVRP as described in the guidelines on
the ECE ("OVRP Guidelines").

This *** royalty rate is offered based on COMPANY's and OVRP Customer's
commitment to ship significant volumes of Licensed Product (as listed in the
OVRP Royalty Rate List on ECE) installed on a new device ("Volume Device").

The OVRP is only valid provided that:

     (i) DISTRIBUTOR has a valid Microsoft OEM Distribution Agreement For
Software Products For Embedded Systems, and

     (ii) OVRP Customer has a valid CLA in place.

1. TERM AND TERMINATION.

The term of each OVRP period ("OVRP Period") is effective from agreed start date
until the earlier of:

(a) *** from that date;

(b) termination or expiration of the Agreement (if the OVRP Customer and MS do
not enter into a successor agreement);

(c) termination or expiration of the CLA (if the parties do not enter into a
successor agreement); or

(d) OVRP Program is cancelled as notified by MS.

Any violation of the terms of this Schedule is grounds for a termination of the
Agreement as an uncurable material breach under Section 14 of the Agreement.

2. *** ROYALTY TERMS.

(a) The OVRP royalty rate applies only to Licensed Products shipped on Volume
Devices, as registered and approved by MS in the OVRP Tool in MOO. COMPANY will
not offer this *** royalty to any party other than the OVRP Customer.

(b) ***

(c) COMPANY agrees to pay MS the total royalties due for the specific Licensed
Products distributed to the OVRP Customer at the *** royalty rate as listed in
the then-current OVRP royalty rate list on the ECE.

(d) COMPANY will be notified via ECE or email if MS *** its royalty rate for
Licensed Products that qualify for OVRP. Such royalty rate changes will be
effective on the first date of the calendar month following such notice.

3. WRITTEN AGREEMENT WITH VOLUME CUSTOMER.

***

4. REPORTING.

COMPANY shall include Licensed Product shipments under OVRP in its monthly
sales-out report as described in the Reporting Guidelines on the ECE.

***

                                  CONFIDENTIAL

Microsoft OEM Distribution Agreement for Software Products for Embedded Systems,
# *** dated October 1, 2006 between MS and B SQUARE CORPORATION

***  CONFIDENTIAL TREATMENT REQUESTED

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                              MOO AND ECE SCHEDULE

(a) In this Schedule, MOO and the ECE may be called a "Site" or collectively as
the "Sites." The term "User" means an officer, employee, consultant or other
person or agent of COMPANY who has, or who creates the appearance of having been
authorized by COMPANY, to use the Site on behalf of COMPANY. The term "COMPANY
Administrator" means the Users designated in the Address Schedule. COMPANY shall
give MS not less than 48 house notice that COMPANY has made a change to such
authority. Notices for COMPANY Administrator changes should be sent to *** for
MOO or *** for the ECE, as appropriate.

(b) MS may provide guidelines from time to time in connection with COMPANY's use
of the Sites.

(c) COMPANY Administrator is solely responsible for granting access and other
authorities for Users. *** COMPANY Administrator shall do all of the following:

     (i) Protect Password Info as confidential information and not disclose any
part of it to any person or entity (internal or external) without a need to
know.

     (ii) Only take actions at a Site that the COMPANY has authorized.

     (iii) Instruct and ensure that Users do both (i) and (ii) above. COMPANY
shall designate at least 1 but no more than 2 Administrators.

(d) MS may suspend or terminate authorities, or suspend or block access to all
or any part of a Site to any information. Whenever possible, MS will provide
prior notice of such action.

(e) Neither MS nor any of its agents shall have any liability for any failure to
provide a level of security greater in connection with the ECE than that
generally afforded by the use of:

     (i) ***

     (ii) ***

(f) COMPANY and its Users shall not cause any harm to a Site.

(g) MS PROVIDES EACH SITE "AS IS". Warranty disclaimers, damage exclusions and
limitations of remedies in this Agreement all apply to each Site (and to their
information, functionality, services, and availability or lack thereof). COMPANY
will not rely on or treat any Site information as an express warranty.

(h) MS reserves the right to change or discontinue all or any portion of the MOO
Site at any time. Users may make a copy of MOO information to document COMPANY's
transactions or other information. MS will retain *** years of transactional
records. MS will have no duty to retain or make available Site information or
records for later access.

(i) The Sites are not open to the public and the way they function and all
information on them shall be treated as confidential information under Section
10 of the Agreement. COMPANY agrees not to distribute any Supplemental Code
accessed on ECE to any third party, unless expressly authorized by MS to do so.

(j) (i) COMPANY must access and use MOO for all transactions and purposes
contemplated by MOO until the earlier of:

          (A)  The date MS ceases to provide MOO to similarly situated embedded
               distributors, or

          (B)  The date COMPANY has satisfied all of its obligations under the
               Agreement.

     (ii) All actions taken by any User at or in relation to a Site shall
legally bind COMPANY if any of the following are true.

          (A)  The User has supplied Password Info.

          (B)  COMPANY or Users failed to keep Password Info secure. The failure
               caused or contributed to creation of an appearance that actions
               taken on a Site were being taken by, or on behalf of, COMPANY.

          (C)  COMPANY had approved, allowed or accepted benefits or use of the
               Site by a person purporting to be its agent.

(k) If Password Info is used to cause harm or damage to COMPANY or MS by a
person who obtained it by means that could not have been prevented by complying
with this Schedule, then such acts taken with Password Info will not be
attributed to COMPANY under Section (j)(ii). However, these acts may be
attributed to MS, COMPANY or others under principles of equity or law pertinent
to the act in question.

(l) As part of the MS OEM operations initiative called ***. MS may provide
additional or successor online tools or websites to be used by COMPANY in the
normal course of its business with MS. COMPANY agrees to use such resources for
all intended purposes.

(m) Privacy and Data Protection.

     (i) In this section, "Personal Information" means any information provided
by MS or collected or processed for MS by COMPANY in connection with this
Agreement:

          (A)  That identifies or can be used to identify, contact, or locate
               the person to whom such information pertains, or

          (B)  From which identification or contact information of an individual
               person can be derived.

Personal Information includes, but is not limited to: name, address, phone
number, fax number, email address, social security number or other
government-issued identifier, and credit card information. In addition, to the
extent any other information (such as a personal profile, unique identifier,
biometric information, or IP address) is associated or combined with Personal
Information, then such information also will be considered Personal Information.

     (ii) Any Personal Information collected, processed or accessed by COMPANY
in compliance with this Agreement shall be limited to that which is strictly
necessary to perform such services or to fulfill any legal requirements.

     (iii) COMPANY shall use such Personal Information only as necessary to
perform the services in accordance with this Agreement and not for any other
purpose whatsoever. COMPANY shall maintain such Personal Information in strict
confidence in accordance with the provisions of Section 10. COMPANY shall not
share any Personal Information with any third parties for any reason

                                  CONFIDENTIAL

Microsoft OEM Distribution Agreement for Software Products for Embedded Systems,
# *** dated October 1, 2006 between MS and B SQUARE CORPORATION

***  CONFIDENTIAL TREATMENT REQUESTED

                                       15

<PAGE>

except as authorized by MS in writing. If COMPANY is served with a court order
compelling disclosure of any Personal Information or with notice of proceedings
for such an order, COMPANY:

          (A)  Will oppose the order,

          (B)  Will notify MS of such order or notice, and

          (C)  Will provide MS the opportunity to intervene before COMPANY files
               any response to the order or notice.

     (iv) COMPANY will take reasonable steps to protect any Personal Information
in COMPANY's possession and immediately notify MS of any known security breach
from:

          -    Unauthorized use,

          -    Access,

          -    Disclosure,

          -    Alteration, or

          -    Destruction.

Security measures shall include access controls, encryption or other means,
where appropriate. COMPANY agrees to conduct an audit on at least an annual
basis to evaluate the security of Personal Information in COMPANY's possession
and to verify that the terms of this Agreement with respect to Personal
Information are being followed. The results of such audit shall be made
available to MS on request.

     (v) Upon request from MS, COMPANY shall provide MS with any or all Personal
Information in COMPANY's possession. COMPANY shall within *** days of
termination or expiration of this Agreement, at MS' sole discretion either:

          (i) Provide MS with all documents and materials (including any and all
copies) containing Personal Information which are in its possession or under its
control; or

          (ii) Destroy all such specified documents and materials (including any
and all copies in any and all formats) and provide MS with a certificate of
destruction signed by an officer of COMPANY.

                                  CONFIDENTIAL

Microsoft OEM Distribution Agreement for Software Products for Embedded Systems,
# *** dated October 1, 2006 between MS and B SQUARE CORPORATION

***  CONFIDENTIAL TREATMENT REQUESTED

                                       16

<PAGE>

                           VIRTUAL WAREHOUSE SCHEDULE

COMPANY may establish an off-site warehouse for Licensed Products to permit
flexibility in manufacturing planning and to minimize inventory holding
requirements for an individual OEM Customer ("VW OEM"). The warehouse may be
owned by COMPANY, the VW OEM, or a third party warehouse provider approved in
writing by MS (any of the above, a "Warehouse Provider").

COMPANY may distribute Licensed Product to an MS-authorized warehouse
("Warehouse"), to be pulled by a single VW OEM, subject to the same terms and
conditions applicable to COMPANY under this Agreement and provided that the
following are satisfied.

(a) Establishment of a Warehouse

At least *** days before COMPANY intends to send inventory to a Warehouse,
COMPANY will provide MS the following information:

          -    VW OEM legal name and CLA Number;

          -    Physical address of the Warehouse (must be within COMPANY's
               Territory);

          -    (If COMPANY is not the Warehouse Provider) Warehouse Provider's
               legal name, address, postal code, city, state/province, country
               (must be within the COMPANY's Territory), phone number, fax
               number contact name, job title and email address;

          -    The Warehouse (and Warehouse Provider, if a third party other
               than the VW OEM) must be approved in writing by MS prior to any
               distribution to the Warehouse.

(b) Records and Reports by COMPANY

     (i) COMPANY agrees to track and maintain the following records on COMPANY's
premises:

          -    The number of Licensed Products shipped to the Warehouse,
               including the number of COAs; and

          -    The number of Licensed Products shipped from the Warehouse to the
               VW OEM (regardless of whether COMPANY is the Warehouse Provider).

     (ii) COMPANY will report all shipments from the Warehouse for the past
month in its next required sales-out report.

(c) Deliveries to the Warehouse

     (i) All shipments from ARs must continue to be delivered to COMPANY. Only
COMPANY is authorized to deliver the Licensed Product to the approved Warehouse.

     (ii) All Licensed Product will be delivered by COMPANY to the Warehouse

     (iii) COMPANY shall suspend all shipments to and from the Warehouse upon
notice from MS.

(d) Warehouse Agreement

If COMPANY is not the Warehouse Provider, it must enter into a separate written
agreement with the Warehouse Provider to remain effective concurrently with this
Agreement ("Warehouse Agreement"). A sample warehouse agreement may be provided
on the ECE or such other website as MS may designate. MS reserves the right to
modify the sample warehouse agreement without notice to COMPANY. In the event of
any inconsistencies between the sample warehouse agreement and this Schedule,
the latter shall control.

     (i) The Warehouse Agreement must require the Warehouse Provider to:

          (A)  Distribute Licensed Product only to VW OEM on behalf of COMPANY;

          (B)  Comply with obligations identical to those imposed on COMPANY by
               Section 2(c)(iii), 2(c)(iv), 2(l), 2(m), 2(p), 2(q), 2(r) and
               9(c)(ii) of this Agreement;

          (C)  Report in real-time to COMPANY all pulls of Licensed Product from
               the Warehouse.

          (D)  Account for and reconcile all Licensed Products in inventory on a
               monthly basis, which shall include:

               -    Beginning and ending COA inventory;

               -    COAs received from COMPANY;

               -    COA distribution to COMPANY or VW OEM; and

               -    COAs that cannot be distributed for any reason.

          (E)  Maintain a log of each damaged or destroyed COA that includes the
               date damaged, or destroyed, Licensed Product name, COA range and
               cause of damage or destruction, and return each damaged COA to
               COMPANY.

          (F)  Report the reconciliation in Section (d)(i)(D) above to COMPANY
               on a monthly basis;

          (G)  Return, at Warehouse Provider's expense, Licensed Product
               (including COAs) and any copies thereof, to COMPANY as directed,
               within *** business days after cancellation or expiration of the
               Warehouse Agreement; and

          (H)  Provide access to the Warehouse to audit or inspection teams sent
               on behalf of MS or COMPANY. Such team may perform an audit of the
               Warehouse Provider's records, an inspection of the Warehouse and
               Warehouse procedures to determine compliance with the terms of
               this Schedule and the Warehouse Agreement.

     (ii) The Warehouse Agreement must also:

          (A)  Expressly provide that MS is an intended third party beneficiary
               of the Warehouse Agreement; and (D) to pay MS' or COMPANY's
               attorneys' fees if COMPANY or MS employs attorneys to enforce any
               rights arising out of the Warehouse Agreement.

          (B)  Include the Warehouse Provider's consent to venue and
               jurisdiction exclusively in the federal courts within the State
               of Washington or the federal courts within the State of New York,
               or in the event there is no federal subject matter jurisdiction,
               exclusive venue and jurisdiction in the state courts of the State
               of Washington with respect to any action brought by MS to enforce
               its rights under the Warehouse Agreement;

                                  CONFIDENTIAL

Microsoft OEM Distribution Agreement for Software Products for Embedded Systems,
# *** dated October 1, 2006 between MS and B SQUARE CORPORATION

***  CONFIDENTIAL TREATMENT REQUESTED

                                       17

<PAGE>

     (iii) COMPANY shall immediately cancel all Warehouse Agreements upon the
cancellation or expiration of this Agreement or the CLA with the VW OEM.

     (iv) Upon MS request, COMPANY shall provide a copy of such Warehouse
Agreement template, and executed agreements to MS. If the Warehouse Agreement is
not in the English language, COMPANY shall also provide an accurate and complete
English translation of such Warehouse Agreement.

     (v) COMPANY shall promptly notify MS in writing of the cancellation,
expiration or significant modification of the terms of any Warehouse Agreement.

     (vi) COMPANY shall immediately cease use of any Warehouse Provider upon
receipt of written notice from MS:

          -    that the Warehouse Provider has breached a material provision of
               the Warehouse Agreement; or

          -    has caused COMPANY to be in breach of a material provision of
               this Agreement.

     (vii) COMPANY may resume using the services of such Warehouse Provider
provided that:

          -    COMPANY and/or Warehouse Provider is able to completely cure such
               breach within *** days of COMPANY's receipt of MS' notice,

          -    MS has confirmed the breach has been cured to its satisfaction,
               and

          -    MS has agreed in writing to COMPANY's continued use of the
               Warehouse Provider.

(e) Returns. All copies of Licensed Product (including COAs) in the Warehouse
shall be returned to COMPANY upon any expiration or termination of this
Agreement, the Warehouse Agreement, or the CLA with the VW OEM, whichever occurs
earliest.

(f) Guarantee. COMPANY guarantees the performance of each Warehouse Provider
under its Warehouse Agreement. Such guarantee is unconditional and irrevocable.

(g) Indemnity. COMPANY shall defend, indemnify and hold harmless MS and its
Suppliers from and against all damages (including attorneys' fees) of any kind
in connection with the Warehouse Provider's use or distribution of the Licensed
Product, including, without limitation, damages resulting from:

     (i) a breach of the terms of this Agreement and/or the Warehouse Agreement,
or

     (ii) any and all unauthorized distribution of any portion of the Licensed
Product by the Warehouse Provider.

(h) Survival. Sections (b),(d), (e), (f), and (g) of this Schedule shall survive
any cancellation or expiration of this Agreement.

                                  CONFIDENTIAL

Microsoft OEM Distribution Agreement for Software Products for Embedded Systems,
# *** dated October 1, 2006 between MS and B SQUARE CORPORATION

***  CONFIDENTIAL TREATMENT REQUESTED

                                       18

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