UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): June 25, 2018
BSQUARE CORPORATION
(Exact name of Registrant as specified in its charter)
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Washington |
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000-27687 |
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91-1650880 |
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(State or Other Jurisdiction of Incorporation) |
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(Commission File Number) |
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(IRS Employer Identification No.) |
110 110 th Ave NE, Suite 300
Bellevue, WA 98004
425-519-5900
(Address and Telephone Number of Registrant’s Principal Executive Offices)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
On June 25, 2018, BSQUARE Corporation (the “Company”) entered into a Board Observer and Standstill Agreement (the “Board Observer Agreement”) with Palogic Value Fund, L.P., Palogic Value Management, L.P., and Palogic Capital Management, LLC (collectively, “PCM”), pursuant to which the Company granted to PCM the right to appoint one PCM representative to attend meetings of the Company’s Board of Directors (the “Board”) in a non-voting observer capacity. In addition, PCM agreed, during the period in which PCM has the right to appoint a Board observer and for a period of three years thereafter, not to beneficially own, directly or indirectly, without the Company‘s prior written consent, greater than 15% (in the aggregate) of the Company’s total outstanding shares of Common Stock. Pursuant to the Board Observer Agreement, PCM is appointing Robert J. Peters as the PCM Board observer. In connection therewith, effective as of June 25, 2018, the Board approved, solely for purposes of RCW 23B.19.040(1)(a)(ii), any future purchase of shares of the Company’s Common Stock by PCM which results in PCM becoming an “acquiring person” as defined in RCW 23B.19.020(1) (defined as beneficially owning in the aggregate total outstanding shares of the Company’s Common Stock comprising 10% or more of the voting power of the Company).
The foregoing description of the Board Observer Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Board Observer Agreement, which is filed herewith as Exhibit 10.1 and which is incorporated by reference herein.
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Item 5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On June 25, 2018, upon the recommendation of the Governance and Nominating Committee (the “GNC”) of the Board, Ryan L. Vardeman was appointed as a member of the Board to fill the current vacancy on the Board. Mr. Vardeman will serve as a Class III Director and as such his term of office will expire at the Company’s 2021 Annual Meeting of Shareholders.
Mr. Vardeman is a principal of Palogic Value Management, L.P., a Dallas, Texas based investment management company and one of the parties to the Board Observer Agreement described above. As reported on Schedule 13D filed by PCM with the Securities and Exchange Commission (the “SEC”) on May 18, 2018, PCM beneficially owned 885,993 shares of the Company’s Common Stock as of such date, representing 7.0% of the Company’s outstanding shares of Common Stock based upon 12,690,868 shares of the Company’s Common Stock outstanding as of April 30, 2018, as disclosed in the Company’s Quarterly Report on Form 10-Q filed by the Company with the SEC on May 15, 2018 for the quarterly period ended March 31, 2018.
Pursuant to the Company’s compensation plan for non-employee directors and the Company’s Fourth Amended and Restated Stock Plan (the “Plan”), Mr. Vardeman was granted non-qualified options to purchase 25,000 shares of the Company’s common stock at an exercise price equal to the Company’s closing stock price on the date of grant, which will vest quarterly in equal installments over two years, and received an award of 16,667 restricted stock units, which will vest quarterly in equal installments over one year. The grants shall be subject to the Plan and to the Company’s standard non-qualified stock option and restricted stock unit agreements which have been previously filed by the Company with the SEC.
Item 9.01 Financial Statements and Exhibits.
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(d) |
The following exhibit is filed with this Form 8-K pursuant to Item 1.01: |
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Exhibit No. |
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Description |
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10.1 |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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BSQUARE CORPORATION |
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Date: June 26, 2018 |
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By: |
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/s/ Peter J. Biere |
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Peter J. Biere |
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Chief Financial Officer, Assistant Secretary and Treasurer |
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Bsquare Corporation Board Observer and Standstill Agreement |
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Exhibit 10.1
Bsquare Corporation
Board Observer and Standstill Agreement
This Board Observer Agreement (the “ Agreement ”) is made effective as of June 25, 2018 (“ Effective Date ”) by and between:
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(i) |
Bsquare Corporation , a Washington corporation with offices at 110 – 110 th Avenue NE #300, Bellevue, WA 98004 (the “ Company ”), and |
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Each of Palogic Value Fund, L.P., Palogic Value Management, L.P., and Palogic Capital Management, LLC (collectively, “ PCM ”). |
WHEREAS , the Company desires to provide to PCM, a shareholder of the Company, with certain observation rights regarding the Company’s board of directors (the “ Board ”), as further described, and subject to the terms and conditions set forth, herein.
NOW, THEREFORE , for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
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Bsquare Corporation Board Observer and Standstill Agreement |
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Bsquare Corporation Board Observer and Standstill Agreement |
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attorney-client or work product privilege between the Company and its counsel; (ii) such Board Materials or discussion relates to the Company’s relationship, contractual or otherwise, with PCM or its affiliates or any actual or potential transactions between or involving the Company and PCM; or (iii) such exclusion is necessary to avoid a conflict o f interest or disclosure that is restricted by any agreement to which the Company is a party or otherwise bound. |
2. Confidential Information . PCM agrees that each Observer shall execute a Nondisclosure Agreement in the form attached hereto as Exhibit B (the “ Observer NDA ”). The Observer NDA and the PCM NDA (as defined in Section 6.4 below) are incorporated herein by reference in their entirety. If the Observer NDA and/or the PCM NDA expires by their terms prior to a Termination (as defined below), each of the Observer and PCM agrees to continue to abide by all of the terms of the Observer NDA and the PCM NDA, as applicable (as if such agreements remained in effect), through the date of Termination and for period of three (3) years following any Termination.
3. Expenses . PCM and/or the Observer shall be responsible for any and all out-of-pocket expenses incurred in connection with the Observer’s attendance at Board meetings.
4. Standstill and Related Obligations. PCM agrees that during the term of this Agreement and for period of three (3) years following any Termination (the “ Standstill Period ”), unless otherwise consented to in writing by the Company in advance, PCM will not in any manner, directly or indirectly:
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(a) |
effect or seek, offer or propose (whether publicly or otherwise) to effect, or cause any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect, any acquisition of any securities (or beneficial ownership thereof) of the Company or any of its subsidiaries, if after any such acquisition PCM holds, beneficially or of record, directly or indirectly, in excess of fifteen percent (15%) of the total outstanding common stock of the Company; or |
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(b) |
enter into any discussions or arrangements with any third party with respect to any actions covered by clause (a). |
For clarification, nothing in this Section 4 shall restrict PCM from making any offer or proposal to the Company on a confidential basis so long as such offer or proposal does not require the Company to make a public announcement regarding such offer or proposal or any of the types of matters described in this Section 4.
The Company confirms that the Board has previously approved in advance, solely for purposes of RCW 23B.19.040(1)(a)(ii), any future acquisition by PCM of shares of the Company’s common stock that would result in PCM becoming an “acquiring person” as defined in RCW 23B.19.020(1) (defined as beneficially owning in the aggregate total outstanding shares of the Company’s common stock comprising 10% or more of the voting power of the Company). The Company agrees that such approval shall not be withdrawn and shall remain effective at least until the termination of the Standstill Period.
5. Notices . Notices must be in writing and delivered to each party at their respective addresses set forth below, or to such other address as may be given by each party from time to time under this Section. Notices shall be deemed properly given upon personal delivery, the day following deposit by overnight carrier, or three (3) days after deposit in the U.S. mail.
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Bsquare Corporation Board Observer and Standstill Agreement |
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Bsquare Corporation Board Observer and Standstill Agreement |
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Palogic Value Fund, L.P. Palogic Value Management, L.P. Palogic Capital Management, LLC |
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110 – 110 th Avenue NE, Suite 300 Bellevue, WA 98004
Attn: General Counsel and VP, Legal |
5310 Harvest Hill Road, Suite 110 Dallas, TX 75230
Attn: Ryan Vardeman |
6. Remedies: Injunctive Relief . The Company, on the one hand, and PCM, on the other hand, each acknowledge and agree that monetary damages would not be a sufficient remedy for any breach (or threatened breach) of this Agreement by it and that, in the event of any breach or threatened breach hereof, (a) the non-breaching party shall have the right to immediate injunctive and other equitable relief, without proof of actual damages; (b) the breaching party will not plead in defense thereto that there would be an adequate remedy at law; and (c) the breaching party agrees to waive any applicable right or requirement that a bond be posted by the non-breaching party. Such remedies will not be the exclusive remedies for a breach of this Agreement, but rather will be in addition to all other remedies that may be available to the non-breaching party at law or in equity. In the event that either party institutes any legal suit, action or proceeding against the other party arising out of or relating to this Agreement, the prevailing party in the suit, action or proceeding shall be entitled to receive, in addition to all other damages to which it may be entitled, the co sts incurred by such party in conducting the suit, action or proceeding, including reasonable attorneys’ fees and expenses and court costs.
7. Applicable Law; Venue . This Agreement, and any and all claims, controversies and causes of action arising out of or relating to this Agreement, whether sounding in contract, tort or statute, shall be governed by the laws of Washington, including its statutes of limitations, without giving effect to any conflict-of-laws rule that would result in the application of the laws of a different jurisdiction. Each party (a) irrevocably and unconditionally consents to the personal jurisdiction and venue of the courts located in King County, Washington; (b) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court; (c) agrees that it shall not bring any action relating to this Agreement or otherwise in any court other than the courts located in King County, Washington or in the United States District Court for the Western District of Washington; and (d) irrevocably waives the right to trial by jury.
8. Termination . In the event that the percentage of the outstanding common stock of the Company beneficially held by PCM decreases materially from the percentage that PCM holds as of the Effective Date, then the Company may terminate this Agreement at any time thereafter upon written notice to PCM. PCM may terminate this Agreement at any time upon written notice to the Company. Any such termination of this Agreement shall be referred to herein as a “ Termination .” Sections 2, 4, 6, 7 and 8 shall survive any such Termination.
9. Miscellaneous Provisions .
9.1 Severability . The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision. Solely to the extent that any provisions or restrictions in this Agreement is found by a court to be unreasonable or unenforceable, then such court may amend or modify any such provision or restriction so it can be enforced to the fullest extent permitted by law.
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Bsquare Corporation Board Observer and Standstill Agreement |
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Bsquare Corporation Board Observer and Standstill Agreement |
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9.2 Headings and eSignature . The section headings in this Agreement have been inserted as a matter of convenience of reference and are not a part of this Agreement. This Agreement may be ex ecuted by electronic signature in any number of counterparts, each of which together shall constitute one and the same instrument.
9.3 No Waivers . Any waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist on strict adherence to any term of this Agreement on one or more occasions shall not be construed as a waiver or deprive such party of the right to thereafter insist on strict adherence to that term or any other term of this Agreement.
9.4 Entire Agreement; No Assignment. This Agreement, together with Observer NDA and the Mutual Nondisclosure Agreement entered into as of June 25, 2018 (“ PCM NDA ”), which are incorporated herein by this reference, constitutes the entire agreement and understanding of the parties, and supersedes any and all previous agreements and understandings, whether oral or written, between the parties regarding the matters set out in this Agreement. No provision of this Agreement may be amended, modified or waived, except in a writing signed by the parties hereto. This Agreement may not be assigned by PCM.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
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Palogic Value Fund, L.P. (“PCM”) |
Bsquare Corporation |
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By: /s/ Ryan Vardeman Name: Ryan Vardeman Title: Sole Member of Palogic Capital Management, LLC Palogic Value Management, L.P. (“PCM”)By: /s/ Ryan Vardeman Name: Ryan Vardeman Title: Sole Member of Palogic CapitalManagement, LLC Palogic Capital Management, LLC (“PCM”)By: /s/ Ryan Vardeman Name: Ryan Vardeman Title: Sole Member of Palogic Capital Management, LLC
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By: /s/ Andrew Harries Name: Andrew Harries Title: Executive Chair, Board of Directors
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Bsquare Corporation Board Observer and Standstill Agreement |
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Bsquare Corporation Board Observer and Standstill Agreement |
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EXHIBIT A
ACKNOWLEDGEMENT AND AGREEMENT TO BE BOUND
June 25, 2018
This Acknowledgement and Agreement to be Bound (” Acknowledgement ”) is given by the undersigned as a representative designated by PCM to act as the Observer pursuant to that certain Board Observer Agreement by and between Bsquare Corporation (the “ Company ”) and PCM dated as of June 25, 2018 (the “ Agreement ”). Capitalized terms used, but not defined, herein have the meanings ascribed thereto in the Agr eement.
1. By executing this Acknowledgement, the undersigned acknowledges and agrees as follows:
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(a) |
That he has received and reviewed a copy of the Agreement and that his execution of this Acknowledgement is a condition precedent to his appointment as the Observer under the Agreement. |
2. Upon the written request of the Company or PCM, the undersigned will promptly execute and deliver any and all further instru ments and documents and take such further action as such party deems necessary to effect the purposes of this Acknowledgement.
3. No provision of this Acknowledgement may be amended, modified or waived, except in a writing signed by the undersigned, the C ompany and PCM. The invalidity or unenforceability of any provision of this Acknowledgement shall not affect the validity or enforceability of any other provision, and if any restriction in this Acknowledgement is found by a court to be unreasonable or unenforceable, then such court may amend or modify the restriction so it can be enforced to the fullest extent permitted by law. This Acknowledgement may be executed by electronic signature in any number of counterparts, each of which together shall constitute one and the same instrument.
4. The undersigned acknowledges and agrees that monetary damages would not be a sufficient remedy for any breach (or threatened breach) of this Agreement by him and that, in the event of any breach or threatened breach hereof, (a) the Company shall have the right to immediate injunctive and other equitable relief, without proof of actual damages; (b) he will not plead in defense thereto that there would be an adequate remedy at law, and (c) he agrees to waive any applicable right or requirement that a bond be posted by the Company. Such remedies will not be the exclusive remedies for a breach of this Agreement, but will be in addition to all other remedies that may be available to the Company at law or in equity.
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Bsquare Corporation Board Observer and Standstill Agreement |
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Bsquare Corporation Board Observer and Standstill Agreement |
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5. Section 9(Applicable Law; Venue) of the Agreement shall be applicable to this Acknowledgement, and the undersigned hereby agrees to be bound thereby, as if set forth herein. If any notice, request, demand or other communication is given to the undersigned under this Acknowledgement, it shall be given to him at his address set forth on the signature page hereto or such other address as the undersigned shall have provided in writing to the Company and PCM in accordance with Section 5 of the Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Acknowledgement as of the date first above written.
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/s/ Robert Peters Robert Peters Principal, Palogic Value Management, L.P. 5310 Harvest Hill Road, Suite 110 Dallas, TX 75230
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ACKNOWLEDGED AND ACCEPTED as of this 25th day of June, 2018:
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Bsquare Corporation |
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Signed: /s/ Andrew Harries Name: Andrew Harries Title: Executive Chairman of the Board of Directors
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Bsquare Corporation Board Observer and Standstill Agreement |
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Bsquare Corporation Board Observer and Standstill Agreement |
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Form of Nondisclosure Agreement
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Bsquare Corporation Board Observer and Standstill Agreement |
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