Employment Agreement

Exhibit 10.1.   Employment Agreement, dated January 28, 2009, by and between Braintech, Inc. and Jerry Osborn

CONFIDENTIAL

Employment Agreement

THIS AGREEMENT dated January 28, 2009 (“Effective Date”).

BETWEEN:

Jerry Osborn
6985 Woodlyn Ct.
Clarkson, MI  48348

("EXECUTIVE")

AND:

BRAINTECH, INC.

("BRAINTECH")

WHEREAS:

A.       BRAINTECH is a robotic vision software high-technology company that is publicly traded on the NASD Over-The-Counter Bulletin Board;

B.       The business objectives for BRAINTECH include developing and operating the sales, marketing and technology of its existing markets for its software products especially in the development and growth of revenue for Braintech Industrial Inc., a wholly-owned subsidiary of BRAINTECH Inc. (“Industrial”) and Braintech Government Defense Systems Inc. , a wholly-owned subsidiary of BRAINTECH Inc. (GDS).

C.       In order to achieve the business objectives BRAINTECH wishes to engage EXECUTIVE to serve at its Detroit area office at 2001 Centerpoint Parkway, Suite 103, Pontiac, MI 48341 as Executive Vice President, Braintech, Inc. and President, Braintech Industrial, Inc., on the terms and conditions set forth in this Agreement.

IN CONSIDERATION of the mutual promises contained herein, the parties agree as follows:

1.         EMPLOYMENT :  BRAINTECH hereby employs EXECUTIVE to perform the duties and render the services customarily required for the position(s) set forth above, and EXECUTIVE hereby accepts said employment and agrees faithfully to perform said duties and render said services, subject to the terms and conditions of this Agreement. With the CEO’s approval, EXECUTIVE may serve in the capacity of director of other corporations or charities provided that activity does not materially interfere with EXECUTIVE’s ability to perform his duties hereunder and that any such entities do not compete with BRAINTECH’s business.

Braintech, Inc.
Proprietary and Confidential

2.         TERM :  EXECUTIVE’s full time employment with BRAINTECH is for a term of three (3) years, unless terminated earlier in accordance with Paragraph 12 of this Agreement (“Term”).  

3.         REPORTING : EXECUTIVE shall report directly to Rick Weidinger, BRAINTECH’s Chief Executive Officer (referred to herein as the “CEO”).

4.         DUTIES:   EXECUTIVE agrees to perform such duties as normally required for the position(s) set forth above and carry out the policies, procedures and projects as assigned by the CEO, including:  a) to assess, acquire and balance operational resources throughout the organization; (b) responsible for support services, training, vision solution development, vision integration, etc; (c) oversight of all operational projects; (d) responsible for proposal development; (e) responsible for sales support, revenue generation and business development and the coordination of operational resources; (f) responsible for “asset management” -  particularly ensuring lab in Detroit and office in Virginia is properly outfitted with robots, vision hardware, tooling, etc; and (g) member of executive staff with participation in strategic discussions. EXECUTIVE understands and agrees that his position(s) may require extensive travel both within and outside of the Detroit metropolitan area.  For the avoidance of doubt, EXECUTIVE’s duties shall not include the research and development or other activities/operations of the CTO including capital equipment requests and approval processes.  EXECUTIVE’s duties shall include those of President of an operating subsidiary.  Within 30 to 45 days after the start of EXECUTIVE’s employment, the parties agree to refine the definition of EXECUTIVE’s duties contained in this Paragraph 4.

5.         BASE SALARY :  BRAINTECH shall pay EXECUTIVE, in consideration for the services, an annual base salary of US$175,000.00 (“Base Salary”).  The Base Salary shall be paid on a current, pro-rated basis at least twice each month beginning on the Effective Date. EXECUTIVE will be eligible for a Base Salary increase of up to 10% annually as part of a performance evaluation and such increase will be at the CEO’s discretion based upon the EXECUTIVE’S performance of his duties as mutually agreed upon with CEO.

6.         SIGNING BONUS :  Upon execution of this Agreement, BRAINTECH shall pay a US$17,500 signing bonus to EXECUTIVE, which in return EXECUTIVE shall apply to the purchase of 1,750,000 shares of the common stock of BRAINTECH in accordance with Paragraph 7 below.

7.         BONUS SECURITIES COMPENSATION :  EXECUTIVE shall be entitled to bonuses, based on achieving certain milestones, which bonuses will be provided in the form of a first tranche of 250,000 issued shares of restricted Common Stock, a second tranche of 250,000 issued shares of restricted Common Stock, a third tranche 250,000 issued shares of restricted Common Stock, a fourth tranche of 500,000 issued shares of restricted Common Stock, and a fifth tranche of 500,000 shares of restricted Common Stock (collectively, all five such tranches are hereinafter referred to as the “Bonus Stock”) of BRAINTECH at a purchase price of US$0.01 per share, and options to purchase 500,000 shares of Common Stock (the “Bonus Stock Options”) of BRAINTECH, in accordance with the Bonus Stock and Bonus Stock Option Incentive Plan (the “Bonus Plan”) approved by the Board of Directors on October 22, 2007 and attached as Schedule 1.  EXECUTIVE hereby applies his $17,500 signing bonus described in Paragraph 6 above to the purchase of the Bonus Stock.  The vesting of the Bonus Stock and the Bonus Stock Options is subject to the milestones and levels of incentive compensation set forth in the Bonus Securities Compensation Structure as set forth in Appendix I of this Agreement.  

Braintech, Inc.
Proprietary and Confidential

8.         BONUS CASH INCENTIVE :  EXECUTIVE will be eligible to participate in BRAINTECH’s 2009 Bonus Incentive Plan with a target payout of up to 40% of EXECUTIVE’s Base Salary for 2009, pro-rated based on EXECUTIVE’s start date.  A copy of the 2009 Bonus Incentive Plan is available from Human Resources.  EXECUTIVE will also be eligible to participate in BRAINTECH’s bonus incentive plans for subsequent years.

9.         BENEFITS :  EXECUTIVE shall be entitled to the following benefits:

(a)        Leave .  Thirty (30) days of paid leave per year.  This leave may be used as vacation, personal leave or short-term sickness, and is vested immediately upon the Effective Date;

(b)        Holidays .  Holidays shall be determined by BRAINTECH.  A list of the holidays for 2009 is available from Human Resources; and

(c)        Medical/Dental/Group Life and Disability Insurance . EXECUTIVE has insurance benefits from his former employer through February 28, 2009.  From March 1, 2009 until EXECUTIVE becomes eligible for BRAINTECH’s insurance, BRAINTECH shall reimburse 80% of EXECUTIVE’s COBRA payments.  When EXECUTIVE becomes eligible for BRAINTECH’s insurance, BRAINTECH shall provide to EXECUTIVE a comprehensive family health insurance policy including medical, dental, life and long term disability plans.

10.        EXPENSE REIMBURSEMENT : EXECUTIVE shall be entitled to reimbursement for all reasonable expenses, including travel and entertainment, incurred by EXECUTIVE in the performance of EXECUTIVE's duties.  EXECUTIVE will maintain records and written receipt as required by BRAINTECH policy and reasonably requested by the accounting manager to substantiate such expenses.  All such expenses are subject to the approval of the CEO and are to be reimbursed within twenty (20) business days after submission.  BRAINTECH will also provide EXECUTIVE with a company credit card.

11.        OTHER EXPENSES/BENEFITS:   EXECUTIVE shall be entitled to reimbursement of following expenses:

(a)        Cell Phone/Data Services/Laptop. BRAINTECH shall provide EXECUTIVE with a Blackberry or other cell phone / data device of EXECUTIVE’s choice and BRAINTECH shall pay the charges related to the purchase of such device and its use. BRAINTECH shall also provide EXECUTIVE with a laptop computer and other reasonable equipment consistent with his role(s).

Braintech, Inc.
Proprietary and Confidential

(b)        Professional Meetings and Professional Organizations’ Dues . EXECUTIVE shall be entitled to attend and participate in appropriate professional meetings approved by the CEO at the local, state, and national levels with the reasonable expenses for such attendance to be borne by BRAINTECH.  BRAINTECH shall also pay EXECUTIVE’s professional membership fees and dues. The EXECUTIVE may hold offices or accept responsibilities in these professional organizations provided that such responsibilities are applicable to EXECUTIVE’s position or do not interfere with the performance of his duties as stated herein.

(c)        Car Allowance . EXECUTIVE shall be paid a monthly car allowance of $600.00 which is in lieu of mileage and gas charges for business use unless such mileage or gas charges are considered to be in excess of normal practical business use in which case the CEO may pre-approve additional charges for mileage and gas.

12.        TERMINATION OF EXECUTIVE’S EMPLOYMENT .

(a)       “Good Cause” shall mean:

i.        the willful and continued failure by EXECUTIVE to substantially perform his duties hereunder (other than due to incapacity from physical or mental illness) which failure continues after written demand for performance is delivered by the CEO to EXECUTIVE specifying the nature of such failure and providing a reasonable opportunity for EXECUTIVE to cure such failure;

ii.         gross misconduct which is or could reasonably be expected to become materially injurious to BRAINTECH, including, without limitation, fraud, or misappropriation of material Company property or unauthorized and intentional disclosure of material confidential information;

iii.      material dishonesty resulting, or intending to result, directly or indirectly, in gain or personal enrichment at the expense of the Company.

(b)       “Good Reason” shall mean:

i.        any material reduction of the titles, duties or responsibilities of EXECUTIVE or assignment of any duties inconsistent with EXECUTIVE’s position; or

ii.       any material adverse change in EXECUTIVE’s compensation or benefits including but not limited to any failure by BRAINTECH, without EXECUTIVE’s consent, to pay to EXECUTIVE any portion of his Base Salary or any other earned compensation within ten (10) business days of the date such compensation is due or other breach by BRAINTECH of any of its obligations hereunder;

iii.      any material adverse change in EXECUTIVE’s compensation under the Bonus Plan or;

iv.       any requirement for EXECUTIVE to relocate outside of the Detroit, MI area;

v.        any obvious bad faith by BRAINTECH in dealing with EXECUTIVE or his employment conditions.

Braintech, Inc.
Proprietary and Confidential

(c)        Termination By BRAINTECH for Good Cause .  BRAINTECH may terminate EXECUTIVE’s employment without notice (or payment in lieu thereof) for Good Cause.  In such event, on the next regular payday following the date of his termination of employment (“Termination Date”), EXECUTIVE will be paid all unpaid compensation and benefits, allowances and perquisites hereunder up to the Termination Date, and EXECUTIVE shall be entitled to keep all Bonus Stock for which the milestone conditions have been satisfied, free of escrows. If BRAINTECH terminates EXECUTIVE for Good Cause, he shall not be entitled to any further cash Bonus under Paragraph 8.

(d)        Termination By EXECUTIVE .  EXECUTIVE may terminate this Agreement for any reason by giving the CEO 30 days’ prior written notice.  In such event, EXECUTIVE will be paid on the next regular payday following the Termination Date all unpaid compensation, leave and benefits, allowances and perquisites hereunder up to the Termination Date, and EXECUTIVE shall be entitled to keep all Bonus Stock for which the milestone conditions have been satisfied, free of all restrictions, escrows or other conditions and to all Bonus Stock Options which are vested as of such time and such Bonus Stock Options may be exercised at any time within twenty-four (24) months of the Termination Date.  If EXECUTIVE terminates without Good Reason, he shall not be entitled to any further Cash Bonus under Paragraph 8.  

(e)        Death or Total Permanent Disability .  The total permanent disability or death of EXECUTIVE shall be treated as termination of EXECUTIVE by BRAINTECH without Good Cause. For the purposes of this Agreement, “Total Permanent Disability” means any physical or mental incapacity, disease or affliction as determined by a legally qualified medical practitioner, which prevents EXECUTIVE from performing his obligations as set out in this Agreement and which incapacity persists for a continuous period of six months or more.  This provision will also be subject to any duty to accommodate or human rights laws imposed by any government authority.

(f)        Termination by BRAINTECH without Good Cause or by EXECUTIVE for Good Reason .  In the event of a termination of this Agreement or EXECUTIVE’s employment by the Company without Good Cause, or due to Total Permanent Disability or due to the death of EXECUTIVE, or by EXECUTIVE for Good Reason, then EXECUTIVE will be entitled to and paid on the next regular payday following the Termination Date all unpaid compensation, leave and benefits, allowances and perquisites hereunder up to the Termination Date.  In addition, within 10 days after the date of execution of the Release (as defined hereinafter), BRAINTECH shall pay EXECUTIVE the “Severance Pay” (as hereinafter defined) and provide EXECUTIVE with the Bonus Securities Acceleration (as hereinafter defined) notwithstanding anything to the contrary in The Bonus Stock and Bonus Stock Option Incentive Plan (Schedule “A”):

i.        “Severance Pay” shall mean:

1.        a lump sum payment (less all deductions required by law such as income taxes) equal to two (2) times EXECUTIVE’s highest Base Salary during his employment with BRAINTECH; and  

Braintech, Inc.
Proprietary and Confidential

2.        Continuation of all EXECUTIVE’s employee benefits and executive benefits under this Agreement for two (2) years after the Termination Date.

ii.       “Bonus Securities Acceleration” shall mean:

1.        all restrictions, including escrow restrictions, satisfaction of milestones and any other restrictions on Bonus Stock issued to EXECUTIVE will cease and EXECUTIVE will have clear title to all Bonus Stock subject to no further restrictions or contingencies, and

2.        all Bonus Stock Options granted as of the Termination Date will immediately vest in EXECUTIVE (and all milestones shall be deemed satisfied), and may be exercised on any date between the Termination Date and a date which is 36 months from the Termination Date.

iii.      BRAINTECH and EXECUTIVE agree that on the Termination Date, EXECUTIVE and BRAINTECH shall execute a mutual general release in the form attached hereto as Appendix II (“Release”), of any and all claims which BRAINTECH may have against EXECUTIVE or which EXECUTIVE may have against BRAINTECH and its officers, employees, directors, parents and affiliates.  

(g)       Change in Control.  In the event of a Change in Control (as defined hereinafter), then, in addition to EXECUTIVE’s other rights under this Agreement and irrespective of whether or not EXECUTIVE’s employment is terminated, BRAINTECH shall provide EXECUTIVE with the Bonus Securities Acceleration. For the purposes of this Paragraph 12(g), "Change in Control" shall mean the first to occur of any of the following events:

i.        Any person or group of person (as defined in Paragraph 13(d) and 14(d) of the Securities Exchange Act of 1934 (“Exchange Act”)) together with its affiliates, excluding employee benefit plans of BRAINTECH, is or becomes, directly or indirectly, the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of securities of BRAINTECH representing 50% or more of the combined voting power of BRAINTECH’s then outstanding securities and Rick Weidinger ceases to be the CEO of BRAINTECH; or

ii.       The shareholders of BRAINTECH approve a merger or consolidation of BRAINTECH with any other corporation or entity regardless of which entity is the survivor, other than a merger or consolidation which would result in the voting securities of BRAINTECH outstanding immediately prior thereto continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity) at least 50% of the combined voting power of the voting securities of BRAINTECH, such surviving entity or any parent thereof outstanding immediately after such merger of consolidation in any single transaction or related series of transactions and Rick Weidinger ceases to be the CEO of BRAINTECH.

Braintech, Inc.
Proprietary and Confidential

13.        CONFIDENTIALITY :  Unless this agreement is publicly filed, EXECUTIVE agrees to keep the terms and conditions of this Agreement confidential and BRAINTECH reserves the right to terminate the Agreement if EXECUTIVE publicly discloses any of the terms and conditions contained herein without the specific written consent of BRAINTECH, other than disclosure by EXECUTIVE to his tax, financial or other advisors, which is permitted.  In consideration of the execution of this Agreement, EXECUTIVE shall execute a Non-disclosure and Confidentiality Agreement, in the form provided by BRAINTECH, with respect to BRAINTECH, Inc., and any subsidiaries and affiliates thereof. Any information deemed necessary by BRAINTECH counsel to require public filing stands as allowable exception to this clause.

14.        BEST EFFORTS :  EXECUTIVE will, at all times, faithfully, industriously and to the best of his or her ability, experience and talents, perform the services provided herein or any other duties required of or from him or her pursuant to the express terms set forth in this Agreement, to the reasonable satisfaction of the CEO.  EXECUTIVE represents and warrants to BRAINTECH that EXECUTIVE is under no obligation to any prior employer that would prevent or in any way interfere with the utmost fulfillment of his role(s) with BRAINTECH.

15.        SUCCESSORS; BINDING AGREEMENT :  

(a)       BRAINTECH shall require any successor, whether direct or indirect, by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of BRAINTECH to expressly assume and agree to perform this Agreement in the same manner and to the same extent that BRAINTECH would be required to perform it if no such succession had taken place.  BRAINTECH as hereinbefore defined, includes BRAINTECH and any successor to its business and/or assets or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

(b)       This Agreement and all rights of EXECUTIVE hereunder shall inure to the benefit of and be enforceable by EXECUTIVE'S personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If EXECUTIVE should die while any amounts are payable to him hereunder all such amounts unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee, or other designee or, if there be no such designee, to the Executive's estate.

16.        SEVERABILITY .  Should any of the provisions of this Agreement be determined to be invalid or unenforceable by a court, governmental agency, or arbitrator of competent jurisdiction, such determination shall not affect the enforceability of the other provisions.  

17.        GOVERNING LAW; DISPUTES :  This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Virginia without giving effect to any choice of law or conflict of law provision or rule (whether of Virginia or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Virginia.  The parties hereby submit to the jurisdiction of the courts of Virginia in connection with any dispute related to this Agreement.  In the event of litigation between the parties related to this Agreement, the prevailing party shall be entitled to reimbursement of reasonable legal fees and expenses incurred in connection with such litigation.

Braintech, Inc.
Proprietary and Confidential

18.        PARAGRAPH HEADINGS :  The titles to the paragraphs of this Agreement are solely for the convenience of the parties and shall not be used to explain, modify, simplify, or aid in the interpretation of the provisions of this Agreement.

19.        COMPLETE AGREEMENT :  This Agreement contains the complete agreement concerning the employment arrangement between the parties and shall, as of the effective date hereof, supersede all other agreements between the parties.  The parties stipulate that neither of them has made any representation with respect to the subject matter of this Agreement or any representation including the execution and delivery of this Agreement except such representations as are specifically set forth in this Agreement and each of the Parties acknowledges that he or it has relied on its own judgment in entering into this Agreement. This Agreement may be amended only by a written amendment signed by both EXECUTIVE and BRAINTECH, provided, however, that the 2009 Bonus Incentive Plan and the Bonus Plan may be amended unilaterally by BRAINTECH from time to time without EXECUTIVE’s consent.

20.        INDEMNIFICATION :  BRAINTECH shal