THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE
"SUBSCRIPTION AGREEMENT") RELATES HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, AND WILL BE
ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS.

 

BRAINTECH INC.

LOAN GUARANTEE AND SUBSCRIPTION AGREEMENT

UNITS

INSTRUCTIONS TO PURCHASER

1.

The purchaser is to complete all the information in the boxes on page 2 and sign
where indicated with an “X”.

2.

IF THE PURCHASER IS A UNITED STATES RESIDENT, the purchaser must complete the
“US Securities Law Questionnaire” that starts on page 12.

3.

IF THE PURCHASER IS A CANADIAN RESIDENT AND AN ACCREDITED INVESTOR, then
complete the “Accredited Investor Questionnaire” that starts on page 15.

4.

Execute the Agreement to Guarantee Loan and Issue Units that starts on page 3.

4.

All other information must be filled in where appropriate.

 

1

 

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LOAN GUARANTEE AND SUBSCRIPTION AGREEMENT

TO:

BRAINTECH INC. (the “Issuer” or the “Company”), of 930 West 1st Street, Suite
102, North Vancouver, British Columbia V7P 3N4

Subject and pursuant to the Terms set out on pages 3 and 4, the General
Provisions on pages 8 to 14 and the other schedules and appendices attached
which are hereby incorporated by reference, the Purchaser hereby irrevocably
subscribes for, and on Closing will purchase from the Issuer, the following
securities at the following price:

                                                 Units (1 Unit for $1.00 of LC
advanced)

US$___________________LC advanced as security for Braintech borrowings from
Royal Bank

The Purchaser owns, directly or indirectly, the following securities of the
Issuer:

[Check if applicable] The Purchaser is [ ] an insider of the Issuer or [ ] a
member of the professional group

The Purchaser directs the Issuer to issue, register and deliver the certificates
representing the Purchased Securities as follows:

REGISTRATION INSTRUCTIONS

 

DELIVERY INSTRUCTIONS

 

 

 

Name to appear on certificate

 

Name and account reference, if applicable

 

 

 

Account reference if applicable

 

Contact name

 

 

 

Address

 

Address

 

 

 

 

 

Telephone Number

EXECUTED by the Purchaser this _______ day of _____________, 2006. By executing
this Subscription Agreement, the Purchaser certifies that the Purchaser and any
beneficial purchaser for whom the Purchaser is acting is resident in the
jurisdiction shown as the “Address of Purchaser”. Unless the jurisdiction shown
as the “Address of Purchaser” is British Columbia, then the Purchaser certifies
that the Purchaser is NOT resident in British Columbia.

WITNESS:

 

EXECUTION BY PURCHASER:

 

 

X

Signature of Witness

 

Signature of individual (if Purchaser is an individual)

 

 

X

Name of Witness

 

Authorized signatory (if Purchaser is not an individual)

 

 

 

Address of Witness

 

Name of Purchaser (please print)

 

 

 

 

 

Name of authorized signatory (please print)

Accepted this _____ day of ____________, 2006

 

 

BRAINTECH INC.

 

Address of Purchaser (residence)

Per:

 

 

 

 

Telephone Number

Authorized Signatory

 

 

 

 

E-mail address

 

 

 

 

 

Social Security/Insurance No.:

 

By signing this acceptance, the Issuer agrees to be bound by the Terms on pages
3 and 4, the General Provisions on pages 8 to 14 and the other schedules and
appendices incorporated by reference.

 

2

 

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AGREEMENT TO GUARANTEE LOAN AND ISSUE UNITS

 

Whereas:

 

A.

Braintech Inc (‘the Company”) has applied to the Royal Bank Of Canada, (“RBC”)
for a loan of up to US$2,500,000.

 

B.

The loan is required to fund redemption of approximately US$2,500,000 of Secured
Convertible Debentures (the “Debentures”).

 

C.

RBC has agreed to lend the Company US$2,500,000 (the “Loan”) provided that they
receive Irrevocable Standby Letters of Credit (the “LCs”) which guarantee
repayment in the amount of US$2,500,000, pursuant to an offer of credit
facilities letter dated September 12, 2006. Purchasers should review the said
offer letter prior to subscribing for Units.

 

D.

The Loan will be drawn down by the Company to fund the Debentures redemption.

 

Now therefore, in consideration of the terms and conditions contained in this
Agreement, the Company and each Subscriber agree to the specific terms as
follows:

 

1.

The Company will pay to Purchasers providing LCs (the “LC Providers”) one Unit
for each dollar of LC provided to guarantee the Loan (the “Unit”). The LC
Providers will provide LCs acceptable to the Royal Bank Of Canada pursuant to
the offer of credit facilities letter dated September 12, 2006. Minimum LC to be
provided by any LC Provider is US$100,000.00.

 

2.

Each Unit shall consist of two (2) shares (the “LC Shares”) of the common stock
of the Company, three (3) share purchase warrants entitling the holder to
purchase one (1) additional share of the common stock of the Company for each
share purchase warrant held at a price of $0.30 per share (the “$0.30 Warrant”),
and one and one-half (1 ½) share purchase warrants entitling the holder to
purchase one (1) additional share of the common stock of the Company for each
whole share purchase warrant held at a price of $0.50 per share (the “$0.50
Warrant”). The $0.30 Warrants and the $0.50 Warrants have a term of five years.
The LC Shares, the $0.30 Warrants and the $0.50 Warrants and the common shares
issuable upon exercise of the Warrants are together called the “Securities”.

3.

Certificates representing the LC Shares, the $0.30 Warrants and the $0.50
Warrants will be delivered to the LC Providers within 5 business days of their
LC being approved by RBC. The Company will use its best efforts to register the
Securities with the United States Securities and Exchange Commission within 6
months of issue so that the Securities will be freely tradable under the
registration statement. In the event a registration statement regarding
securities [shares and warrants] are not filed with, and not approved by the SEC
for any reason, within 6 months from closing, the company will pay an additional
one (1) share of the common stock of the Company for each dollar of LC provided
[total of 3 shares] to the company in order to guarantee the Loan. In the event
the securities [shares and warrants] are not registered on an effective
registration statement for any reason, within 12 months from closing, the
company will pay an additional one (1) share of the common stock of the Company
[up to total of 4 shares] for each dollar of LC provided to the company in order
to guarantee the Loan.

4.

The Company will reimburse all expenses, including without limitation,
reasonable legal fees incurred by the LC Providers in connection with obtaining
and maintaining the LCs, and with enforcing the GSA (defined below) or any other
rights granted pursuant to this Agreement.

 

 

3

 

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5.

The LC Providers will rank pari-passu with each other with regard to Loan draw
downs, bank loan repayments, LC security and all other transactions associated
with the provision of the LCs. The LC Providers’ security will rank behind
security granted by the Company to the RBC for the Loan.

6.

The Company agrees to use its best efforts to reduce the Loan as soon as
practicable and that all cash flow not required for Company operations will be
applied to reduce the Loan. The Company also agrees that funds received from any
customer contract, equity financing, debt financing or debt refinancing, that
are not required for operations, will be applied to reduce the Loan.

7.

The Company and the LC Providers agree that Rick Weidinger be appointed
"Managing Member" as per Schedule “A”, Appointment of Managing Member section
attached.

8.

The Company agrees to first receive approval from the Managing Member regarding
a financing or other event that would subordinate the LC Providers general
security position. No such subordination will be allowed by fully secured LC
Provider Group unless written approval from Managing Member received by Company.

9.

For a period of one year from signing this Agreement, the Company will only seek
a maximum of US$1,200,000.00 equity or debt financing for funding operations.
Such use of funds and valuation of equity raise shall be reviewed and approved
by the Managing Member as representative of the LC Provider Group. For any
further funding required for operations or growth the Company must seek the
approval of the Managing Member of the LC Providers before doing so. The failure
of obtaining such an approval regarding financing for operations will be
considered a default.

10.

In the event the Company defaults on the Loan and the LCs are called to satisfy
the repayment of the Loan, the Managing Member may take actions as specified in
Schedule “A”, Default Provisions section attached.

11.

This Agreement’s Default Provisions will continue in force until the Loan is
paid in full and the LCs are released by the RBC. At which time the LC Providers
will give the Company a full release from the General Security Agreement
attached as Schedule “D”

12.

At Closing, the Company will cause to be registered against all of the Company’s
assets and intellectual property, a General Security Agreement (“GSA”),
(attached as Schedule “D”, General Security Agreement) in favor of the LC
Providers, which, upon redemption of the Secured Convertible Debentures, will
rank in second place to the GSA granted to the RBC. The GSA will cover all
assets including intellectual property of the Company. If the LCs are called to
satisfy the repayment of the Loan, then immediately the LC Providers will rank
in first place to the GSA and the Managing Member may begin immediate actions
regarding the business of the Company.

 

13.

The Company will:

 

(a)

provide the Managing Member with immediate disclosure of any material adverse
change in the financial condition of the Company, including without limitation
quarterly reports in writing and when reasonably requested by the Managing
Member, meetings of all LC Providers;

 

(b)

request, (as per letter attached as Schedule “C”), the RBC to notify the
Managing Member of LC draw downs and copy the Managing Member with all
correspondence with the Company that indicates that the Loan may not be in good
standing or that there

 

4

 

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may be an impending or existing default. The Managing Member shall be provided
all correspondence between Company and RBC.

 

(c)

reduce the exercise price on existing Company stock purchase warrants
exercisable at $1.00 for all LC Providers to the new exercise price of $0.30.
The Warrants are exercisable for a term of five years, no other Terms are
changed.

14.

This Agreement is subject to and includes the terms of the General Provisions
and the Accredited Investor Questionnaires attached. The Company reserves the
right to accept or reject any Subscription for any reason in its discretion.

 

LC Provider

 

______________________________________

Signature

Braintech, Inc.

 

 

Per:

                                                             

 

Authorized Signatory

 

 

 

5

 

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GENERAL PROVISIONS

1.

DEFINITIONS

1.1          In the Subscription Agreement (including the first (cover) page,
the Terms on pages 3 and 4, the General Provisions on pages 8 to 14 and the
other schedules and appendices incorporated by reference), the following words
have the following meanings unless otherwise indicated:

 

(a)

“1933 Act” means the United States Securities Act of 1933, as amended;

 

(b)

“Applicable Legislation” means the Securities Legislation Applicable to the
Issuer and all legislation incorporated in the definition of this term in other
parts of the Subscription Agreement, together with the regulations and rules
made and promulgated under that legislation and all administrative policy
statements, blanket orders and rulings, notices and other administrative
directions issued by the Commissions;

 

(c)

“Closing” means the completion of the sale and purchase of the Purchased
Securities;

 

(d)

“Closing Date” has the meaning assigned in the Terms;

 

(e)

“Closing Year” means the calendar year in which the Closing takes place;

 

(f)

“Commissions” means the Commissions with Jurisdiction over the Issuer and the
securities commissions incorporated in the definition of this term in other
parts of the Subscription Agreement;

 

(g)

“Final Closing” means the last closing under the Private Placement;

 

(h)

“General Provisions” means those portions of the Subscription Agreement headed
“General Provisions” and contained on pages 8 to14;

 

(i)

“Private Placement” means the offering of the Units on the terms and conditions
of this Subscription Agreement;

 

(j)

“Purchased Securities” has the meaning assigned in the Terms;

 

(k)

“Regulatory Authorities” means the Commissions;

 

(l)

“Securities” means the Shares and the Warrants comprising the Units and the
Warrant Shares;

 

(m)

“Subscription Agreement” means the first (cover) page, the Terms on 3 and 4, the
General Provisions on pages 8 to 14 and the other schedules and appendices
incorporated by reference;

 

 

(n)

“Terms” means those portions of the Subscription Agreement headed “Terms” and
contained on pages 3 and 4;

 

 

(o)

“Units” means the units to be issued as defined in the Terms on pages 3 and 4;

 

(p)

“Warrants” means the non-transferable share purchase warrants forming part of
the Units; and

 

(q)

“Warrant Shares” means the common shares of the Issuer to be issued on exercise
of the Warrants.

1.2          In the Subscription Agreement, the following terms have the
meanings defined in Regulation S: “Directed Selling Efforts”, “Foreign Issuer”,
“Substantial U.S. Market Interest”, “U.S. Person” and “United States”.

1.3

In the Subscription Agreement, unless otherwise specified, currencies are
indicated in United States dollars.

 

 

6

 

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1.4          In the Subscription Agreement, other words and phrases that are
capitalized have the meanings assigned to them in the body hereof.

2.

Acknowledgements, REPRESENTATIONS AND WARRANTIES OF PURCHASER

2.1

Acknowledgements concerning offering

 

The Purchaser acknowledges that:

 

(a)

no securities commission or similar regulatory authority has reviewed or passed
on the merits of the Securities;

 

(b)

there is no government or other insurance covering the Securities;

 

(c)

there are risks associated with the purchase of the Securities;

 

(d)

there are restrictions on the Purchaser’s ability to resell the Securities and
it is the responsibility of the Purchaser to find out what those restrictions
are and to comply with them before selling the Securities;

 

(e)

the Issuer has advised the Purchaser that the Issuer is relying on an exemption
from the requirements to provide the Purchaser with a prospectus or offering
memorandum and to sell securities through a person registered to sell securities
under the Applicable Legislation and, as a consequence of acquiring securities
pursuant to this exemption, certain protections, rights and remedies provided by
the Applicable Legislation, including statutory rights of rescission or damages,
will not be available to the Purchaser;

 

(f)

no prospectus or offering memorandum has been filed by the Issuer with the
Commissions in connection with the issuance of the Purchased Securities, the
issuance is exempted from the prospectus and registration requirements of the
Applicable Legislation and:

 

(i)

the Purchaser is restricted from using most of the civil remedies available
under the Applicable Legislation;

 

(ii)

the Purchaser may not receive information that would otherwise be required to be
provided to the Purchaser under the Applicable Legislation; and

 

(iii)

the Issuer is relieved from certain obligations that would otherwise apply under
the Applicable Legislation;

 

(g)

the Purchaser acknowledges that the Securities have not been registered under
the 1933 Act and may not be offered or sold in the United States unless
registered under the 1933 Act and the securities laws of all applicable states
of the United States or an exemption from such registration requirements is
available, and that the Issuer has no obligation or present intention of filing
a registration statement under the 1933 Act in respect of the Purchased
Securities or any of the Securities;

2.2

Representations by the purchaser

The Purchaser represents and warrants to the Issuer that, as at the Agreement
Date and at the Closing:

 

(a)

to the best of the Purchaser’s knowledge, the Securities were not advertised;

 

(b)

no person has made to the Purchaser any written or oral representations:

 

(i)

that any person will resell or repurchase the Securities;

 

 

(ii)

that any person will refund the purchase price of the Purchased Securities;

 

 

7

 

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(iii)

as to the future price or value of any of the Securities; or

 

(iv)

that any of the Securities will be listed and posted for trading on a stock
exchange or that application has been made to list and post any of the
Securities for trading on any stock exchange, other than the Shares and Warrant
Shares on the OTCBB;

 

(c)

this subscription has not been solicited in any other manner contrary to the
Applicable Legislation or the 1933 Act;

 

(d)

the Purchaser (or others for whom it is contracting hereunder) has been advised
to consult its own legal and tax advisors with respect to applicable resale
restrictions and tax considerations, and it (or others for whom it is
contracting hereunder) is solely responsible for compliance with applicable
resale restrictions and applicable tax legislation;

 

(e)

the offer made by this subscription is irrevocable (subject to the Purchaser’s
right to withdraw the subscription and to terminate the obligations as set out
in this Subscription Agreement) and requires acceptance by the Issuer;

 

(f)

the Purchaser has the legal capacity and competence to enter into and execute
this Subscription Agreement and to take all actions required pursuant to the
Subscription Agreement and, if the Purchaser is a corporation, it is duly
incorporated and validly subsisting under the laws of its jurisdiction of
incorporation and all necessary approvals by its directors, shareholders and
others have been given to authorize execution of this Subscription Agreement on
behalf of the Purchaser;

 

(g)

the Purchaser will not become a “control person” of the Issuer as defined in the
Applicable Legislation, by virtue of this purchase of any of the Securities, and
does not intend to act in concert with any other person to form a control group
of the Issuer;

 

(h)

the Purchaser is an “Accredited Investor”, as the term is defined in Regulation
D under the 1933 Act, or some other exemption from 1933 Act prospectus
requirements applies to the Purchaser;

 

(i)

the Purchaser has not acquired the Purchased Securities as a result of, and will
not itself engage in, any “directed selling efforts” in the United States in
respect of any of the Purchased Securities which would include any activities
undertaken for the purpose of, or that could reasonably be expected to have the
effect of, conditioning the market in the United States for the resale of any of
the Shares or Warrant Shares; provided, however, that the Subscriber may sell or
otherwise dispose of any of the Shares or Warrant Shares pursuant to
registration thereof under the 1933 Act and any applicable state securities laws
or under an exemption from such registration requirements;

 

(j)

the current structure of this transaction and all transactions and activities
contemplated hereunder is not a scheme to avoid the registration requirements of
the 1933 Act;

 

(k)

the Purchaser has no intention to distribute either directly or indirectly any
of the Purchased Securities, the Shares and Warrants underlying the Purchased
Securities or the Warrant Shares in the United States, except in compliance with
the 1933 Act;

 

(l)

the entering into of this Subscription Agreement and the transactions
contemplated hereby will not result in the violation of any of the terms and
provisions of any law applicable to, or the constating documents of, the
Purchaser or of any agreement, written or oral, to which the Purchaser may be a
party or by which the Purchaser is or may be bound;

 

(m)

this Subscription Agreement has been duly executed and delivered by the
Purchaser and constitutes a legal, valid and binding agreement of the Purchaser
enforceable against the Purchaser;

 

(n)

the Purchaser has been independently advised as to the applicable hold period
imposed in respect of the Securities by securities legislation in the
jurisdiction in which the Purchaser resides and confirms that no representation
has been made respecting the applicable hold periods for the Securities and is
aware of the risks and other characteristics of the Securities and of the fact
that

 

8

 

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the Purchaser may not be able to resell the Securities except in accordance with
the applicable securities legislation and regulatory policies;

 

(o)

the Purchaser is capable of assessing the proposed investment as a result of the
Purchaser’s financial and business experience or as a result of advice received
from a registered person other than the Issuer or any affiliates of the Issuer;
and

 

(p)

if required by applicable securities legislation, policy or order or by any
securities commission, stock exchange or other regulatory authority, the
Purchaser will execute, deliver, file and otherwise assist the Issuer in filing,
such reports, undertakings and other documents with respect to the issue of the
Securities as may be required.

2.3

Reliance, indemnity and notification of changes

The representations and warranties in the Subscription Agreement (including the
first (cover) page, the Terms on pages 3 and 4, the General Provisions on pages
8 to 14 and the other schedules and appendices incorporated by reference) are
made by the Purchaser with the intent that they be relied upon by the Issuer in
determining its suitability as a purchaser of Purchased Securities, and the
Purchaser hereby agrees to indemnify the Issuer against all losses, claims,
costs, expenses and damages or liabilities which any of them may suffer or incur
as a result of reliance thereon. The Purchaser undertakes to notify the Issuer
immediately of any change in any representation, warranty or other information
relating to the Purchaser set forth in the Subscription Agreement (including the
first (cover) page, the Terms on pages 3 and 4, the General Provisions on pages
8 to 14 and the other schedules and appendices incorporated by reference) which
takes place prior to the Closing.

 

2.4

Survival of representations and warranties

The representations and warranties contained in this Section will survive the
Closing.

3.

WARRANTS

 

3.1

The Warrants will be non-transferable.

 

3.2

If the Purchaser exercises any Warrants, the Issuer will:

 

(a)

issue to the Purchaser the number of Warrant Shares equal to the number of
Warrants exercised; and

 

(b)

deliver to the Purchaser a share certificate representing the Warrant Shares.

4.

ISSUER'S ACCEPTANCE

The Subscription Agreement, when executed by the Purchaser, and delivered to the
Issuer, will constitute a subscription for Units which will not be binding on
the Issuer until accepted by the Issuer by executing the Subscription Agreement
in the space provided on the face page(s) of the Agreement and, notwithstanding
the Agreement Date, if the Issuer accepts the subscription by the Purchaser, the
Subscription Agreement will be entered into on the date of such execution by the
Issuer.

5.

CLOSING

6.1          On or before the end of the fifth business day before the Closing
Date, the Purchaser will deliver to the Issuer the Subscription Agreement and
all applicable schedules and required forms, duly executed, and payment in full
for the total price of the Purchased Securities to be purchased by the
Purchaser.

6.2          Within 5 days of Closing, the Issuer will deliver to the Purchaser
the certificates representing the Purchased Securities purchased by the
Purchaser registered in the name of the Purchaser or its nominee, or as directed
by the Purchaser. The Issuer will provide to the Purchaser an opinion of counsel
in a form satisfactory to counsel for the Purchaser.

 

9

 

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6.

MISCELLANEOUS

7.1          The Purchaser agrees to sell, assign or transfer the Securities
only in accordance with the requirements of applicable securities laws and any
legends placed on the Securities as contemplated by the Subscription Agreement.

7.2          The Purchaser hereby authorizes the Issuer to correct any minor
errors in, or complete any minor information missing from any part of the
Subscription Agreement and any other schedules, forms, certificates or documents
executed by the Purchaser and delivered to the Issuer in connection with the
Private Placement.

7.3          The Issuer may rely on delivery by fax machine of an executed copy
of this subscription, and acceptance by the Issuer of such faxed copy will be
equally effective to create a valid and binding agreement between the Purchaser
and the Issuer in accordance with the terms of the Subscription Agreement.

7.4          Without limitation, this subscription and the transactions
contemplated by this Subscription Agreement are conditional upon and subject to
the Issuer’s having obtained such regulatory approval of this subscription and
the transactions contemplated by this Subscription Agreement as the Issuer
considers necessary.

7.5          This Subscription Agreement is not assignable or transferable by
the parties hereto without the express written consent of the other party to
this Subscription Agreement.

7.6          Time is of the essence of this Subscription Agreement and will be
calculated in accordance with the provisions of the Interpretation Act (British
Columbia).

7.7          Except as expressly provided in this Subscription Agreement and in
the agreements, instruments and other documents contemplated or provided for in
this Subscription Agreement, this Subscription Agreement contains the entire
agreement between the parties with respect to the Securities and there are no
other terms, conditions, representations or warranties whether expressed,
implied, oral or written, by statute, by common law, by the Issuer, or by anyone
else.

7.8

The parties to this Subscription Agreement may amend this Subscription Agreement
only in writing.

7.9          This Subscription Agreement enures to the benefit of and is binding
upon the parties to this Subscription Agreement and their successors and
permitted assigns.

7.10        A party to this Subscription Agreement will give all notices to or
other written communications with the other party to this Subscription Agreement
concerning this Subscription Agreement by hand or by registered mail addressed
to the address given on page 2.

7.11

This Subscription Agreement is to be read with all changes in gender or number
as required by the context.

7.12        This Subscription Agreement will be governed by and construed in
accordance with the internal laws of British Columbia (without reference to its
rules governing the choice or conflict of laws), and the parties hereto
irrevocably attorn and submit to the exclusive jurisdiction of the courts of
British Columbia with respect to any dispute related to this Subscription
Agreement.

7.13        Each Purchaser acknowledges that the Securities are subject to
resale restrictions in British Columbia and may not be traded in British
Columbia except as permitted by the Securities Act (British Columbia) and the
rules made thereunder. In particular, pursuant to Multilateral Instrument
45-102, as adopted by the British Columbia Securities Commission, a subsequent
trade in any of the Securities will be a distribution subject to the prospectus
and registration requirements of applicable Canadian securities legislation,
unless certain conditions are met, including the following: (a) at least four
months (the "Canadian Hold Period") shall have elapsed from the date on which
the Securities were issued to the Purchasers; and (b) during the currency of the
Canadian Hold Period, any certificate representing the Securities is imprinted
with a legend (the "Canadian Legend") stating

"UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES
SHALL NOT TRADE THE SECURITIES BEFORE [INSERT THE DATE THAT IS FOUR MONTHS AND A
DAY AFTER THE DISTRIBUTION DATE."

 

10

 

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By executing and delivering this Agreement, each Purchaser will have directed
the Company not to include the Canadian Legend on any certificates representing
the Securities to be issued to such Purchaser. As a consequence, the Purchaser
will not be able to rely on the resale provisions of Multilateral Instrument
45-102, and any subsequent trade in the Securities during or after the Canadian
Hold Period will be a distribution subject to the prospectus and registration
requirements of Canadian securities legislation, to the extent that the trade is
at that time subject to any such Canadian securities legislation.

 

End of General Provisions

 

11

 

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U.S. SECURITIES LAW QUESTIONNAIRE

All capitalized terms herein, unless otherwise defined, have the meanings
ascribed thereto in the Subscription Agreement.

1.

The Subscriber covenants, represents and warrants to the Company that:

 

(a)

the Subscriber is a U.S. Person;

 

(b)

the Subscriber has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of the transactions
detailed in the Subscription Agreement and it is able to bear the economic risk
of loss arising from such transactions;

 

(c)

the Subscriber is acquiring the Securities for investment only and not with a
view to resale or distribution and, in particular, it has no intention to
distribute either directly or indirectly any of the Securities in the United
States or to U.S. Persons; provided, however, that the Subscriber may sell or
otherwise dispose of any of the Securities pursuant to registration thereof
pursuant to the Securities Act of 1933 (the “1933 Act”) and any applicable State
securities laws unless an exemption from such registration requirements is
available or registration is not required pursuant to Regulation S under the
1933 Act or registration is otherwise not required under this 1933 Act;

 

(d)

the Subscriber satisfies one or more of the categories indicated below (please
check the appropriate box):

 

o

Category 1             An organization described in Section 501(c)(3) of the
United States Internal Revenue Code, a corporation, a Massachusetts or similar
business trust or partnership, not formed for the specific purpose of acquiring
the Securities, with total assets in excess of US$5,000,000;

 

o

Category 2             A natural person whose individual net worth, or joint net
worth with that person’s spouse, on the date of purchase exceeds US$1,000,000;

 

o

Category 3             A natural person who had an individual income in excess
of US$200,000 in each of the two most recent years or joint income with that
person’s spouse in excess of US$300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current year;

 

o

Category 4             A “bank” as defined under Section (3)(a)(2) of the 1933
Act or savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the 1933 Act acting in its individual or fiduciary
capacity; a broker dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934 (United States); an insurance company as defined in
Section 2(13) of the 1933 Act; an investment company registered under the
Investment Company Act of 1940 (United States) or a business development company
as defined in Section 2(a)(48) of such Act; a Small Business Investment Company
licensed by the U.S. Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958 (United States); a plan with total
assets in excess of US$5,000,000 established and maintained by a state, a
political subdivision thereof, or an agency or instrumentality of a state or a
political subdivision thereof, for the benefit of its employees; an employee
benefit plan within the meaning of the Employee Retirement Income Security Act
of 1974 (United States) whose investment decisions are made by a plan fiduciary,
as defined in Section 3(21) of such Act, which is either a bank, savings and
loan association, insurance company or registered investment adviser, or if the
employee benefit plan has total assets in excess of US$5,000,000, or, if a self-

 

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directed plan, whose investment decisions are made solely by persons that are
accredited investors;

 

o

Category 5             A private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940 (United States);

 

o

Category 6

A director or executive officer of the Company;

 

o

Category 7             A trust with total assets in excess of US$5,000,000, not
formed for the specific purpose of acquiring the Securities, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the
1933 Act; or

 

o

Category 8             An entity in which all of the equity owners satisfy the
requirements of one or more of the foregoing categories; and

 

(e)

the Subscriber is not acquiring the Securities as a result of any form of
general solicitation or general advertising including advertisements, articles,
notices or other communications published in any newspaper, magazine or similar
media or broadcast over radio, or television, or any seminar or meeting whose
attendees have been invited by general solicitation or general advertising.

2.

The Subscriber acknowledges and agrees that:

 

(a)

if the Subscriber decides to offer, sell or otherwise transfer any of the
Securities, it will not offer, sell or otherwise transfer any of such securities
directly or indirectly, unless:

 

(i)

the sale is to the Company;

 

(ii)

the sale is made outside the United States in a transaction meeting the
requirements of Rule 904 of Regulation S under the 1933 Act and in compliance
with applicable local laws and regulations;

 

(iii)

the sale is made pursuant to the exemption from the registration requirements
under the 1933 Act provided by Rule 144 thereunder if available and in
accordance with any applicable state securities or “Blue Sky” laws; or

 

(iv)

the Securities are sold in a transaction that does not require registration
under the 1933 Act or any applicable U.S. state laws and regulations governing
the offer and sale of securities, and it has prior to such sale furnished to the
Company an opinion of counsel reasonably satisfactory to the Company;

 

(b)

any of the Warrants may not be exercised in the United States or by or on behalf
of a U.S. Person unless registered under the 1933 Act and any applicable state
securities laws unless an exemption from such registration requirements is
available;

 

(c)

the Subscriber has not acquired the Securities as a result of, and will not
itself engage in, any “directed selling efforts” (as defined in Regulation S
under the 1933 Act) in the United States in respect of the Securities which
would include any activities undertaken for the purpose of, or that could
reasonably be expected to have the effect of, conditioning the market in the
United States for the resale of any of the Securities; provided, however, that
the Subscriber may sell or otherwise dispose of any of the Securities pursuant
to registration of any of the Securities pursuant to the 1933 Act and any
applicable state securities laws or under an exemption from such registration
requirements and as otherwise provided herein; ‘

 

(d)

upon the issuance thereof, and until such time as the same is no longer required
under the applicable requirements of the 1933 Act or applicable U.S. State laws
and regulations, the certificates representing any of the Securities will bear a
legend in substantially the following form:

 

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“THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.”

 

(e)

the Company may make a notation on its records or instruct the registrar and
transfer agent of the Company in order to implement the restrictions on transfer
set forth and described herein; and

 

(f)

the Subscriber, if an individual, is a resident of the state or other
jurisdiction in its address on the Subscriber’s execution page of the
Subscription Agreement, or if the Subscriber is not an individual, the office of
the Subscriber at which the Subscriber received and accepted the offer to
acquire the Securities is the address listed on the Subscriber’s execution page
of the Subscription Agreement.

IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the
________ day of __________________, 2006.

 

If a Corporation, Partnership or Other Entity:

 

If an Individual:

 

 

X

Print or Type Name of Entity

 

Signature

X

 

 

Signature of Authorized Signatory

 

Print or Type Name

 

 

 

Type of Entity

 

Social Security/Tax I.D. No.

 

 

 

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NATIONAL INSTRUMENT 45-106

ACCREDITED INVESTOR QUESTIONNAIRE

The purpose of this Questionnaire is to assure Braintech Inc. (the “Company”)
that the undersigned (the “Subscriber”) will meet certain requirements for the
registration and prospectus exemptions provided for under National Instrument
45-106 (“NI 45-106”), as adopted by the Securities Commissions in Canada, in
respect of a proposed private placement of securities by the Company (the
“Transaction”). The Company will rely on the information contained in this
Questionnaire for the purposes of such determination.

The undersigned Subscriber covenants, represents and warrants to the Company
that:

 

1.

the Subscriber has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of the Transaction
and the Subscriber is able to bear the economic risk of loss arising from such
Transaction;

 

2.

the Subscriber satisfies one or more of the categories of “accredited investor”
(as that term is defined in NI 45-106) indicated below (please check the
appropriate box):

 

o

(a) a Canadian financial institution as defined in National Instrument 14-101,
or an authorized foreign bank listed in Schedule III of the Bank Act (Canada);

 

o

(b) the Business Development Bank of Canada incorporated under the Business
Development Bank Act (Canada);

 

o

(c) a subsidiary of any person referred to in any of the foregoing categories,
if the person owns all of the voting securities of the subsidiary, except the
voting securities required by law to be owned by directors of that subsidiary;

 

o

(d) an individual registered or formerly registered under securities legislation
in a jurisdiction of Canada, as a representative of a person or company
registered under securities legislation in a jurisdiction of Canada, as an
adviser or dealer, other than a limited market dealer registered under the
Securities Act (Ontario) or the Securities Act (Newfoundland);

 

o

(e) an individual registered or formerly registered under the securities
legislation of a jurisdiction of Canada as a representative of a person referred
to in paragraph (d);

 

o

(f) the government of Canada or a province, or any crown corporation or agency
of the government of Canada or a province;

 

o

(g) a municipality, public board or commission in Canada and a metropolitan
community, school board, the Comite de gestion de la taxe scholaire de l’ile de
Montreal or an intermunicipal management board in Québec;

 

o

(h) a national, federal, state, provincial, territorial or municipal government
of or in any foreign jurisdiction, or any agency thereof;

 

o

(i) a pension fund that is regulated by either the Office of the Superintendent
of Financial Institutions (Canada) or a pension commission or similar regulatory
authority of a jurisdiction of Canada;

 

o

(j) an individual who either alone or with a spouse beneficially owns, directly
or indirectly, financial assets (as defined in NI 45-106) having an aggregate
realizable value that, before taxes but net of any related liabilities, exceeds
CDNUS$1,000,000;

 

o

(k) an individual whose net income before taxes exceeded CDNUS$200,000 in each
of the two more recent calendar years or whose net income before taxes combined
with that

 

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of a spouse exceeded US$300,000 in each of those years and who, in either case,
reasonably expects to exceed that net income level in the current calendar year;

 

o

(l) an individual who, either alone or with a spouse, has net assets of at least
CDN US$5,000,000;

 

o

(m) a person, other than a person or investment fund, that had net assets of at
least CDNUS$5,000,000 as reflected on its most recently prepared financial
statements;

 

o

(n) an investment fund that distributes it securities only to persons that are
accredited investors at the time of distribution, a person that acquires or
acquired a minimum of CDN$150,000 of value in securities, or a person that
acquires or acquired securities under Sections 2.18 or 2.19 of NI 45-106;

 

o

(o) an investment fund that distributes or has distributed securities under a
prospectus in a jurisdiction of Canada for which the regulator or, in Québec,
the securities regulatory authority, has issued a receipt;

 

o

(p) a trust company or trust corporation registered or authorized to carry on
business under the Trust and Loan Companies Act (Canada) or under comparable
legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on
behalf of a fully managed account managed by the trust company or trust
corporation, as the case may be;

 

o

(q) a person acting on behalf of a fully managed account managed by that person,
if that person (i) is registered or authorized to carry on business as an
adviser or the equivalent under the securities legislation of a jurisdiction of
Canada or a foreign jurisdiction, and (ii) in Ontario, is purchasing a security
that is not a security of an investment fund;

 

o

(r) a registered charity under the Income Tax Act (Canada) that, in regard to
the trade, has obtained advice from an eligibility advisor or an advisor
registered under the securities legislation of the jurisdiction of the
registered charity to give advice on the securities being traded;

 

o

(s) an entity organized in a foreign jurisdiction that is analogous to any of
the entities referred to in paragraphs (a) to (d) or paragraph (i) in form and
function;

 

o

(t) a person in respect of which all of the owners of interests, direct,
indirect or beneficial, except the voting securities required by law are persons
or companies that are accredited investors.

 

o

(u) an investment funds that is advised by a person registered as an advisor or
a person that is exempt from registration as an advisor; or

 

o

(v) a person that is recognized or designated by the securities regulatory
authority or, except in Ontario and Québec, the regulator as (i) an accredited
investor, or (ii) an exempt purchaser in Alberta or British Columbia after this
instrument comes into force;

 

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The Subscriber acknowledges and agrees that the Subscriber may be required by
the Company to provide such additional documentation as may be reasonably
required by the Company and its legal counsel in determining the Subscriber’s
eligibility to acquire the Units under relevant Legislation.

IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the
________ day of __________________, 2006.

 

If a Corporation, Partnership or Other Entity:

 

If an Individual:

 

 

X

Print or Type Name of Entity

 

Signature

X

 

 

Signature of Authorized Signatory

 

Print or Type Name

 

 

 

Type of Entity

 

Social Insurance Number:

 

 

17

 

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Schedule “A”

Appointment of Managing Member and Default Provisions

Appointment of Managing Member

1.

The Company agrees that Rick Weidinger assume the position of "Managing Member"
for the LC Providers. The Company agrees to recognize the Managing Member as
having the right to make decisions on behalf of LC Providers.

2.

Each LC Provider hereby irrevocably appoints Rick Weidinger, the “Managing
Member”, as the true representative of the LC Provider for and in the name of or
otherwise on behalf of the LC Provider with full power to do and execute any and
all acts, consents and/or waivers, that are requested by the Company to be given
under this Agreement and the Schedules hereto and to receive any notices from
the Company that are required to be given under this Agreement.

3.

Each LC Provider agrees and acknowledges that so long as the Managing Member
acts in good faith and without intentional gross misconduct, intentional gross
negligence, or intentional harm the Managing Member shall not be liable for any
action taken in respect of the shares, or warrants, or Loan, or financings, or
operations, or the rights under this Agreement of the LC Provider, and the LC
Providers and the Company will indemnify and save harmless the Managing Member
from all acts or omissions undertaken as a representative of the LC Provider
without limitation. Each parties obligation is joint and several.

4.

The position of Managing Member expires once RBC releases all of the LC
Providers’ LCs and no monies are owing to the LC Providers by the Company.

Default Provisions

5.

In the event that the Company defaults on the Loan and the LCs are called to
satisfy the repayment of the Loan, the Company will pay 10% interest to the LC
Providers for the balance of the outstanding LCs.

6.

In the event that the LCs are drawn down by the RBC or upon any other specified
default by the Company , the Company, will then require and accept the
resignations of the then current directors of the Company and appoint the LC
Providers as members of a new Board of Directors. The new Board of Directors
will immediately decide upon and approve appropriate compensation for the
Managing Member and decide upon the management of the Company

7.

In the event that the Company defaults on the Loan and the LCs are called to
satisfy the repayment of the Loan, the Company consents to the GSA granted to
the RBC being extinguished by virtue of the Loan repayment and the GSA granted
to the LC Providers to rank in first place.

8.

In the event that the Company defaults on the Loan and the LCs are called to
satisfy the repayment of the Loan, the RBC agrees to discharge their GSA as per
Schedule “B”, RBC Agreement to Discharge Security.

9.

In any case where the LCs are drawn upon by the RBC to any level, the Company
will immediately appoint the Managing Member as the manager of the Company’s
assets with full power under the GSA to take such action as is necessary to
recover the amounts due to the LC Providers and manage the business and affairs
of the company, in the best overall interests of the LC Providers.

 

 

18