Exhibit
      10.3
            Non-Recourse
      Letter of Credit Agreement dated as of October 30, 2009 by Rick Weidinger
      in favor of Silicon Valley Bank






NON-RECOURSE
LETTER OF CREDIT AGREEMENT






This continuing Non-Recourse Letter of
Credit Agreement (“Agreement”) is entered into as of October 30, 2009, by Rick
Weidinger (“LC Provider”), in favor of Silicon Valley Bank
(“Bank”).






Recitals






A.           Bank
and Braintech, Inc., a Nevada corporation, Braintech Industrial, Inc., a
Delaware corporation, and Braintech Government & Defense, Inc., a Delaware
corporation (individually and collectively, jointly and severally, “Borrower”),
are entering into (a) a certain Loan and Security Agreement (term loan) dated as
of even date herewith (“Term Loan Agreement”) and (b) a certain Loan and
Security Agreement (accounts receivable line of credit) dated as of even date
herewith (“Working Capital Loan Agreement”) (each as may be amended, restated,
or otherwise modified from time to time, collectively, the “Loan Agreements”)
pursuant to which Bank has agreed to make certain advances of money and to
extend certain financial accommodations to Borrower (collectively, the “Loans”),
subject to the terms and conditions set forth therein.  Capitalized
terms used but not otherwise defined herein shall have the meanings given them
in the Term Loan Agreement.






B.           In
consideration of the agreement of Bank to make the Loans to Borrower under the
Loan Agreements, LC Provider is willing to enter into this
Agreement.






C.           LC
Provider is a stockholder of Borrower and will obtain substantial direct and
indirect benefit from the Loans made by Bank to Borrower under the Loan
Agreements.






Now,
Therefore, to induce Bank to enter into the Loan Agreements, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, LC Provider hereby
represents, warrants, covenants and agrees as follows:




Section
1.  Agreement.




1.1  Agreement.  In
consideration of the foregoing, LC Provider has provided an irrevocable Letter
of Credit (as defined hereinafter).  Upon the occurrence and during
the continuance of an Event of Default under the Term Loan Agreement, Bank may
make a draw under the Letter of Credit (as defined hereinafter) and exercise any
and all of its rights with respect thereto.  Until this Agreement is
terminated pursuant to Section 16, LC Provider agrees that it shall execute such
other documents or agreements and take such action as Bank shall reasonably
request to effect the purposes of this Agreement.




1.2  Separate
Obligations.  LC Provider’s obligations are independent of Borrower’s
obligations and separate actions may be brought against LC Provider (whether
action is brought against Borrower or whether Borrower is joined in the
action).









Section
2.  Representations
and Warranties.






LC Provider hereby represents and
warrants that:




(a)  The
execution, delivery and performance by LC Provider of this Agreement (i) do not
contravene any law or any contractual restriction binding on or affecting LC
Provider; (ii) do not require any authorization or approval or other action by,
or any notice to or filing with, any governmental authority or any other Person
under any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which LC Provider is a party or by which LC Provider or any of its
property is bound, except such as have been obtained or made; and (iii) do not
result in the imposition or creation of any Lien upon any property of LC
Provider other than with respect to the underlying Letter of
Credit.




(b)  LC
Provider is legally competent to execute, deliver and perform this
Agreement.




(c)  This
Agreement is a valid and binding obligation of LC Provider.




(d)  LC
Provider’s obligations hereunder are not subject to any offset or defense
against Bank or Borrower of any kind.




(e)  LC
Provider covenants, warrants, and represents to Bank that all representations
and warranties contained in this Agreement shall be true at the time of LC
Provider’s execution of this Agreement, and shall continue to be true so long as
this Agreement remains in effect.




(f)  LC
Provider shall maintain an irrevocable letter of credit, issued by SunTrust
Bank, with an undrawn amount at all times equal to at least Seven Hundred Fifty
Thousand Dollars ($750,000.00), listing Bank as beneficiary, permitting Bank to
draw thereon, and otherwise in form and substance acceptable to Bank in its sole
discretion (the “Letter of Credit”).  Notwithstanding the foregoing,
Bank acknowledges and agrees that the undrawn amount of the Letter of Credit may
proportionately decline as the Term Advances are paid off, as long as the
undrawn amount of the Letter of Credit continues to represent the same
proportionate amount of the Term Advances as it did as of the date of this
Agreement (for purposes of this provision, the amount of Term Advances on the
date of this Agreement shall be deemed to be Two Million Two Hundred Thousand
Dollars ($2,200,000.00)).




Section
3.  General Waivers.  LC
Provider waives:




(a)  Any right
to require Bank to (i) proceed against Borrower or any other person;
(ii) proceed against or exhaust any security or (iii) pursue any other
remedy.  Bank may exercise or not exercise any right or remedy it has
against Borrower or any security it holds (including the right to foreclose by
judicial or nonjudicial sale) without affecting LC Provider’s liability
hereunder.










(b)  Any
defenses from disability or other defense of Borrower.




(c)  Any
setoff, defense or counterclaim against Bank.




(d)  Any
defense from the absence, impairment or loss of any right of subrogation against
Borrower.  Until Borrower’s obligations to Bank have been paid, LC
Provider has no right of subrogation against Borrower.




(e)  Any right
to enforce any remedy that Bank has against Borrower.




(f)  Any
rights to participate in any security held by Bank.




(g)  Any
demands for performance, notices of nonperformance or of new or additional
indebtedness incurred by Borrower to Bank.  LC Provider is responsible
for being and keeping itself informed of Borrower’s financial
condition.




(h)  The
benefit of any act or omission by Bank which directly or indirectly results in
or aids the discharge of Borrower from any of the Obligations by operation of
law or otherwise.




Section
4.  Real Property Security
Waiver.  LC Provider acknowledges that, to the extent LC
Provider has or may have rights of subrogation against Borrower for claims
arising out of this Agreement, those rights may be impaired or destroyed if Bank
elects to proceed against any real property security of Borrower by non-judicial
foreclosure.  That impairment or destruction could, under certain
judicial cases and based on equitable principles of estoppel, give rise to a
defense by LC Provider against its obligations under this
Agreement.  LC Provider waives that defense and any others arising
from Bank’s election to pursue non-judicial foreclosure.  LC Provider
waives the benefits, if any, of any statutory or common law rule that may permit
a subordinating creditor to assert any defenses of a surety, or that may give
the subordinating creditor the right to require a senior creditor to marshal
assets, and LC Provider agrees that it shall not assert any such defenses or
rights.




Section
5.  No Waiver;
Amendments.  No failure on the part of Bank to exercise, no
delay in exercising and no course of dealing with respect to, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right.  The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.  This
Agreement may not be amended or modified except by written agreement between LC
Provider and Bank, and no consent or waiver hereunder shall be valid unless in
writing and signed by Bank.




Section
6.  Compromise and
Settlement.  Subject to Section 16, no compromise, settlement,
release, renewal, extension, indulgence, change in, waiver or modification of
any of the Obligations or the release or discharge of Borrower from the
performance of any of the Obligations shall release or discharge LC Provider
from this Agreement or the performance of the obligations
hereunder.  For the avoidance of doubt, LC Provider shall have no
further obligation or liability to Bank under this Agreement or the Letter of
Credit once this Agreement is terminated pursuant to Section 16.









Section
7.  Notice.  Any notice
or other communication herein required or permitted to be given shall be in
writing and may be delivered in person or sent by facsimile transmission,
overnight courier, or by United States mail, registered or certified, return
receipt requested, postage prepaid and addressed as follows:










If to LC
Provider:                                    Rick
Weidinger
 Provider                                                  
Braintech, Inc.
 LC/Pledged Account Provider
Committee1750 Tysons Boulevard,
Suite 350McLean, VA
22102
 Facsimile No.:
703-637-9772
   
   With a
copy
to:                                       Thomas
E. McCabe
 EVP,
General Counsel &
Secretary Braintech,
Inc.
 1750
Tysons Boulevard, Suite 350
 McLean,
VA 22102
 Fax:           (703)
637-9772
   
  If to
Bank:                                                
Silicon Valley Bank
 8020 Towers Crescent
Drive, Suite 475
 Vienna, Virginia
22182
 Attn:           Ms.
Heather Parker
 Fax:           (703)
356-7643
 
 
  With a
copy
to:                                       Riemer
& Braunstein,
LLP Three
Center
Plaza Boston,
Massachusetts  02108 Attn:           David
A. Ephraim, Esquire Fax:           (617)
880-3456




or at
such other address as may be substituted by notice given as herein
provided.  Every notice, demand, request, consent, approval,
declaration or other communication hereunder shall be deemed to have been duly
given or served on the date on which personally delivered or sent by facsimile
transmission or three (3) Business Days after the same shall have been deposited
in the United States mail.  If sent by overnight courier service, the
date of delivery shall be deemed to be the next Business Day after deposited
with such service.




Section
8.  Entire
Agreement.  This Agreement constitutes and contains the entire
agreement of the parties and supersedes any and all prior and contemporaneous
agreements, negotiations, correspondence, understandings and communications
between LC Provider and Bank, whether written or oral, respecting the subject
matter hereof.










Section
9.  Severability.  If
any provision of this Agreement is held to be unenforceable under applicable law
for any reason, it shall be adjusted, if possible, rather than voided in order
to achieve the intent of LC Provider and Bank to the extent
possible.  In any event, all other provisions of this Agreement shall
be deemed valid and enforceable to the full extent possible under applicable
law.




Section
10.  Subordination of
Indebtedness.  Issues of subordination are addressed in the
Subordination Agreement dated as of even date herewith between LC Provider and
Bank, as acknowledged by Borrower.




Section
11.  Business Debt.  LC
Provider hereby represents and agrees that none of the Obligations and none of
LC Provider’s obligations hereunder are consumer debt, or were or shall be
incurred by Borrower or LC Provider, respectively, primarily for personal,
family or household purposes.  LC Provider further agrees and
represents that the Obligations are and shall be incurred by Borrower, and the
obligations of LC Provider hereunder are and shall be incurred by LC Provider,
for business and commercial purposes only.




Section
12.  Assignment; Governing Law.  This
Agreement shall be binding upon and inure to the benefit of LC Provider and Bank
and their respective successors and assigns, except that LC Provider shall not
have the right to assign its rights hereunder or any interest herein without the
prior written consent of Bank, which may be granted or withheld in Bank’s sole
discretion.  Any such purported assignment by LC Provider without
Bank’s written consent shall be void.  This Agreement shall be
governed by, and construed in accordance with, the laws of the Commonwealth of
Massachusetts without regard to principles thereof regarding conflict of
laws.




SECTION
13.  JURISDICTION.LC Provider
hereby irrevocably agrees that any legal action or proceeding with respect to
this Agreement or any of the agreements, documents or instruments delivered in
connection herewith may be brought in the state and federal courts located in
the Commonwealth of Massachusetts as Bank may elect (PROVIDED THAT LC PROVIDER
ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF THE COMMONWEALTH OFMASSACHUSETTS), and, by execution and
delivery hereof, LC Provider accepts and consents to, generally and
unconditionally, the jurisdiction of the aforesaid courts and agrees that such
jurisdiction shall be exclusive, unless waived by Bank in writing, with respect
to any action or proceeding brought by LC Provider against
Bank.  Nothing herein shall limit the right of Bank to bring
proceedings against LC Provider in the courts of any other
jurisdiction.  LC Provider hereby waives, to the full extent permitted
by law, any right to stay or to dismiss any action or proceeding brought before
said courts on the basis of forum non conveniens.




SECTION
14.  WAIVER OF JURY
TRIAL.  EACH OF BANK AND LC PROVIDER HEREBY WAIVES, TO THE FULL
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR
IN CONNECTION WITH THIS AGREEMENT.  EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND
ANY RELATED INSTRUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.









SECTION
15.  LETTER OF
CREDIT.LC
Provider hereby acknowledges and agrees that upon the occurrence and during the
continuance of an Event of Default, Bank may make a draw under the Letter of
Credit and exercise any and all of its rights and remedies with respect
thereto.




Section
16.  TERMINATION.This
Agreement shall terminate upon the earlier to occur of (a) both (i) payment in
full of all Term Advances and any other amounts due to Bank under the Term Loan
Agreement (but specifically excluding any amounts due in connection with the
Working Capital Loan Agreement or any other agreement) and (ii) termination of
the Term Loan Agreement, or (b) March 2, 2013.




SECTION
17.  NON-RECOURSE
AGREEMENT.  NOTWITHSTANDING THE FOREGOING, OR ANYTHING TO THE
CONTRARY CONTAINED IN THIS AGREEMENT, IT IS EXPRESSLY ACKNOWLEDGED AND AGREED
THAT THE LIABILITY OF THE LC PROVIDER HEREUNDER AT ALL TIMES SHALL BE LIMITED TO
THE UNDRAWN AMOUNT OF THE LETTER OF CREDIT (AS DEFINED IN SECTION
2).  IN FURTHERANCE AND NOT IN LIMITATION OF THE FOREGOING, IF AN
EVENT OF DEFAULT SHALL OCCUR AND BE CONTINUING UNDER THE TERM LOAN AGREEMENT,
AND/OR THERE IS A DEFAULT OR ANY BREACH OF ANY PROVISION HEREUNDER, BANK'S SOLE
RECOURSE AGAINST THE LC PROVIDER SHALL BE ITS ABILITY TO DRAW ON THE LETTER OF
CREDIT.






LC
PROVIDER













_____________________________






Rick
Weidinger