Document:

Exhibit 10.36

CHANGE
IN CONTROL

AGREEMENT

 

AGREEMENT made and
entered into as of this 31st day of July, 2007 by and between MSC
INDUSTRIAL DIRECT CO., INC., a New York corporation (the “Corporation”), and
Charles Bonomo having an address at                                                            ,
(the “Associate”).

 

	
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WHEREAS, the Associate has been employed by the Corporation in a senior
Associate capacity and desires to remain in the employ of the Corporation in
such capacity; and

WHEREAS, the Corporation desires to induce the Associate to so remain
in the employ of the Corporation.

NOW, THEREFORE, the parties hereto hereby agree as follows:

FIRST:  Inducement Payments.

A.            If, within two (2) years after a
Change in Control, the Associate’s “Circumstances of Employment” (as
hereinafter defined) shall have changed, the Associate may terminate his
employment by written notice to the Corporation given no later than ninety (90)
days following such change in the Associate’s Circumstances of Employment.  In the event of such termination by the
Associate of his employment or if, within two (2) years after a Change in
Control, the Corporation shall terminate the Associate’s employment other than
for “Cause” (as hereinafter defined), the Corporation shall pay to the
Associate, subject to the provisions of paragraph F of this Article FIRST and
compliance by Associate with Article THIRD hereof, in cash, the “Special
Severance Payment” (as hereinafter defined) as provided in Section E below.

 

 

B.            Change in Control shall be deemed to
occur upon:

(a)           a change in ownership of the
Corporation, which shall occur on the date that any one person, or more than
one person acting as a “Group” (as defined under Section 409A of the Code (as
defined hereunder)), other than Mitchell Jacobson or Marjorie Gershwind or a
member of the Jacobson or Gershwind families or any trust established
principally for members of the Jacobson or Gershwind families or an executor,
administrator or personal representative of an estate of a member of the
Jacobson or Gershwind families and/or their respective affiliates, acquires
ownership of stock of the Corporation that, together with stock held by such
person or Group, constitutes more than 50% of the total fair market value or
total voting power of the stock of the Corporation; provided, however, that, if
any one person or more than one person acting as a Group, is considered to own
more than 50% of the total fair market value or total voting power of the stock
of the Corporation, the acquisition of additional stock by the same person or
persons is not considered to cause a change in the ownership of the
Corporation;

(b)           a change in the effective control of
the Corporation, which shall occur on the date that (1) any one person, or more
than one person acting as a Group, other than Mitchell Jacobson or Marjorie
Gershwind or a member of the Jacobson or Gershwind families or any trust
established principally for members of the Jacobson or Gershwind families or an
executor, administrator or personal representative of an estate of a member of
the Jacobson or Gershwind families and/or their respective affiliates, acquires
(or has acquired during the 12-month 

 

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period
ending on the date of the most recent acquisition by such person or persons)
ownership of stock of the Corporation possessing 50% or more of the total
voting power of the stock of the Corporation; or (2) a majority of the members
of the Board is replaced during any 12-month period by directors whose
appointment or election is not endorsed by a majority of the members of the
Board prior to the date of the appointment or election; provided, however,
that, if one person, or more than one person acting as a Group, is considered
to effectively control the Corporation, the acquisition of additional control
of the Corporation by the same person or persons is not considered a change in
the effective control of the Corporation; or

(c)           a change in the ownership of a
substantial portion of the Corporation’s assets, which shall occur on the date
that any one person, or more than one person acting as a Group, acquires (or
has acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) assets from the Corporation that have a
total Gross Fair Market Value (as defined hereunder) equal to or more than 80%
of the total Gross Fair Market Value of all of the assets of the Corporation
immediately prior to such acquisition or acquisitions; provided, however, that,
a transfer of assets by the Corporation is not treated as a change in the
ownership of such assets if the assets are transferred to (1) a shareholder of
the Corporation (immediately before the asset transfer) in exchange for or with
respect to its stock; (2) an entity, 50% or more of the total value or voting
power of which is owned, directly or indirectly, by the Corporation; (3) a
person, or more than one person acting as a Group, that owns, 

 

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directly
or indirectly, 50% or more of the total value or voting power of all the
outstanding stock of the Corporation; or (4) an entity, at least 50% of the
total value or voting power of which is owned, directly or indirectly, by a
person described in Article FIRST B(c)(3).

For purposes of this Article FIRST B, “Gross Fair Market Value” means
the value of the assets of the Corporation, or the value of the assets being
disposed of, determined without regard to any liabilities associated with such
assets.  For purposes of this Article
FIRST B, stock ownership is determined under Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”).

C.            The Associate’s “Circumstances of
Employment” shall have changed if there shall have occurred any of the
following events: (a) a material reduction or change in the Associate’s
employment duties or reporting responsibilities; (b) a reduction in the annual
base salary made available by the Corporation to the Associate from the annual
base salary in effect immediately prior to a Change in Control; or (c) a
material diminution in the Associate’s status, working conditions or other
economic benefits from those in effect immediately prior to a Change in
Control.

D.            “Cause” shall mean (i) the commission
by the Associate of any act or omission that would constitute a felony or any
crime of moral turpitude under Federal law or the law of the state or foreign
law in which such action occurred, (ii) dishonesty, disloyalty, fraud,
embezzlement, theft, disclosure of trade secrets or confidential information or
other acts or omissions that result in a breach of fiduciary or other material
duty to the Corporation and/or a subsidiary; or (iii) continued reporting to
work or working under the influence of alcohol, an 

 

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illegal drug, an
intoxicant or a controlled substance which renders the Associate incapable of
performing his or her material duties to the satisfaction of the Corporation
and/or its subsidiaries.

E.             The “Special Severance Payment”
shall mean: (X) payment equal to the sum of (i) the product of one and one-half
(1.5) and the annual base salary in effect immediately prior to a change in the
Associate’s Circumstances of Employment or the termination other than for Cause
of the Associate’s employment by the Corporation, as the case may be, and (ii)
the product of one and one half (1.5) and the targeted bonus for the Associate
in effect immediately prior to a change in Associate Circumstances of
Employment or termination other than for Cause, as the case may be, such
payment to be made in equal installments in accordance with the Corporation’s
regular payroll policies (but not less frequently than biweekly) for a period
of eighteen months, with the first such installment being made on the fifth (5th)
business day following the six-month anniversary of Associate’s termination of
employment; (Y) payment of a pro rata portion of the Associate’s targeted bonus
in effect immediately prior to the date such change in Associate’s
Circumstances of Employment or termination of employment other than for Cause
occurs (the “In Year Bonus”), calculated as the product of (a) the In
Year Bonus multiplied by (b) a fraction the numerator of which is the
number of whole months elapsed in the fiscal year up to the date such change in
Associate’s Circumstances of Employment or termination occurs, and the
denominator of which is twelve (12), such payment to be made on the fifth (5th)
business day following the six (6) months’ anniversary of termination of
employment; and (Z) for the two (2) year period or the remaining term of the
automobile lease at issue, whichever is less following Associate’s date of
termination of employment (other than termination for Cause), the Corporation shall,
at Associate’s option, (a) pay Associate a monthly automobile allowance in
amounts equal to those in effect immediately prior to such termination, if
applicable, or (b) continue to make the 

 

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monthly lease payments
under the automobile lease in effect for the benefit of Associate immediately
prior to such termination, provided that if any payment (or portion thereof)
otherwise due under this clause (Z) during the first six (6) months following
the Associate’s termination of employment is not exempt from the application of
section 409A of the Code under applicable Treasury regulations, the amount
subject to section 409A that would otherwise be paid during such first six
months shall be held (without adjustment for earnings and losses) and paid on
the fifth (5th) business day following the six-month anniversary of
such termination date.

F.             As a condition to receiving the
Special Severance Payment, Associate shall execute the General Release in the
form attached as Exhibit A hereto and the Associate Confidentiality,
Non-Solicitation and Non-Competition Agreement referred to in Article THIRD
hereof and attached as Exhibit B hereto and shall return such executed General
Release and Agreement no later than 60 days following the Associate’s
termination of employment, and shall at all times be in compliance therewith.

G.            For purposes of this Agreement, “affiliate”
shall have the meaning ascribed thereto under the Securities Act of 1933.

H.            For purposes of this Agreement, “termination
of employment” means cessation of full or part time employment with the Company
and any of its subsidiaries.

SECOND:  Tax Indemnification.

A.            In the event that, as a result of
any of the payments or other consideration provided for or contemplated by
Article FIRST of this Agreement or otherwise, a tax (an “Excise Tax”) shall be
imposed upon the Associate or threatened to be imposed upon the Associate by 

 

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virtue of the application
of Section 4999(a) of the Code, as now in effect or as the same may at any time
or from time to time be amended, or the application of any similar provisions
of state or local tax law, the Corporation shall indemnify and hold the
Associate harmless from and against all such taxes (including additions to tax,
penalties and interest and additional Excise Taxes, whether applicable to
payments pursuant to the provisions of this Agreement or otherwise) incurred
by, or imposed upon, the Associate and all expenses arising therefrom.

B.            Each indemnity payment to be made by
the Corporation pursuant to Part A of this Article SECOND shall be increased by
the amount of all Federal, state and local tax liabilities (including additions
to tax, payroll taxes, penalties and interest and Excise Tax) incurred by, or
imposed upon, the Associate so that the effect of receiving all such indemnity
payments will be that the Associate shall be held harmless on an after-tax
basis from the amount of all Excise Taxes imposed upon payments made to the
Associate by the Corporation pursuant to this Agreement, it being the intent of
the parties that the Associate shall not incur any out-of-pocket costs or
expenses of any kind or nature on account of the Excise Tax and the receipt of
the indemnity payments to be made by the Corporation pursuant hereto.

C.            Each indemnity payment to be made to
the Associate pursuant to this Article SECOND shall be payable within fifteen
(15) business days of delivery of a written request (a “Request”) for such
payment to the Corporation (which request may be made prior to the time the
Associate is required to file a tax return showing a liability for an Excise
Tax or other tax) but, in any event, such Request shall be made at least 15
days prior to (i) the end of the Associate’s taxable year following the
Associate’s taxable year in which an Excise Tax is remitted to a taxing
authority, or (ii) in the event that no Excise Tax is remitted, the end of the
Associate’s taxable year following the Associate’s taxable year in which an
audit is completed or there is a 

 

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final and non-appealable
settlement or other resolution of the litigation.  A Request shall set forth the amount of the
indemnity payment due to the Associate and the manner in which such amount was
calculated, and the Associate shall thereafter submit such other evidence of
the indemnity to which the Associate is entitled as the Corporation shall
reasonably request.  All such information
shall, if the Corporation shall request, be set forth in a statement signed by
a nationally recognized accounting firm or a partner thereof and the
Corporation shall pay all fees and expenses of such accounting firm incurred in
the preparation thereof.

D.            The Associate agrees to notify the
Corporation (a) within fifteen (15) business days of being informed by a
representative of the Internal Revenue Service (the “Service”) or any state or
local taxing authority that the Service or such authority intends to assert
that an Excise Tax is or may be payable, (b) within fifteen (15) business days
of the Associate’s receipt of a revenue agent’s report (or similar document)
notifying the Associate that an Excise Tax may be imposed and (c) within
fifteen (15) business days of the Associate’s receipt of a Notice of Deficiency
under Section 6212 of the Code or similar provision under state or local law
which is based in whole or in part upon an Excise Tax and/or a payment made to
the Associate pursuant to this Article SECOND.

E.             After receiving any of the
aforementioned notices, and subject to the Associate’s right to control any and
all administrative and judicial proceedings with respect to, or arising out of,
the examination or the Associate’s tax returns, except as such proceedings
relate to an Excise Tax, the Corporation shall have the right (a) to examine
all records, files and other information and documentation in the Associate’s
possession or under the Associate’s control, (b) to be present and to
participate, to the extent desired, in all administrative and judicial
proceedings with respect to an Excise Tax, including the right to appear and
act for the Associate 

 

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at such proceedings in
resisting any contentions made by the Service or a state or local taxing
authority with respect to an Excise Tax and to file any and all written
responses in connection therewith, (c) to forego any and all administrative
appeals, proceedings, hearings and conferences with the Service or a state or
local taxing authority with respect to an Excise Tax on the Associate’s behalf,
and (d) to pay any tax increase on the Associate’s behalf and to control all
administrative and judicial proceedings with respect to a claim for refund from
the Service or state or local taxing authority with respect to such tax
increase, provided that all such payments shall be paid (i) by the end of the
Associate’s taxable year following the Associate’s taxable year in which such
tax increase is remitted to a taxing authority, or (ii) in the event that no
such tax increase is remitted, by the end of the Associate’s taxable year
following the Associate’s taxable year in which an audit is completed or there
is a final and non-appealable settlement or other resolution of the litigation.

F.             The Corporation shall be solely
responsible for all reasonable legal and accounting or other expenses (whether
of the Associate’s representative or the representative of the Corporation)
incurred in connection with any such administrative or judicial proceedings insofar
as they relate to an Excise Tax or other tax increases resulting therefrom and
the Associate agrees to execute and file, or cause to be executed and filed,
such instruments and documents, including, without limitation, waivers,
consents and Powers of Attorneys, as the Corporation shall reasonably deem
necessary or desirable in order to enable it to exercise the rights granted to
it pursuant to part E of this Article SECOND, provided that all such payments
shall be paid (i) by the end of the Associate’s taxable year following the
Associate’s taxable year in which such tax increase is remitted to a taxing
authority, or (ii) in the event that no such tax increase is remitted, by the
end of the Associate’s taxable year following the Associate’s taxable 

 

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year in which an audit is
completed or there is a final and non-appealable settlement or other resolution
of the litigation.

G.            The liability of the Corporation
shall not be affected by the Associate’s failure to give any notice provided
for in this Article SECOND unless such failure materially prejudices the
Corporation’s ability to effectively resist any contentions made by the Service
or a state or local taxing authority.  The
Associate may not compromise or settle a claim which he is indemnified against
hereunder without the consent of the Corporation, unless the Associate can
establish by a preponderance of the evidence that the decision of the
Corporation was not made in the good faith belief that a materially more
favorable result could be obtained by continuing to defend against the claim
(or prosecute a claim for refund).

THIRD:  Associate Confidentiality,
Non-Solicitation and Non-Competition Agreement.  In consideration of the Associate’s employment
and continued employment, the payment of Associate’s compensation by the
Corporation, the Corporation entrusting Associate with Confidential Information
(as defined below), and the benefits provided hereunder, including without
limitation the Special Severance Payment, the parties have entered into the
Associate Confidentiality, Non-Solicitation and Non-Competition Agreement
attached as Exhibit B hereto, which is hereby incorporated by reference herein
and make a part hereof as if set forth in full herein.

FOURTH:  Continued Medical Coverage.  If Associate’s employment is terminated in
either of the circumstances described in Article FIRST, Part A hereof, in the
event Associate timely elects under the provisions of COBRA to continue his
group health plan coverage that was in effect prior to the date of the
termination of Associate’s employment with the Corporation, Associate will be
entitled to continuation of such coverage, at the Corporation’s 

 

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expense, for a period of
eighteen (18) months from the date of termination, provided that Associate
continues to be eligible for COBRA coverage.

FIFTH:  Outplacement.  If Associate’s employment is terminated in
either of the circumstances described in Article FIRST, Part A hereof,
Associate shall be eligible for outplacement services, at the Corporation’s
expense and with a service selected by the Corporation in its reasonable
discretion, for up to six (6) months from the date of the termination of
Associate’s employment with the Corporation.

SIXTH:  At Will Employment.  Nothing in this Agreement shall confer upon
the Associate the right to remain in the employ of the Corporation, it being
understood and agreed that (a) the Associate is an employee at will and serves
at the pleasure of the Corporation at such compensation as the Corporation
shall determine from time to time and (b) the Corporation shall have the right
to terminate the Associate’s employment at any time, with or without Cause.  In the event of any such termination prior to
the occurrence of a Change in Control, no amount shall be payable by the
Corporation to the Associate pursuant to Article FIRST hereof.

SEVENTH:  Costs of Enforcement.  In the event that the Associate incurs any
costs or expenses, including attorney’s fees, in the enforcement of his rights
under this Agreement then, unless the Corporation is wholly successful in
defending against the enforcement of such rights, the Corporation shall pay to
the Associate all such costs and expenses sixty (60) days following a final
decision.

EIGHTH:  Term.  The initial term of this Agreement shall be
for three (3) years from the date hereof, and this Agreement shall
automatically renew for successive three (3) year terms unless terminated by
the Corporation, in its sole discretion, by delivering to Associate 

 

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written notice thereof
provided to Associate at least 18 months prior to the end of the initial term
or such successive terms, as applicable.

NINTH:  Notices.  All notices hereunder shall be in writing and
shall be sent by registered or certified mail, return receipt requested, if
intended for the Corporation shall be addressed to it, attention of its
President, 75 Maxess Road, Melville, New York 11747 or at such other address of
which the Corporation shall have given notice to the Associate in the manner
herein provided; and if intended for the Associate, shall be mailed to him at
the address of the Associate first set forth above or at such other address of
which the Associate shall have given notice to the Corporation in the manner
herein provided.

TENTH:  Entire Agreement. This Agreement
constitutes the entire understanding between the parties with respect to the
matters referred to herein, and no waiver of or modification to the terms
hereof shall be valid unless in writing signed by the party to be charged and
only to the extent therein set forth.  All
prior and contemporaneous agreements and understandings with respect to the
subject matter of this Agreement are hereby terminated and superseded by this
Agreement.

ELEVENTH:  Withholding.  The Corporation shall be entitled to withhold
from amounts payable to the Associate hereunder such amounts as may be required
by applicable law.

TWELFTH:  Binding Nature.  This Agreement shall be binding upon and inure
to the benefit of the parties hereto, their respective heirs, administrators,
executors, personal representatives, successors and assigns.

THIRTEENTH:  Governing Law.  This Agreement shall be governed by and
construed and enforced in accordance with the law of the State of New York.  Notwithstanding 

 

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the foregoing, it is the
intent of the parties hereto that the Agreement, as amended herewith, conform
in form and operation with the requirements of section 409A of the Code to the
extent subject to section 409A, and that the Agreement as amended herewith be
interpreted to the extent possible to so conform.

[signature page to
follow]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

	
   

  	
  MSC INDUSTRIAL DIRECT
  CO., INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DAVID SANDLER

  
	
   

  	
   

  	
  Name:

  	
  David Sandler

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ CHARLES BONOMO

  
	
   

  	
   

  	
  Charles Bonomo

  

 

 

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Exhibit A

RELEASE 

[TEMPLATE]

                WHEREAS, ________________ (the “Associate”) was a
party to an Agreement dated as of __________, 20__ (the “Agreement”) by and
between the Associate and MSC INDUSTRIAL DIRECT CO., INC., a New York corporation (the “Corporation”),
pursuant to which the Associate served as the ____________________ of the
Corporation, and the employment of the Associate with the Corporation has been
terminated; and

                WHEREAS, it is a condition to the Corporation’s
obligations to make the severance payments and benefits available to the
Associate pursuant to the Agreement that the Associate execute and deliver this
Release to the Corporation.

                NOW, THEREFORE, in consideration of the receipt by
the Associate of the benefits under the Agreement, which constitute a material
inducement to enter into this Release, the Associate intending to be legally
bound hereby agrees as follows:

                Subject to the next succeeding paragraph, effective
upon the expiration of the 7-day revocation period following execution hereof
as provided below, the Associate irrevocably and unconditionally releases the
Corporation and its owners, stockholders, predecessors, successors, assigns,
affiliates, control persons, agents, directors, officers, employees,
representatives, divisions and subdivisions (collectively, the “Related Persons”)
from any and all causes of action, charges, complaints, liabilities,
obligations, promises, agreements, controversies and claims (a) arising out of
the Associate’s employment with the Corporation and the conclusion thereof,
including, without limitation, any federal, state, local or other statutes,
orders, laws, 

 

ordinances, regulations
or the like that relate to the employment relationship and/or specifically that
prohibit discrimination based upon age, race, religion, sex, national origin,
disability, sexual orientation or any other unlawful bases, including, without
limitation, as amended, Title VII of the Civil Rights Act of 1964, the Civil
Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Civil
Rights Acts of 1866 and 1871, the Americans With Disabilities Act of 1990, the
New York City and State Human Rights Laws, and any applicable rules and
regulations promulgated pursuant to or concerning any of the foregoing statutes;
(b) for tort, tortious or harassing conduct, infliction of emotional distress,
interference with contract, fraud, libel or slander; and (c) for breach of
contract or for damages, including, without limitation, punitive or
compensatory damages or for attorneys’ fees, expenses, costs, salary, severance
pay, vacation, injunctive or equitable relief, whether, known or unknown,
suspected or unsuspected, foreseen or unforeseen, matured or unmatured, which,
from the beginning of the world up to and including the date hereof, exists,
have existed, or may arise, which the Associate, or any of his heirs,
executors, administrators, successors and assigns ever had, now has or at any
time hereafter may have, own or hold against the Corporation and/or any Related
Person.

                Notwithstanding anything contained herein to the
contrary, the Associate is not releasing the Corporation from any of the
Corporation’s obligations (a) under the Agreement, (b) to provide the Associate
with insurance coverage defense and/or indemnification as an officer or
director of the Corporation, if applicable to Associate, to the extent
generally made available at the date of termination to the Corporation’s
officers and directors in respect of facts and circumstances existing or
arising on or prior to the date hereof, or (c) in respect of the Associate’s
rights under the Corporation’s Associate Stock Purchase Plan, 1995 Stock Option

 

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Plan, 1998 Stock Option
Plan, 2001 Stock Option Plan, 1995 Restricted Stock Plan or the 2005 Omnibus
Equity Plan, as applicable.

                The Corporation has advised the Associate in writing
to consult with an attorney of his choosing prior to the signing of this
Release and the Associate hereby represents to the Corporation that he has in
fact consulted with such an attorney prior to the execution of this
Release.  The Associate acknowledges that
he has had at least twenty-one days to consider the waiver of his rights under
the ADEA. Upon execution of this Release, the Associate shall have seven
additional days from such date of execution to revoke his consent to the waiver
of his rights under the ADEA.  If no such
revocation occurs, the Associate’s waiver of rights under the ADEA shall become
effective seven days from the date the Associate executes this Release.

                IN WITNESS WHEREOF, the undersigned has executed this
Release on the ___ day of ______________, 20__.

 

	
   

  	
   

  	
                                     

  

 

 

 

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Exhibit B

 

 

ASSOCIATE CONFIDENTIALITY, NON-SOLICITATION

AND NON-COMPETITION AGREEMENT

ASSOCIATE
CONFIDENTIALITY,  NON-SOLICITATION  AND  NON-
COMPETITION  AGREEMENT  dated
as of July 31, 2007,  between
MSC  Industrial Direct  Co.,  Inc.,  on  behalf  of  itself  and  its  subsidiaries
(collectively, “Employer” or “Corporation”),
and Charles Bonomo (“Associate”).

In consideration of Associate’s employment and
continued employment, the payment of Associate’s compensation by Employer, and
Employer entrusting Associate with Confidential Information (as defined below),
and the benefits provided in the Agreement between Employer and Associate dated
as of even date herewith (the “Agreement”), it being acknowledged and agreed by
Associate that his receipt of such benefits is expressly conditioned on his
continued compliance with the terms hereof,  the parties
have entered into this Associate Confidentiality, Non-Solicitation and
Non-Competition Agreement.

1.                           Confidentiality.

A.           During  the  term  of  Associate’s  employment  with  Employer,  Associate
will  not use  or  disclose  to  any  individual
or entity  any  Confidential  Information  (as
defined  below)  except  (i)  in  the  performance  of  Associate’s  duties  for  Employer,
(ii) as  authorized  in  writing  by  Employer,
or  (iii)  as  required  by  law  or  legal
process,  provided  that,  prior  written
notice  of  such  required  disclosure  is  provided
to Employer and, provided further
that all  reasonable  efforts  to  preserve  the confidentiality
of such information shall be made.

B.             As  used  in  this  Agreement,  “Confidential Information”  shall  mean  information
that  (i)  is  used  or  potentially  useful  in  Employer’s  business,
(ii)  Employer  treats as  proprietary,  private  or  confidential, and  (iii)  is  not  generally  known  to  the public.  “Confidential  Information”
includes,  without  limitation,  information
relating  to  Employer’s  products
or services,  processing,  manufacturing,
marketing,  selling,  customer  lists,  call  lists,  customer  data,  memoranda,  notes, records,  technical  data,  sketches,
plans,  drawings,  chemical  formulae,
trade secrets,  composition
of  products,  research
and  development  data,  sources  of
supply  and  material,  operating
and  cost  data,  financial  information,  personal information  and  information  contained
in  manuals  or  memoranda.  “Confidential
Information”  also  includes  proprietary  and/or  confidential  information  of Employer’s  customers,  suppliers  and  trading  partners
who  may  share  such information  with  Employer  pursuant
to  a  confidentiality  agreement  or  otherwise.
The  Associate  agrees  to  treat  all  such  customer,  supplier  or  trading  partner
information  as  “Confidential  Information”  hereunder.  The  foregoing  restrictions on  the  use  or  disclosure  of  confidential  information  shall

 

 

continue  after
Associate’s  employment  terminates  for  any  reason  for  so  long  as  the  information is
not  generally  known  to  the  public.

2.                           Non-competition.

A.           Associate  recognizes  that  the  Corporation’s  relationship  and  goodwill
with  its customers have been established at substantial
cost and effort by the Corporation.

B.             Therefore,  associate  shall  not  enter  into  competition  (as  defined  below)  with Employer
during the term of Associate’s employment
with Employer, and

C.             for  a  period  of two (2)
years  following  cessation
of  Associate’s  employment  with
the  Corporation  for  any  reason,
Associate  will  not,  in  any  capacity,  accept employment  with  the  employer  with  whom  Associate
was  employed  immediately preceding  the  commencement  of  Associate’s  employment  with  the  Corporation,  nor will  Associate,  in  any  capacity,  accept  employment  with  the  following  business entities,  including  any  parent  or  subsidiary  entities
or  other  affiliated
organizations:  W.W.  Grainger,
Inc.;  J&L  Industrial  Supply;
Fastenal  Corporation; and The
Home Depot, Inc.

3.                           Non-Solicitation.

A.           Associate  recognizes  that  the  Corporation’s  relationship  and  goodwill
with  its customers have been established at substantial
cost and effort by the Corporation.

B.             Therefore,  while  employed
by  the  Corporation,  and  for  an  additional  period  of  two (2)  years  after  the  termination  of  employment,  Associate  shall  not  in  any  capacity employ  or  solicit  for  employment,  or  recommend  that  another  person
employ  or solicit  for  employment,  any  person  who  is  then,  or  was  at  any  time  during  the  six (6)  months  immediately  preceding  the  termination  of  Associate’s  employment,  an
Associate,  sales  representative  or  agent of  Employer  or  any  present
or  future subsidiary or affiliate of
Employer.

C.             Further,
Associate  agrees  that  while  employed
by  the  Corporation,  and  for  a  period of  two  (2)  years  after  his/her  employment with
the  Corporation  ends,  s/he  will  not,  on behalf
of  himself/herself,  or  any  other  person,
firm  or  corporation,  solicit
any  of the  Corporation’s  or  its  Affiliate’s  customers  with  whom  s/he  has  had  contact  while working  for  the  Corporation;  nor  will  Associate  in  any  way,  directly  or  indirectly,
for  himself/herself,  or  any  other  person,  firm,  corporation  or  entity,  divert,  or  take away
any  customers  of  the  Corporation  or  its  Affiliates  with  whom  Associate  has had
contact.  For  purposes
of  this  paragraph, the term “contact”
shall mean engaging  in  any  communication,  whether
written  or  oral,  with  the  customer  or  a
representative  of  the  customer,  or  obtaining
any  information  with  respect
to  such customer or customer representative.

 

 

2

 

4.                           Employment
At-Will.  Associate acknowledges that
his or her employment by Employer is not for any specified period of time and
that it can be terminated by either Associate or Employer at any time for any
lawful reason. This is an “employment at will.”

5.                           Termination
of  Employment.  In  the  event  of  termination  of  employment  by  either  party, this  Agreement  will  remain  in  effect. Upon  termination,  Associate  will  immediately deliver  to  Employer
all  property  belonging to  Employer  then  in  the  Associate’s
possession  or  control,  including  all  Documents  (as  defined  herein)  embodying
Confidential  Information.
As  used  herein,  “Documents”
shall mean originals or copies of
files,  memoranda,  correspondence,  notes,  manuals,
photographs,  slides,  overheads,  audio or video tapes, cassettes, or disks, and records maintained
on computer or other electronic media.

6.                           Notice  to  Future  Employers.  For  the  period  of  two (2) years
immediately following the end
of Associate’s  employment  with  the  Corporation,  Associate will inform each new employer, in writing,  prior  to  accepting  employment,  of  the  existence  and  details  of  this  Agreement
and  will  provide  that  employer  with  a  copy  of  this  Agreement.  Associate
will  send  a copy  of  each  such  writing
to  the Corporation  at  the  time  the  Associate  informs  each  new  employer
of the Agreement.

7.                           Remedies.  Associate  acknowledges  that  this  Agreement,  its  terms  and  his/her compliance  is  necessary  to  protect  the  Corporation’s  confidential  and  proprietary
information,  its  business  and  its  goodwill;
and that  a  breach  of  any  of  Associate’s promises  contained  in  this  Agreement  will  irreparably  and  continually  damage  the Corporation  to  an  extent
that  money  damages may  not  be  adequate.
For  these  reasons, Associate  agrees  that  in  the  event
of  a  breach  or  threatened  breach
by  the  Associate  of this  Agreement,  the  Corporation  shall  be  entitled  to  a  temporary  restraining  order  and preliminary  injunction  restraining  Associate  from  such  breach.  Nothing  contained  in  this
provision  shall  be  construed  as  prohibiting  the  Corporation  from  pursuing
any  other remedies
available  for  such  breach  or  threatened  breach  or  any  other  breach  of  this
Agreement.  If  Associate  violates
this  Agreement,  then  the  duration
of  the  restrictions contained  in  paragraphs  2  and  3  shall  be extended  for  an  amount  of  time  equal  to  the
period of time during which
Associate was in violation of the Agreement.

8.                           Entire  Agreement.
 This  Agreement  embodies  the  entire  agreement  and  understanding
between  the  Parties  with  regard  to  the  subject  matter  of  this  Agreement,  is  binding  upon and
inures  to  the  benefit  of  the  Parties,  and  it  supersedes  any  and  all  prior  agreements  or understandings between the Corporation
and Associate.

9.                           Modification.  This
Agreement  may  be  modified
or  amended  only  by  an  instrument  in writing executed by the Parties
hereto, or in accordance with paragraph 15 herein.

10.                     Governing  Law  and  Venue. 
This  Agreement  shall  be  construed  and  enforced  in accordance  with  and  governed
by  the  laws  of  the  State  of  New  York,  and  may  be
enforced in any court of competent
jurisdiction.

11.                     Waiver. 
If  in  one  or  more  instances  either  party  fails
to insist that the other party perform any  of  this  Agreement’s  terms,  this  failure  shall  not  be  construed  as  a  waiver  by  the  party

 

 

3

 

of  any  past,  present,
or  future  right  granted  under  this  Agreement;  the  obligations  of  both
Parties under this Agreement shall
continue in full force and effect.

12.                     Assignment. This  Agreement  may  not  be  assigned  by  Associate.  The  Corporation  shall have  the  right  to  assign  its  rights  and  obligations  hereunder  without
the  consent  of  the
Associate.

13.                     Arbitration.  Except
as  otherwise  provided
in  this  Agreement,  any  controversy  or  claim
arising  out  of  Associate’s  employment  with  Employer
or  the  termination  thereof, including  without  limitation
any  claim  related  to  this  Agreement  or  the  breach  thereof shall  be  resolved  by  binding  arbitration  in  accordance  with  the  rules  then  in  effect  of  the
American  Arbitration  Association,  at  the  office  of  the  American
Arbitration  Association
nearest  to  where  the  Associate
performed the  Associate’s  principal
duties  for  the Employer.
Nothing  in  this  paragraph  shall  prevent  the  parties  from  seeking  injunctive relief  from  the  courts  pending
arbitration.  Each  party
shall  be  permitted  to  engage  in arbitral  discovery  in  the  form  of  document  production,  information  requests, interrogatories,  depositions  and  subpoenas.  The  parties  shall  share  equally
the  fee  of  the arbitration
panel.

To  the  extent  that  an  arbitrator  or  court  shall  find  that  any  dispute  between
the  parties, including  any  claim  made  under  or  relating  to  this  Agreement,  is  not  subject  to arbitration,  such  claim  shall  be  decided  by the
courts  of  the  State  and  the  County,
in which  this  agreement  was  executed,  in  a  proceeding  held  before  a  Judge  of  the  Trial Court  of  the  State  and  County  in  which  this  agreement  was  executed
or  in  the  United States  District
Court  in  and  for  the  District  Court  of  covering  the  County  in  which  this agreement  was  executed.
Any  trial  of  such  a  claim  shall  be  heard  by  the  Judge  of  such Court,  sitting  without  a  jury  at  a  bench  trial,  to  ensure
more  rapid  adjudication  of  that claim and application of existing law.

14.                     Attorneys’  Fees.
 If  any  party  to  this  Agreement  breaches  any  of  this  Agreement’s  terms,
then  that  party  shall  pay  to  the  non-defaulting  party  all  of  the  non-defaulting  party’s  costs
and  expenses,  including  reasonable  attorneys’ fees,  incurred  by  that  party  in  enforcing
this Agreement.

15.                     Severability. 
If  any  one  or  more  of  the  provisions  contained  in  this  Agreement  is  held
illegal  or  unenforceable  by  an  arbitrator  or  court
and  cannot  be  modified
to  be enforceable  (which  the  parties
expressly  authorize  such  court,  arbitrator,  or  other  forum to do), no other provisions shall be
affected by this holding.

16.                     Acknowledgment. 
I have read this agreement,
have had an opportunity to ask Employer’s representatives  questions  about  it,  and  understand  that  my  signing  this  agreement  is  a condition of employment.

17.                     Section  Headings.  Section  headings
are  used  herein  for  convenience  of  reference  only and shall not affect the meaning of any provision of this Agreement.

 

 

4

 

THUS, the parties knowingly and voluntarily execute this Agreement as of the dates set forth below.

 

 

	
  MSC INDUSTRIAL DIRECT CO., INC.:

  	
  ASSOCIATE:

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Eileen McGuire

  	
   

  	
  By:

  	
  /s/ Charles Bonomo

  
	
   

  	
   

  
	
  Title:

  	
  Sr. V.P. Human
  Resources

  	
   

  	
  Printed Name:

  	
  Charles Bonomo

  
	
   

  	
   

  
	
  Date:

  	
  7/31/07

  	
   

  	
  Date:

  	
  7/31/07Filed by Automated Filing Services Inc. (604) 609-0244 - Braintech, Inc. - Exhibit 10.1

THIS EMPLOYMENT CONTRACT (the “Agreement”) is entered
into on October 22, 2007 

BETWEEN:

Braintech Canada, Inc. a Canadian
Company, incorporated in the Province of 
British Columbia and having a
business office at Suite 102 – 930 West 1st Street, North Vancouver,
BC 
V7P-3N4 

AND 

Braintech, Inc. an United States
Entity, incorporated in the State of Nevada and 
having a business
office at Suite 102 – 930 West 1st Street, North Vancouver, BC

V7P-3N4 

(herein together referred to as the “Company”) 

AND 

Owen Jones 
309 9th
Avenue 
New Westminster, BC 
V3L 2A2 

(herein referred to as the “Executive”) 

WHEREAS: 

	A. 	
      The Company is engaged in the business of developing and
      selling robot vision software globally; and

	 	 
	B. 	
      In order to achieve its corporate and business
      objectives, the Company desires to continue to employ The Executive as a
      senior executive on the terms contained in this
  Agreement.

NOW, THEREFORE, the parties hereto hereby agree as
follows:

	1. 	
      Definitions:

	 	 	 
		(a) 	
      “Good Reason” shall be specifically limited to the
      occurrence of any of the following without the Executive’s written
      consent:

(i) A reduction of the Executive’s
Base Salary, and/or Founder’s Contribution Bonus; 

(ii) A significant change in the
Executive’s Duties as defined in Section 4; or 

(iii) The Company or any of its
subsidiaries relocating the Executive to any place other than the location at
which he reported for work on a regular basis or a place within the Greater
Vancouver, B.C. area, except for required travel on the Company’s or a
subsidiary’s business to an extent substantially consistent with the Executive’s
obligations; or 

(iv) Any breach by the Company of any
of its obligations under this Agreement 

	 	(b) 	
      “Just Cause” shall have the following
    meaning:

(i) A repeated and demonstrated
failure on the part of the Executive to perform the material duties of the
Executive’s position in a competent manner and where the Executive fails to
substantially remedy the failure within a reasonable period of time after
receiving written notice of such failure from the Company; 

(ii) The Executive is convicted of (1)
fraud, felonious conduct or dishonesty or (2) misconduct or negligence in the
performance of his duties hereunder, which determination shall be in the sole
and absolute judgment of the Company; 

(iii) The Executive or any member of
his family makes any personal profit arising out of or in connection with a
transaction to which the Company is a party or with which it is associated
without making disclosure to and obtaining the prior consent of the Company;

(iv) The Executive fails to honour his
fiduciary duties to the Company, including the duty to act in the best interest
of the Company; 

(v) The Executive disobeys reasonable
instructions given in the course of employment by the CEO of the Company that
are not inconsistent with the Executive’s management position and not remedied
by the Executive within a reasonable period of time after receiving written
notice of such disobedience; or 

(vi) The Executive’s breach of any
material provision of this Agreement where such breach is not cured by the
Executive within a twenty-one (21) day period after notice by the Company 

	2. 	Term. 

2.1 This Agreement shall be for a
period of four (4) years, beginning with the signing of this Agreement, unless
terminated on the date on which the first of the following occurs: 

	 	(a) 	
      Termination of the Executive’s employment by the Company
      for Just Cause;

	 	 	 
	 	(b) 	
      Termination of the Executive’s employment by the Company
      without Just Cause;

	 	 	 
	 	(c) 	
      Resignation of employment by the Executive for Good
      Reason;

	 	 	 
	 	(d) 	
      Resignation of employment by the Executive for personal
      reasons; or

	 	(e) 	
      Death or total disability of the
  Executive.

After the expiry of the initial Term,
this Agreement may be extended, upon the mutual consent of the parties, on an
annual basis, provided the Executive gives the Company, and the Company gives
the Executive no less than 180 days written notice of their intentions to
extend. 

Such notice requirement shall apply to
each and every annual extension in which the Company and the Executive wishes to
exercise their options to extend. 

In the event the Company chooses not to
extend the Agreement, the Executive is entitled to termination benefits as
specified in Section 3.1(a. i), and 3.1(b,c,d) . 

In the event the Executive chooses not
to extend the Agreement, the Executive is entitled to resignation benefits as
specified in Section 3.3. 

	3. 	Termination. 

3.1 In the case of termination by the
Company without Just Cause or resignation by the Executive for Good Reason, the
Company will provide the Executive the following severance: 

		(a) 	
      The Company shall pay to the Executive after termination,
      the aggregate of the following amounts (less any deductions required by
      law):(i) if not already paid within ten days, the Executive’s Salary plus
      Performance Bonuses owing at the time of termination;(ii) as partial
      compensation for the Executive’s loss of employment, an amount equal to
      the greater of twenty-four (24) months Base Salary or the remainder of the
      contract in place within ten days;

	 	 	 	 
	 	(b) 	
      The Company shall pay to the Executive all outstanding
      and accrued regular vacation pay to the date of termination;

	 	 	 	 
	 	(c) 	
      The Company shall provide a letter of recommendation
      satisfactory to the Executive;

	 	 	 	 
	 	(d) 	
      The Executive shall not be prohibited in any manner
      whatsoever from obtaining employment with or otherwise forming or
      participating in a business competitive to the business of the Company or
      otherwise to the extent allowed by this agreement, by the Company without
      Just Cause or resignation by the Executive of his employment for Good
      Reason;

	 	 	 	 
	 	(e) 	
      The Company shall reimburse, to the full extent provided
      by law, all legal fees and expenses that the Executive, the Executive’s
      legal representatives or the Executive’s family may reasonably incur or
      face arising out of or in connection with this Agreement (but this
      Agreement only), including any litigation concerning the validity or
      enforceability of, or liability under, any provision of this Agreement or
      any action by the Executive, the Executive’s legal representatives or the
      Executive’s family to enforce his or their rights under the Agreement (but
      this Agreement only), provided that the Executive prevails in such
      litigation

3.2 The Company may terminate this
Agreement for Just Cause. The Executive will only be entitled to salary,
vacation pay, options and bonuses earned up to the date of such termination.

3.3 The Executive may terminate this
Agreement for any reason by giving sixty (180) days prior written notice to the
Company. The Executive will be only entitled to salary and vacation pay, options
and bonuses earned up to the date of such resignation. 

3.4 In case of termination for any
reason, the Company shall continue to provide health and dental benefits that
exist form time-to-time for all Braintech employees, for a period of twenty-four
(24) months from the date of termination 

	4. 	
      Titles and Duties.

	 	 	 
		
      The Executive shall perform diligently and
      conscientiously those duties as assigned by the Chief Executive Officer of
      Braintech, Inc., including such duties as are customarily rendered by and
      required of a senior executive subject to change from time-to-time, which
      shall include, but be not be limited to:

	 	 	 
		(a) 	
      the title of Founder, Braintech, Inc. at the pleasure of
      the Chief Executive Officer of Braintech, Inc.;

	 	 	 
		(b) 	
      carrying out special projects as agreed upon with the
      Chief Executive Officer from time-to-time; and

	 	 	 
		(c) 	
      providing leadership and direction for the Company while
      establishing a positive work environment for all
  employees.

	5. 	
      Change of Duties and Titles.

	 	 
		
      The Company has, in its sole discretion, the right from
      time to time to set or alter the Duties and Titles where such variation
      shall not substantially affect the Duties of the Executives and where such
      variation shall not result in the reassignment of the Executive to a new
      location outside of the Greater Vancouver, B.C. area.

	 	 
	6. 	
      Compensation.

	 	(a) 	Salary 

(i) During the first
year of the term of his employment, the Executive will work Monday to Thursday
and be paid 4/5ths of the base salary on the first and fifteenth day of each
month based on an annual rate of CDN$150,000.00 (the “Base Salary”),

(ii) During the 2nd year of the term of his employment, the
Executive will work Tuesday to Thursday and be paid 3/5ths of the base salary on
the first and fifteenth day of each month based on an annual rate of
CDN$150,000.00 (the “Base Salary”), 
(iii) During the 3rd year
of the term of his employment, the Executive will work two days a week and or an
equivalent aggregate amount throughout the year 

and be paid 2/5ths of the base salary
on the first and fifteenth day of each month based on an annual rate of
CDN$150,000.00 (the “Base Salary”), 
(iv) During the
4th year of the term of his employment, the Executive will work one
day a week and /or an equivalent aggregate amount and be paid 1/5th of base
salary on the first and fifteenth day of each month based on an annual rate of
CDN$150,000.00 (the “Base Salary”), 

In addition, the Executive will be
entitled to the following bonuses: 

	 	(b) 	
      Founder’s Contribution Bonus:

	 	 	 	 
	 		
      The Executive will be granted 750,000 stock options. The
      stock options will vest immediately and the exercise price of the stock
      options will be the closing price of the Common Stock on the date the
      Agreement is executed by the Executive. The exercise period of these stock
      options will extend to three years after the termination of this Agreement
      inclusive of all extensions herein. The stock options will be granted, in
      accordance with the Bonus Stock and Bonus Stock Option Incentive Plan
      attached to this Agreement as Schedule “A”.

	 	 	 	 
	 	(c) 	
      Performance Bonuses:

	 	 	 	 
	 		(i) 	
      Cash Bonus

	 		
      As recommended from time-to-time by the Chief Executive
      Officer and approved by the Board of Directors.

	 	 	 	 
	 		(ii) 	
      Stock Grant Bonus

	 		
      As recommended from time-to-time by the Chief Executive
      Officer and approved by the Board of
Directors.

	7. 	
      Outstanding Options and Warrants

	 	 
		
      All outstanding stock options granted to date to the
      Executive pursuant to any existing agreements will immediately vest and,
      regardless of any documentation to the contrary, the exercise period of
      all outstanding stock options will extend to three years after the
      termination of this Agreement inclusive of all extensions herein. All
      outstanding share purchase warrants held by the Executive as at the
      execution date of this Agreement will immediately vest and, regardless of
      any documentation to the contrary, the exercise period of all outstanding
      share purchase warrants will extend to three years after the termination
      of this Agreement inclusive of all extensions thereto.

	 	 
	8. 	
      Expenses

	 	 
		
      The Company shall reimburse the Executive for all
      reasonable expenses incurred by him in the course of performing his duties
      under this Agreement which are consistent with the Company’s policies in
      effect from time to time with respect to travel, entertainment and other
      business expenses, subject to the Company’s customary requirements with
      respect to reporting and documentation of such
expenses.

	9. 	
      Benefits

	 	 
		
      The Executive shall be entitled to participate in all of
      the Company’s employee benefit and incentive programs including medical
      insurance for which senior executive employees of the Company are
      generally eligible, such benefit programs are subject to change from time
      to time.

	 	 
	10. 	
      Vacation.

	 	 
		
      The Executive shall be entitled to a vacation period each
      year of six weeks, during which time his compensation shall continue to be
      paid in full.

	 	 
	11. 	
      Death and Disability

	 	 
		
      The Company shall have the right to terminate this
      Agreement upon the Executive’s death or total permanent disability, as
      defined herein. For the purposes of this Agreement, the phrase “total
      permanent disability” shall mean the inability of the Executive to perform
      his duties hereunder for a continuous period of more than six months, such
      determination to be made by the Company in its sole discretion.

	 	 
	12. 	
      Confidential Information

	 	 
		
      The Executive shall not disclose or appropriate for his
      own use, or for the use of any third party, at any time before or after
      termination of this Agreement, any confidential information (the
      “Confidential Information”) of the Company or any of the Company's
      affiliates or subsidiaries of which the Executive becomes informed while
      engaged by the Company, whether or not developed by the Executive, except
      as strictly required in connection with the Executive's performance of his
      employment duties, or as required by a governmental authority.
      Confidential Information shall include, but not be limited to, information
      pertaining to customer lists, pricing, contract terms, products, services,
      production and operating methods and procedures, and financial
      information. Upon termination of this Agreement, the Executive shall
      promptly deliver to the Company all manuals, letters, notes, notebooks,
      reports, disks and all other materials containing the Confidential
      Information or the Executive’s analysis of same that are under his
      control.

	 	 
	13. 	
      Intellectual Property

	 	 
		
      The Company shall own all title, intellectual property
      rights, copyright, moral rights, trademarks and patents in and to all
      work, product, conceived, produced or worked on, by the Executive
      (collectively the “Work Product”) for, or in relation to, the business of
      the Company or any affiliate or subsidiary while employed by the Company.
      The Executive hereby waives and assigns to the Company any and all
      intellectual property rights including moral rights, copyright,
      trademarks, and patent rights at law or otherwise that the Executive has
      in the Work Product. The Executive will in no event be entitled to claim
      title or ownership interest in the Work Product. Further, the Executive
      will execute

		
any documentation reasonably required by the Company to memorialize the Company’s existing and continued ownership or rights to the Work Product.

	
	 	 
	
14. 		
Inventions and Discoveries

	
	 	 
		
The Executive shall disclose promptly to the Company, any and all inventions, discoveries and improvements conceived or made by the Executive while employed by the Company and related to the business or activities of the Company
or any of its subsidiaries or affiliates, and hereby assigns and agrees to assign all his interest therein to the Company or its nominee. Whenever requested to do so by the Company, the Executive shall execute any and all applications, assignments
or other instruments which the Company shall deem necessary to apply for and obtain Letters Patent of the United States, Canada, or any foreign country or to protect otherwise the Company's interest therein.

	
	 	 
	
15. 		
Non-Solicitation of Employees.

	
	 	 
		
The Executive shall not, during the twenty-four (24) month period following the termination of this Agreement, regardless of the reason therefore, solicit any person then employed by the Company or appointed as a representative of
the Company to join the Executive as a partner, co-venturer, employee, investor or otherwise, in any substantial business activity whatsoever.

	
	 	 
	
16. 		
Non-Solicitation of Clients.

	
	 	 
		
The Executive shall not, during the twenty-four (24) month period following the termination of this Agreement, regardless of the reason therefore, solicit, induce, aid or suggest to any customer of the Company to leave or
terminate its customer relationship as may exist during such the twenty-four (24) month period. Furthermore, the Executive shall not, within the twenty-four (24) month period following the termination of this Agreement, directly contract any client
of the Company to perform tasks which are in competition with the services and products provided to that client by the Company.

	
	 	 
	
17. 		
Non-Competition.

	
	 	 
		
While this Agreement is in effect and for a period of the twenty-four (24) months after the termination of this Agreement by the Company with Just Cause or resignation by the Executive for personal reasons, the Executive shall
not, directly or indirectly, either as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director, or in any other individual or representative capacity, own, operate, control, assist, or participate in
any business that is in direct competition with the business of the Company world-wide. The foregoing prohibitions shall not apply to ownership by the Executive of less than five percent (5%) of the issued or outstanding stock of any company whose
shares are listed for trading over any public exchange or the over-the- counter market provided that the Executive does not control, work in or for any such company in any capacity.

	

	
18. 		
Injunctive Relief.

	
	 	 
		
The Executive expressly agrees and acknowledges that any breach or threatened breach by him including, but not limited to, Sections 11, 12, 13, 14, 15, and 16 herein, and each of them, will cause irreparable damage to the Company,
for which the payment of money will not be an adequate remedy, and that the damages flowing from such breach are not readily susceptible to being measured in monetary terms. Accordingly, in addition to all of the Company’s rights and remedies
under this Agreement, including, but not limited to, the right to recovery of monetary damages from the Executive, the Company shall be entitled to seek an issuance by any court of competent jurisdiction of temporary, preliminary and permanent
injunctions, without bond, enjoining any such breach or threatened breach by the Executive.

	
	 	 
	
19. 		
Reasonable Terms.

	
	 	 
		
The Company has bargained for the covenants set forth in this Agreement in consideration for the experience, knowledge and information the Executive will gain and the substantial compensation the Executive will earn under this
Agreement. The Executive acknowledges that the covenants set forth in this Agreement will not in any way preclude the Executive, upon termination of this Agreement, from engaging in a lawful profession, trade or business.

	
	 	 
	
20. 		
Place of Performance.

	
	 	 
		
It is contemplated that the Executive shall perform his principal duties in the greater Vancouver B.C. area, except for temporary or emergency assignments.

	
	 	 
	
21. 		
Company Reputation.

	
	 	 
		
The Executive agrees that he will at no time take any action or make any statement that could discredit the reputation of the Company or its products or services. Further, the Executive will use his reasonable commercial best
efforts in performing the terms of this Agreement and will act in a loyal and trustworthy manner.

	
	 	 
	
22. 		
Governing Law.

	
	 	 
		
This Agreement shall be subject to and governed by the laws applicable in the Province of British Columbia, irrespective of the fact that the Executive may become a resident of a different Province or State.

	
	 	 
	
23. 		
Binding Effect.

	
	 	 
		
This Agreement shall be binding upon and inure to the benefit of the Company and the Executive and their respective heirs, legal representatives, executors, administrators, successors and assigns.

	

	
24. 		
Severability.

	
	 	 
		
If any portion or portions of this Agreement shall be, for any reason, invalid or unenforceable, the remaining portion or portions shall nevertheless be valid, enforceable and carried into effect, unless to do so would clearly
violate the present legal and valid intention of the parties hereto.

	
	 	 
	
25. 		
Survival.

	
	 	 
		
This Agreement shall survive in its entirety and continue in full force in accordance with the terms and provisions contained herein, notwithstanding any termination of this Agreement.

	
	 	 
	
26. 		
Headings.

	
	 	 
		
The headings of this Agreement are inserted for convenience only and are not to be considered in construction of the provisions hereof.

	
	 	 
	
27. 		
Assignment.

	
	 	 
		
This Agreement is personal between the Company and the Executive, and may not be assigned by either party, except the Company shall have the right to assign this Agreement, and all of the rights under it, to any subsidiary or
affiliate of the Company.

	
	 	 
	
28. 		
Indemnification.

	
	 	 
		
The company will indemnify the Executive in accordance with any terms for the indemnification of directors or officers of the Company. The Company will also enter into an indemnification agreement with the Executive in a form
substantially similar to any form of indemnification agreement entered into between the Company and its other directors or officers of the company at such times as any other directors or officer of the Company enter into such indemnification
agreement or agreements.

	
	 	 
	
29. 		
Entire Agreement.

	
	 	 
		
This Agreement contains the entire understanding of the parties with respect to the subject matter herein and supersedes all prior agreements or understandings, written, verbal or otherwise, including, without limitation,
agreements or understandings between the Executive and the Company or the Executive and a subsidiary of the Company.

	

IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first written above.

	Witnessed by: 	 	The Executive 
	  	 	 
	  	 	
	  	 	
	/s/ Babak Habibi	 	/s/ Owen
      Jones 
	  	 	Owen Jones 
	  	 	  
	October 22, 2007 	 	  
	  	 	  
	  	 	Braintech, Inc. 
	  	 	  
	  	 	  
	  	 	Per: /s/
      Edward White 
	  	 	Authorized Signatory 
	  	 	  
	  	 	  
	  	 	Braintech Canada, Inc. 
	  	 	  
	  	 	  
	  	 	Per: /s/ Babak Habibi
	  	 	Authorized Signatory 

Schedule “A” 

Bonus Stock and Bonus Stock Option Incentive
Plan 

(the “Bonus Plan”) 

	1. 	
      PURPOSE OF THE BONUS PLAN

	 	 
	1.1 	
      The purpose of this Bonus Plan is to strengthen
      Braintech, Inc. (the “Company”) by rewarding its directors and key
      employees (collectively referred to as the “Participants”) for high levels
      of performance and extraordinary efforts resulting in an increase in the
      development of the Company and the sales and earnings of the Company. The
      Bonus Plan provides for the issuance of common stock of the Company
      (“Bonus Stock”) and options to acquire common stock of the Company (“Bonus
      Stock Options”) to the Participants upon the Company reaching certain
      identifiable milestones (the “Milestones”) in its business plan, and is
      intended to reward the Participants for their unique expertise and
      experience in achieving these Milestones. Bonus Stock and Bonus Stock
      Options are hereinafter collectively referred to as “Bonus
    Securities”.

	 	 
	1.2 	
      The Company believes that, from a corporate governance
      perspective, it is more appropriate to provide a reward mechanism of this
      nature than to provide incentive to insiders exclusively in the form of
      stock options, since the Company’s share price can vary in accordance with
      a range of external factors not related to the performance of management
      and key employees.

	 	 
	2. 	
      ADMINISTRATION OF THE BONUS PLAN

	 	 
	2.1 	
      Administration. This Bonus Plan will be
      administered by the Chief Executive Officer (the “CEO”) of the Company who
      shall make recommendations to the Compensation Committee (the “Committee”)
      of the Board of Directors of the Company (the “Board”) with regard to
      awards of Bonus Securities and the related terms and conditions. The Board
      will establish the initial targets and parameters for the issuance of such
      Bonus Securities that may serve as guidelines to the CEO. Upon approval of
      the Committee of any such CEO award recommendations, such recommendations
      shall be final unless such awards are outside the established Board
      targets in which case the Board must approve the final recommended award.
      Any such action of the Board with respect to such final approval will be
      taken pursuant to a majority vote, or to the written consent of a majority
      of its members.

	 	 
	2.2 	
      Authority. Subject to the express provisions of
      the Bonus Plan, the CEO will have the authority to construe and interpret
      the Bonus Plan and to define the terms used herein and to prescribe, amend
      and rescind the rules and regulations relating to the administration of
      the Bonus Plan. The determination of the CEO on the foregoing matters will
      be conclusive. The CEO shall not have the authority to make any
      change or amendment to the Bonus Plan that would affect any Participant to
      the extent that the Participant is a party to an employment agreement with
      the Company that requires the Participant’s consent to such change or
      amendment.

	
3. 		
PARTICIPATION

	
	 	 
	
3.1 		
Eligibility. Directors and key employees of the Company shall be eligible for selection by the CEO to participate in the Bonus Plan. An individual who has been granted Bonus Securities may, if otherwise eligible, be granted
additional Bonus Securities if the CEO shall so determine.

	
	 	 
	
3.2 		
Time of Granting of Bonus Securities. The granting of Bonus Securities pursuant to this Bonus Plan will take place at the time specified in any employment agreement or any other written agreement between the Company and the
Participant. The granting of Bonus Securities may be subject to certain Milestones agreed upon in writing between the Company and the Participant. In the event that Bonus Securities, subject to Milestones, are granted prior to the time that the
Milestones have been achieved then, until such time as the Milestones have been achieved, such Bonus Securities shall be subject to escrow restrictions as set forth in Section 7.2.

	
	 	 
	
4. 		
STOCK SUBJECT TO THE BONUS PLAN

	
	 	 
	
4.1 		
Subject to the adjustments as provided in Article 9 of this Bonus Plan, the stock to be offered under this Bonus Plan will be shares of the Company’s authorized but unissued common stock, including re-acquired common stock or
common stock previously issued but cancelled. The aggregate amount of shares that may be issued under the Bonus Plan will not exceed 30 million (30,000,000) shares. The aggregate amount of shares to be issued as Bonus Stock will not exceed 20
million (20,000,000) shares and the aggregate amount of shares to be issued pursuant to the exercise of Bonus Stock Options will not exceed 10 million (10,000,000) shares.

	
	 	 
	
5. 		
MILESTONES

	
	 	 
	
5.1 		
Performance Milestones will be determined by the Company and included in any employment agreement or any other written agreement between the Company and the Participant. Each Milestone will be subject to a time restriction for
achieving that Milestone. Bonus Stock Options granted will be subject to the provision of Section 6 and Bonus Stock granted will be subject to the provision of Section 7.

	
	 	 
	
6. 		
PROVISIONS RELATING TO THE STOCK OPTIONS

	
	 	 
	
6.1 		
Option Price. The purchase price of stock covered by each Bonus Stock Option will be determined by the CEO taking into consideration the market value of the underlying shares on the date of grant. The purchase price of any
stock purchased will be paid in full by bank draft or by certified cheque at the time of each purchase, or will be paid in such other manner as the CEO may determine in compliance with applicable laws.

	
	 	 
	
6.2 		
Option Period. Each Bonus Stock Option and all rights or obligations thereunder will expire on the fifth (5th) anniversary of the date on which the Bonus Stock Option is granted or on such other date as the CEO may
determine or the Company may have agreed to contractually, subject to earlier termination as hereinafter provided.

	

	
6.3 		
Privileges of Stock Ownership. The holder of a Bonus Stock Option pursuant to this Bonus Plan will not be entitled to the privileges of stock ownership as to any shares of stock not actually issued and delivered to him.

	
	 	 
	
6.4 		
Exercise of Option. Each Bonus Stock Option may be exercised in accordance with its terms and the total number of shares subject thereto may be purchased, in instalments, which need not be equal. No Bonus Stock Option or
instalment thereof will be exercisable except in respect to whole shares, and fractional share interests will be disregarded.

	
	 	 
	
6.5 		
Agreement to Remain in Employ of Company. Each individual to whom a Bonus Stock Option is granted is not required to remain in the employ of the Company following the date of the grant of the Bonus Stock Option. Nothing
contained in this Bonus Plan, or in any Bonus Stock Option granted pursuant to this Bonus Plan, will confer upon any individual any right to continue in the employ of the Company or constitute any contract or agreement of employment or interfere in
any way with the right of the Company to reduce such individual’s compensation from the rate in existence at the time of the granting of a Bonus Stock Option or to terminate such individual’s employment, but nothing contained herein or in
any Bonus Stock Option agreement will affect any contractual rights of an individual.

	
	 	 
	
6.6 		
Death of an Individual. If any Bonus Stock Option holder dies while employed by the Company, such holder’s Bonus Stock Option will, subject to earlier termination pursuant to Section 6.2, expire two years (2) years
after the date of such death, and during such period after such death such Bonus Stock Option may, to the extent that the holder may have exercised the Bonus Stock Option if alive during such period, be exercised by the person or persons to whom the
Bonus Stock Options holder’s rights under the Bonus Stock Option will pass by will or by the applicable laws of descent and distribution.

	
	 	 
	
6.7 		
Termination. Subject to Section 6.6 and earlier termination pursuant to Section 6.2, if the holder of a Bonus Stock Option resigns or ceases to be employed by the Company for any reason other than death, such holder’s
Bonus Stock Option will expire and become null and void thirty (30) days after the holder ceases to be a director or key employee of the Company or on such other date as the Committee may determine or the Company may have agreed to contractually.
During such period, the Bonus Stock Option will be exercisable only to the extent the holder could have exercised the Bonus Stock Option at the date the holder ceased to be a director or key employee of the Company.

	
	 	 
	
6.8 		
Non-transferability of Stock Options. A Bonus Stock Option granted under this Bonus Plan will, by its terms, be non-transferable by the Bonus Stock Option holder other than by will or by the laws of descent and distribution
and will be exercisable during his lifetime only by the Bonus Stock Option holder [or heirs].

	
	 	 
	
7. 		
PROVISIONS RELATING TO BONUS STOCK

	
	 	 
	
7.1 		
The Company will issue share certificates in the names of the Participants in accordance with the terms of any employment agreement or any other written agreement between the

	

		
Company and the Participant in the amounts detailed in such agreements and the Participant will purchase the shares for the purchase price of $0.01 per share.

	
	 	 
	
7.2 		
Each of the share certificates for any shares subject to Milestones will be held in escrow by a third party escrow agent until such time as the individual Milestones have been met or until the time restriction for achieving the
individual Milestones has elapsed. On notification by the Company that an individual Milestone has been met, the third party escrow agent will deliver the share certificate to the appropriate Participant.

	
	 	 
	
7.3 		
In the event that an individual Milestone has not been achieved within the time restriction for achieving that Milestone, the Company will purchase the share certificate from the Participant for the purchase price of $0.01 per
share.

	
	 	 
	
8. 		
COMPLIANCE WITH SECURITIES LAWS

	
	 	 
	
8.1 		
Shares will not be issued pursuant to the grant of Bonus Stock or the exercise of a Bonus Stock Option unless the grant of Bonus Stock and the exercise of such Bonus Stock Option and the issuance and delivery of such shares
pursuant thereto will comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, the rules and regulations promulgated there under, and the requirements of
any Stock Exchange.

	
	 	 
	
8.2 		
As a condition to the grant of Bonus Stock or the exercise of a Bonus Stock Option, the Company may require the recipient to represent and warrant at the time of any such grant or exercise that the shares received or purchased are
being received or purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by law.

	
	 	 
	
8.3 		
Further, the Company will have no liability whatsoever (including, but not restricted to, alternate compensation) to the holder of a Bonus Stock Option if a change in the exercise price or a change in the terms and provisions of a
Bonus Stock Option and/or this Bonus Plan hereof is required pursuant to any applicable laws.

	
	 	 
	
8.4 		
The Company and any party to this Bonus Plan will comply with all relevant provisions of law relating to this Bonus Plan and any Bonus Stock or Bonus Stock Option granted hereunder.

	
	 	 
	
9. 		
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

	
	 	 
	
9.1 		
Corporate Reorganizations. If the outstanding shares of the stock of the Company are increased, decreased or changed into, or exchanged for, a different number or kind of shares or securities of the Company through
reorganization, recapitalization, reclassification, stock split, stock dividend, stock consolidation, or merger as a result of which the Company is the surviving corporation, or otherwise, an appropriate and proportionate adjustment will be made in
the number and kind of shares as to which Bonus Securities may be granted. A corresponding adjustment changing the number of Bonus Stock allocated but not issued, which will have been allocated prior to any such change, will likewise be made. A
corresponding adjustment changing the number of

	

		
shares and the exercise price per share allocated to unexercised Stock Options or portions thereof, which will have been granted prior to any such change, will likewise be made. Any such adjustment, however, in an outstanding
Bonus Stock Option will be made without change in the total price applicable to the unexercised portion of the Bonus Stock Option but with a corresponding adjustment in the price for each share covered by the Bonus Stock Option.

	
	 	 
	
9.2 		
Dissolution, Liquidation. Upon the dissolution or liquidation of the Company, or upon reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the
surviving corporation, or upon the sale of substantially all of the property of the Company to another corporation, unless all of the obligations of this Bonus Plan have been assumed by a successor entity, holders of Bonus Securities shall be
treated, for purposes of such dissolution, liquidation, reorganization, merger or consolidation as holding fully vested and unrestricted shares of Common Stock of the Company and, accordingly, be treated the same as other holders of Common
Stock.

	
	 	 
	
10. 		
INCOME TAX LAWS

	
	 	 
	
10.1 		
The Company and all Participants will comply with all applicable income tax laws and other tax laws (e.g. any withholding tax or similar obligations).

	
	 	 
	
11. 		
AMENDMENT AND TERMINATION

	
	 	 
	
11.1 		
The Board may at any time suspend, amend or terminate this Bonus Plan as the Board, in its own discretion, sees fit. No Bonus Stock may be issued and no Bonus Stock Option may be granted during any suspension of the Bonus Plan or
after such termination. The amendment, suspension or termination of the Bonus Plan will not, without the consent of Bonus Stock Option holder, alter or impair any rights or obligations under any Bonus Stock Option theretofore granted under the Bonus
Plan.

	
	 	 
	
11.2 		
Unless terminated sooner by the Board of Directors, this Bonus Plan will terminate at the close of business on October 22, 2017.

	

This Bonus Plan was approved and confirmed at a Meeting of the Board of Directors of Braintech, Inc. held October 22, 2007.

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