<PAGE>

                                                                   Exhibit 10.10

                MARQUETTE CAPITAL BANK, N. A. - LETTER AGREEMENT



November 4, 1999



To:      August Technology Corporation (the "Borrower")
         5237 Edina Industrial Blvd.
         Edina, Minnesota 55439

Gentlemen:

This letter agreement confirms the additional agreements between the Borrower
and Marquette Capital Bank, N. A. (the "Bank"). In consideration of the mutual
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by the parties, the
Borrower and the Bank agree as follows:

         1. Subject to the provisions of this letter agreement, at the
Borrower's request, the Bank shall make loans to the Borrower during the period
from the date of this letter agreement to May 31, 2000 in an aggregate amount
not exceeding Two Million Seven Hundred and Fifty Thousand Dollars
($2,750,000.00) at any time outstanding (the "Line of Credit"). The Line of
Credit is a revolving line of credit, and the Borrower may borrow, prepay and
reborrow under the Line of Credit. The Borrower's obligation to repay such loans
and to pay interest and other charges, fees and expenses thereon is evidenced by
the Borrower's promissory note dated November 4, 1999 payable to the order of
the Bank in the principal amount of exceeding Two Million Seven Hundred and
Fifty Thousand Dollars ($2,750,000.00) (together with any amendments,
extensions, renewals and replacements thereof, called the "Revolving Note"). The
Bank shall have no obligation to make any such loan after the occurrence of any
Event of Default.

         2. Subject to the provisions of this letter agreement, at the
Borrower's request, the Bank shall issue one or more standby letters of credit
for the account of the Borrower (each a "Letter of Credit") from time to time
during the period from the date hereof to and including the expiration date in
an aggregate amount at any time outstanding not to exceed the amount of the line
of credit less the sum of (A) all outstanding advances under the line of credit
and (B) the letter of credit amount. The Borrower acknowledges and agrees that
the letter of Credit amount shall reduce the line of credit amount available for
advances. Each Letter of Credit request will be further evidenced by an
application and reimbursement agreement.

         3. The Borrower shall pay the following fees to the Bank: With respect
to each Letter of Credit, the Borrower shall pay to the Bank annually and in
advance a letter of credit fee equal to one percent (1.0%) per annum on the face
amount of such Letter of Credit, computed for the period commencing on the date
of issuance of such Letter of Credit and ending on the expiration date thereof.
In addition, the Borrower agrees to pay to the Bank, on written demand


                                       1
<PAGE>

by the Bank, the administrative fees charged by the Bank in the ordinary
course of business in connection with the honoring of drafts under any Letter
of Credit and for all other activity with respect to any Letter of Credit at
the then-current rates of the Bank.

         THE BORROWER SHALL NOT AT ANY TIME PERMIT THE UNPAID PRINCIPAL BALANCE
OF THE REVOLVING NOTE PLUS THE AMOUNT OF OUTSTANDING LETTERS OF CREDIT TO EXCEED
THE BORROWING BASE.

         4. As long as any now existing or hereafter arising debt, obligation or
liability of the Borrower to the Bank (including but not limited to any debt,
obligation or liability relating to any letter of credit) shall remain
outstanding, the Borrower shall comply with the following requirements:

                  a. The Borrower shall deliver to the Bank, in form and
substance acceptable to the Bank:

                  As soon as available, and in any event within 120 days after
                  each fiscal year of the Borrower, the annual audited financial
                  statements of the Borrower for such fiscal year, prepared in
                  accordance with GAAP; and

                  As soon as available, and in any event within 30 days after
                  the end of each fiscal year of the Borrower, the projected
                  financial statements of the Borrower for the next fiscal year;
                  and

                  As soon as available, and in any event within 30 days after
                  the end of each month, the financial statements. of the
                  Borrower for such period, prepared by the Borrower in
                  accordance with GAAP; and

                  As soon as available, and in any event within 30 days after
                  the end of each month, an aging and a listing of accounts
                  receivable of the Borrower and a listing of inventory of the
                  Borrower as of the end of such period; and

                  As soon as available, and in any event within 30 days after
                  the end of each month, a Borrowing Base and Covenant
                  Compliance Certificate in the form of Exhibit A attached
                  hereto, completed with amounts determined as of the end of
                  such period; and

                  At least once every 12 months, and as otherwise requested by
                  the Bank, the current signed personal financial statements of
                  any guarantors of any of the Borrower's indebtedness to the
                  Bank (called the "Guarantors"); and

                  Within 45 days after the same are filed with the United States
                  Internal Revenue Service, the annual federal income tax
                  returns of the Borrower and any Guarantors, including all
                  schedules, attachments and amendments thereto; and


                                       2
<PAGE>

                  Within 10 days after the Bank's request therefor, such other
                  information about the Borrower and any Guarantors as the Bank
                  may reasonably request from time to time.

                  b. The Borrower shall keep accurate books and records in which
         true and complete entries will be made in accordance with GAAP. Upon
         request of the Bank, the Borrower, during normal business hours, shall
         give any representatives of the Bank access to and permit such
         representatives to examine and copy all books, records and other
         writings in its possession, to inspect its property and to discuss its
         finances, accounts, property and business with any of its officers and
         directors.

                  c. The Borrower shall file when due all required tax returns,
         shall pay when due all taxes, assessments and other governmental
         charges levied or imposed upon it or upon its income or profits or upon
         any of its property, and shall pay when due all lawful claims for
         labor, materials and supplies which, if unpaid, might become a lien or
         charge upon any property of the Borrower; provided, that the Borrower
         shall not be required to pay any such tax, assessment, charge or claim
         whose amount, applicability or validity is being contested in good
         faith by appropriate proceedings.

                  d. The Borrower shall keep and maintain its inventory,
         equipment, real estate and other property necessary or useful in its
         business in good condition and repair and shall pay when due all rental
         and mortgage payments due on such property; provided, that nothing in
         this Section shall prevent the Borrower from discontinuing the
         operation and maintenance of any such property if such discontinuance
         is desirable in the conduct of the Borrower's business and is not
         disadvantageous to the Bank.

                  e. The Borrower shall obtain and maintain insurance with
         insurers that are acceptable to the Bank, in such amounts and with such
         coverages (including without limitation professional liability
         insurance, public liability insurance, fire, hazard and extended
         coverage insurance on all of its assets, necessary workers'
         compensation insurance, and all other coverages as are consistent with
         industry practice) as are acceptable to the Bank.

                  f. The Borrower shall not declare or pay any dividends or
         other distributions on account of any shares of its stock or any of its
         other ownership interests, or make any payment on account of any
         purchase, redemption or other retirement of any shares of such stock or
         any such ownership interests, or make any other payment or distribution
         on account of any shares of stock or any ownership interests, or any
         warrant or option therefor, either directly or indirectly.

                  g. The Borrower shall preserve and maintain its existence and
         all of its rights, privileges and franchises, and shall comply with all
         applicable laws and regulations.

                  h. The Borrower shall not create, incur or permit to exist in
         favor of any person other than the Bank any mortgage, deed of trust,
         assignment, security interest or


                                       3
<PAGE>


         other than on any of its property now owned or hereafter acquired,
         except purchase money security interests securing indebtedness
         permitted by Section 3(h)(ii).

                  i. The Borrower shall not incur, create, assume or permit to
         exist any Funded Debt, except:

                           (i)      Indebtedness to the Bank;

                           (ii) Indebtedness in an aggregate amount not to
                  exceed at any time outstanding $500,000 incurred in the
                  purchase (or borrowing for the purchase) or lease of
                  equipment.

                  j. The Borrower shall maintain its primary operating deposit
         account at the Bank.

                  k. The Borrower shall comply with the following requirements:

                  The Borrower shall not permit the aggregate amount of the
                  Borrower's Capital Expenditures in any fiscal year of the
                  Borrower to exceed $750,000.

                  The Borrower shall not permit the Borrower's Tangible Net
                  Worth to be less than $2,750,000.

                  The Borrower shall not permit the ratio of Debt to Tangible
                  Net Worth of the Borrower to be more than 1.5 to 1.

                  The Borrower shall not permit the Borrower's cumulative EBITDA
                  to be less than the amounts described in the following table
                  for the indicated periods:
<TABLE>
<CAPTION>
                                PERIOD                          MINIMUM EBITDA
                         <S>                                    <C>
                          12/31/98 - 9/30/99                    $250,000
                          12/31/98 - 12/31/99                   $350,000
                          12/31/99 - 3/31/00                    $150,000
</TABLE>
                  l. Year 2000 Compliance. "Year 2000 Compliance" means, with
         regard to any person or entity, that all software, embedded microchips,
         and other processing capabilities utilized by, and material to the
         business operations or financial condition of, such person or entity
         are able to interpret and manipulate data on and involving all calendar
         dates correctly and without causing any abnormal ending scenario,
         including but not limited to all dates in and after the year 2000. The
         Borrower represents and warrants to the Bank and agrees that: (a) the
         Borrower has made due inquiry to determine whether the computer
         applications and hardware the Borrower and the Borrower's material
         suppliers and customers will be Year 2000 Compliant by January 1, 2000;
         and (b) the Borrower has a plan to become Year 2000 compliant. By
         January 1, 2000, and the Borrower agrees to devote adequate resources
         toward, diligently pursue, and take all actions necessary to complete
         such plan and become Year 2000 Compliant by January 1,


                                       4
<PAGE>

         2000; and (c) to the best of the Borrower's knowledge, all of the
         Borrower's material suppliers and customers will be Year 2000 Compliant
         by January 1, 2000; and (d) the Borrower agrees to deliver to the Bank
         such information regarding the plans and progress of the Borrower
         and the Borrower's material suppliers and customers toward becoming
         Year 2000 Compliant as the Bank may reasonably request from time to
         time,including but not limited to any assessment by a third party of
         the Borrower's efforts to become Year 2000 Compliant; (e) at the
         Banks request from time to time,the Borrower shall order, obtain, and
         deliver to the Bank a copy of audits of the Borrower's plans and
         progress to become Year 2000 Compliant by January 1, 2000, and the
         Borrower shall permit the Bank and the Bank's representatives to
         conduct audits of the Borrower's operations for such purpose, and (f)
         the Borrower shall substantially complete implementation of the
         Borrower's plan and remediation of material Year 2000 problems by
         September 30, 1999. Breach of any representation, warranty or agreement
         in this paragraph, or failure of the Borrower or a significant portion
         of the Borrower's material suppliers and customers to become Year 2000
         Compliant by January 1, 2000 shall constitute an Event of Default
         hereunder.

         5. In this letter agreement:

                  a. "Borrowing Base" means the sum of (i) 80% of Eligible
         Accounts Receivable, plus (ii) the lesser of 50% of Eligible Inventory
         or $1,375,000.

                  b. "Capital Expenditures" means all expenditures for any
         assets, or for improvements, replacements, substitutions or additions
         therefor or thereto, which are capitalized on the balance sheet and
         which, in accordance with GAAP, are required to be included in or
         reflected by the property, plant or equipment or similar fixed asset
         account reflected in such balance sheet, and shall include without
         limitation capitalized lease obligations.

                  c. "Debt" means (i) all items of indebtedness or liability of
         the Borrower which in accordance with GAAP would be included in
         determining total liabilities as shown on the liabilities side of the
         Borrower's balance sheet on the date as of which Debt is to be
         determined, plus (ii) indebtedness secured by any mortgage, pledge, hen
         or security interest on property of the Borrower, whether or not the
         indebtedness secured thereby shall have been assumed, plus (iii)
         guaranties, endorsements (other than for purposes of collection in the
         ordinary course of business) and other contingent obligations of the
         Borrower in respect of, or to purchase or otherwise acquire
         indebtedness of others.

                  d. "EBITDA" means for any period of determination, the net
         income of the Borrower for such period plus (i.) deductions for
         Interest Expense, income taxes, depreciation and amortization for such
         period, minus (ii) extraordinary income and gains (losses) on sales of
         assets during such period, all as determined in accordance with GAAP.



                                       5
<PAGE>

                  e. "Eligible Accounts Receivable" means only such accounts
         receivable of the Borrower as the Bank, in its sole discretion, shall
         deem eligible. Without limiting the discretion of the Bank to consider
         any account receivable not to be an Eligible Account Receivable, and by
         way of example only of the types of accounts receivable that the Bank
         will consider not to be Eligible Accounts Receivable, notwithstanding
         any earlier classification of eligibility, the following accounts
         receivable shall not be considered Eligible Accounts Receivable: (i)
         any account receivable which is not paid in full within 90 days after
         it is created; (ii) any account receivable as to which any warranty is
         breached; (iii) any account receivable as to which the account debtor
         or other obligor disputes liability or makes any claim; (iv) any
         account receivable owed by any officer, director or shareholder of the
         Borrower or any of their relatives or any partnership, corporation,
         association, joint venture or other business entity wholly or partly
         owned or controlled directly or indirectly by the Borrower or any of
         them or any of their relatives; (v) any account receivable owed by any
         person as to whom a petition in bankruptcy or other application for
         relief is filed under any bankruptcy, reorganization, receivership,
         moratorium, insolvency or s law; (vi) any account receivable owed by
         any person who makes an assignment for the benefit of creditors,
         becomes insolvent, fails, suspends business, or goes out of business;
         (vii) any account receivable owed by the United States government or
         any agency of the United States government; (viii) any account
         receivable owed by any person if 10% or more in amount of the accounts
         receivable owed by such person to the Borrower are considered
         ineligible; (ix) consignment receivables; (x) bonded receivables; (xi)
         any account receivable constituting a retainage; (xii) any account
         receivable for goods which have not been shipped or work which has not
         been fully performed; (xiii) any account receivable owed by any person
         outside the United States of America, except account debtors approved
         in writing by the Bank (approved foreign account debtors are described
         on Exhibit B) ; (xiv) any account receivable owed by any person with
         whose creditworthiness the Bank becomes dissatisfied; and (xv) any
         account receivable in which the Bank does not have a perfected security
         interest constituting a first hen. In the event the Borrower owes any
         amount to any person that owes an account receivable to the Borrower,
         such amount owed by the Borrower shall be deducted from that portion of
         the account receivable which would otherwise qualify as an Eligible
         Account Receivable and only the difference thereof shall be considered
         an Eligible Account Receivable. No account receivable which does not
         qualify as an Eligible Account Receivable shall be considered an
         Eligible Account Receivable unless the Bank, upon the written request
         of the Borrower, states in writing that such account receivable is to
         be considered an Eligible Account Receivable.

                  f. "Eligible Inventory" means the lesser of cost or fair
         market value of only such raw materials inventory and finished goods
         inventory of the Borrower as the Bank, in its sole discretion, shall
         deem eligible. Without limiting the discretion of the Bank to consider
         any inventory not to be Eligible Inventory, notwithstanding any earlier
         classification of eligibility, the following inventory shall not be
         considered Eligible Inventory: (i) any inventory which does not
         constitute finished goods, or which does not constitute raw materials
         that are to be used or consumed by the Borrower in the normal course of
         its business in the processing of such raw materials into finished
         goods which, upon completion, will constitute Eligible Inventory; (ii)
         any inventory which does not


                                       6
<PAGE>

         meet all standards imposed by any governmental agency; (iii) any
         inventory which is not located in the United States of America; (iv)
         any inventory which is obsolete, or which is not usable by the
         Borrower in the normal course of its business; (v) any inventory
         which is on consignment to or from any other person, or which has been
         sold or otherwise delivered, transferred or conveyed to any other
         person, or which is subject to any bailment or lease; (vi) any finished
         goods inventory which is not held for sale by the Borrower in the
         normal course of its business, or which is not saleable by the Borrower
         in the normal course of its business; and (vii) any inventory in which
         the Bank does not have a perfected security interest constituting a
         first lien.

                  g. "Event of Default" means any default or event of default
         under any existing or future note or other agreement of the Borrower
         with the Bank.

                  h. "GAAP" means generally accepted accounting principles
         consistently applied. Except as otherwise approved by the Bank in
         writing, all financial reporting, financial record keeping, and
         financial calculations in connection with this letter agreement shall
         be made on the basis of accounting principles, methods, elections and
         estimates that are consistent and that are consistent with the
         accounting principles, methods, elections and estimates used in the
         last annual financial statements of the Borrower delivered by tie
         Borrower to the Bank before or upon the execution of this letter
         agreement, and that fairly present the financial condition or results
         of operations for the period then ended.

                  i.       "Tangible Net Worth" means the difference of:

                           (i) the tangible assets of the Borrower which, in
                           accordance with GAAP, are tangible assets, after
                           deducting adequate reserves in each case where, in
                           accordance with GAAP, a reserve is proper, minus

                           (ii)  all Debt of the Borrower;

provided, that (A) inventory shall be taken into account on the basis of the
cost or current market value, whichever is lower, (B) in no event shall there be
included as such tangible assets patents, trademarks, tradenames, copyrights,
licenses, good will, memberships, or treasury stock or any securities or debt of
the Borrower, or any officer, director, employee, agent, shareholder or
affiliate of the Borrower, or any officer, director, employee, agent,
shareholder or affiliate of any shareholder or affiliate of the Borrower, or any
other debt or securities unless the same are readily marketable in the United
States of America, (C) securities included as such tangible assets shall be
taken into account at their current market price or cost, whichever is lower,
and (D) any write-up in the book value of any assets shall not be taken into
account.

         6. In addition to all other defaults and events of default, each of the
following events shall constitute a default and an event of default under each
of the Borrower's existing and future notes and other agreements with the Bank:
The Borrower's failure to comply with any provision of this letter agreement;
Jeff O'Dell is no longer the President of the Borrower and a collateral


                                       7
<PAGE>

survey prepared by an outside firm and acceptable to the Bank has not been
completed prior to December 31, 1999 at the Borrower's expense.

         7. The Borrower consents to the personal jurisdiction of the state
and federal courts located in the State of Minnesota in connection with any
controversy relating in any way to this letter agreement or to any
transaction or matter relating to this letter agreement, waives any argument
that venue in such forums is not convenient, and agrees that any litigation
initiated by the Borrower against the Bank relating in any way to this letter
agreement or to any transaction or matter relating to this letter agreement
shall be venued in either the Minnesota District Court of the county where
the Bank is located, or the United States District Court, District of
Minnesota.

         8. No provision of this letter agreement can be amended, modified,
waived or terminated, except by a writing executed by the Borrower and the
Bank. The Borrower shall pay to the Bank on demand all of the Bank's costs
and expenses, including but not limited to reasonable attorneys' fees and
legal expenses, in connection with this letter agreement, the writings
executed herewith, and the transactions described herein and therein. This
letter agreement shall bind and benefit the parties and their respective
successors and assigns; provided, the Borrower shall not assign any of its
rights or obligations under this letter agreement without the prior written
consent of the Bank, and any assignment in violation of this sentence shall
be null and void. This letter agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.

         9. This letter agreement supersedes and replaces all prior commitment
letters, proposal letters, term sheets, and other statements of loan terms
issued by the Bank to the Borrower, and all such letters and term sheets are
terminated.

Sincerely,

MARQUETTE CAPITAL BANK, N.A.


By___________________________
    Ryan McKinney
    Title:  Vice President

         The Borrower agrees to this letter agreement.



                                       8
<PAGE>

         THE BORROWER REPRESENTS AND WARRANTS TO THE BANK AND AGREES THAT THE
BORROWER HAS READ ALL OF THIS LETTER AGREEMENT AND UNDERSTANDS ALL OF THE
PROVISIONS OF THIS LETTER AGREEMENT.


         Executed as of November 4, 1999.



By_________________________________
    Tom C. Velin
    Title:  Chief Financial Officer









































                                        9
<PAGE>



                                    EXHIBIT A
                     BORROWER: AUGUST TECHNOLOGY CORPORATION
                BORROWER BASE AND COVENANT COMPLIANCE CERTIFICATE


         I,____________________the___________________________ of August
Technology Corporation, a corporation (the "Borrower"), pursuant to the
letter agreement dated November 4, 1999 (the "Agreement"), hereby certify to
Marquette Capital Bank, N.A. (the "Bank") as follows:

BORROWING BASE

         As of the close of business on______________ , the Borrowing Base
and the unpaid principal balance of the Revolving Note were as follows:
<TABLE>
<S>      <C>                        <C>                                                <C>
1.       Accounts Receivable                                                            $__________________(1)

2.       Less:  Ineligibles
                  Over 90 days      $___________
                  10% Rule          $___________
                  Other Ineligibles $___________
                  Total Ineligibles $___________                                        $__________________(2)

3.       Eligible Accounts Receivable (1 minus 2)                                       $__________________(3)

4.       80% of Line 3                                                                  $__________________(4)

5.       Eligible Inventory                                                             $__________________(5)

6.       Lesser of 50% of Line 5 or $1,375,000                                          $__________________(6)

7.       Borrowing Base (4 plus 6)                                                      $__________________(7)

8.       Credit Limit (lesser of $2,750,000                                             $__________________(8)
         or Line 7)

9.       Unpaid Principal Balance of                                                    $__________________(9)
         Revolving Note

10.      Outstanding Amount of Letters of Credit                                        $__________________(10)

11.      Availability or (Shortfall) (8 minus 9 minus 10)                               $__________________(11)
</TABLE>

FINANCIAL COVENANTS

As of the dose of business on_________________, the following amounts and
ratios were true and correct:


                                       10
<PAGE>

<TABLE>
<CAPTION>

1.       CAPITAL EXPENDITURES IN FISCAL YEAR ENDING
         <S>     <C>                                                                <C>
         a.       Actual Capital Expenditures                                       $____________________

         b.       Maximum Amount                                                    $      750,000

2.       TANGIBLE NET WORTH

         a.       Actual Tangible Net Worth                                         $____________________

         b.       Minimum Tangible Net Worth                                        $    2,750,000

3.       RATIO OF DEBT TO TANGIBLE NET WORTH

         a.       Debt                                                              $____________________

         b.       Tangible Net Worth                                                $____________________

         c.       Actual Ratio of Debt to Tangible Net Worth                         _________to 1

         d.       Maximum Ratio                                                          1.50 to 1

4.       MINIMUM EBITDA:

         a.       Actual EBITDA 12/31/98 - 9/30/99                                  $____________________
                           Minimum EBITDA required                                  $    250,000

         b.       Actual EBITDA 12/31/98 - 12/31/99                                 $____________________
                           Minimum EBITDA required                                  $    350,000

         c.       Actual EBITDA 12/31/99 - 3/31/00                                  $____________________
                           Minimum EBITDA required                                  $    150,000

</TABLE>

         AS OF THE DATE OF THIS CERTIFICATE, NO EVENT HAS OCCURRED WHICH
CONSTITUTES AN EVENT OF DEFAULT AS DEFINED IN THE AGREEMENT.


Date of Certificate:___________________________________


                                                   _________________________
                                                   Signature


                                       11

<PAGE>

                                    EXHIBIT B

                     BORROWER: AUGUST TECHNOLOGY CORPORATION
                        APPROVED FOREIGN ACCOUNT DEBTORS

                              MARUBENI CORPORATION
                              METRON TECHNOLOGY LTD









                                       12

<PAGE>

[LOGO]  MARQUETTE CAPITAL BANK -- AMENDMENT TO
                       LETTER AGREEMENT


This Agreement is made as of this 10 day of March 2000, by and between
Marquette Capital Bank, N.A., a national banking association, having its
office at 60 South Sixth Street, Minneapolis, MN (the "Bank") and August
Technology Corporation, a corporation, (the "Borrower").

                                    RECITALS

A.  The Borrower executed and delivered to the Bank that certain promissory
    Note, dated November 4, 1999, in the original principal amount of
    2,750,000.00 (the "Note").

B.  The Borrower further executed and delivered to the Bank that certain
    Letter Agreement, dated November 4, 1999, (the "Letter Agreement")
    pursuant to which additional agreements were made between the Borrower and
    the Bank regarding advances under the Note.

C.  The Borrower has requested and the Bank is willing to amend the Minimum
    EBITDA covenant as it appears in the Letter Agreement.

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto agree as follows:

The Borrower will not be required to obtain a Minimum EBITDA for the period
between 1/1/99 to 03/31/00.

The Letter Agreement is amended only to the extent necessary to reflect the
changes set forth herein.

IN WITNESS WHEREOF, the parties hereto have each duly executed this Amendment
effective as of the day and year first above written.

MARQUETTE CAPITAL BANK, N.A.                     AUGUST TECHNOLOGY CORPORATION


By /s/ Ry McKinney                               By /s/ [ILLEGIBLE]
  -----------------------------                    ----------------------------
 Its    VP                                        Its        CFO
    ---------------------------                      --------------------------

<PAGE>

        MARQUETTE CAPITAL BANK, N.A. -- AMENDMENT TO LETTER AGREEMENT
-------------------------------------------------------------------------------

This Agreement is made as of this 16th day of March, 2000, by and between
Marquette Capital Bank, N.A., a national banking association, having its
office at 60 South Sixth Street, Minneapolis, MN (the "Bank") and August
Technology Corporation, a Minnesota Corporation, (the "Borrower").

                                  RECITALS

A.   The Borrower executed and delivered to the Bank that certain promissory
     Note, dated November 4, 1999, in the original principal amount of
     $2,750,000.00 (the "Note") and that certain amended Note dated March 16,
     2000 in the amount of $4,000,000.00 (the "Amended Note").

B.   The Borrower further executed and delivered to the Bank that certain
     Letter Agreement, dated November 4, 1999, (the "Letter Agreement") and
     that certain Amendment to Letter Agreement dated March 10, 2000 (the
     "First Amendment") pursuant to which additional agreements were made
     between the Borrower and the Bank regarding advances under the Note.

C.   The Borrower has requested and the Bank is willing to extend the
     maturity of the Amended Note reflected in the Letter Agreement as well
     as modify the financial covenants and borrowing based calculation of the
     Letter Agreement.

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto agree as follows:

1.   The date of May 31, 2000 in Paragraph 1 of the Letter Agreement is
     hereby changed to July 31, 2000.

2.   Paragraph 3 of the Letter Agreement is amended to include an extension
     fee of $7,500.00 (the "Extension Fee") to be paid at or before the
     maturity of the Amended Note; provided; however, that such Extension Fee
     will be waived if the Borrower invests substantially all of the net
     proceeds of the proposed initial public offering with the Bank or its
     affiliates.

3.   Paragraph 5, sub-paragraph a of the Letter Agreement is amended to reads
     as follows: " "Borrowing Base" means the sum of (I) 80% of Eligible
     Accounts Receivable, plus (ii) the lesser of 50% of Eligible Inventory
     of $2,000,000". (See attached revised Exhibit A)

4.   Paragraph 6 of the Letter Agreement is amended to read as follows: "In
     addition to all other defaults and events of default, each of the
     following events shall constitute a default and an event of default
     under each of the Borrower's existing and future notes and other
     agreements with the Bank; the Borrower's failure to comply with any
     provision of this letter agreement; Jeff O'Dell, Mark Harless, Thomas
     Velin, Thomas Verburgt or David Klenk are no longer members of the
     senior management of the Borrower; Jeff O'Dell, Mark Harless, or Thomas
     Verburgt are no longer members of the Board of Directors of the
     Borrower; or the beneficial ownership percentage of the existing
     directors and executive officers falls below 51% prior to the completion
     of the proposed initial public offering of The Borrower's common stock; or
     the existing institutional investors owning more than 5% of The

<PAGE>

     Borrower's common stock (i.e. Brightstone Capital, Ltd. and ESI
     Investment Co.) were to sell the majority of their equity interest prior
     to the proposed initial public offering of the Borrower's common stock."

The Letter Agreement is amended only to the extent necessary to reflect the
changes set forth herein.

IN WITNESS WHEREOF, the parties hereto have each duly executed this Amendment
effective as of the day and year first above written.

MARQUETTE CAPITAL BANK, N.A.           AUGUST TECHNOLOGY CORPORATION


By /s/ Ryan McKinney                   By /s/ Thomas Velin
   -------------------------------        ---------------------------------
   Ryan McKinney                          Thomas Velin
   Its Vice President                     Its Chief Financial Officer

<PAGE>


              MARQUETTE CAPITAL BANK, N.A. -- PROMISSORY NOTE
-------------------------------------------------------------------------------

$4,000,000.00

No. 418100000071
    ------------------------------                       Minneapolis, Minnesota
Maker: August Technology Corporation                       Date: March 16, 2000

     FOR VALUE RECEIVED, the Maker promises to pay to the order of Marquette
Capital Bank, N.A., (the "Bank"), at its office in Minneapolis, Minnesota, or
at such other place as any present or future holder of this Note may
designate from time to time, the principal amount of Four Million and No/100
dollars, ($4,000,000.00), or so much thereof as is advanced and remains
outstanding as shown in the records of the holder of this Note, plus interest
thereon from the date on which the same is advanced until this Note is fully
paid, computed on the basis of the actual number of days elapsed and a
360-day year.

INTEREST:  The interest rate under this Note is:

           A variable rate that shall always be 2.75% per annum more than the
           prior month average of the 30 day LIBOR rate as published in The
           Wall Street Journal, as determined by the holder of this Note.

If the interest rate under this Note is a variable rate based on an index
rate that is no longer available, the holder of this Note may select a
comparable index rate for use under this Note. If this Note provides for a
variable interest rate based on an index rate, the Bank may lend to its other
customers at rates that are equal to, more than, or less than the index rate.

PAYMENTS:  The Maker shall make the following payments of principal and
           interest under this Note:

           Payments of accrued interest only on the last day of each month
           beginning March 31, 2000, and 1 final payment of the remaining
           unpaid balance of principal and accrued interest on July 31,
           2000.

ADDITIONAL INTEREST:

           Notwithstanding the foregoing, after the occurrence of an Event of
           Default and until such Event of Default is cured, the interest
           rate under this Note shall automatically increase to a rate that
           is 2.0% per annum in excess of the rate otherwise in effect. If
           this Note provides for a variable interest rate, the increased
           rate shall continue to vary based on changes in the index rate.

LATE FEES:

           If any payment under this Note (including but not limited to any
           final payment, and any payment due by reason of default or
           acceleration) is more than 10 days past due, the Maker shall pay
           the holder of this Note a late fee equal to 5% of the past due
           amount.

PREPAYMENTS:

           All or any part of the unpaid balance of this Note may be prepaid
           at any time without penalty.

OTHER PROVISIONS:

           This note evidences the Maker's obligation to repay one or more
           loans under a revolving line of credit.

           This Note is an amendment of the Maker's $2,750,000.00 promissory
           note to the Bank dated November 4, 1999.

           The extensions of credit under this Note are made under Section
           47.59 of the Minnesota Statutes.

     At the option of the holder of this Note, any payment under this Note
may be applied first to the payment of charges, fees and expenses (other than
principal and interest) under this Note and any other agreement or writing in
connection with this Note, second to the payment of interest accrued through
the date of payment, and third to the payments of principal under this Note
in inverse order of maturity. Also, at the option of the holder of this
Note, if there is any overpayment of interest under this Note, the holder
may hold the excess and apply it to future interest accruing under this Note.
The Maker represents, warrants, certifies

<PAGE>

to the Bank and agrees that all advances under this Note shall be used solely
for business purposes.

The occurrence of any of the following events shall constitute an Event of
Default under this Note:

     (i)     any breach or default in the payment of this Note; or
     (ii)    any breach or default under the terms of any other note,
             obligation, mortgage, assignment, guaranty, other agreement, or
             other writing heretofore, herewith or hereafter existing to which
             the Maker or any endorser, guarantor or surety of this Note or
             any other person or entity providing security for this Note or
             for any guaranty of this Note is a party; or
     (iii)   the insolvency, death, dissolution, liquidation, merger or
             consolidation of any such Maker, endorser, guarantor, surety
             or other person or entity; or
     (iv)    the appointment of a receiver, trustee or similar officer of
             any property of any such Maker, endorser, guarantor, surety
             or other person or entity; or
     (v)     any assignment for the benefit of creditors of any such Maker,
             endorser, guarantor, surety or other person or entity; or
     (vi)    any commencement of any proceeding under any bankruptcy,
             insolvency, receivership, dissolution, liquidation or similar
             law by or against any such Maker, endorser, guarantor, surety
             or other person or entity; or
     (vii)   the sale, lease or other disposition (whether in one or more
             transactions) to one or more persons or entities of all or a
             substantial part of the assets of any such Maker, endorser,
             guarantor, surety or other person or entity; or
     (viii)  any such Maker, endorser, guarantor, surety or other person or
             entity takes any action to go out of business, or to revoke or
             terminate any agreement, liability or security in favor of the
             holder of this Note; or
     (ix)    the entry of any judgment or other order for the payment of
             money in the amount of $100,000.00 or more against any such
             Maker, endorser, guarantor, surety or other person or entity; or
     (x)     the issuance or levy of any writ, warrant, attachment,
             garnishment, execution or other process against any property
             of any such Maker, endorser, guarantor, surety or other person
             or entity; or
     (xi)    the attachment of any tax lien to any property of any such
             Maker, endorser, guarantor, surety or other person or entity; or
     (xii)   any statement, representation or warranty made by any such Maker,
             endorser, guarantor, surety or other person or entity (or any
             representative of any such Maker, endorser, guarantor, surety
             or other person or entity) to the holder of this Note at any
             time shall be incorrect or misleading in any material respect
             when made; or
     (xiii)  there is a material adverse change in the condition (financial
             or otherwise), business or property, of any such Maker, endorser,
             guarantor, surety or other person or entity; or
     (xiv)   the holder of this Note shall in good faith believe that the
             prospect of due and punctual payment or performance of this
             Note or the due and punctual payment or performance of any
             other note, obligation, mortgage, assignment guaranty, or
             other agreement heretofore, herewith or hereafter given to or
             acquired by the holder of this Note in connection with this
             Note is impaired.

     Upon the commencement of any proceeding under any bankruptcy law by or
against any such Maker, endorser, guarantor, surety or other person or entity,
the unpaid principal balance of this Note plus accrued interest and all other
charges, fees and expenses under this Note shall automatically become
immediately due and payable in full, without any declaration, presentment,
demand, protest, or other notice of any kind. Upon the occurrence of any other
Event of Default and at any time thereafter, the then holder of this Note
may, at its option, declare this Note to be immediately due and payable and
thereupon the unpaid principal balance of this Note plus accrued interest and
all other charges, fees and expenses under this Note shall automatically
become due and payable in full, without any presentment, demand, protest or
other notice of any kind.

     The Maker: (i) waives demand, presentment, protest, notice of protest,
notice of dishonor and notice of nonpayment of this Note; (ii) agrees to
promptly provide the holder of this Note from time to time with the Maker's
financial statements and such other information respecting the financial
conditions, business and property of the Maker as the holder of this Note may
request, in form and substance acceptable to the holder of this Note; (iii)
agrees that when or at any time after this Note becomes due the holder of
this Note may offset or charge the full amount owing on this Note against any
account then maintained by the Maker with the holder of this Note without
notice; (iv) agrees to pay on demand all fees, costs and expenses of the
holder of this Note in connection with this Note and any transactions and
matters relating to this Note, including but not limited to audit fees and
expenses and reasonable attorneys' fees and legal expenses, plus interest on
such amounts at the rate set forth in this Note; and (v) consents to the
personal jurisdiction of the state and federal courts located in the State of
Minnesota in connection with any controversy related in any way to this Note
or any transaction or matter relating to this Note, waives any argument that
venue in such forums is not convenient, and agrees that any litigation
initiated by the Maker against the Bank or any other holder of this Note
relating in any way to this Note or any transaction or matter relating to
this Note, shall be venued in either the Minnesota District Court of the
county where the Bank is located, or the United States District Court,
District of Minnesota. Interest on

<PAGE>

any amount under this Note shall continue to accrue, at the option of the
holder of this Note, until such holder receives final payment of such amount
in collected funds in form and substance acceptable to such holder.

     No waiver of any right or remedy under this Note shall be valid unless
in writing executed by the holder of this Note, and any such waiver shall be
effective only in the specific instance and for the specific purpose given.
All rights and remedies of the holder of this Note shall be cumulative and
may be exercised singly, concurrently or successively. The Maker, if more
than one, shall be jointly and severally liable under this Note, and the term
"Maker", wherever used in this Note, shall mean the Maker or any one or more
of them. All references in this Note to the holder of this Note shall mean
the Bank and any and all other present and future holders of this Note. This
Note shall bind the Maker and the heirs, representatives, successors and
assigns of the Maker. This Note shall benefit the holder of this Note and its
successors and assigns. This Note shall be governed by and construed in
accordance with the internal laws of the State of Minnesota (excluding
conflict of law rules).

     THE MAKER REPRESENTS AND WARRANTS TO THE BANK AND AGREES THAT THE MAKER
HAS READ ALL OF THIS NOTE AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS NOTE.

ADDRESS OF MAKER:                      MAKER:
5237 Edina Industrial Blvd.
Edina, Minnesota 55439-2910            AUGUST TECHNOLOGY CORPORATION

TELEPHONE: (612) 820-0080

                                       By: /s/ Tom C. Velin
                                           -----------------------------------
                                           Tom C. Velin
                                           Title: Chief Financial Officer