EXHIBIT 10.1

                              SETTLEMENT AGREEMENT


         This Settlement Agreement is entered into this 12th day of August, 1997
among ADVANCED MACHINE VISION CORPORATION ("AMV"),  CREDIT SUISSE, a corporation
existing under the laws of Switzerland,  SWISS AMERICAN SECURITIES, INC. ("SWISS
AMERICAN"), ILVERTON INTERNATIONAL,  INC., a corporation existing under the laws
of the British Virgin Islands ("ILVERTON"),  KONRAD MEYER ("MEYER") and MAX KHAN
("KHAN").
                                 R E C I T A L S

         WHEREAS  AMV fka ARC  Capital  is the  plaintiff  in an action  against
CREDIT  SUISSE,  ILVERTON,  KHAN and  MEYER now  pending  in the  United  States
District  Court for the District of Oregon as Case No.  97-3307-CO  related to a
Subscription Agreement dated May 14, 1996 ("Subscription Agreement Litigation");

         WHEREAS AMV is the plaintiff in an action  against  SWISS  AMERICAN and
ILVERTON  now pending in the United  States  District  Court for the District of
Oregon as Case No. CV  97-3039-CO  related  to a Pledge and  Security  Agreement
dated April 13, 1995,  and in which SWISS  AMERICAN  has filed an  interpleader,
("Security Agreement Litigation"); and

         WHEREAS the parties or participant to this Settlement  Agreement desire
to resolve all  disputes  among them that relate to the  Subscription  Agreement
Litigation and/or the Security Agreement Litigation.

         IT IS HEREBY AGREED AS FOLLOWS:

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1.  Dismissal of Litigation.

           1.1 By AMV. Upon delivery of the  securities as set forth in
               Sections 4 and 5 of this Settlement  Agreement,  AMV will dismiss
               with  prejudice  its  complaints  in the  Subscription  Agreement
               Litigation  and the  Security  Agreement  Litigation  against the
               PARTIES SIGNING THIS SETTLEMENT AGREEMENT.

           1.2 By CREDIT SUISSE. Upon delivery of the securities as set
               forth in Sections 4 and 5 of this  Settlement  Agreement,  CREDIT
               SUISSE will dismiss with prejudice its counterclaim  filed in the
               Subscription Agreement Litigation.

           1.3 By SWISS  AMERICAN.  Upon delivery of the  securities as
               set forth in Sections 4 and 5 of this Settlement Agreement, SWISS
               AMERICAN will dismiss with  prejudice its claim for  interpleader
               filed in the Security Agreement Litigation.

2.  Release of Claims.

           2.1 By AMV.  Conditioned  on and effective upon the delivery
               of the  securities  as set  forth  in  Sections  4 and 5 of  this
               Settlement  Agreement,  AMV releases and  absolutely  and forever
               discharges  CREDIT SUISSE,  SWISS AMERICAN,  ILVERTON,  MEYER and
               KHAN,  but  only  if  such  PARTY  HAS  SIGNED  THIS   SETTLEMENT
               AGREEMENT,   and  each  of  their  respective  current  officers,
               directors  and  agents of and from any and all  claims,  demands,
               damages, debts, liens, actions and causes of action of every kind
               and nature whatsoever, whether now known or unknown, suspected or
               unsuspected,  which it might  have  had,  shall or may  hereafter
               have, upon or arising out of

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               any matter,  cause, fact, thing, act or omission  whatsoever
               occurring or existing at any time through and  including the date
               of this Settlement Agreement and including without limitation any
               theory recited in the Subscription  Agreement  Litigation  and/or
               the Security Agreement Litigation.

           2.2 By Remaining Parties.  Conditioned on and effective upon
               the delivery of the  securities  as set forth in Sections 4 and 5
               of this  Settlement  Agreement,  CREDIT SUISSE,  SWISS  AMERICAN,
               ILVERTON,  MEYER  and KHAN  hereby  release  and  absolutely  and
               forever  discharge  AMV and its  subsidiaries  and  each of their
               current  officers,  directors  and agents of and from any and all
               claims,  demands,  damages,  debts, liens,  actions and causes of
               action of every kind and nature whatsoever,  whether now known or
               unknown,  suspected or unsuspected,  which any of them had, shall
               or may hereafter have, upon or arising out of any matter,  cause,
               fact, thing, act or omission whatsoever  occurring or existing at
               any  time  through  and  including  the  date of this  Settlement
               Agreement and including without  limitation any theory recited in
               the  Subscription   Agreement   Litigation  and/or  the  Security
               Agreement Litigation.

          2.3  Nonsigners:   Notwithstanding  the  release  of  claims
               provided in Sections  2.1 and 2.2 of this  Settlement  Agreement,
               the  provisions  of  Sections  2.1 and 2.2 shall not apply to any
               party not signing the Settlement Agreement.

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3.  Convertible Subordinated Bonds.

           3.1 Description of Bonds.  AMV is the issuer of $3.4 million
               of  convertible  subordinated  bonds sold on April 17, 1996,  and
               remains the obligor  under such bonds until paid by AMV according
               to the terms of the bonds.

           3.2 Repurchase of Convertible  Subordinated Bonds. ILVERTON,
               MEYER,  KHAN and CREDIT  SUISSE  shall have the right to "put" to
               AMV up to a maximum of $3.4  million  face value of bonds  issued
               pursuant to AMV's $3.4  million  Convertible  Secured  Note dated
               April 17, 1996. The bonds shall be purchased by AMV at face value
               without prepayment  penalty,  but with interest accrued as of the
               date of the repurchase.  This "put" shall  terminate  thirty days
               following execution of this Settlement Agreement.  AMV shall have
               no obligation to  repurchase  bonds in the event this  Settlement
               Agreement  is  not  executed,  the  delivery  of  the  securities
               required by Sections 4 and 5 of this Settlement  Agreement is not
               timely  completed,  or in the event such redemption would require
               filings by AMV with the  Securities  and Exchange  Commission  or
               would  otherwise  violate  the laws of the  United  States or any
               state thereof or of the country in which a bondholder  requesting
               redemption may reside.

          3.3  Bondholder  Rights.  Pursuant  to this  section  of the
               agreement,  the $3.4 million of bonds may either (i) "put" to AMV
               in accordance with Section 3.2 of this Settlement Agreement, (ii)
               converted  into AMV Class A Common Stock as permitted in the bond
               instrument, or (iii) held until maturity or otherwise sold.

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           3.4 Obligation of AMV: The $3.4 million  Convertible Secured
               Note dated April 17, 1996 is a primary  obligation  of AMV and is
               due on April 17,  2001.  The note is backed by the full faith and
               credit of AMV.

4.  Delivery of SRC Vision, Inc. Common Stock.

               Upon execution of this Settlement Agreement, ILVERTON and/or
               SWISS  AMERICAN  shall  deliver to AMV all of the common stock of
               SRC Vision,  Inc.,  AMV's  wholly  owned  subsidiary,  pledged to
               secure the $2,160,000 Convertible Subordinated Secured Note dated
               April 13,  1995  between  AMV and  ILVERTON.  ILVERTON  and MEYER
               represent  and warrant that they have no further  interest in, or
               claim to, the SRV Vision,  Inc.  common  stock  pledged to secure
               that note.

5.  Repurchase of AMV Common Stock and Return of Warrants.

           5.1 Delivery of Stock.  Upon  execution  of this  Settlement
               Agreement  ILVERTON  and  SWISS  AMERICAN  will  deliver  to  AMV
               1,001,640  shares of AMV  common  stock held in the name of SWISS
               AMERICAN.

           5.2 Return of Warrants. Within fifteen days of the execution
               of this  Settlement  Agreement,  ILVERTON will deliver to AMV for
               cancellation  ILVERTON's warrants to purchase 300,000 and 340,000
               shares, respectively, of AMV's common stock (the Class F Warrants
               and Class H Warrants).

          5.3  Purchase  Price.  Concurrent  with the  delivery of the
               stock and warrants pursuant to Sections 4, 5.2 and 5.3 above, AMV
               will pay to ILVERTON a total of $1,903,116.

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6.  Participation of MEYER in AMV's Affairs.

               For a period of five years from the date of this  Agreement,
               MEYER nor any of his agents or  affiliates  shall,  without prior
               consent  of  the  then  Chair  of  AMV's   Board  of   Directors,
               communicate  on matters  related to AMV with AMV's  shareholders,
               bondholders,  current  and former  officers  and  directors,  or,
               except to the extent  compelled by  applicable  law,  participate
               directly or indirectly in any lawsuit  asserted  against AMV, its
               officers  or  directors,  or make any  untruthful  or  defamatory
               statements  about AMV, its officers or  directors.  Additionally,
               MEYER and his agents or  affiliates  will not engage in any proxy
               contest,  tender  offer,  merger  or any other  similar  activity
               related to AMV for five years.  Recognizing  that  damages to AMV
               cannot be readily ascertained in the event of a violation of this
               Agreement,  MEYER  agrees to a payment of $100,000 as  liquidated
               damages for each breach of this provision.  Notwithstanding  this
               Section  6,  MEYER  shall  be  able  to  discuss  or  communicate
               regarding publicly disclosed AMV information.

7.   Participation of KHAN in AMV's Affairs.

               For a period of five years from the date of this  Agreement,
               KHAN,  nor any of his agents or affiliates  shall,  without prior
               consent  of  the  then  Chair  of  AMV's   Board  of   Directors,
               communicate  on matters  related to AMV with AMV's  shareholders,
               bondholders,  current  and former  officers  and  directors,  or,
               except to the extent  compelled by  applicable  law,  participate
               directly or indirectly in any lawsuit  asserted  against AMV, its
               officers  or  directors,  or make any  untruthful  or  defamatory
               statements  about AMV, its officers or  directors.  Additionally,
               KHAN and his  agents or  affiliates  will not engage in any proxy
               contest,

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               tender offer,  merger or any other similar  activity related
               to AMV for five years.  Recognizing that damages to AMV cannot be
               readily   ascertained  in  the  event  of  a  violation  of  this
               Agreement,  KHAN agrees to a payment of  $100,000  as  liquidated
               damages for each breach of this provision.  Notwithstanding  this
               Section 7, KHAN shall be able to discuss or communicate regarding
               publicly  disclosed AMV information.

8.  Participation of AMV in KHAN's  Affairs.

               For a period of five years from the date of this  Agreement,
               AMV,  nor any of its agents or  affiliates  shall  without  prior
               consent  of KHAN  communicate  on  matters  related  to KHAN with
               KHAN's  associates and affiliated  businesses,  or, except to the
               extent  compelled  by  applicable  law,  participate  directly or
               indirectly in any lawsuit  asserted  against KHAN, his associates
               or affiliated  businesses,  or make any  untruthful or defamatory
               statements  about KHAN, its associates or affiliated  businesses.
               Recogniging that damages to KHAN cannot be readily ascertained in
               the  event of a  violation  of this  Agreement,  AMV  agrees to a
               payment of $100,000 as liquidated damages for each breach of this
               provision.  Notwithstanding  this Section 8, AMV shall be able to
               discuss  or  communicate   regarding   publicly   disclosed  KHAN
               information.  9.  Participation of AMV in MEYER's Affairs.  For a
               period of five years from the date of this  Agreement,  AMV,  nor
               any of its agents or affiliates  shall,  without prior consent of
               MEYER  communicate  on  matters  related  to MEYER  with  MEYER's
               associates  and affiliated  businesses,  or, except to the extent
               compelled by applicable law,  participate  directly or indirectly
               in any lawsuit asserted against MEYER, its

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               associates or affiliated businesses,  or make any untruthful
               or  defamatory   statements   about  MEYER,   his  associates  or
               affiliated  businesses.  Recognizing that damages to MEYER cannot
               be  readily  ascertained  in the  event  of a  violation  of this
               Agreement,  AMV agrees to a payment  of  $100,000  as  liquidated
               damages for each breach of this provision.  Notwithstanding  this
               Section 8, AMV shall be able to discuss or communicate  regarding
               publicly disclosed MEYER information.

10.  Severability.

               If  one  or  more  of  the  provisions  of  this  Settlement
               Agreement  shall  be for any  reason  held  invalid,  illegal  or
               unenforceable  in any respect,  such  invalidity,  illegality  or
               unenforceability  shall not affect  the  validity,  legality  and
               enforceability of any other provision hereof, and this Settlement
               Agreement  shall be  construed  as if such  invalid,  illegal  or
               unenforceable provision had never been contained herein, provided
               that the Agreement, as so modified, preserves the basic intent of
               the parties.

11.  Miscellaneous.

          11.1 Governing Law. This  Settlement  Agreement is made, and
               intended to be  performed,  in the state of Oregon,  and shall be
               enforced and interpreted by the laws of that state. Any action to
               enforce or otherwise related to or arising out of this Settlement
               Agreement shall be pursued only through arbitration in accordance
               with the Commercial Arbitration Rules of the American Arbitration
               Association.  All such  arbitrations  shall take place within the
               state of Oregon.

          11.2 Entire  Agreement.  This  Settlement  Agreement  is the
               final and complete  agreement of the parties  hereto with respect
               to its subject  matter,  and  supersedes  any prior  discussions,
               negotiations or agreements, whether written

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               or oral,  between  the parties  with  respect to the subject
               matter hereof.  It may be amended only by an agreement in writing
               executed by the parties hereto.

         11.3  Attorneys'  Fees.  Each party shall bear its own costs
               and attorneys' fees associated  with the  Subscription  Agreement
               Litigation  and/or the Security  Agreement  Litigation and/or the
               review and execution of this Settlement Agreement.

         11.4  Advice  of  Counsel.   Each  of  the  parties   hereto
               acknowledges,  represents and warrants that he, she or it has had
               the  opportunity  to obtain the advice of counsel of such party's
               own choosing in the  negotiations  for and in the  preparation of
               this Settlement Agreement, that the party has read the Settlement
               Agreement,  that  each has had this  Settlement  Agreement  fully
               explained  by such  counsel  and that each is fully  aware of its
               contents and legal effect.

          11.5 Binding Obligations.  Each party signing this agreement
               expressly  warrants and  represents  to each other party  signing
               this agreement  that such party is duly  authorized and empowered
               to enter  into  this  Settlement  Agreement  and to  perform  and
               observe its  agreements  and  obligations  herein,  and that such
               party has been advised by its legal counsel that this  Settlement
               Agreement  creates and  constitutes a binding  obligation on such
               party  and his or its  successors  and  assigns,  and  that  this
               Settlement Agreement is enforceable in accordance with its terms.

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         11.6  Further  Assistance.  Each party agrees to execute and
               deliver  to the  other  parties  all such  other  and  additional
               instruments  and other  documents,  and to do all such other acts
               and things as any party may  reasonably  deem  necessary  to more
               fully  carry out this  Agreement  and the  obligations  contained
               herein.

          11.7 Condition Precedent to Obligations. The parties to this
               Settlement  Agreement understand that AMV will pay its obligation
               pursuant to Section 5.3 above by delivery upon  execution of this
               Settlement Agreement of a standard AMV bank check(s).  Should the
               check(s)  fail to clear AMV's bank within five  business  days of
               deposit,  AMV will return to the appropriate party the securities
               returned to AMV in accordance with this Settlement  Agreement and
               this  Settlement  Agreement will be deemed to be null and void as
               if it never existed.


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     IN WITNESS WHEREOF, the parties have executed this Settlement Agreement, or
caused it to be executed by its officers, being thereunto duly authorized by all
necessary corporate action, as of the date first above written.


Advanced Machine Vision Corporation       Credit Suisse


By  /s/ William J. Young                  By
-----------------------------------       --------------------------------------
    President and CEO



Swiss American Securities, Inc.           Ilverton International, Inc.


By                                        By  /s/ Ilverton International, Inc.
-----------------------------------       --------------------------------------



Konrad Meyer                              Max Khan


    /s/ Konrad Meyer
-----------------------------------       --------------------------------------

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