<PAGE>

                                                                   Exhibit 10.3

                          AUGUST TECHNOLOGY CORPORATION

                            INTERNATIONAL DISTRIBUTOR
                                    AGREEMENT

This, Agreement is made as of the 10th day of September, 1999, between AUGUST
TECHNOLOGY CORPORATION, a Minnesota (USA) corporation with a principal place of
business at 5237 Edina Industrial Blvd., Edina, Minnesota 55439, USA, (hereafter
referred to as "August Technology") and Metron Technology B.V., an entity
organized and existing under the laws of The Netherlands, having its principal
place of business at Almere, The Netherlands, (hereafter referred to as
"Distributor").
                                    AGREEMENT

In consideration of the mutual covenants and agreements hereinafter set forth,
the parties agree as follows:

1.       DEFINITIONS:

         The terms listed below will have the following meaning, unless the
         context clearly indicates otherwise:

         1.1      "AGREEMENT" means this International Distributor Agreement and
         all Exhibits.

         1.2      "PRODUCTS" means image inspection technology, vision system
         controlled manufacturing tools, licensed software programs and related
         spare parts manufactured and supplied by August Technology and
         specified in Exhibit A.

         1.3      "COMPETITIVE PRODUCTS" will mean image inspection technology,
         vision system controlled manufacturing tools, licensed software
         programs, and related spare parts, providing substantially the same
         functionality as the Products.

         1.4      "PRICE LIST" will mean the published prices that August
         Technology shall issue from time to time.


         1.5      "Territory" will mean the countries specified in Exhibit D.

2.       APPOINTMENT AND TERRITORY:

         August Technology hereby appoints Distributor as its exclusive
         authorized Distributor for the purpose of selling and servicing the
         Products to customers in the Territory only (except to those customers
         listed in .Exhibit C, which are considered exclusive August
         Technology-accounts). Distributor agrees that it will resell Products
         to end-user of the


                                                                          PAGE 1

<PAGE>

         Products only and not to resellers through its staff of employees and
         not through or by means of third-party dealers, sub-agents or
         representatives. Distributor agrees not to establish a branch office or
         other entity or association for the purpose of selling or distributing
         Products outside the Territory.

3.       PRICE, PAYMENT, TAXES, DUTY & DISCOUNT:

         3.1      Prices for the Products purchased under this Agreement,
         including discounts, are subject to change upon thirty (30) days'
         notice, are quoted in U.S. Dollars and are exclusive of taxes, duties,
         freight insurance, or other similar handling costs. All applicable
         duties, sales, use or excise taxes or other charges assessed or levied
         will be added to the purchase price and itemized and/or invoiced
         separately. Price changes will not apply to unfilled purchase orders
         that have been accepted by August Technology prior to the effective
         date of the price change. All prices are F.C.A./F.O.B. point of origin
         or manufacture.

         3.2      The Distributor shall pay for all Products by wire transfer to
         the account of August Technology as specified on Exhibit B or at such
         other bank as may be directed from time to time by August Technology.
         Payment terms for each order are also specified on Exhibit B. If any
         amount remains unpaid after the due date, the outstanding amount will
         incur interest at the rate of one and one-half percent (1.5%) per month
         or at the highest rate allowed by law, which ever is higher. In
         addition, if any amount is not paid when due, August Technology may
         suspend further shipments to the Distributor until all outstanding
         amounts are paid in full and thereafter may require the Distributor to
         open an irrevocable letter of credit for each order in favor of August
         Technology at a bank acceptable to August Technology payable thirty
         (30) days after sight.

         3.3      Both Distributor and August Technology agree that a customer
         order has three primary components: (1) project/equipment
         specification, (2) purchasing/negotiations, and (3) training,
         installation, and follow-on service support. The-Distributor's
         purchasing discount from the August Technology published list price
         will be effected by these primary components (see Table-1).

         TABLE-1:            Equipment Discount Schedule

<TABLE>
<CAPTION>

         ---------------------------------------------------------------------------------------
                               LOCATION                           LOCATION
                                WHERE           LOCATION           WHERE         %OF STANDARD
              ORDER             PROJECT           WHERE            EQUIP.           EQUIP.
           POSSIBILITY         SPECIFIED       P.O. ISSUED        INSTALLED        DISCOUNT
         ---------------------------------------------------------------------------------------
<S>                            <C>              <C>               <C>                  <C>
                1              Territory        Territory         Territory            100%
         ---------------------------------------------------------------------------------------
                2              Territory        Territory          Not in              66 1/3%
                                                                  Territory
         ---------------------------------------------------------------------------------------
                3              Not in           Territory         Territory            66 1/3%
         ---------------------------------------------------------------------------------------
                4              Territory         Not in
                                                Territory         Territory            66 1/3%
         ---------------------------------------------------------------------------------------
                5              Territory         Not in            Not in              33 1/3%
                                                Territory         Territory
         ---------------------------------------------------------------------------------------
                6               Not in          Territory          Not in              33 1/3
                               Territory                          Territory
         ---------------------------------------------------------------------------------------


                                                                          PAGE 2

<PAGE>

<CAPTION>

         ---------------------------------------------------------------------------------------
                               LOCATION                           LOCATION
                                WHERE           LOCATION           WHERE         %OF STANDARD
              ORDER             PROJECT           WHERE            EQUIP.           EQUIP.
           POSSIBILITY         SPECIFIED       P.O. ISSUED        INSTALLED        DISCOUNT
         ---------------------------------------------------------------------------------------
<S>                            <C>              <C>               <C>                  <C>
                7               Not in           Not in           Territory            33 1/3%
                               Territory        Territory
         ---------------------------------------------------------------------------------------
                8               Not in           Not in            Not in                   0%
                               Territory        Territory         Territory
         ---------------------------------------------------------------------------------------
</TABLE>


4.       TITLE, SECURITY AGREEMENT, RISK OF LOSS:

         4.1      Title and ownership of the Products shall remain in August
         Technology until payment is made in full including any additional
         charges provided for herein.

         4.2      August Technology reserves a purchase money security interest
         in the Products sold hereunder as security for performance of the
         Distributor's obligations set forth herein. A copy of this
         International Distributor Agreement in addition to a specific purchase
         order or orders may be filed as evidence thereof. In addition, and as
         may be allowed by local law, the Distributor will record any
         reservation of title or liens in favor of August Technology in such a
         format and at all places directed by August Technology including,
         without Stations on all purchase orders or invoices issued to customers
         of the Distributor prior to delivery of Products to the customer if
         payment or any portion thereof remains outstanding at the time of
         delivery to customer.

         4.3      Risk of loss shall pass to the Distributor or the
         Distributor's customer upon transfer of the Products to the
         Distributor's or customer's common or specified carrier. The
         Distributor expressly agrees to keep in force fire, theft, and accident
         insurance for the benefit of both parties as their interests appear on
         the date of shipment. Freight, insurance, export arrangements and other
         similar costs and duties shall be solely the responsibility of the
         Distributor or the Distributor's customer; August Technology takes no
         responsibility therefor.

5.       PURCHASE ORDERS, SHIPMENTS, CANCELLATIONS & CHANGES, DELIVERY:

         5.1      The Distributor agrees to deliver to August Technology a hard
         copy purchase order, in substantially the form attached hereto as
         Exhibit E, before August Technology will accept an order. August
         Technology reserves the right to amend the contents of Exhibit E from
         time to time, as the need for different or additional information
         required to process a purchase order is deemed to be necessary.
         Distributor purchase orders are subject to acceptance at August
         Technology.

         August Technology reserves the right to reject any order which does not
         comply with the provisions of this Agreement and conform to Exhibit E.
         AR orders accepted for delivery will be governed exclusively by the
         terms and conditions of this Agreement and its incorporated Exhibits.
         Unless August Technology expressly agrees in writing, no additional or
         different terms and conditions appearing on the face or reverse side of
         any order issued by Distributor will become part of such order.
         Acknowledgment of a


                                                                          PAGE 3

<PAGE>

         Distributor purchase order by August Technology will not constitute
         acceptance of any additional or different terms and conditions.

         5.2      No purchase order will be binding on August Technology until
         accepted by August Technology in writing. August Technology agrees to
         use its best efforts to accept or reject a purchase order, and notify
         Distributor within three (3) working days from receipt of order.

         5.3      Distributor may cancel a shipment or request a change in a
         scheduled shipment date at no charge up to ninety (90) days prior to
         shipment. In the event Distributor cancels or requests a schedule
         change within ninety (90) days prior to shipment a portion of the
         purchase order amount (price) will be charged as provided below. No
         cancellation or changes in a scheduled shipment may be made within
         fifteen (15) days of shipment.

                  5.3.1    RESCHEDULING.  (LATER DELIVERY).

                  Distributor may reschedule shipment of Products for up to
                  sixty (60) days upon written notice, on a one-time basis per
                  purchase order, without cost or liability. Distributor agrees
                  to immediately provide August Technology with a written notice
                  of any rescheduling.

                  5.3.2    CANCELLATION.

                  Distributor may cancel any purchase order in advance of
                  shipment upon written notice to August Technology, subject to
                  the following:

                           (i)      No cancellation is possible within fifteen
                                    (15) days of the shipment date on the
                                    purchase order.

                           (ii)     If cancellation occurs during the LAST 1/3
                                    of the quoted delivery schedule, the charge
                                    will be 25% of the total purchase order
                                    amount - except as provided in "(i)," which
                                    states that no cancellation is possible
                                    within fifteen (15) days of the shipment
                                    date.

                           (iii)    If cancellation occurs during the MIDDLE 1/3
                                    of the quoted delivery schedule, the charge
                                    will be 17.5% of the total purchase order
                                    amount.

                           (iv)     If cancellation occurs during the FIRST 1/3
                                    of the quoted delivery schedule, the charge
                                    will be 10% of the total purchase order
                                    amount.

                                [GRAPHIC OMITTED]

         5.4      August Technology reserves the right to delete a Product from
         Exhibit A if August Technology ceases manufacturing the Product or in
         the event the Product or technology is sold or otherwise transferred to
         a third-party.


                                                                          PAGE 4

<PAGE>

         5.5      August Technology may refuse to ship, or delay the shipment of
         any Products on order, if Distributor becomes delinquent in performance
         of its obligations or fails to meet other credit or special
         requirements established by August Technology. No such cancellation,
         refusal or delay will be deemed a termination of this Agreement by
         August Technology, unless August Technology advises Distributor.

         5.6      All Products will be considered delivered to distributor
         F.C.A./F.O.B. point of origin or MANUFACTURE upon transfer to
         Distributor's or customer's common or specified carrier.

6.       INDEPENDENT CONTRACTOR:

         6.1      The Distributor agrees that it has been granted the right to
         distribute and market the Products for resale to Distributor's
         customers and to conduct its business as an independent agent with
         respect to August Technology. The Distributor agrees that it will at
         all times, represent to third persons and to the public generally and
         to all governmental bodies and authorities that the business conducted
         by Distributor with respect to August Technology is that of an
         independent agent and that is the sole relationship and exclusive
         relationship between the Distributor and August Technology. It is
         expressly understood that the Distributor is not in any way constituted
         the legal representative of August Technology for any purpose
         whatsoever with respect to the Products. It is further expressly
         understood that the sole compensation to be received by the Distributor
         shall be derived from sales of the Products. The Distributor has no
         claim or right against August Technology for compensation for efforts
         to market August Technology's Products except as herein provided.

         It is further understood that the Distributor may have its employees
         and agents in the Territory engage in the solicitation of orders for
         selling and/or servicing of August Technology's Products, and in that
         event those persons shall be employees or agents of the Distributor and
         not of August Technology. All financial obligations associated with
         Distributor's business are the sole responsibility of Distributor. The
         Distributor shall hold August Technology harmless from all losses,
         damages, costs, and expenses of any nature, including attorneys' fees,
         arising from or in any way connected with an act failure to act, or
         negligence of the Distributor or its employees or agents, or others
         acting with authority from the Distributor in the sale, transportation,
         possession, or use of the Products. Distributor and August Technology
         agree that this Agreement does not establish a franchise, joint
         venture, or partnership.

         6.2      Any commitment made by Distributor to its customers with
         respect to quality, delivery, modifications, interfacing, capability,
         suitability of software, or suitability in specific applications, will
         be Distributor's sole responsibility, unless prior written approval is
         obtained from August Technology. Distributor has no authority to modify
         the Product Warranties.

         6.3      Distributor has the right to determine its own resale prices,
         and no August Technology representative will require that any
         particular price be charged by Distributor.


                                                                          PAGE 5

<PAGE>

         6.4      Distributor agrees that August Technology may market and sell
         Products, other than those listed in Exhibit A, without making them
         available to Distributor.

         6.5      August Technology assigns each distributor based on their
         respective expertise and comprehensive knowledge of the Territory,
         including regional customs, culture, and specific customer business
         practices. Distributor agrees that the standard distributor equipment
         discount is provided by August Technology in order that August
         Technology can fully rely on the Distributor for all sales, marketing,
         training, service, and financial responsibilities (in order to satisfy
         the agreed upon payment terms m this Agreement).

7.       PRODUCT ACCEPTANCE:

         Distributor agrees to inspect all Products immediately upon receipt at
         their facility, and may reject any Products that fail to meet the
         August Technology published specifications. Any Products not rejected'
         within fifteen (15) days after receipt by Distributor will be
         considered accepted. Distributor agrees to provide a detailed written
         notification to August Technology of any and all reasons for rejection
         within the fifteen (I 5) day inspection period. Upon receipt of
         rejection notification, August Technology will promptly determine an
         appropriate course of action to be taken regarding the rejected
         Products. All returns of rejected Products to August Technology will
         require prior written approval by August Technology.

8.       OBLIGATIONS OF AUGUST TECHNOLOGY:

         During the term of this Agreement August Technology agrees to perform
         the following:

         8.1      August Technology will furnish to Distributor circulars,
         catalogs, advertising literature, samples, information on new product
         releases, current technical data and all other sales materials
         pertinent to the sale and distribution of the Products in the Territory
         in the English language only and will otherwise assist the Distributor
         in the sale of its Products as requested by the Distributor. In
         addition, August Technology will identify Distributor as its exclusive
         distributor in the Territory for Products in appropriate advertising
         and other promotions.

         8.2      August Technology agrees to provide training for Distributor
         personnel for Products. Training will be available (at a minimum) as
         follows:

                  8.2.1    August Technology will provide factory training at a
                           minimum of one (1) time per year. August Technology
                           will pay for all training material and class room
                           time. All other expenses, including air travel and
                           hotel accommodations, will be paid for by
                           Distributor.

                  8.2.2    In addition to factory training, August Technology
                           may provide at Distributor's facility on a mutually
                           agreed upon bases (for example, during a trade show
                           in Distributor's Territory). This additional training
                           is in no way intended to be a substitute for factory
                           training.


                                                                          PAGE 6

<PAGE>

         8.3      August Technology agrees to actively support the marketing,
         sales, and service efforts of Products by Distributor, give priority
         responses to Distributor's requests, and keep Distributor informed of
         lead times and any related changes to Products.

9.       OBLIGATIONS OF DISTRIBUTOR:

         During the term of this Agreement Distributor agrees to perform the
         following:

         9.1      Distributor agrees to use its best efforts in good faith to
         promote, demonstrate, and sell Products on a face-to-face basis and in
         an end-user environment within the Territory. Distributor agrees to
         ensure the highest quality of pre-sale and post-sale support to the
         customers, and to promote the goodwill, name and interests of August
         Technology and its Products. August Technology expects the Distributor
         to provide the following basic marketing activities in the Territory -
         [a] industry trade shows, [b] print advertising, [c] direct mail
         campaigns, [d] marketing literature and data sheets in local language
         (if necessary). In connection with the foregoing, the Distributor also
         agrees to do the following:

                  9.1.1    Provide each customer at the time of order acceptance
                           a written copy of the August Technology statement of
                           warranty ("August Technology Statement of Warranty")
                           attached hereto as Exhibit F.

                  9.1.2    Solicit potential and existing customers on a regular
                           basis and deliver to August Technology, not later
                           than the end of each month, a written report of all
                           activities of the, Distributor with respect to key
                           customers during that month.

                  9.1.3    Keep August Technology continuously informed of the
                           progress of the Distributor's marketing efforts, and
                           the efforts of all of the Distributor's sales
                           representatives.

                  9.1.4    Deliver to August Technology, not later than June 30
                           each year, a forecast of potential sales of Products
                           in the Territory for the next twelve month period,
                           including the names of customers, type and quantity
                           of Products likely to be purchased. In addition, not
                           later than the end of each calendar quarter,
                           Distributor agrees to provide updates of the
                           foregoing to August Technology in a similar format to
                           roll the forecast forward, with actual sales against
                           the forecasted sales, and projecting sales out
                           continuously for each twelve month period.

         9.2      Distributor agrees to purchase demonstration Products, within
         thirty (30) days of this Agreement, to be used to actively promote,
         demonstrate, and sell Products to the customers. A demonstration unit
         may be purchased for each Product at a special discount of 32.5% off
         published list pricing. This demonstration discount is available
         one-time per year, beginning from the date of first demonstration
         equipment purchase. Distributor has the right to re-sell the
         demonstration equipment at any time, provided that it is immediately
         replaced (physically) with another similar or functionally enhanced
         unit (replacement of the demonstration equipment will be at the
         standard Distributor Products


                                                                          PAGE 7

<PAGE>

         discount price if the replacement occurs before the one-time per year
         special discount period expires). At the end of this agreement,
         Distributor has the right to return the demonstration unit to August
         Technology for the value that was paid for it originally, provided that
         effort has been made to first sell the demonstration unit in the
         Region.

         9.3      Distributor agrees to maintain adequate facilities and to
         actively train and maintain an adequate number of employees to properly
         promote, demonstrate, sell, and service the Products. Distributor will
         ensure that its employees complete appropriate training courses (at a
         minimum of one time per year at August Technology's facility). August
         Technology will pay for all training material and class room time. All
         other expenses, including air travel and hotel accommodations, will be
         paid for by Distributor.

         9.4      Distributor agrees to promptly handle customer complaints,
         inquiries and orders, and will provide and support Territory based
         services such as applications assistance, operation and maintenance
         training, Factory Acceptance Testing (F.A.T. - held at August
         Technology), final on-site acceptance testing, warranty labor services,
         post-warranty spares and service support systems retrofits, up-grade
         kit installation, and the like. Distributor agrees to stock adequate
         spare parts for Products to meet the requirements of this Agreement as
         defined in Exhibit A.

         9.5      Distributor agrees to handle all warranty claims of customers
         and comply with August Technology policy for in-warranty repairs and
         post-warranty support of Products.

         9.6      Distributor agrees to conduct its marketing, sales and service
         activities in compliance with local laws, rules and regulations. Both
         August Technology and the Distributor acknowledge each and every
         authorized representative or distributor of August Technology Products
         is an integral part of a worldwide network and that not -only August
         Technology but all other representatives and distributors of August
         Technology are relying upon the Distributor to perform in accordance
         with this Agreement. For this reason, the Distributor will maintain the
         highest standards of performance in sales, service, physical
         facilities, financial responsibility and general conduct toward the
         public.

         9.7      Distributor agrees to bear all of its operating expenses
         during the term of this Agreement. Distributor will maintain sufficient
         net worth and working capital and devote sufficient financial resources
         to allow Distributor to perform its obligation as outlined in this
         Agreement.

         9.8      If, during the term of this Agreement, Distributor receives
         any inquiry or order regarding Products from any person or business
         entity outside the Territory, Distributor agrees to immediately refer
         the inquiry or order to August Technology, and agrees not to receive
         compensation for this referral.

         9.9      Distributor agrees to, at its expense, arrange for the
         violation of any documentation for the use and operation of the
         Products in the Territory (as required or determined to be necessary by
         Distributor). Distributor shall use its best efforts to make any
         translation accurate.


                                                                          PAGE 8

<PAGE>

         9.10     Distributor agrees to establish a cleanroom at it's facility
         in Taiwan for the purposes of displaying, operating and using the
         demonstration unit and to provide August Technology's Field
         Applications Engineer an office space and phone at this same facility.

10.      INTELLECTUAL PROPERTY:

         10.1     Products shall bear only the trademarks, trade names, other
         marks, or intellectual property rights of August Technology
         (hereinafter referred to as the "Trademarks") as designated by August
         Technology from time to time. To the extent applicable, August
         Technology may grant to the Distributor during the term of Trademarks,
         however, will be strictly to the marketing and sale solely of the
         Products as specifically set forth in this Agreement and does not
         include the right to use the Trademarks generally in the name of the
         Distributor's business or for any other products or services offered by
         the Distributor. In addition, the Distributor will execute, separate
         agreements acknowledging this license, including a registered user
         agreement, if appropriate, for filing with appropriate trademark
         offices. The Distributor shall at all times comply with the reasonable
         instructions or requests of August Technology with respect to the
         application, fixation, manner, and styling of the Trademarks, its
         packaging, and all other documents, marketing, or promotional material.

         10.2     The Distributor acknowledges that August Technology has the
         sole right, title, and interest in the Trademarks, and all other rights
         associated with the Products, including, but not limited to, any
         patents, know-how, approvals, certifications of Products (in the
         countries of the Territory), and all other records or information of
         August Technology with respect to the sale, distribution, and servicing
         of the Products, and all catalogs and other printed information of
         August Technology, whether or not prepared by the Distributor (the
         "Property").

         10.3     Upon request by August Technology the Distributor agrees, on
         behalf of August Technology to assist August Technology in securing any
         approvals, certifications, registrations, letters patent or any other
         registrations to protect the Property in the Territory.

         10.4     The Distributor agrees to promptly inform August Technology
         upon the assertion of a claim, institution of a proceeding by a third
         party, or any circumstances giving rise to any claim by August
         Technology against a third party with respect to the Products, August
         Technology, the Trademarks, or the Property. August Technology shall
         have complete control of any litigation or proceeding related to
         alleged or actual pirating, infringement or imitation of Products, the
         Property, or the Trademarks. The Distributor will advise all employees,
         officers, directors, and agents of the Distributor that the Property is
         the property of August Technology.

         10.5     The Distributor represents and warrants that the Distributor
         has not sought or obtained, and agrees not to seek or obtain, in the
         Territory, or elsewhere, unless for the benefit and at the request of
         August Technology any certification, registration, or approval
         embodying the Property, including, but not limited to, patents,
         copyrights, trademarks, trade names, product certifications; and agrees
         further to discontinue all use


                                                                          PAGE 9

<PAGE>

         of the Property or the Trademarks immediately upon termination of this
         Agreement for any reason. Furthermore, in the event the Distributor
         obtains registrations or certifications of Products in the countries of
         the Territory at the request of August Technology, the parties agree
         those registrations and certifications are solely for the benefit of
         August Technology, they may be canceled or referred by August
         Technology at any time, and the Distributor shall execute all documents
         appropriate to accomplish the cancellation or transfer thereof.

         10.6     The Distributor agrees not to use the Property or the
         Trademarks and any goodwill related thereto except solely as approved
         by August Technology, and only in connection with advertising and
         promoting the Products. Any such use, value, or goodwill shall inure
         solely to the benefit of August Technology and shall not give rise to
         any license to the use thereof by or to further compensate the
         Distributor.

         10.7     The Distributor shall communicate promptly to August
         Technology all engineering, applications, ideas, developments,
         improvements or changes, whether patentable or not, conceived or made
         by the Distributor or the Distributor's representatives,
         sub-distributors, or agents, alone or in conjunction with others during
         the term of this Agreement relating to the Products (the "Distributor's
         Suggestions").

         10.8     The Distributor and August Technology shall make every effort
         to agree upon reasonable terms to allow August Technology to acquire
         the rights to the Distributor's Suggestions. The Distributor shall not
         sell grant, or otherwise offer to third parties any title to the
         Distributor's Suggestions. August Technology shall have the sole right
         to acquire the title or license to the Distributor's Suggestions, and
         the Distributor agrees to offer such rights to August Technology on
         request.

         10.9     The parties understand that, except as may be otherwise
         expressly stated herein, neither the terms and conditions of this
         Agreement nor the acts of either party arising out of this Agreement or
         in connection with performance hereunder, may be considered in any way
         as a grant of any license whatsoever under any of August Technology's
         present or future patents, copyrights, trademarks, trade secrets or
         other proprietary rights; nor is any such license granted by
         implication, estoppel or otherwise.

11.      PRODUCT LIABILITY; TECHNICAL INFORMATION; WARRANTY:

         11.1     The Distributor shall have no responsibility for the Products
         manufactured by August Technology to the purchasers of such Products or
         to persons claiming through such purchasers; unless the Distributor has
         assembled and/or serviced such Products and has failed to do so
         pursuant to August Technology's instructions and warranty, or has
         represented or warranted the Products beyond the scope of August
         Technology's written warranty, if any, without the express written
         authority of August Technology. Except as herein provided, any product
         liability which may result from the sale or distribution of August
         Technology's Product shall be the sole responsibility of August
         Technology and not of the Distributor. The Distributor agrees not to
         make any such representations concerning August Technology's Products,
         other than such representations as may be made by August Technology
         from time to time in writing.


                                                                         PAGE 10

<PAGE>

         11.2     IN NO EVENT SHALL AUGUST TECHNOLOGY OR THE DISTRIBUTOR BE
         LIABLE TO ONE ANOTHER FOR GENERAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES
         OR FOR LOSS OF ANTICIPATED PROFITS ON ANY CLAIM OF ANY KIND STEMMING
         FROM A PURCHASE ORDER, A PRODUCT, OR FROM PERFORMANCE OR BREACH OF THIS
         AGREEMENT EXCEPT FOR BREACH OF SECTION 11.1.

         11.3     No warranties exist with respect to the Products except
         express warranties explicitly provided in customer quotations, catalogs
         and other materials provided to the Distributor for delivery to
         ultimate customers. August Technology EXPRESSLY DISCLAIMS ANY IMPLIED
         WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND
         ANY OTHER WARRANTY, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO,
         ANY IMPLIED WARRANTY ARISING OUT OF A COURSE OF DEALING OR PERFORMANCE,
         CUSTOMER USAGE OR TRADE USAGE, EXCEPT EXPRESS WRITTEN WARRANTIES, IF
         ANY, PROVIDED TO ULTIMATE CUSTOMERS IN WRITTEN MATERIALS PROVIDED BY
         AUGUST TECHNOLOGY RELATING TO THE PRODUCTS.

         11.4     August Technology warrants that August Technology Products
         sold and delivered to the Distributor hereunder are in accordance with
         August Technology's Statement of Warranty attached hereto as Exhibit F
         (the "August Technology Statement of Warranty").

         11.5     August Technology reserves the right to change technical
         specifications without notice. Some information contained within
         Product catalogs has been obtained from sources other than August
         Technology, but is believed to be reliable. No warranty, express or
         implied, is made or intended as to the accuracy or the completeness
         thereof. August Technology cannot anticipate all applications or
         variations in the use, application or manufacturing methods intended by
         end users of the Products; therefore, August Technology does not assume
         liability for use thereof in association with any technical information
         contained in Product catalogs.

12.      POST-WARRANTY SPARE PARTS SUPPORT:

         August Technology agrees to use its best efforts to maintain the
         ability to provide spare parts and documentation for any Products
         shipped to the Territory for as long as technologically and
         economically feasible. If a direct replacement spare part can not be
         maintained to exact specifications, August Technology will make every
         effort to supply an equal or superior substitute spare part. For a
         period of five (5) years -following Product purchase, under no
         circumstances will the customer be forced to abandon the use of an
         August Technology Product (or accept inferior performance) due to
         unavailable post-warranty service or spare parts.

13.      WARRANTY PROCEDURES:

         13.1     Distributor agrees to request approval from August Technology
         before returning any defective Products. Once approval is granted,
         August Technology will provide


                                                                         PAGE 11

<PAGE>

         Distributor with a Return Material Authorization (RMA) number to be
         displayed on the shipping container of the defective Products. Once
         August Technology approves-the return of any defective Product,
         Distributor agrees to ship the Products to August Technology's factory
         using an August Technology approved shipping method. August Technology
         will attempt to make all necessary repairs or replacements, and will
         ship the Product or a substitute of substantially the same form and
         function back to Distributor or its customer, freight prepaid.

         13.2     All returned Products found to be free of defects will be
         subject to an inspection charge of ten (10) percent of the purchase
         order amount, plus shipping charges. Repairs and replacements due to
         reasons not covered by the warranty will be invoiced at August
         Technology's then current prices and will be payable under the terms of
         this Agreement.

14.      CONFIDENTIALITY:

         The Distributor agrees and shall cause its employees, officers and
         agents: (a) not to communicate, divulge, or use for the benefit of any
         other firm, person, or organization, any of the business secrets or
         methods, business policies, manuals, instructions, reports, and lists
         of names of customers of August Technology; (b) to exercise caution at
         all times in protecting confidential information of August Technology
         pertaining to the Products, its pricing, business, or assets with at
         least the same degree of care as is by the Distributor for the
         protection of its own confidential and proprietary information; and (c)
         not to reveal any other confidential information of August Technology.
         The provisions of this Section 14 shall survive termination of this
         Agreement and the Distributor shall return to August Technology, and
         refrain after the termination of this Agreement from any use of, all
         samples, manuals, product information letters, and similar material
         supplied to it by August Technology, including, but not limited to, all
         documents and copies thereof designated confidential by August
         Technology.

15.      TERM AND TERMINATION:

         15.1     EFFECTIVE DATE. This Agreement shall become effective on the
         date executed (the "Effective Date").

         15.2     TERM - This Agreement shall continue in effect for a period of
         two(2) years from the Effective Date unless terminated sooner in
         accordance with provisions contained herein (the "Initial Term"). This
         Agreement shall continue after the Initial Term, until voluntarily
         terminated by either party upon written notice delivered at least one
         (1) year prior to the end of the Initial Term or ongoing period. Notice
         will be deemed given on the date that the party mails notice as set
         forth in Section 20 below. However, termination in this manner shall
         not release the Distributor from any accrued obligations of this
         Agreement, which will be satisfied promptly. Except as otherwise
         provided, termination, for whatever reason, shall terminate all rights
         of the Distributor set forth herein, including without limitation, the
         right to market or sell the Products or use the Trademarks.


                                                                         PAGE 12

<PAGE>

         15.3     Notwithstanding the provisions of Section 15.2, either
         Distributor or August Technology may terminate this Agreement, to be
         effective upon receipt of written notice, based on the occurrence of
         any of the following events:

                  15.3.1   If the other party commits a breach of any obligation
                           in this. Agreement which is not cured within thirty
                           (30) days after written notice thereof specifying the
                           nature of the breach.

                  15.3.2   The commencement by either party of a voluntary
                           action under the federal bankruptcy laws, or any
                           other applicable federal state, or foreign
                           bankruptcy, insolvency, or other SIMILAR laws.

                  15.3.3   The consent of either party to the appointment of a
                           receiver, assignee, or e (or other similar official).

                  15.3.4   The admission by either party of its inability to pay
                           its debts as they become due.

                  15.3.5   If Distributor is acquired or in the event of a
                           change in control.

                  15.3.6   The nationalization of either party's assets or
                           business.

                  15.3.7   The passage of any legislation by a country, or
                           subdivision of a country, granting Distributor extra
                           contractual compensation upon termination or
                           non-renewal of this Agreement.

                  15.3.8   By mutual consent at any time and with a written
                           notice of termination signed by both parties.

         15.4     Except as provided for herein, each party acknowledges that
         the other has made no commitments regarding the renewal of this
         Agreement. Neither August Technology or Distributor will be liable to
         the other for damages of any kind, including incidental or
         consequential damages, or for any losses or claims whatsoever on
         account of or arising out of the termination of this Agreement.
         Distributor waives any and all benefit of any law or regulation
         providing compensation arising from the termination or non-renewal of
         this Agreement.

16.      POST TERMINATION COOPERATION:

         Upon receipt of notice of termination, and during the remaining period
         of this Agreement, Distributor agrees to use its best efforts to carry
         out an orderly transition in the marketing, sales, and service of
         Products in the Territory and to facilitate a transfer of the customers
         to a new distributor or to August Technology, as the case may be.
         Distributor's best efforts shall include, but not be limited to,
         introducing August Technology representatives to each customer,
         providing each customer's corporate name and buyer name, relevant
         addresses, communications information, historical prices charged for
         the Products as well as any other information or actions deemed
         necessary to facilitate the transition.


                                                                         PAGE 13

<PAGE>

17.      NON-COMPETE:

         The Distributor agrees that August Technology would be substantially
         harmed if the Distributor were to compete with August Technology by
         manufacturing, selling, marketing or distributing Competitive Products
         in the Territory, except as provided by the terms of this Agreement In
         partial consideration for the benefits provided to the Distributor
         hereunder, the Distributor agrees as follows: Du ring the term of this
         Agreement and for a period of one (1) years following the termination
         of this Agreement for whatever reason, the Distributor shall not,
         directly or indirectly, manufacture, sell market or distribute
         Competitive Products in the Territory, except as provided by the terms
         of this Agreement.

18.      FORCE MAJEURE:

         Neither party will be liable, or deemed to be in breach of this
         Agreement, by reason of any act, delay or omission caused by labor
         disputes, lockouts, or other labor disputes, regulations; ordinances,
         or order of a court of competent jurisdiction, act of government, act
         of God, war, riot, epidemic, flood, earthquake or like natural
         disaster, embargo or quarantine, or any other cause beyond the
         reasonable control of the party claiming force majeure. The party whose
         performance will have been prevented or delayed must provide immediate
         written notice to the other party explaining the nature of the act,
         delay or omission, and the date such condition commenced. The party
         also agrees to provide further written notice when the condition has
         ended.

19.      GOVERNMENT EXPORT RESTRICTIONS:

         Distributor agrees that the Products purchased will not be exported y
         or indirectly, separately or as part of a system, without complete and
         full compliance with the export and re-export restrictions imposed by
         U.S. export laws and regulations. Distributor also agrees to take
         reasonable action to assure that no customer contravenes the U.S. laws
         and regulations.

20.      NOTICES:

         20.1     Notices - Any notices required or permitted to be given under
         this Agreement shall be sufficient if in writing and sent by registered
         or certified mail to the address of the party set forth below. The
         parties hereto may change the address to which notices may be sent by
         giving written notice of such change of address to the other party:


                                                                         PAGE 14

<PAGE>

                            If to August Technology:

                       Vice President, Sales and Marketing
                             August Technology, Inc.
                           5237 Edina Industrial Blvd.
                              Edina Minnesota 55439

                             If to the Distributor:

                                ----------------
                                ----------------
                                ----------------

                                 With a copy to:

                                ----------------
                                ----------------
                                ----------------

21.      GENERAL PROVISIONS:

         21.1     ASSIGNMENT - This Agreement shall be binding upon and inure to
         the benefit of August Technology and the Distributor, and their
         respective successors and permitted assigns. August Technology may
         assign or transfer this Agreement without the permission of
         Distributor.' Any attempted assignment or further in violation of the
         Agreement will be void or effect a termination at the election of
         August Technology. Both parties agree to advise each other of any
         change in ownership, control or operating arrangements.

         21.2     WAIVER - Either party's failure to enforce any provisions of
         this Agreement will not be deemed a waiver of that provision or of the
         right to enforce it in the future.

         21.3     APPLICABLE LAW, MERGER - This Agreement will be governed by
         the laws of the State of Minnesota, USA and specifically excludes the
         United States Convention on Contracts of International Sales of Goods.
         This Agreement, including the attached Exhibits, contains the entire
         and only understanding between the parties, and supersedes all prior
         agreements, either written or oral relating to the subject matter of
         this Agreement. No modifications to this Agreement will be binding on
         either party, unless in writing and signed by both parties.

         21.4     SEVERANCE - If any provision of this Agreement will be
         determined illegal, invalid, or unenforceable, that provision will be
         understood and enforced as if it had been more narrowly drawn so as not
         to be illegal, invalid or unenforceable. Any determination will have no
         effect upon the enforceability of any other provision of this
         Agreement.

         21.5     ARBITRATION - All disputes, controversies or differences which
         may arise between the parties hereto, out of, in relation to or in
         connection with this Agreement or any purchase order for Products
         entered into pursuant hereto, or for the breach hereof or


                                                                         PAGE 15

<PAGE>

         thereof, which cannot be resolved amicably by the parties shall be
         finally settled by arbitration in Minneapolis, Minnesota, pursuant to
         the Commercial Arbitration Rules of the American Arbitration
         Association or its successor, before a panel of one (1) arbitrator to
         be selected in accordance with said rules. Arbitration proceedings
         shall be conducted in the English language. The parties to the
         arbitration shall be provided the opportunity to conduct reasonable
         discovery in accordance with the Federal Rules of Civil Procedure. The
         arbitrator shall establish a discovery schedule and shall rule on all
         discovery issues. The arbitration award rendered shall be final and
         binding upon all the parties and may be reduced to a judgment in a
         court of competent jurisdiction. The arbitration and all proceedings
         related thereto and any award of the arbitrator shall be held in strict
         confidence by the parties. The nonprevailing party shall pay the
         prevailing party's attorney's fees and costs including the arbitrator's
         fees and costs. The award will include interest from the date of any
         damages incurred for breach or other violation of the Agreement until
         the award is paid in full at a rate to be fixed by the arbitrator, but
         in no event less than the London Interbank Offering Rate "LIBOR") per
         annum quoted for the corresponding period by the Bank of America in the
         London Interbank Market of United States Dollars for immediately
         available funds.

         21.6     INJUNCTIONS, OTHER REMEDIES AND PERFORMANCE - The parties
         agree that a breach or a threat of a breach of any provision of
         Sect-ions 10, 14 or 17 herein would result in irreparable injury. The
         parties agree that a party may seek to enforce any or all of Sections
         10, 14 or 17 by applying to the State or Federal District Court in and
         for the State of Minnesota, or any other court of general jurisdiction,
         for injunctive relief only pending commencement and completion of
         arbitration proceedings. The court shall refer proceedings to the
         arbitrator selected herein to determine whether any injunctive relief
         issued hereunder shall be made permanent or be dissolved. The
         arbitrator's finding shall be binding and conclusive upon the parties.
         The non-prevailing party shall pay the prevailing party's attorney's
         fees and court costs.

21.7     COUNTERPARTS - This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective, duly authorized representatives as of the day and year
first above written.

DISTRIBUTOR:                                ACCEPTED BY:

Metron Technology                           August Technology Corporation

       WITH CONTINGENCIES (SEE BELOW)
-------------------------------------       ------------------------------------

Authorized Signature                        Authorized Signature

Title:                                      Title:
      -------------------------------             ------------------------------


                                                                         PAGE 16

<PAGE>

The agreement is being signed with the understanding that Exhibit C will be
negotiated further during the week of September 13, 1999. Ratification of this
agreement is contingent upon consent by both parties on the contents of Exhibit
C after those discussions.


                                                                         PAGE 17

<PAGE>

EXHIBIT A:        PRODUCTS


Distributor is granted the right to distribute the following August Technology
Products under the terms of this Agreement.

(1)      CV SERIES - AUTOMATIC CASSETTE INSPECTION SYSTEMS

(2)      NSX SERIES - AUTOMATIC 2ND OPTICAL DEFECT INSPECTION SYSTEMS

Spare parts agreement for each product granted will be as follows:

(1)      CV SERIES - AUTOMATIC CASSETTE INSPECTION SYSTEMS - because the CV
         Series is generally considered to be a "non-production critical" tool,
         it is the Distributor's responsibility to determine each individual
         customer's requirements for spare parts (August Technology will provide
         a recommended spare parts list). Once determined, the Distributor or
         customer is responsible for purchasing these spare parts for local
         stocking.

(2)      NSX SERIES - AUTOMATIC 2ND OPTICAL DEFECT INSPECTION SYSTEMS - because
         the NSX Series is considered to be a "production critical" tool locally
         stocked spare parts are highly recommended. It is the Distributor's
         responsibility to determine each individual customer's requirements for
         spare parts (August Technology will provide a recommended spare parts
         list). Once determined, the Distributor or customer is responsible for
         purchasing these spare parts for local stocking.

NOTE:

Additional Products may be added from time to time by mutual consent and
official amendment to this Exhibit A.


                                                                         PAGE 18

<PAGE>

EXHIBIT B: PRICING, DISCOUNT, AND TERMS


Distributor agrees to pay August Technology for Products purchased based on a
set discount from official published Price Lists, or a set discount from special
pricing quoted by August Technology for mutually agreed to custom projects. The
current applicable Price List for Products and spare parts will be provided and
updated by August Technology on a regular basis.

All pricing is Ex-works (INCOTERMS 1990) at August Technology's factory,
including airfreight.

Distributor agrees to pay all freight insurance, requested interim storage fees,
bank transfer fees, and all international taxes and customs duties assessed on
each order.

Distributor's set discount from official published International Price Lists
will be:  17.5%

Distributor agrees to make all payments in US$ for Products based on the
following terms:

         100% on shipment net 45 days.

         Note:    August Technology views each Distributor as its only
                  "customer" in the Territory, and provides a set discount based
                  on this business model. Payment terms are also based on this
                  business model. Any changes to this model may require August
                  Technology to assume additional business risk, and will
                  require changes to the set discount. August Technology does
                  not expect to participate or be directly involved with any
                  individual customer negotiations (such as pricing, payment
                  terms, delivery, training, warranty, etc.) - this is the full
                  responsibility of the Distributor.

         Distributor agrees to make all payments to August Technology by the
         following method:

                  Direct wire transfer to August Technology's bank. Detailed
                  bank account information is:

                           Norwest Band N.A.
                           Routing # 091000019
                           Swift Code:  NWNBUS44
                           Beneficiary Bank:  Marquette Capital Bank
                           Account Number 6355010918
                           Phone Wire Transfer at:  1-612-525-5944
                           For further credit to:
                           Beneficiary Name:  August Technology
                           Beneficiary Account # 1810820753


                                                                         PAGE 19

<PAGE>

NOTES:

August Technology agrees that the following customers should be approached in a
global strategy with regards to pricing and that both parties will work together
to develop pricing that will allow a global price yet protect both parties gross
margin interests: Intel, Motorola, AMD, Philips and STM.

August Technology agrees that further development is needed on global pricing
and the International Price List. August Technology commits to have this
developed by the end of Ql 2000 and to work with Distributor in the development
of this pricing strategy so that it protects both parties gross margins.

Engineering services, field service labor charges, and personnel travel expenses
are not subject to discounting or commission.


                                                                         PAGE 20

<PAGE>

EXHIBIT C: SPECIAL ACCOUNTS


The following customers who have offices, facilities, factories, fabs, or any
other business facilities within the Territory will be considered Special
Accounts, which will remain exclusive to August Technology regarding all
business activities (including, but not limited to, sales, marketing, and
service support):

August Technology's previous distributor in the Region, Eberts/SET, will
continue to represent August Technology at the following accounts for the
specified products until either a purchase order is received from the customer
for the unit described or December 31, 1999, whichever occurs first.

         NSX Series

                  Philips, KaoHsiung, Taiwan
                  ASE KaoHsiung, Taiwan
                  Chipbond, Taiwan
                  Winbond, Taiwan
                  Amkor, Phillipines
                  Linear Technology, Penang, Malaysia

         CV Series

                  TSMC Hsinchu Taiwan
                  USC Hsinchu, Taiwan
                  SIS Taiwan


                                                                         PAGE 21

<PAGE>

EXHIBIT D: TERRITORY


August Technology hereby appoints Distributor as an authorized, independent,
exclusive Distributor for the Products, for the purpose of reselling and
servicing the Products directly to its customers in the following countries:

                                   South Korea
                                      China
                                    Hong Kong
                                     Taiwan
                                    Thailand
                                    Malaysia
                                   Phillipines
                                    Singapore
                                      India


                                                                         PAGE 22

<PAGE>

EXHIBIT E: PURCHASE ORDER


In order to receive Products, Distributor agrees to deliver to August Technology
a hard copy purchase order. All purchase orders issued by Distributor will
include the following information:

a)       Final customers name (end user) , location and customers official
         purchase order number
b)       Distributor purchase order number
c)       Ship To location
d)       Bill To location and accounts payable contact person
e)       Method of shipment, including contact person and phone number
f)       Quantity and description of each item being purchased
g)       Details of any options purchased
h)       Pricing
i)       Requested ship dates
j)       Power requirements
k)       Environmental Requirements, if any (cleanroom specifications, etc)
l)       Any other special requirements, such as customer part number, drawing
         numbers or samples.


                                                                         PAGE 23

<PAGE>

EXHIBIT F:  AUGUST TECHNOLOGY STATEMENT OF WARRANTY


Hardware Products - August Technology warrants that it will repair or replace,
at its option, hardware Products which are found to be defective in material or
workmanship. August Technology must receive written notification of any defect
within fourteen (14) months from date of shipment. All transportation charges
associated with hardware Products warranty will be arranged and paid for by
August Technology.

Software Products - August Technology warrants that it will repair or replace,
at its option, software Products which fad in a manner which significantly and
adversely affects operating performance as specified in August Technology's
published Products description. August Technology must receive written
notification of any failure to conform within fourteen (14) months from date of
shipment. August Technology does not warrant that the software Products are free
from errors. All transportation charges associated with software Products
warranty will be arranged and paid for by August Technology.

The foregoing warranties will not apply to any deficiency or defect resulting
from:

         (a)      Normal wear and tear, or items subject to deterioration,
                  breakage, or burnout through use.
         (b)      Installation or maintenance by customer or any third party
                  (other dm Distributor).
         (c)      Modifications or alterations made by customer or any third
                  party without August Technology's written consent.
         (d)      Misuse or abuse.
         (e)      Failure of customer to maintain the equipment site, and
                  environmental conditions as required for the normal operation
                  of the Products.
         (f)      Causes beyond August Technology's reasonable control.

August Technology makes no other warranty, either expressed or implied,
including, but not limited to, any implied warranty of merchantability or
fitness for a particular purpose, or arising from course of dealing or usage of
trade. The foregoing constitutes August Technology's sole obligation and the
exclusive remedies of the customer for any breach by August Technology of the
warranties contained in this Agreement. August Technology's total liability
under this Section will be limited to the repair or replacement of Products and
will in no case exceed the value of the purchase order.


                                                                         PAGE 24

<PAGE>

EXHIBIT G: WORLDWIDE SALES AND SERVICE SUPPORT PLAN


                          AUGUST TECHNOLOGY CORPORATION

                     WORLDWIDE SALE'S & SERVICE SUPPORT PLAN

This Plan will define how each Distributor is compensated (paid) when equipment
is shipped into their Territory, August Technology recognizes three (3) periods
of time as shown below.

(1)      Pre-Warranty Period (Installation & Training)
(2)      Warranty Period / Local Service Support (12 months after ship date from
         August
(3)      After Warranty Period (Ongoing Service Support - billable by
         Distributor)

THE PRE- WARRANTY period is for INSTALLATION AND TRAINING of a system once it
has been shipped to the customer. The WARRANTY period is for 12 MONTHS AFTER
SHIPMENT FROM AUGUST TECHNOLOGY. The AFTER-WARRANTY period is for ON-GOING
SERVICE SUPPORT once the standard equipment warranty expires. August Technology
recognizes that the Distributor must be compensated for providing customer
service support during each of these periods.

FOR EXAMPLE: When Distributor "A" takes a purchase order for a CV system in
their Territory, and the customer requests shipment of the system into
Distributor "B" Territory, special arrangements must be made for Installation &
Training and Local Service Support. In this case, DISTRIBUTOR "B" IS RESPONSIBLE
FOR ALL THREE periods -

(1)      Pre-Warranty Period (Installation & Training):  Distributor "N' pays
         for the PRE- WARRANTY (Installation & Training) period.
(2)      Warranty Period (one (1) Year Local Service Support): August Technology
         pays Distributor "B" a 1/3 commission' for the WARRANTY period.
         Distributor "A' receives 1/3 less "commission" on the order.
(3)      After Warranty Period (Ongoing Service Support): Distributor "B"
         charges their normal service support rates for the AFTER- WARRANTY
         PERIOD.

                                [GRAPHIC OMITTED]


                                                                         PAGE 25

<PAGE>

AUGUST TECHNOLOGY'S WORLDWIDE SALE AND SERVICE PLAN IS OUTLINED BELOW.


(1)      REQUEST FOR QUOTATION - when Distributor "A" plans to ship a system
         outside their Territory, they must first contact August Technology and
         request a quotation for the Pre-Warranty Period (Installation &
         Training) at the location where the system will be installed. August
         Technology will contact Distributor "B", request a quotation, and
         forward this quotation to the Distributor "A".

(2)      PRE-WARRANTY PERIOD (INSTALLATION & TRAINING) Distributor "A" must
         include in their pricing the cost of the PreWarranty Period
         (Installation & Training) quoted by Distributor "B". When Distributor
         "A" orders the system from August Technology, their purchase order will
         include: [a] Pre-Warranty Period (Installation & Training), [b]
         equipment, [c] any options ordered.(3) DISTRIBUTOR DISCOUNT ADJUSTMENTS
         MADE - August Technology provides every Distributor and equipment
         purchase discount. This Discount has three (3) parts:

         [1] 1/3, for Project Specification.
         [2] 1/3, for Purchase Order.
         [3] 1/3, for (In-Warranty) Service Support.

in the example shown on the first page, Distributor "A" would receive a 2/3
equipment purchase discount from the list price (for project specification and
purchase order). Distributor "B" would be paid by August Technology for the
Pre-Warranty Period (Installation & Training) of the system (based on the
earlier quotation from Distributor plus 1/3 of the system list price for local
service support during the WARRANTY period.

TO COMPLETE THE EXAMPLE ON THE FIRST PAGE:

Distributor "A" completes the negotiations with LG (Lucky Goldstar) for the
equipment specification and purchase order. LG plans to have the system shipped
to their new factory in the U.K. In this case, Distributor "X' would first
contact August Technology and inform them of these plans.

August Technology would immediately contact Distributor "B" and request
a-quotation for installation and training of the system at LG's site in the U.K.
This quotation is reviewed by August Technology and then forwarded to
Distributor ")V'. Distributor "A" would then add this amount to their quotation
to LG for a complete system package (equipment, options, and local installation
and training).

Once LG places the order, Distributor "A" would order from August Technology,
including equipment, any options, and local installation and training support
for the U.K. NOTE THAT DISTRIBUTOR "A" WILL RECEIVE 2/3 OF THEIR NORMAL
EQUIPMENT DISCOUNT FOR THIS order. Distributor "B"` will be paid their quoted
price, by August Technology, for local installation and (FOR PRE-WARRANTY
support), plus 1/3 of their normal equipment discount for this order (for
Warranty support).

                                                                         PAGE 26

<PAGE>


FOR EXTENDED WARRANTY PERIODS (BEYOND 12 MONTHS FROM SHIP DATE FROM AUGUST
TECHNOLOGY.

Should Distributor "A" choose to offer an EXTENDED WARRANTY PERIOD to the
customer, then Distributor "B" will provide a separate quote for this item. When
Distributor "A" orders the system from August Technology, their purchase order
will include: [a] Pre-Warranty Period (Installation & Training), [b] equipment,
[c] any options ordered and [d] EXTENDED WARRANTY PERIOD.




                                                                         PAGE 27