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                         EXECUTIVE EMPLOYMENT AGREEMENT

                                    PARTIES:

                  THOMAS VELIN, Chief Financial Officer ("Executive")
                  12745 Florida Lane
                  Apple Valley, Minnesota 55124

                  August Technology Corporation ("Company")
                  5237 Industrial Boulevard
                  Minneapolis, Minnesota 55439

Dated this 21st-day of September, 1998.

                                    RECITALS

A.       The parties desire to provide for employment of Executive by Company as
         its Chief Financial Officer.

B.       Executive desires to be protected in the event of a change in the
         control of the Company.

C.       Company desires reasonable protection of Company's confidential
         business and technical information which has been developed over the
         years by Company at substantial expense.

Company and Executive, each intending to be legally bound, covenant and agree as
follows:

1.       EMPLOYMENT. Upon the terms and conditions set forth in this Agreement,
         Company hereby employs Executive, and Executive accepts such employment
         as its Chief Financial Officer. Except as expressly provided herein,
         termination of this Agreement by either party shall also terminate
         Executive's employment by Company.

2.       DUTIES. Executive shall devote his full-time and best efforts to
         Company and fulfilling the duties of his position which shall include
         such duties as may from time to time be assigned him or her by the CEO
         or Board of Directors of the Company; provided that such duties are
         reasonably consistent with Executive's education, experience and
         background.

3.       EMPLOYMENT DATE. Executive's employment shall commence as of the date
         hereof ("Employment Date"), and continue until terminated as provided
         herein. In any event, the Agreement shall automatically terminate
         without notice when the Executive reaches 70 years of age. If
         employment is continued after the age of 70 by mutual agreement, it
         shall be terminable at will by either party.

4.       COMPENSATION.

         (a)      BASE SALARY. For all services rendered under this Agreement
                  during the term of Executive's employment, Company shall pay
                  Executive a Base Salary ("Base
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                  Salary" shall mean regular cash compensation paid on a
                  periodic basis exclusive of benefits, bonuses or incentive
                  payments) at the annual rate of $97,500, payable twice monthly
                  subject to adjustment by the Board of Directors at least
                  annually. If the Executive's salary is adjusted during the
                  term of this Agreement, the adjusted amount shall be the Base
                  Salary until further adjusted by the Board of Directors. A
                  merit review will be held at six (6) months from employment
                  start date, with all follow on merit reviews to occur
                  annually, in accordance with the Company's standard review
                  policy.

         (b)      BONUS AND INCENTIVE. Bonus or incentive compensation shall be
                  at the discretion of the Board of Directors, provided that
                  Executive shall participate in those bonus or incentive plans
                  in which any executive employee of the Company currently or
                  hereafter participates. Company reserves the right to alter,
                  amend or eliminate any bonus or incentive plans in accordance
                  with their terms.

         (c)      FRINGE BENEFITS. In addition to the compensation payable to
                  Executive as provided in paragraphs 4(a) and (b) above:

                  i)       VACATION. Executive shall be entitled to accrue three
                           (3) weeks paid vacation for each year of employment,
                           which shall be calculated in arrears on a monthly
                           basis commencing as of the end of the month following
                           the Employment Date. Vacation shall accumulate, so
                           that if the full vacation that is earned and accrued
                           in a particular year of employment is not taken in
                           that particular year of employment, any unused
                           portion will be carried into and may be taken in the
                           following year of employment only.

                  ii)      OTHER BENEFITS. The Executive shall be entitled to
                           participate in all other benefit programs offered by
                           the Company to its full-time executive employees,
                           including, but not limited to,
                           health/medical/cafeteria plans; retirement benefits
                           through the Company's 401k plans; personal days off
                           benefits; and other benefits that may be offered from
                           time to time by the Company.

         (d)      STOCK OPTIONS. Company hereby agrees to grant the Executive
                  Incentive Stock Options under the Company's 1997 Stock Option
                  Plan to purchase up to 85,000 shares of its common stock Such
                  options shall have an exercise price equal to $1.80, shall
                  expire seven (7) years from the date of hereof, shall vest 20%
                  per year commencing August 31, 1999 (subject to paragraph 10
                  hereof), and shall have other provisions generally included in
                  stock option agreements of the Company. Such stock options
                  shall be governed by the terms of the Company's applicable
                  stock option plan(s) and a stock option agreement with
                  Executive. It is the intention of the Board of Directors, from
                  time to time, to make additional options available to
                  executives based on performance.

5.       BUSINESS EXPENSES. Company shall, in accordance with, and to the extent
         of, its policies in effect from time to time, bear all ordinary and
         necessary business expenses incurred by the Executive in performing his
         duties as an employee of Company, provided that


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         Executive accounts promptly for such expenses to Company in the manner
         prescribed from time to time by Company.

6.       TERMINATION. Subject to the respective continuing obligations of the
         parties, pursuant to paragraphs 7, 8, 9, 10, 11 and 12, this Agreement
         may be terminated as follows:

         (a)      BY THE COMPANY. The Company may terminate this Agreement under
                  the following circumstances:

                  (i)      WITH CAUSE, ETC. Company may terminate this Agreement
                           immediately for cause, which for purposes of this
                           agreement shall include without limitation, fraud,
                           misrepresentation, theft or embezzlement of Company
                           assets, material intentional violations of law or
                           Company policies, actions involving moral turpitude
                           or a material breach of the provisions of this
                           Agreement, including specifically the repeated
                           failure to perform his duties as required by
                           paragraph 2 after notice of such failure from Company
                           and the expiration of thirty (30) days without
                           collective action having been undertaken by
                           Executive.

                  (ii)     WITHOUT CAUSE. Company may terminate this Agreement
                           without cause on sixty (60) days' advance written
                           notice subject to the severance payment provisions
                           set forth in paragraph 7.

         (b)      BY EXECUTIVE. Executive may terminate this Agreement without
                  cause on sixty (60) days' notice.

         (c)      DEATH. If Executive should die during the term of this
                  Agreement, this Agreement shall thereupon terminate; provided,
                  however, that the Company shall pay to the Employees
                  beneficiary or estate, the compensation as provided in
                  paragraph 7 below.

         (d)      PERMANENT DISABILITY. in the event the Executive should become
                  permanently disabled during the term of this Agreement, then
                  this Agreement shall terminate. For the purposes hereof, a
                  permanent disability shall mean that disability resulting from
                  injury, disease or other cause, whether mental or physical,
                  which incapacitates the Executive from performing his normal
                  duties as an employee, appears to be permanent in nature and
                  contemplates the continuous, necessary and substantially
                  complete loss of all management and professional activities
                  for a continuous period of six (6) months.

         (e)      PARTIAL DISABILITY. If the Executive should become partially
                  disabled, he shall be entitled to his salary as provided
                  herein for a period of six (6) months. At the end of said
                  period of time, if such Executive remains partially disabled,
                  the disabled Executive's salary shall be reduced according to
                  the amount of time the disabled Executive is able to devote to
                  the Company's business.

         (f)      TEMPORARY DISABILITY. In the event the Executive should become
                  disabled, but such disability is not permanent, as defined
                  above, such disabled Executive shall


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                  be entitled to his salary for a period of six (6) months. If
                  such temporary disability continues longer than said period of
                  time, then the disabled Executive shall be deemed to have
                  become permanently disabled for the purposes of this Agreement
                  at the end of said six (6) month period.

7.       REMEDIES FOR EARLY TERMINATION.

         (a)      In the event of termination pursuant to paragraph 6, Base
                  Salary and any other compensation shall be paid as follows:

                  (i)      In the event of termination pursuant to paragraph
                           6(a)(i), Base Salary shall continue to be paid on a
                           semimonthly basis prorated through the date of
                           termination specified in any notice of termination
                           and Executive shall be entitled to continue to
                           participate in those benefit programs provided by
                           Subparagraph 4(c)(ii) for the minimum time period
                           required by law following termination at his own
                           cost.

                  (ii)     In the event of termination pursuant to paragraph
                           6(a)(ii), Base Salary shall continue to be paid on a
                           semi-monthly basis for six (6) months following the
                           date of termination specified in any notice of
                           termination, and Executive shall be entitled to
                           continue to participate in those benefit programs
                           provided by Subparagraph 4(c)(ii) for the longer of
                           six (6) months or the minimum time period required by
                           law following termination, provided that the Company
                           shall bear the cost of such benefits for no longer
                           than six (6) months.

                  (iii)    In the event of termination pursuant to paragraph
                           6(b), compensation shall continue to be paid as if
                           the notice of termination is given by Executive at
                           any time, Base Salary shall continue to be paid on a
                           semi-monthly basis prorated through the date of
                           termination specified in such notice and Executive
                           shall be entitled to continue to participate in those
                           benefit programs provided by Subparagraphs 4(c)(ii)
                           for the minimum time period required by law following
                           termination at his own cost.

                  (iv)     In the event of termination of this Agreement by
                           reason of Executive's death, payment of Base Salary
                           shall terminate as of the end of the month following
                           the Executive's death.

                  (v)      In the event of disability, payment of Base Salary
                           shall terminate as of the end of the month in which
                           the last day of the six (6) month period of
                           Executive's inability to perform his duties occurs.

         (b)      In the event of termination by reason of Executive's death or
                  disability (clauses (a)(iv) and (a)(v) above):

                  (i)      Executive shall receive a pro rata portion (prorated
                           through the last day Base Salary is payable pursuant
                           to clauses (a)(iii) and (a)(iv), respectively) of any
                           bonus or incentive payment (for the you in which
                           death or


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                           disability occurred), to which he/she would have been
                           entitled had he/she remained continuously employed
                           for the full fiscal year in which death or disability
                           occurred and continued to perform his duties in the
                           same manner as they were performed immediately prior
                           to the death or disability; and

                  (ii)     The exercise of any options then held by Executive
                           shall be governed by the terms of the applicable
                           Company stock option plan.

8.       CONFIDENTIAL INFORMATION.

         (a)      For purposes of this paragraph 8, the term "Confidential
                  Information" means information which is not generally known
                  and which is proprietary to Company or which has been made
                  available to the Company in a manner reasonably understood to
                  require confidential treatment, including (i) trade secret
                  information about Company and its products; and (ii)
                  information relating to the business of Company as conducted
                  at any time within the previous two (2) years or anticipated
                  to be conducted by Company, and to any of its past, current or
                  anticipated products, including, without limitation,
                  information about Company's research, development
                  manufacturing, purchasing, accounting, engineering, marketing,
                  selling, leasing or servicing. All information that Executive
                  has a reasonable basis to consider Confidential Information or
                  which is treated by Company as being Confidential Information
                  shall be presumed to be Confidential Information, whether
                  originated by Executive or by others, and without regard to
                  the manner in which Executive obtains access to such
                  information.

         (b)      Executive will be governed by the terms of the Employee
                  Assignment and Disclosure Agreement attached hereto as Exhibit
                  A .

9.       INVENTIONS.

         (a)      For purposes of this paragraph 9, the term "Inventions" means
                  discoveries, improvements and ideas (whether or not in writing
                  or reduced to practice) and works of authorship, whether or
                  not patentable or copyrightable, (1) which relate directly to
                  the business of Company, or to Company's actual or
                  demonstrably anticipated research or development, (2) which
                  result from any work performed by Executive for Company, (3)
                  for which equipment, supplies, facilities or trade secret
                  information of Company is utilized, or (4) which were
                  developed during the time Executive was obligated to perform
                  the duties described in paragraph 2.

         (b)      Executive will be governed by the terms of the Employee
                  Assignment and Disclosure Agreement attached hereto as Exhibit
                  A.

10.      BUSINESS COMBINATION. For purposes of this paragraph 10, a "Business
         Combination" shall mean the merger or consolidation of Company with,
         the sale of all or substantially all the assets of Company to, or the
         ownership of fifty-one percent (51%) or more of the total voting
         capital stock of Company then issued and outstanding by, any person or
         entity not affiliated with Company as of the date of this Agreement. It
         is expressly recognized by the parties that a Business Combination
         would necessarily result in


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         material alteration or diminishment of Executive's position and
         responsibilities. Therefore, notwithstanding any other provision
         herein, if, during the first twenty-four (24) months of this Agreement,
         there shall occur, with or without the consent of Company, a Business
         Combination, the Company shall have the option to terminate this
         Agreement on ten (10) days' notice. Accordingly, in the event that
         Company elects to terminate the agreement because of a Business
         Combination under this paragraph 10:

         (a)      Executive shall be under no obligation whatever to seek other
                  employment opportunities during any period between termination
                  of this Agreement under this paragraph 10 and expiration of
                  six (6) months, and Executive shall not be obligated to accept
                  any other employment opportunity which may be offered to
                  Executive during such period.

         (b)      During such six (6) months, one hundred percent (100%) of
                  Executive's Base Salary in effect upon the date immediately
                  prior to the Business Combination shall continue to be paid on
                  a semi-monthly basis.

         (c)      In addition to the continued compensation provided in
                  paragraph 10(b), a bonus in an amount equal to one hundred
                  percent (100%) of the total aggregate Base Salary payments
                  provided in paragraph 10(b) shall also be paid on a
                  semi-monthly basis for six (6) months, together with the
                  payments provided in paragraph 10(b).

         (d)      Executive shall be entitled to continue to participate in
                  those benefit programs provided by Subparagraphs 4(c)(ii) for
                  the longer of six (6) months or the minimum time period
                  required by law following termination, provided that the
                  Company shall bear the cost of such benefits for no longer
                  than six (6) months.

The right to exercise any unexpired stock options granted Executive shall
accelerate as provided by the terms of the 1997 Stock Option Plan regardless of
when the Business Combination occurs.

11.      NO ADEQUATE REMEDY. The parties declare that it is impossible to
         measure in money the damages which will accrue to either party by
         reason of a failure to perform any of the obligations under this
         Agreement. Therefore, if either party hall institute any action or
         proceeding to enforce the provisions hereof, such person against whom
         such action or proceeding is brought hereby waives the claim or defense
         that such party has an adequate remedy at law, and such person shall
         not urge in any such action or proceeding the claim or defense that
         such party has an adequate remedy at law.

12.      MISCELLANEOUS.

         (a)      SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
                  and inure to the benefit of the successors and assigns of
                  Company, whether by way of merger, consolidation, operation of
                  law, assignment, purchase or other acquisition of
                  substantially all the assets or business of Company and shall
                  only be assignable under the foregoing circumstances and shall
                  be deemed to be materially breached by Company if any such
                  successor or assign does not absolutely and unconditionally
                  assume all of Company's obligations hereunder. Any such


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                  successor or assign shall be included in the term "Company" as
                  used in this Agreement.

         (b)      NOTICES. All notices, requests and demands given to or made
                  pursuant hereto shall, except as otherwise specified herein,
                  be in writing and be delivered or mailed to any such party at
                  its address which:

                  In the case of the Executive shall be:

                                  Thomas Velin
                               12745 Florida Lane
                          Apple Valley, Minnesota 55124

                  In the case of Company shall be:

                          August Technology Corporation
                            5237 Industrial Boulevard
                          Minneapolis, Minnesota 55439

         Either party may, by notice hereunder, designate a changed address. Any
         notice, if mailed properly addressed, postage prepaid, registered or
         certified mail, shall be deemed dispatched on the registered date or
         that stamped on the certified mail receipt, and shall be deemed
         received within the second business day thereafter or when it is
         actually received, whichever is sooner.

         (c)      CAPTIONS. The various headings or captions in this Agreement
                  are for convenience only and shall not affect the meaning or
                  interpretation of this Agreement.

         (d)      GOVERNING Law. The validity, construction and performance of
                  this Agreement shall be governed by the laws of the State of
                  Minnesota and any and every legal proceeding arising out of or
                  in connection with this Agreement shall be brought in the
                  appropriate courts of the State of Minnesota, each of the
                  parties hereby consenting to the exclusive jurisdiction of
                  said courts for this purpose.

         (e)      CONSTRUCTION. Wherever possible, each provision of this
                  Agreement shall be interpreted in such manner as to be
                  effective and valid under applicable law, but if any provision
                  of this Agreement shall be prohibited by or invalid under
                  applicable law, such provision shall be ineffective only to
                  the extent of such prohibition or invalidity without
                  invalidating the remainder of such provision or the remaining
                  provisions of this Agreement.

         (f)      WAIVERS. No failure on the part of either party to exercise,
                  and no delay in exercising, any right or remedy hereunder
                  shall operate as a waiver thereof, nor shall any single or
                  partial exercise of any right or remedy hereunder preclude any
                  other or further exercise thereof or the exercise of any other
                  right or remedy granted hereby or by any related document or
                  by law.


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         (g)      MODIFICATION. This Agreement may not be and shall not be
                  modified or amended except by written instrument signed by the
                  parties hereto.

         (h)      ENTIRE AGREEMENT. This Agreement constitutes the entire
                  Agreement and understanding between the parties hereto in
                  reference to all the matters herein agreed upon; provided,
                  however, that this Agreement shall not deprive Executives of
                  any other rights Executives may have now or in the future,
                  pursuant to law or the provisions of Company benefit plans.

         IN WITNESS WHEREOF, The parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.



                                  ---------------------------------------------
                                  Thomas Velin

                                  August Technology Corporation

                                  By:
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                                  Its:
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