Document:

EXHIBIT 10.3

                              RETIREMENT AGREEMENT
                              --------------------

         This Retirement Agreement ("Agreement") is between Steven M. Quist
("you") and CyberOptics Corporation (the "Company"). In consideration of the
mutual promises contained in this Agreement, you and the Company agree as
follows:

         1.0 Employment Term. Subject to your compliance with this Agreement and
with the other normal responsibilities of your employment, your employment with
the Company will continue through December 31, 2002 (the "Final Employment
Date"). Effective at the close of business on the Final. Employment Date, you
will retire and your employment with the Company will terminate, although you
may continue as a member of the Board of Directors of the Company after the
Final Employment Date.

         You agree that this Agreement, and the compensation that is provided in
paragraph 2.0 of this Agreement, may be terminated early by the Company in the
event you breach any of your obligations under this Agreement or the
Confidential Information and Inventions Agreement referred to in 5.0 below.

         2.0 Compensation. In consideration for your release contained in
paragraph 7.0 below, and the agreement to provide the Company with post
employment management consulting services contained in paragraph 8.0, the
Company will amend, and by our mutual signatures below is amending, the option
agreements listed in the attached Appendix A (the "Options") to accelerate the
vesting of those Options so that they are fully vested and exercisable from and
after the Final Employment Date and remain exercisable until December 31, 2004.

         You understand and agree that, because of the extension of those
Options past the Final Employment Date, all of the Options will become options
that are not qualified (not "incentive stock options") under Section 422 of the
Internal Revenue Code and understand and agree to the tax consequences of this
change.

         3.0 Forfeiture of Options Resulting From Certain Activities.

         3.1 If, at any time while the Options remain outstanding you engage in
any Forfeiture Activity (as defined below), then the Options shall immediately
terminate effective as of the date any such activity first occurred.

         3.2 As used herein, you shall be deemed to have engaged in a Forfeiture
Activity if you (i) directly or indirectly, engage in any business activity on
your own behalf or as a partner, stockholder (other than as a holder of less
than 5% of the shares of a publicly traded entity), director, trustee,
principal, agent, employee, consultant or otherwise of a Competitor or solicit,
entice or induce any employee or representative of the Company to engage in any
such activity, (ii) directly or indirectly solicit, entice or induce (or assist
any other person or entity in soliciting, enticing or inducing) any customer or
potential customer (or agent, employee or consultant of any customer or
potential customer) with whom you had contact in the course of your employment
with the Company to deal with a Competitor, or (iii) fail to hold in a fiduciary
capacity for the benefit of the Company all confidential information, knowledge
and data, including customer lists and information, business plans and business
strategy ("Confidential

<PAGE>

Data") relating in any way to the business of the Company for so long as such
Confidential Data remains confidential. For purposes of this Section 3.2, a
"Competitor" shall mean any of the companies listed in the attached Appendix B,
or any subsidiary or other company controlled by a company listed in Appendix B.

         3.3 If any court of competent jurisdiction shall determine that the
foregoing forfeiture provision is invalid in any respect, the court so holding
may limit such covenant either or both in time, in area or in any other manner
which the court determines such that the covenant shall be enforceable against
you.

         4.0 Health Insurance and other Benefit Programs. In full satisfaction
of the terms of your offer letter of employment, the Company will provide you
with a post-retirement health insurance benefit. Through the Final Employment
Date, you will be entitled to the same health and dental coverage as you have
received prior to the date of this Agreement. Following the Final Employment
Date, and pursuant to COBRA, you may voluntarily elect to continue group health
and dental coverage, in accordance with the Company's policies for employees,
for a period not to exceed eighteen (18) months. The Company will pay 100% of
the cost of this coverage for you and your spouse. After your COBRA period
expires, and provided that you are not eligible to participate in another
employer-sponsored group medical plan, you will have the right to convert from
the Group plan to an individual plan. The Company will pay you an amount equal
to 100% of the cost for employee plus spouse coverage in the company's employee
plan, through the month in which you turn 65 (January 2011). This payment will
be made on or about April 1 of each year for the upcoming year, and will include
an additional 25% to defray tax expense of the benefit. You will receive a 1099
each year reflecting this payment.

         The Company will pay for PriceWaterhouseCoopers LLP to prepare your
2002 Income Tax returns. Your participation in all other company benefit
programs will cease on your Final Employment Date.

         5.0 Confidential Information. You executed a Confidential Information
and Inventions Agreement with the Company, a copy of which is attached hereto as
Exhibit C. Nothing in this Agreement negates or supercedes the Confidential
Information and Inventions Agreement and all the provisions of the Confidential
Information and Inventions Agreement which, by their terms survive the Final
Employment Date and termination of your employment, continue in full force and
effect and are not negated or otherwise affected by this Agreement.

         6.0 Return of Company Property. You acknowledge that, on or before the
Final Employment Date, you will return all Company property in your possession,
including, but not limited to, all files, memoranda, documents, records, copies
of the foregoing, any Company credit card, fax machine, printer, copier, keys,
access cards, and any other property of the Company in your possession, , except
those applicable to directors to the extent you remain a member of the Company's
Board of Directors and with the exception of any other items mutually agreed
upon by you and the Company.

         7.0 Release. As an inducement to the Company to enter into this
Agreement, you fully release and discharge the Company, and its predecessors,
successors, assigns, subsidiaries, and affiliates, and any of such entities'
respective officers, directors, employees, agents, and

                                      -2-
<PAGE>

shareholders from all liability for damages or claims of any kind arising out of
any actions, decisions, alleged omissions, or events occurring prior to your
signing of this Agreement, including, but not limited to, your termination from
employment, but not including any liability of the Company for indemnity with
respect to your capacity as an officer of the Company through the Final
Employment Date or with respect to your capacity as a director through such the
date of your service as a director. You understand that this release includes
claims under the Minnesota Human Rights Act, Minn. Stat. ss.ss. 363.01, et seq.;
Title VII of the Civil Rights Act, 42 U.S.C. ss.ss. 2000e, et seq.; the Age
Discrimination in Employment Act, 29 U.S.C. ss.ss. 621, et 5N.; and any other
federal, state, or local law, rule, or regulation. You further understand that
this release includes all claims that you have or may have for wrongful
discharge, discrimination, breach of contract, promissory estoppel or breach of
an expressed or implied promise, misrepresentation or fraud, retaliation,
infliction of emotional distress, defamation, or any other common law theory of
recovery, or otherwise based on any other theory, whether legal or equitable,
whether developed or undeveloped, arising from or related to your employment
with the Company, your termination from employment with the Company, or any
other actions, decisions, alleged omissions, or events occurring prior to your
signing of this Agreement.

         You agree that you will not institute any lawsuit against the Company,
and its predecessors, successors, assigns, subsidiaries, and affiliates, and any
of such entities' respective officers, directors, employees, agents, and
shareholders, arising from or related to your employment with the Company, your
termination from employment with the Company, or any other actions, decisions,
alleged omissions, or events occurring prior to your signing of this Agreement
(except to the extent necessary to enforce your rights to indemnity as an
officer or director of the Company). You also waive the right to monetary
damages or other individual legal or equitable relief awarded by any
governmental agency related to any claim against the Company, and its
predecessors, successors, assigns, subsidiaries, and affiliates, and any of such
entities' respective officers, directors, employees, agents, and shareholders,
arising from or related to your employment with the Company, your termination
from employment with the Company, or any other actions, decisions, alleged
omissions, or events occurring prior to your signing of this Agreement (except
to the extent of your rights to indemnity). Appendix D sets forth the statutory
periods during which you may consider this release and this agreement and the
periods of your statutory right to rescind.

         8.0 Post Employment Consulting. You agree to provide management
consulting services as requested by the Company under the terms established in
the Consulting Agreement of APPENDIX E.

         9.0 Breach. If you breach any of the provisions of this Agreement, the
Company shall have the right to terminate its obligations under this Agreement
to you or others whose rights may derive from you.

         10.0 No Admission. This Agreement is not an admission by the Company
that it has acted wrongfully or unlawfully, and the parties agree that it will
not be interpreted as such.

         11.0 Governing Law. This Agreement shall be governed by the laws of the
State of Minnesota. If any part of this Agreement is construed to be in
violation of any law, rule, or

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<PAGE>

regulation, such part shall be modified to achieve the objective of the parties
to the fullest extent permitted, and the balance of this Agreement shall remain
in full force and effect.

         12.0 Entire Agreement. You agree that this Agreement (including the
attached Exhibits) contains the entire agreement between the parties with
respect to the subject matter of this Agreement. Any modification of or addition
to this Agreement must be in writing, signed by an officer of the Company and
you.

         13.0 Acknowledgment. YOU AFFIRM THAT YOU HAVE READ THIS AGREEMENT. YOU
ACKNOWLEDGE THAT YOU WERE PROVIDED WITH A REASONABLE AND SUFFICIENT PERIOD OF
TIME TO CONSIDER WHETHER OR NOT TO ACCEPT THIS AGREEMENT PRIOR TO SIGNING THIS
AGREEMENT. YOU AGREE THAT THE PROVISIONS OF THIS AGREEMENT ARE UNDERSTANDABLE TO
YOU, THAT YOU HAVE ENTERED INTO THIS AGREEMENT FREELY AND VOLUNTARILY, AND THAT
YOU WERE PROVIDED WITH AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY FOR ADVICE IN
CONNECTION WITH THIS AGREEMENT IN WITNESS WHEREOF, the parties have executed
this Agreement by their signatures below.

Dated:  13 Sept. 02                      /s/ Steven M. Quist
        ------------------------         ---------------------------------------
                                             Steven M. Quist

                                         CYBEROPTICS CORPORATION

Dated:  13 Sept. 02                      By  /s/ Steven K. Case
        ------------------------             -----------------------------------
                                         Its     Chairman
                                             -----------------------------------

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                        AMENDMENT TO RETIREMENT AGREEMENT
                        ---------------------------------

         This Amendment to Retirement Agreement ("Amendment"), dated as of this
21 day of November, 2002, amends that certain Retirement Agreement dated as of
September 13, 2002, by and between CyberOptics Corporation (the "Company") and
Steven M. Quist ("you").

         WHEREAS, the Retirement Agreement specifies the financial arrangements
that the Company will provide to you upon your separation from employment with
the Company under the circumstances described therein; and

         WHEREAS, the Company has agreed to employ you on a half-time basis as
its General Manager in its Portland, Oregon facility effective January 1, 2003
at an annualized pay rate of $80,000, until no later than December 31, 2003 on
an at-will basis, and you have accepted such employment; and

         WHEREAS, the parties desire to amend the Retirement Agreement in the
manner set forth herein.

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

1.0      Paragraph 1.0 of the Retirement Agreement is hereby amended to read in
         its entirety as follows:

         1.0      Employment Term. Subject to your compliance with this
                  Agreement and with the other normal responsibilities of your
                  employment, your employment with the Company will continue
                  until no later than December 31, 2003, or such earlier date as
                  your employment is terminated (the "Final Employment Date").
                  Effective at the close of business on the Final Employment
                  Date, you will retire and your employment with the Company
                  will terminate, although you may continue as a member of the
                  Board of Directors of the Company after the Final Employment
                  Date.

                  You agree that this Agreement, and the compensation that is
                  provided in paragraph 2.0 of this Agreement, may be terminated
                  early by the Company in the event you breach any of your
                  obligations under this Agreement or the Confidential
                  Information and Inventions Agreement referred to in paragraph
                  5.0 below.

2.0      Paragraph 2.0 of the Retirement Agreement is hereby amended to read in
         its entirety as follows:

         2.0      Compensation. In consideration for your release contained in
                  paragraph 7.0 below, and the agreement to provide the Company
                  with post-employment management consulting services contained
                  in paragraph 8.0, the Company will amend, and by our mutual
                  signatures below is amending, the option agreements listed in
                  the attached Appendix A (the

<PAGE>

                  "Options") to accelerate the vesting of those Options so that
                  they are fully vested and exercisable from and after December
                  31, 2002 and remain exercisable until December 31, 2004. You
                  understand and agree that, because of the extension of those
                  Options past the Final Employment Date, all of the Options
                  will become options that are not qualified (not "incentive
                  stock options") under Section 422 of the Internal Revenue Code
                  and understand and agree to the tax consequences of this
                  change.

3.0      This Amendment constitutes an amendment of the Retirement Agreement in
         conformity with and pursuant to the terms of paragraph 12.0 of the
         Retirement Agreement. Except as expressly amended herein, all terms set
         forth in the Retirement Agreement shall continue in full force and
         effect.

4.0      This Amendment shall be governed by the laws of the State of Minnesota.
         If any part of this Amendment is construed to be in violation of any
         law, rule, or regulation, such part shall be modified to achieve the
         objective of the parties to the fullest extent permitted, and the
         balance of this Amendment shall remain in full force and effect.

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

Dated:  21 November 02                         /s/ Steven M. Quist
        --------------------                   ---------------------------------
                                               Steven M. Quist

                                               CYBEROPTICS CORPORATION

Dated:  21 November 02                         By  /s/ Kitty Iverson
        --------------------                       -----------------------------
                                               Its President and COO
                                                   -----------------------------EXHIBIT 10.4

                             CYBEROPTICS CORPORATION
                   INDEPENDENT CONTRACTOR - SERVICES AGREEMENT

         This Independent Contractor - Services Agreement (`Agreement") is made
and entered into this 13th day of October 2002 ("Effective Date") by and between
CyberOptics Corporation, having a principal place of business at 5900 Golden
Hills Drive, Golden Valley, Minnesota 55416 U.S.A. ("CyberOptics") and Steven M.
Quist, having a principal place of business at 10565 Estate Drive, Eden Prairie,
MN, 55347 U.S.A. ("Contractor").

                                    RECITALS

         WHEREAS, CyberOptics requires services to address particular business
needs of CyberOptics; and

         WHEREAS, Contractor has expertise in certain services required by
CyberOptics and is willing to provide such services.

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises more particularly set forth hereinafter, the above parties,
intending to be legally bound, agree as follows:

1. DEFINITIONS. As used in this Agreement, the following terms shall have the
following meanings:

         1.1. "Contractor Personnel" shall mean the employees, contractors,
agents, representatives and/or other persons utilized by Contractor to provide
the Services.

         1.2.     "Intellectual Property Rights" shall mean any and all patents,
                  copyrights, trade marks, trade secrets and other intellectual
                  or proprietary rights, and any and all right, title and
                  interest in any of the foregoing.

         1.3.     "Inventions" shall mean any and all improvements, inventions,
                  discoveries, designs and/or implementations, whether or not
                  patentable, created, conceived or first reduced to practice in
                  the performance of this Agreement, and including any
                  Intellectual Property Rights therein.

         1.4.     "Reimbursable Expenses" shall mean any direct, reasonable,
                  verifiable expenses incurred by Contractor related solely to
                  providing the Services for CyberOptics under this Agreement,
                  and which have been pre-approved in writing by CyberOptics.

         1.5.     "Services" shall mean any and all services provided by
                  Contractor and Contractor Personnel to CyberOptics, including,
                  without limitation, any and all materials, documentation,
                  drawings, designs, products, deliverables and/or other items
                  that Contractor provides to CyberOptics as part of such
                  services. The parties will describe the Services in as much
                  detail as is reasonably possible and set forth such in
                  Attachment A to this Agreement ("Statement of Work");
                  provided, however,

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<PAGE>

                  that all Services provided by Contractor and Contractor
                  Personnel for CyberOptics during the term of this Agreement
                  shall be subject to this Agreement, whether or not such
                  Services are included in such description.

         1.6.     "Statement of Work" shall mean the description of the Services
                  to be provided by Contractor under this Agreement, including,
                  as applicable, the required or expected duration of the
                  Statement of Work, the compensation to be paid Contractor
                  under a given Statement of Work, name(s) of authorized
                  Contractor Personnel, and any other special terms or
                  conditions related to providing any specific Services, all as
                  set forth in Attachment A which is incorporated herein by
                  reference.

2.       AGREEMENT TO PERFORM SERVICES / PERSONNEL & RESOURCES. In consideration
         of the compensation to be provided Contractor as set forth in the
         applicable Statement of Work, Contractor agrees to furnish Contractor
         Personnel to provide the Services required by CyberOptics as specified
         in the Statement of Work, and to complete such Services in accordance
         with such Statement of Work. If Contractor is providing Services at
         CyberOptics facility, then CyberOptics will, in its sole discretion,
         furnish Contractor Personnel with reasonable and necessary
         accommodations at such facility to the extent such are required to
         complete the Services (work space, access to any CyberOptics equipment
         and/or computers, etc.). Except for the foregoing accommodations
         provided by CyberOptics, or as otherwise agreed to by CyberOptics in
         writing, Contractor shall furnish all tools, equipment, vehicles and
         other necessary resources to provide the Services specified in the
         Statement of Work.

3.       COMPLETION OF SERVICES. Completion of Services within the time
         specified in the applicable Statement of Work is of the essence.
         CyberOptics reserves the right to immediately terminate, without
         incurring any cost or liability whatsoever, all or part of the
         uncompleted portion(s) of the Statement of Work if Contractor does not,
         or if in CyberOptics' reasonable judgment Contractor cannot, complete
         the Services as specified in the Statement of Work. If Contractor fails
         to meet the Statement of Work completion schedule, CyberOptics shall be
         entitled to request completion of the Services by the most expeditious
         means available with expenses related to such means to be borne by
         Contractor.

4.       OTHER CONTRACTORS. CyberOptics retains the right to contract with other
         companies, contractors, individuals or entities for services, materials
         or other items similar or identical to the Services provided by
         Contractor under this Agreement.

5.       INDEPENDENT CONTRACTOR / RESPONSIBILITY. Contractor agrees that it is
         an independent contractor and that it has no right or authority to bind
         Cyber0ptics in any way. Contractor and Contractor Personnel shall not
         be considered employees, agents or representatives of CyberOptics for
         any purpose whatsoever, and Contractor shall have full responsibility
         and liability, at all times, for any and all actions and consequences
         of Contractor Personnel. Contractor Personnel shall not be entitled to
         any benefits from CyberOptics whatsoever, including, without
         limitation, those benefits that CyberOptics provides its employees.
         Contractor is responsible for the payment of compensation to the

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<PAGE>

         Contractor Personnel and, as applicable, for any withholding of any
         taxes (including, without limitation, any taxes related to income,
         social security or otherwise), workers compensation coverage,
         unemployment and disability benefits, and the like. Should Contractor
         breach any of the foregoing provisions, Contractor shall indemnify and
         hold CyberOptics harmless from all costs, expenses, liabilities of any
         kind arising out of or incidental to such breach (including, without
         limitation, any reasonable attorneys' fees).

6.       INVENTIONS & OWNERSHIP. Contractor and Contractor Personnel shall
         promptly disclose to CyberOptics any and all Inventions which
         Contractor or Contractor Personnel, individually or in collaboration
         with Cyber0ptics or others, may conceive or first actually reduce to
         practice during the term of this Agreement or after the term of this
         Agreement, if such Inventions relate to any Services provided during
         the term of the Agreement. Any and all such Inventions shall be the
         sole and exclusive property of CyberOptics or its nominee, and shall be
         considered "work for hire". Contractor hereby acknowledges and agrees
         that all right, title and interest in and to the Services, including,
         without limitation, any and all Intellectual Property Rights, shall be
         in and with CyberOptics. The foregoing shall not apply to any
         Inventions that satisfy both of the following conditions: (1) that for
         which no equipment, supplies, facility, assistance, compensation, trade
         secret information of CyberOptics, or any CyberOptics Confidential
         Information, was used and/or received by Contractor or Contractor
         Personnel; and (2) that which was developed entirely on Contractor's
         own time using only its employees and/or contractors.

7.       CONTRACTOR ASSISTANCE WITH RESPECT TO INVENTIONS. At any time, whenever
         requested to do so by CyberOptics, Contractor and Contractor Personnel
         shall execute and assign any and all applications, assignments, and
         other instruments, and provide all other aid and assistance which
         CyberOptics deems necessary in its opinion, in order to apply for,
         obtain, perfect and/or assign Intellectual Property Rights in the
         United States or in foreign countries, which are related to and/or are
         a result of the Services (including any Inventions arising thereunder).
         Cyber0ptics shall pay for and/or reimburse Contractor for all
         reasonable and documented expenses incurred by Contractor in providing
         such assistance.

8.       DOCUMENTATION & OTHER MATERIALS. Upon termination of any given
         Statement of Work, and upon termination of this Agreement, Contractor
         shall turn over to CyberOptics all notes, memoranda, drawings, designs,
         software, parts, components or other documents and items (and all
         copies thereof) made, compiled or obtained by Contractor and Contractor
         Personnel comprising or concerning the Services, it being understood
         that the same and all information contained therein shall be at all
         times be the sole property of CyberOptics.

9.       CONTRACTOR PERSONNEL AGREEMENTS. Contractor shall require all
         Contractor Personnel to sign a "Contractor Personnel Confidentiality
         and Invention Assignment Agreement" as set forth in Attachment B, which
         shall be incorporated herein by reference.

10.      AGREEMENT TERM. The term of this Agreement shall be from the Effective
         Date and continue for a period of one (1) year, unless earlier
         terminated as provided herein, or otherwise extended by mutual
         agreement of both parties in writing.

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<PAGE>

11.      TERMINATION & CHANGES.

         11.1.    Either party may terminate this Agreement for any reason at
                  any time by giving the other party five (5) calendar days
                  prior written notice. Notwithstanding the foregoing, once the
                  Contractor has agreed to provide any Services under a specific
                  Statement of Work, the Contractor shall not be permitted to
                  terminate this Agreement and any such Statement of Work
                  unless: (1) Cyber0ptics approves such termination in writing
                  in its sole discretion; or (2) CyberOptics is in substantial
                  breach of a material term of this Agreement and such breach
                  remains uncured for thirty (30) days following Contractor's
                  written notice thereof to CyberOptics. In the event
                  CyberOptics substantially breaches a material term of this
                  Agreement, and CyberOptics has failed to cure such breach
                  within the aforesaid thirty (30) day written notice period,
                  then Contractor may terminate the Agreement and/or any
                  Statement of Work thereunder immediately upon written notice
                  to Cyber0ptics. Any Agreement termination shall not prejudice
                  any other legal rights or remedies available to either party.

         11.2.    Cyber0ptics may, at any time, require modifications be made to
                  the Statement of Work, in whole or part, and Contractor agrees
                  to work with Cyber0ptics in good faith to mutually agree upon
                  such modifications, which shall be set forth in a writing
                  signed by both parties- (e.g., an updated Statement of Work).
                  Further, CyberOptics may, at any time and without incurring
                  any costs or liability, suspend performance of the Services
                  under any given Statement of Work; if any given suspension
                  exceeds sixty (60) days in duration, then Contractor may, upon
                  thirty (30) days written notice to CyberOptics, terminate the
                  affected Statement of Work if CyberOptics has not ended such
                  suspension prior to the end of the aforesaid thirty (30) day
                  period.

12.      SURVIVAL. Sections 1, 4 through 9, 12, 14 through 20, 22 and 23 of this
         Agreement, shall survive termination or expiration of this Agreement
         for any reason.

13.      PRICES, TAXES, & INVOICES. Prices shall be in U.S. dollars (USD).
         Contractor warrants that the prices and other terms for the Services
         provided in the applicable Statement of Work are not less favorable
         than those extended to all of its other customers for the same or like
         services. All invoices rendered to CyberOptics shall reference this
         Agreement and clearly illustrate any necessary taxes, freight and/or
         similar charges. CyberOptics shall make payment of Contractor invoices
         thirty (30) days after receipt thereof, subject to adjustment for
         errors and/or other justifiable causes.

14.      CYBEROPTICS' PROPERTY. In the event CyberOptics furnishes and/or pays
         for material, tools, equipment and/or other resources that Contractor
         and Contractor Personnel use to provide the Services (hereinafter
         "CyberOptics Property"), title thereto shall be in and remain with
         CyberOptics, and Contractor shall identify, maintain and preserve such
         CyberOptics Property and shall dispose of such CyberOptics Property
         only in accordance with CyberOptics' written instructions, which
         CyberOptics may give at any time. CyberOptics Property shall be used
         only in the performance of this Agreement for CyberOptics benefit, or
         as otherwise instructed by CyberOptics in writing. Contractor

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<PAGE>

         shall be responsible for any loss, damage, or destruction to
         CyberOptics Property (normal wear and tear excepted). CyberOptics does
         not warrant the accuracy or any other aspect of the CyberOptics
         Property, and such is provided to Contractor and Contractor Personnel
         "AS IS." Any CyberOptics Property provided to Contractor or Contractor
         Personnel at CyberOptics facility shall not, unless specifically agreed
         to by CyberOptics in writing, be removed from such CyberOptics
         facility.

15.      COMPLIANCE WITH LAW. Contractor shall comply with all applicable laws,
         statutes, rules, regulations, executive orders and ordinances of the
         U.S. Government, or of any state or local authority, which now or may
         hereafter govern performance of this Agreement and/or any Services
         provided hereunder. Without limiting the foregoing, Contractor shall
         comply with all U.S. laws and regulations governing the import, export
         or re-export of any materials and/or any technology related thereto.
         Contractor is an equal opportunity employer, and complies with all
         applicable provisions of Executive Order 11246.

16.      GENERAL INDEMNITY. Contractor agrees to indemnify, defend and hold
         harmless CyberOptics from and against any and all Actions (as defined
         in Section 17 above), arising out of or incidental to the injuries or
         death to any persons, or damage to or destruction of any property, or
         breach of any Contractor warranty or representation made part of this
         Agreement, which is caused by or arises from any acts or omissions of
         Contractor and/or Contractor Personnel. Contractor shall maintain such
         insurance as will protect the Indemnified Parties and CyberOptics from
         claims under applicable Worker's Compensation Acts and from any and all
         other claims for damages, personal injury, or death to any person which
         may arise under this Agreement. Upon CyberOptics' request, certificates
         of such insurance shall be filed with CyberOptics and shall be subject
         to CyberOptics' reasonable approval for adequacy of protection
         (including, if requested by CyberOptics, listing CyberOptics as an
         additional insured on such insurance certificates).

17.      CONFIDENTIAL INFORMATION. Any information disclosed by CyberOptics to
         Contractor or Contractor Personnel under this Agreement or any
         Statement of Work thereunder, or which Contractor and Contractor
         Personnel become aware of due to being on CyberOptics' premises
         (including, without limitation, any specifications, drawings, data,
         research and development efforts, or any information related to any
         aspect of CyberOptics' business) shall be considered "CyberOptics
         Confidential Information". Notwithstanding the foregoing, CyberOptics
         Confidential Information shall not include information that is or
         becomes publicly known through no wrongful act of Contractor and/or
         Contractor Personnel. Contractor shall not disclose any CyberOptics
         Confidential Information to any third parties without CyberOptics'
         prior written consent, except in the case of Contractor Personnel who:
         (1) are under a written obligation of confidentiality with Contractor
         which is sufficient to protect CyberOptics Confidential Information as
         required herein; and (2) have signed a Confidentiality and Invention
         Assignment Agreement as set forth in Attachment B to this Agreement.
         CyberOptics shall, at all times, retain all right, title and interest
         in the CyberOptics Confidential Information and all copies thereof.
         Contractor and Contractor Personnel shall use CyberOptics Confidential
         Information only to accomplish their obligations under this Agreement.
         Contractor agrees to use its best efforts to protect the CyberOptics
         Confidential Information from any unauthorized use or disclosure.
         CyberOptics Confidential

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<PAGE>

         Information and all copies thereof shall be returned to CyberOptics
         upon the earlier of CyberOptics' written request or the completion of
         the Services under the applicable Statement of Work. CyberOptics shall
         own all Inventions which Contractor, Contractor Personnel or any other
         party may derive from the CyberOptics Confidential Information, and
         Contractor agrees to assign, and hereby does assign to CyberOptics any
         such Inventions, whether or not any such Inventions are reduced to
         practice. Any information which Contractor discloses to CyberOptics in
         connection with this Agreement shall not, unless agreed to by
         CyberOptics in writing, be deemed to be confidential or proprietary
         information of Contractor and shall be acquired free from any
         restrictions on CyberOptics as to use or disclosure.

18.      GOVERNING LAW & DISPUTES. This Agreement is formed and shall be
         construed, performed and enforced under the laws of the State of
         Minnesota, U.S.A., exclusive of its choice of law or conflict of law
         provisions. CyberOptics and Contractor agree that the proper and sole
         venue for all actions arising under this Agreement shall be in the
         applicable courts in the State of Minnesota. The 1980 United Nations
         Convention on Contracts for the International Sale of Goods (CISG)
         shall not apply to this Agreement. During the pendency of any dispute
         arising under this Agreement, Contractor shall proceed diligently with
         its obligations set forth in this Agreement.

19.      DELAY & FORCE MAJEURE. When any actual or potential event delays or
         threatens delay of completion of any Services, Contractor shall
         immediately provide CyberOptics with written notice thereof, including
         all relevant information with respect thereto. Any delay or failure by
         Contractor to perform its obligations to this Agreement shall be
         excused if and to the extent that such is caused by an event or
         occurrence beyond Contractor's reasonable control, including fires,
         floods, windstorms, explosions, riots, wars, and natural disasters;
         provided, however, that the Contractor's inability to obtain and
         provide Contractor Personnel or supplies / materials required or
         contemplated for providing any given Services shall not be deemed to
         constitute an event or occurrence beyond Contractor's reasonable
         control.

20.      DISCLAIMER & LIMITATION OF LIABILITY. EXCEPT AS EXPRESSLY SET FORTH IN
         THIS AGREEMENT, NEITHER PARTY HAS MADE ANY WARRANTIES OR
         REPRESENTATIONS, EXPRESS OR IMPLIED, BY OPERATION OF LAW OR OTHERWISE,
         CONCERNING THE AMOUNT OF SERVICES, COMPENSATION A1ND/OR OTHER BENEFITS
         THAT CYBEROPTICS WILL PROVIDE TO CONTRACTOR. IN NO EVENT, REGARDLESS OF
         THE FORM OF THE CAUSE OF ACTION, WILL CYBEROPTICS LIABILITY TO
         CONTRACTOR AND CONTRACTOR PERSONNEL UNDER THIS AGREEMENT EXCEED THE
         COMPENSATION PAID TO CONTRACTOR UNDER THE APPLICABLE STATEMENT(S) OF
         WORK UNDER WHICH THE CAUSE(S) OF ACTION ARISE.

21.      GENERAL PROVISIONS. (a) In the event that any of the provisions of this
         Agreement are in conflict with any rule of law or statutory provision
         or otherwise unenforceable, such provisions shall be deemed stricken
         from this Agreement, but such invalidity or unenforceability shall not
         invalidate any of the other provisions of this Agreement and all other
         enforceable provisions of this Agreement shall continue in full force.
         (b) No rights

                                       -6-
<PAGE>

         or obligations other than those expressly recited herein are to be
         granted or implied from this Agreement; in particular, no license is
         hereby granted or implied, either directly or indirectly, under any
         patent, copyright, trademark, trade secret or other intellectual
         property right now held by, or which may be obtained by, or which is or
         may be licensable by CyberOptics. (c) The failure of CyberOptics to
         insist, in any one or more instances, upon the performance of any of
         the terms and conditions of this Agreement, or to excuse any right
         hereunder, shall not be construed as a waiver or relinquishment of the
         future performance of any such term or condition or the future exercise
         of such right, but the obligation of Contractor with respect to such
         future performance shall continue in full force and effect. (d)
         Contractor shall not, without first obtaining the written consent of
         Cyber0ptics, in any manner advertise or publish the fact that
         Contractor has contracted with Cyber0ptics to perform the services
         described herein. (e) There are no understandings, agreements or
         representations, express or implied, written or oral, not specified in
         the Agreement. Any terms or conditions stated by the Contractor in any
         prior, concurrent or subsequent proposal, offer, quotation,
         acknowledgement and/or other document(s) are deemed by CyberOptics to
         be a material alteration of this Agreement and are hereby rejected and
         inapplicable unless specifically agreed to in writing by CyberOptics.
         (f) Any modification of this Agreement or any part thereof must be
         approved in writing by a duly authorized representative of both
         parties. (g) Any notices to be provided under this Agreement shall be
         in writing and shall be sent by certified mail (return receipt
         requested), overnight courier with delivery verification, or by
         verifiable electronic communications (e.g., facsimile or e-mail), to
         the respective personnel signing this Agreement below, at the addresses
         set forth at the top of this Agreement, or as the same may be changed
         from time to time by notice similarly given. If notice is sent by
         certified mail or by overnight courier, it shall be effective when
         received; if sent by verifiable electronic communications, it shall be
         effective when a transmittal can be verified as completed.

                                       -7-
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed and agreed to this
Agreement and made it effective as of the Effective Date.

CYBEROPTICS CORPORATION                           CONTRACTOR

/s/ Kathleen P. Iverson                           /s/ Steven M. Quist
------------------------------                    ------------------------------
(SIGNATURE)                                       (SIGNATURE)

Kathleen P. Iverson                               Steven M. Quist
------------------------------                    ------------------------------
(PRINT/TYPE NAME)                                 (PRINT/TYPE NAME)

President and COO                                 Consultant
------------------------------                    ------------------------------
(TITLE)                                           (TITLE)

Sept. 13, 2002                                    13 Sept. 02
------------------------------                    ------------------------------
(DATE)                                            (DATE)

                                       -8-

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