Document:

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                                                                    EXHIBIT 10.2

                               PURCHASE AGREEMENT

                               DATED MAY 23, 2002

                                      AMONG

                          AUGUST TECHNOLOGY CORPORATION

                 SEMICONDUCTOR TECHNOLOGIES & INSTRUMENTS, INC.

                                       AND

                              ASTI HOLDINGS LIMITED
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                               TABLE OF CONTENTS

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ARTICLE 1 DEFINITIONS...............................................         1
      1.1) Specific Definitions.....................................         1
      1.2) Definitional Provisions..................................         6

ARTICLE 2 PURCHASE AND SALE; PURCHASE PRICE.........................         6
      2.1) Purchase and Sale of Shares..............................         6
      2.2) Purchase and Sale of Assets..............................         7
      2.3) Purchase Price...........................................         7
      2.4) Preliminary Purchase Price Adjustment....................         7
      2.5) Purchase Price Adjustment................................         7
      2.6) Payment of Purchase Price................................        10
      2.7) August Stock Price.......................................        10
      2.8) Tax Treatment............................................        10

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF STI AND ASTIHL..........        11
      3.1) Listing of Certain Assets and Data.......................        11
              (a) Real Property.....................................        11
              (b) Equipment.........................................        11
              (c) Intellectual Property.............................        11
              (d) Leases, Agreements, Etc...........................        12
              (e) Permits, Licenses, Etc............................        12
              (f) Banks and Depositories............................        12
              (g) Loans and Credit Agreements, Etc..................        12
              (h) Insurance Policies and Claims.....................        13
              (i) Certain Employees.................................        13
              (j) Employee Plans....................................        13
              (k) Powers of Attorney................................        13
              (l) Taxes.............................................        13
              (m) Material Components...............................        14
      3.2) Organization; Directors and Officers.....................        14
      3.3) Capitalization and Voting Rights.........................        14
      3.4) [This section intentionally left blank]..................        14
      3.5) Authority of ASTIHL......................................        14
      3.6) Ownership of Shares/Status of ASTIHL.....................        14
      3.7) Subsidiaries.............................................        15
      3.8) Authorization and Binding Obligation.....................        15
      3.9) Consents Required........................................        15
      3.10) Financial Statements....................................        16
      3.11) Taxes...................................................        16
      3.12) Absence of Undisclosed Liabilities......................        17
      3.13) Absence of Certain Changes and Events...................        17
      3.14) Assets..................................................        18
      3.15) Intellectual Property...................................        18
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      3.16) Accounts Receivable.....................................        19
      3.17) Inventories.............................................        19
      3.18) Licenses; Compliance with Laws, Regulations, Etc........        20
      3.19) Litigation..............................................        20
      3.20) Warranties..............................................        20
      3.21) Leases, Contracts.......................................        20
      3.22) Insurance Policies......................................        21
      3.23) Labor Agreements........................................        21
      3.24) Benefit Plans...........................................        21
      3.25) No Finders..............................................        23
      3.26) Contracts with Related Parties..........................        23
      3.27) Relations with Suppliers and Customers..................        23
      3.28) Product Liability Claims................................        23
      3.29) Environmental Matters...................................        23
      3.30) Location of Real Property...............................        24
      3.31) Title to Real Property..................................        24
      3.32) Business and Marketing Plans............................        24
      3.33) Employees...............................................        24
      3.34) Agreements Restricting Business.........................        25
      3.35) Corporate Records.......................................        25
      3.36) Propriety of Past Payments..............................        26
      3.38) Investment Representations..............................        26
      3.39) Completeness of Disclosures.............................        26
      3.40) No Implied Representations..............................        26

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF AUGUST..................        27
      4.1) Organization.............................................        27
      4.2) Authorization and Binding Obligation.....................        27
      4.3) Consents Required........................................        27
      4.4) No Finders...............................................        28
      4.5) Capital Stock............................................        28
      4.6) SEC Documents............................................        28
      4.7) Absence of Certain Changes of Events.....................        28
      4.8) Issuance of August Common Stock..........................        29
      4.9) Completeness of Disclosures..............................        29
      4.10) No Implied Representations..............................        29

ARTICLE 5 PRE-CLOSING COVENANTS.....................................        30
      5.1) Approvals and Consents...................................        30
      5.2) Preserve Accuracy of Representations and Warranties......        30
      5.3) Maintain the Business as Going Concern...................        30
      5.4) No Solicitation of Other Offers..........................        32
      5.5) Access to Information and Records Before Closing.........        33
      5.6) Approval of ASTIHL.......................................        33
      5.7) Intellectual Property Transfers..........................        33
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      5.8) Transfer by Related Parties..............................        34
      5.9) Additional Financial Statements and Reports..............        34
      5.10) Certain Notifications...................................        34
      5.11) Intercompany Debts......................................        34
      5.12) Distribution of the Fixed Assets Related to Machining
              Equipment.............................................        34
      5.13) Audit Reports...........................................        35
      5.14) Escrow Agreement........................................        35
      5.15) Release Agreement.......................................        35
      5.16) Tax Matters.............................................        35
              (a) Net Operating Losses..............................        35
              (b) Section 338 Election..............................        35
      5.17) Further Actions.........................................        36

ARTICLE 6 CLOSING CONDITIONS........................................        36
      6.1) Conditions to Obligations of August and ASTIHL...........        36
      6.2) Conditions to August's Obligations.......................        37
              (a) Truth of Representations and Warranties...........        37
              (b) Performance.......................................        37
              (c) Intellectual Property Opinions....................        38
              (d) Resignations......................................        38
              (e) Employees.........................................        38
              (f) Other Closing Deliveries..........................        38
              (g) Fees and Expenses.................................        38
      6.3) Conditions to ASTIHL's Obligations.......................        38
              (a) Truth of Representations and Warranties...........        38
              (b) Performance.......................................        38
              (c) Required Consents.................................        39

ARTICLE 7 CLOSING...................................................        39
      7.1) Closing Date.............................................        39
      7.2) Closing Deliveries of ASTIHL.............................        39
      7.3) Closing Deliveries of August.............................        39
      7.4) Proceedings..............................................        40

ARTICLE 8 POST-CLOSING COVENANTS....................................        40
      8.1) Further Assurances.......................................        40
      8.2) Litigation Support.......................................        40
      8.3) Insurance................................................        40
      8.4) Section 338 Election.....................................        40

ARTICLE 9 INDEMNIFICATION...........................................        40
      9.1) Indemnification of August................................        40
      9.2) Indemnification of ASTIHL................................        41
      9.3) Third Party Claims.......................................        41
      9.4) Waiver of Subrogation....................................        42
      9.5) Cooperation as to Indemnified Liability..................        42
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      9.6) Offset...................................................        42
      9.7) Release by ASTIHL........................................        42
      9.8) Limitations on Indemnification...........................        42
              (a) Cap...............................................        42
              (b) Exclusive Remedy..................................        42
              (c) Tax Effect and Insurance..........................        43
              (d) Subrogation.......................................        43
              (e) Minimum Claim.....................................        43

ARTICLE 10 TERMINATION..............................................        43
      10.1) Termination.............................................        43
      10.2) Procedure and Effect of Termination.....................        44

ARTICLE 11 REGISTRATION RIGHTS......................................        46
      11.1) Required Registration...................................        46
      11.2) Registration - General Provisions.......................        46
      11.3) Registration Expense....................................        47
      11.4) Restrictions on Sales...................................        48
      11.5) Suspensions on Sales....................................        48
      11.6) Lock Up Agreements......................................        48

ARTICLE 12 ALTERNATIVE DISPUTE RESOLUTION...........................        49
      12.1) Arbitration.............................................        49
      12.2) Notice..................................................        49
      12.3) Binding Arbitration.....................................        49
              (a) Arbitrators.......................................        49
              (b) Cost of Arbitration...............................        50
              (c) Location of Proceedings...........................        50
              (d) Pre-hearing Discovery.............................        50
              (e) Pre-hearing Conference............................        50
              (f) Hearing Procedures................................        51
              (g) Governing Law.....................................        51
              (h) Consolidation.....................................        51
              (i) Award.............................................        51
              (j) Confidentiality...................................        52

ARTICLE 13 OTHER PROVISIONS.........................................        52
      13.1) ASTIHL Agreements.......................................        52
      13.2) Complete Agreement......................................        52
      13.3) Survival of Representations and Warranties..............        52
      13.4) Waiver, Discharge, Amendment, Etc.......................        52
      13.5) Notices.................................................        53
      13.6) Public Announcement.....................................        53
      13.7) Expenses................................................        54
      13.8) Governing Law...........................................        54
      13.9) Successors and Assigns..................................        54
      13.10) Titles and Headings; Construction......................        54
      13.11) Benefit................................................        54
      13.12) Counterparts...........................................        54

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EXHIBITS:

Exhibit 2.3       Promissory Note
Exhibit 2.5       Pro Forma Purchase Price Adjustment
Exhibit 5.7(a)    License Agreement
Exhibit 5.7(b)    Die Sort OEM Agreement
Exhibit 5.14      Escrow Agreement
Exhibit 5.15      Release Agreement

SCHEDULES:

Schedule 3.1A - Real Property
Schedule 3.1B - Equipment
Schedule 3.1C - Intellectual Property
Schedule 3.1D - Certain Leases, Agreements, Etc.
Schedule 3.1E - Permits, Licenses, Etc.
Schedule 3.1F - Banks and Depositories
Schedule 3.1G - Loan and Credit Agreements, Etc.
Schedule 3.1H - Insurance Policies and Claims
Schedule 3.1I - Certain Employees
Schedule 3.1J - Employee Plans
Schedule 3.1K - Powers of Attorney
Schedule 3.1L - Taxes
Schedule 3.1M - Material Components
Schedule 3.2  - Organization Directors and Officers
Schedule 3.9  - Consents Required
Schedule 3.10 - Financial Statements
Schedule 3.12 - Undisclosed Liabilities
Schedule 3.13 - Absence of Certain Changes and Events
Schedule 3.15 - Trademarks, Patents and Trade Secrets
Schedule 3.16 - Accounts Receivable
Schedule 3.17 - Inventories
Schedule 3.19 - Litigation
Schedule 3.20 - Warranties
Schedule 3.26 - Contracts with Related Parties
Schedule 3.27 - Relations with Suppliers and Customers
Schedule 3.28 - Product Liability Claims
Schedule 3.29 - Environmental Matters
Schedule 3.33 - Employees
Schedule 3.34 - Agreements Restricting Business
Schedule 4.3  - August Consents Required
Schedule 5.12 - Distribution of Fixed Assets and Machining Equipment
Schedule 13.3 - Survival of Representations and Warranties
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                               PURCHASE AGREEMENT

      THIS AGREEMENT is dated as of _____________, 2002, by and among AUGUST
TECHNOLOGY CORPORATION, a Minnesota corporation ("August"), SEMICONDUCTOR
TECHNOLOGIES & INSTRUMENTS, INC., a Delaware corporation ("STI") and ASTI
HOLDINGS LIMITED, a company incorporated in Singapore ("ASTIHL").

      WHEREAS, the Board of Directors of ASTIHL has approved the sale by ASTIHL
to August of all of the issued and outstanding shares of capital stock of STI,
upon the terms and subject to the conditions set forth herein; and

      WHEREAS, the Board of Directors of ASTIHL has approved the license by
ASTIHL to August of all technology, know how and intellectual property not owned
by STI which is necessary to, or currently used in, the Wafer Inspection
Business, as defined herein; and

      WHEREAS, the Board of Directors of ASTIHL has approved the license by
ASTIHL to August of all technology, know how and intellectual property related
to the Die Sort Products, as defined herein, and agreed to provide certain other
services to assist August in developing and commercializing the Die Sort
Products; and

      WHEREAS, the parties hereto desire to make certain representations,
warranties and agreements in connection with such sale of capital stock and
transfer of technology and also to set forth various conditions to such sale and
transfer;

      NOW, THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

      1.1)  Specific Definitions. As used in this Agreement, the following terms
shall have the meanings set forth or as referenced below:

      "Advanced Die Sort" is Basic Die Sort together with Inspection to inspect
die, which only occurs after the die are picked off the film frame. (No
Inspection of die on the film frame may ever occur at Advanced Die Sort).

      "Advanced Die Sorter" is a die sorter using Advanced Die Sort.

      "Affiliate" of any entity means any other entity that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the first entity. Control shall mean owning more
than fifty percent (50%) of the total voting power of the entity or fifty
percent (50%) or more of the total capital interests of the entity.

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      "Agreement" means this Purchase Agreement and all Exhibits and Schedules
hereto.

      "ASTI Basic Die Sorter" is any Basic Die Sorter designed by ASTI.

      "ASTIHL" means as defined in the introductory paragraph.

      "August" means as defined in the introductory paragraph.

      "August's Average Stock Price" means as defined in Section 2.6.

      "August Common Stock" means shares of common stock of August, no par value
per share.

      "August Filed SEC Documents" means as defined in Section 4.6.

      "August SEC Documents" means as defined in Section 4.6.

      "August Stock Price" means as defined in Section 2.6.

      "Basic Die Sort" is die removal from one media into another media,
together with vision technology to align the die only. (No inspection of die may
ever occur at Basic Die Sort).

      "Basic Die Sorter" is a die sorter using Basic Die Sort only.

      "Business" means the Wafer Inspection Business and the Die Sort Business
taken together.

      "Cash Portion" means as defined in Section 2.2

      "Closing" and "Closing Date" have the meanings defined in Section 8.1.

      "Closing Balance Sheet" has the meaning defined in Section 2.4(b).

      "Code" means the Internal Revenue Code of 1986, as amended.

      "Determination Period" means as defined in Section 2.6.

      "Die Sort Business" means the business activities of ASTIHL that relate to
its Basic Die Sorters and Advanced Die Sorters.

      "Die Sort Products" means the Basic Die Sorters and Advanced Die
Sorters.

      "Die Sort OEM Agreement" means as defined in Section 5.7

      "Employee Plans" means any health care plan or arrangement; life insurance
or other death benefit plan; deferred compensation or other pension or
retirement plan; option, bonus or other incentive plan; severance, change of
control or early retirement plan; or other fringe or employee benefit plan or
arrangement; or any employment or consulting contract or executive

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compensation agreement; whether the same are written or otherwise, formal or
informal, voluntary or required by law or by STI's policies or practices,
including, without limitation, any "pension plan" as defined in Section 3(2) of
ERISA that is not a Multiemployer Plan, and any "welfare plan" as defined in
Section 3(1) of ERISA (whether or not any of the foregoing is funded), (i) to
which STI is a party or by which STI is bound; (ii) that STI has at any time
established or maintained for the benefit of or relating to present or former
employees, leased employees, consultants, agents, and/or their dependents, or
directors of STI; or (iii) with respect to which STI has made any payments or
contributions.

      "Environmental Laws or Regulations" means any one or more of the
following: the Comprehensive Environmental Response, Compensation, and Liability
Act ("CERCLA") as amended by the Superfund Amendments and Reauthorization Act of
1986 ("SARA"), 42 U.S.C. Section 9601 et seq.; the federal Resource Conservation
and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6921 et seq.; the Clean
Water Act, 33 U.S.C. Section 1321 et seq.; the Clean Air Act, 42 U.S.C. Section
7401 et seq.; the Hazardous Materials Transportation Act, 40 U.S.C. Section 1801
et seq.; any other federal, state, county, municipal, local or other statute,
law, ordinance or regulation that may relate to pesticides, agricultural or
industrial chemicals, wastes, Hazardous Substances, or the environment; and all
regulations promulgated by a regulatory body pursuant to any of the foregoing
statutes, laws, regulations, or ordinances.

      "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

      "Escrow Agent" means Wells Fargo Bank Minnesota, National Association, or
such other party as shall be agreed upon prior to the Closing Date.

      "Escrow Agreement" means as defined in Section 5.14.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

      "File Date" means as defined in Section 11.1.

      "Financial Statements" means as defined in Section 3.10.

      "Flextech" means Flextech Holdings Limited, a company incorporated in
Singapore and the ultimate holding company of the ASTIHL.

      "GAAP" means the generally accepted accounting principles in the United
States of America as in effect from time to time as set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board as at the date on which any calculation
made under this Agreement is to be effective or as at the date of the Financial
Statements referred to in this Agreement, as the case may be.

       "Governmental Entity" means any federal, state, local, or foreign
administrative, governmental or regulatory body or authority whether in the
United States of America or in Singapore as the case may be.

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      "Hazardous Substance" means asbestos, urea formaldehyde, polychlorinated
biphenyls, nuclear fuel or materials, chemical waste, radioactive materials,
explosives, known carcinogens, petroleum products, pesticides, fertilizers, or
other substance that is toxic or hazardous, or which is a pollutant,
contaminant, chemical, material or substance defined as hazardous or toxic or as
a pollutant or contaminant in, or the use, transportation, storage, release or
disposal of which is regulated by, any Environmental Laws or Regulations.

      "Intellectual Property" means letters patent and patent applications;
trade names, trademarks, service marks and registrations thereof and
applications therefor; copyrights and copyright registrations and applications;
and/or discoveries, ideas, technology, know-how, trade secrets, processes,
formulas, business methods, maskworks, drawings and designs, domain names,
computer programs or software, hardware, firmware; and all amendments,
modifications, and improvements to any of the foregoing.

      "Inspection" is any vision technology other than automated vision
alignment.

      "Inventories" means finished goods, raw materials and work-in-process.

      "Liens" means liens, mortgages, charges, security interests, claims,
voting trusts, pledges, encumbrances, options, assessments, restrictions, or
third party or spousal interests of any nature.

      "Note Portion" means as defined in Section 2.3.

      "Material Adverse Effect" means any effect, change or event that,
individually or in the aggregate with all other similar effects, changes or
events, is or would reasonably be expected to be adverse to STI, (i) in an
amount exceeding $500,000 with respect to the business, financial condition,
assets, liabilities or operations of the Business, considered as a whole, or the
Wafer Inspection Business or the Die Sort Business, considered separately, or
(ii) such that the adverse effect to STI impairs the ability of August to own
and operate the Business, the Wafer Inspection Business or the Die Sort Business
after the Closing as they are presently being operated; provided, however, that
a Material Adverse Effect shall not include a change in general economic or
industry conditions.

      "Multiemployer Plan" means as defined in Section 3(37) of ERISA.

      "OEM Business" means the business activities of STI that relate to its OEM
products or modules including, but not limited to, OEM 500 or other like devices
for strip CSP implied coplanarity inspection, OEM 750 or other like devices for
pre-die sort patterned defect inspection, and OEM 1,000 or other like devices
for attachment to die sorters for inspection of wafers or film frames.

      "Preliminary Purchase Price Adjustment" means as defined in Section 2.4.

      "Prober Agreements" means as defined in Section 5.7.

      "Product Liability" means any liability, claim or expense (including
attorneys' fees) arising in whole or in part out of a breach of any product
warranty (whether express or implied), strict liability in tort, negligent
manufacture of product, negligent provision of services, product

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recall, or any other liability arising from the manufacturing, packaging,
labeling (including instructions for use), or sale of products.

      "Purchase Price" means as defined in Section 2.2.

      "Purchase Price Adjustment" means as defined in Section 2.4.

      "Real Property" means as defined in Section 3.30.

      "Registrable Stock" means as defined in Section 12.1.

      "SEC" means the Securities and Exchange Commission, or any other federal
agency at the time administering the Securities Act.

      "Second Optical Inspection" is defined as the markets including wafer
level inspection whether patterned or unpatterned wafer, bare wafer, whole
wafer, and sawn wafer on film frames.

      "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.

      "Shares" means as defined in Section 3.3.

      "STI" is Semiconductor Technologies & Instruments, Inc. of Plano, Texas,
whereby STI represents ASTI's entire Second Optical Inspection business which
includes ASTI's wafer level and/or front end inspection business including but
not limited to the entire WAV Business, OEM Business, white light interferometry
technology, 2D and 3D vision technology, and all other automated vision and
inspection projects developed or worked on in Dallas, all relating to Second
Optical Inspection and including related automation, software, hardware, and
handling.

      "Stock Portion" means as defined in Section 2.2.

      "Taxes" means any tax or other primary, secondary or transferee liability
including, without limitation, all income, profits, franchise, gross receipts,
withholding, payroll, sales, use, employment, value added, custom, duty, and any
other taxes, obligations, and assessments of any kind whatsoever, together with
all interest and penalties, assessed or imposed by the United States of America,
any of its political subdivisions, or any other governmental authority. "Tax"
shall also include any liability arising as a result of being (or ceasing to be)
a member of any affiliated, consolidated, combined, or unitary group as well as
any liability under any tax allocation, tax sharing, tax indemnity or similar
agreement.

      "Trademark Agreement" means as defined in Section 5.7.

      "Wafer Inspection Business" shall mean all of the rights, title and
interest in and to ASTIHL's equity interests in STI including all
non-intercompany assets and liabilities of such entity, all subject to
appropriate and applicable reserves and valuations, together with all
technology, know how and intellectual property not owned by STI which is
necessary to operate, or currently used in, the area of Second Optical
Inspection conducted by STI.

                                       5
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      "WAV Business" means the business activities of STI that relate to the
wafer inspection products which are also known as the WAV Inspection Systems,
including, but not limited to the following products: WAV1000, WAV1000B,
WAV-1000 Sprint, and WAV-1000 STI Handler, each with or without any of the
following options: off-axis lighting for 2D gold and solder applications, lasers
for 3D gold and solder applications, white light interferometry for 3D gold
applications, ADC, cluster analysis, SECS/GEM, ionizer, and 300 mm kit, and
Technology useful or necessary to the design, production, or operation of these
products.

      1.2)  Definitional Provisions.

            (a) The words "hereof," "herein," and "hereunder" and words of
      similar import, when used in this Agreement, shall refer to this Agreement
      as a whole and not to any particular provisions of this Agreement.

            (b) Terms defined in the singular shall have a comparable meaning
      when used in the plural, and vice-versa.

            (c) References to the "knowledge" of STI shall refer to the actual
      knowledge of any of the following persons: Joseph Au, Charles Cher, Dr.
      Pen San Tang, K.K. Woo, Paul Lai, Rajiv Roy, Max Guest, Mark Moore, Tom
      Daftary, Mike Buckhaulter and Billy Wooley and the knowledge that such
      person would reasonably be expected to have assuming reasonable inquiry.

            (d) References to the "knowledge" of August shall refer to the
      actual knowledge of any of its members of the Board of Directors and
      officer level employees of August.

            (e) References to an "Exhibit" or to a "Schedule" are, unless
      otherwise specified, to one of the Exhibits or Schedules attached to or
      referenced in this Agreement, and references to an "Article" or a
      "Section" are, unless otherwise specified, to one of the Articles or
      Sections of this Agreement.

            (f) The term "person" includes any individual, partnership, joint
      venture, corporation, limited liability company, trust, unincorporated
      organization or government or any department or agency thereof or any
      similar entity.

            (g) All dollar amounts are expressed in United States Dollars.

                                    ARTICLE 2
                        PURCHASE AND SALE; PURCHASE PRICE

      2.1) Purchase and Sale of Shares. Subject to the terms and conditions of
this Agreement, effective as of the Closing, ASTIHL shall sell, transfer and
assign to August, and August shall purchase all of the Shares.

                                       6
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      2.2) Purchase and Sale of Assets. Subject to the terms and conditions of
this Agreement, and in order for August to acquire certain assets necessary to
operate the Second Optical Inspection business effective as of the Closing,
Corporation Affiliates shall each sell, transfer and assign to August, and
August shall purchase, all of their respective assets and personal property
related to or used in the operation of the Business in the past or up to the
Closing Date, wherever the same may be located (collectively referred to as the
"Purchased Assets").

      2.3) Purchase Price. The total consideration for the Shares and the
Purchased Assets shall be calculated and paid as described below. The "Purchase
Price" shall consist of the following, subject to adjustment by the Preliminary
Purchase Price Adjustment and the Purchase Price Adjustment: the sum of (a)
Twelve Million U.S. Dollars ($12,000,000) (the "Cash Portion") plus (b) an
unsecured promissory note in the form attached hereto as EXHIBIT 2.3 in the
principal amount of Three Million U.S. Dollars ($3,000,000) bearing interest at
the rate of 5% per annum with principal and interest due six months from the
date of issuance (the "Note Portion"), plus (c) the number of shares of August
Common Stock equal to the sum of Eleven Million One Hundred Thousand Dollars
($11,100,000) (the "Stock Portion") divided by the August Stock Price. The
Purchase Price shall be payable to ASTIHL and Escrow Agent in the manner
described in Section 2.6.

      2.4)  Preliminary Purchase Price Adjustment.  The Preliminary Purchase
Price Adjustment shall be determined as follows:

            (a) ASTIHL shall deliver to August, at least five (5) days prior to
      the Closing Date, a good faith estimate of the Purchase Price Adjustment
      as of the Closing Date along with such reasonable supporting documentation
      as may be requested by August to review such calculation. If August
      accepts such good faith estimate, such amount shall constitute the
      "Preliminary Purchase Price Adjustment." In the event the Final Target
      Amount (as defined below) has been determined before the Closing Date, the
      good faith estimate shall include the Purchase Price Adjustment pursuant
      to Section 2.5(a) below.

            (b) If ASTIHL and August are unable to agree upon the Preliminary
      Purchase Price Adjustment, such dispute shall immediately be submitted to
      Deloitte & Touche in Dallas, Texas for resolution and the Closing Date
      shall be delayed until the accounting firm determines such amount unless
      the parties otherwise agree in writing. Such firm shall present its good
      faith estimate of the Purchase Price Adjustment within five (5) days after
      the submission of such dispute to the firm and the parties hereby agree
      that the estimate by such firm shall, in the absence of fraud or manifest
      error by Deloitte & Touche, be binding and conclusive among the parties
      for the purposes of determining the "Preliminary Purchase Price
      Adjustment." The fees of the above-named accounting firm shall be born
      one-half by August and one-half by ASTIHL.

      2.5)  Purchase Price Adjustment.  The Purchase Price shall be subject
to each of the following adjustments (collectively the "Purchase Price
Adjustment"), as set forth below:

                                       7
<PAGE>
            (a) To the extent that the Final Target Amount (as defined below) is
      less than the Preliminary Target Amount (as defined below) by greater than
      $75,000, the Purchase Price shall be decreased on a dollar for dollar
      basis to the full extent of such difference not taking into account the
      $75,000 threshold amount. Notwithstanding the foregoing, if the Final
      Target Amount is less than the Preliminary Target Amount by more than
      $5,000,000, August and ASTIHL shall each have the right to terminate this
      Agreement in accordance with Section 10.1(e), unless August agrees to
      limit the reduction in Purchase Price pursuant to this Section 2.5(a) to
      not more than $5,000,000. The "Preliminary Target Amount" shall be
      calculated from the unaudited financial statements of STI as of December
      31, 2001 based on STI's general ledger and as adjusted to reflect GAAP.
      The "Final Target Amount" shall be calculated from the audited financial
      statements of STI as of December 31, 2001 based on GAAP. Both the
      Preliminary Target Amount and the Final Target Amount are to be derived as
      set forth in EXHIBIT 2.5 with such adjustments as are set forth therein.

            (b) To the extent that the Closing Date Amount (as defined below) is
      less than the Final Target Amount by greater than $75,000, the Purchase
      Price shall be decreased on a dollar for dollar basis to the full extent
      of such difference not taking into account the $75,000 threshold amount.
      The "Closing Date Amount" shall be calculated from the audited financial
      statements of STI as of the Closing Date. The Closing Date Amount is to be
      derived as set forth in EXHIBIT 2.5 with such adjustments as are set forth
      therein.

            (c) To establish the amount, if any, of the Purchase Price
      Adjustment, within 90 days after the Closing Date, August shall prepare
      and deliver to ASTIHL a balance sheet of STI as of the Closing (the
      "Closing Balance Sheet") reflecting all of the assets and liabilities of
      STI (taking into account all of the transactions, transfers and
      distributions which occur on or prior to the Closing Date in accordance
      with this Agreement) and appropriate reserves, allowances, and accruals
      with respect to STI as of the Closing Date and a calculation of the
      Closing Date Amount in accordance with EXHIBIT 2.5. The Closing Balance
      Sheet shall be prepared in accordance with GAAP. ASTIHL's and STI's
      accountants shall, at ASTIHL's expense, cooperate with August and its
      representatives, and provide them full information, access to accountants
      and other necessary books and records, and assistance, in the preparation
      of the Closing Balance Sheet and the Final Target Amount.

            Upon delivery by August to ASTIHL of the Closing Balance Sheet and
      August's calculation of the Purchase Price Adjustment, ASTIHL shall have
      30 days in which to give August written notice of any objections that
      ASTIHL may have with respect to the Closing Balance Sheet or the Purchase
      Price Adjustment. Failure to give written notice of each objection to
      August within such 30 day period shall be deemed a waiver of all
      objections and the proposed Closing Balance Sheet and Purchase Price
      Adjustment shall be deemed final and binding and shall constitute the
      Purchase Price Adjustment for all purposes of this Agreement. If an
      objection timely made is not resolved by August and ASTIHL within 15 days
      after receipt of ASTIHL's objection, such dispute shall be submitted to
      Deloitte & Touche in Dallas, Texas, for final resolution. Such firm shall
      present its determination and resolution of any such disputes within 30
      days after the

                                       8
<PAGE>
      submission of such dispute to the firm, and the parties hereby agree that
      the determination and resolution by such firm shall, in the absence of
      fraud or manifest error, be binding and conclusive among the parties. The
      fees of the above-named accounting firm, or such other firm as is
      selected, in resolving such dispute shall be born one-half by August and
      one-half by ASTIHL.

            Each of the Preliminary Target Amount, the Final Target Amount and
      the Closing Date Amount shall be calculated based on financial statements
      prepared in accordance with GAAP, including but not limited to Statement
      of Financial Accounting Standards No. 5 (FAS 5) which provides that an
      estimated loss from a contingency shall be accrued by a charge to income
      if both of the following conditions are met: (a) Information available
      prior to the issuance of the financial statements indicates that it is
      probable that an asset had been impaired or a liability had been incurred
      at the date of the financial statements. It is implicit in this condition
      that it must be probable that one or more future events will occur
      confirming the fact of the loss. (b) The amount of the loss can be
      reasonably estimated. Under FAS 5 if a party becomes aware of a loss
      contingency which did not exist at the date of the financial statements,
      the loss would not be accrued on the financial statements because no asset
      has been impaired or loss incurred at the date of the financial
      statements.

            (d) Any decrease in the Purchase Price pursuant to Sections 2.5(a)
      and 2.5(b) shall be applied first to the Note Portion and to the extent
      the decrease exceeds the Note Portion, then to the Stock Portion held in,
      or payable to, the Escrow Fund, and then to any cash held in, or payable
      to, the Escrow Fund. With respect to the Preliminary Purchase Price
      Adjustment, to the extent the decrease exceeds the Note Portion and the
      amounts payable to the Escrow Fund, August shall reduce the number of
      shares of August Common Stock issuable to ASTIHL at Closing Date by a
      number (rounding to the nearest whole share of stock) with a value equal
      to the amount of such excess, valuing the August Common Stock at the
      August Stock Price for this purpose. With respect to the Purchase Price
      Adjustment based on the Closing Balance Sheet, the amount by which the
      aggregate Purchase Price Adjustment exceeds the Preliminary Purchase Price
      Adjustment shall be referred to as the "Final Adjustment," and shall be
      allocated to the Note Portion and the Escrow Fund as set forth in the
      first sentence of this Section 2.5(d). In the event the Final Adjustment
      exceeds the remaining Note Portion and the remaining amounts held in the
      Escrow Fund, ASTIHL shall pay the amount of such excess to August either
      in cash or by delivery of certificates from the Stock Portion for that
      number of shares of August Common Stock which when valued at the August
      Stock Price equals the amount of such excess. If ASTIHL is obligated to
      pay amounts to August in accordance with the preceding sentence, such
      payment shall be made within seven days after the date on which the
      parties agree on the Closing Balance Sheet and the Purchase Price
      Adjustment or within seven days after the date the Closing Balance Sheet
      and the Purchase Price Adjustment are determined by the independent
      accounting firm as described above. The Final Adjustment payable hereunder
      shall bear interest from the Closing Date to the date of payment by ASTIHL
      at the rate of 5.00% per annum, which interest shall be paid at the same
      time and in the same manner as the payment of the Final Adjustment.

                                       9
<PAGE>
      2.6)  Payment of Purchase Price.

            (a) At Closing, subject to ASTIHL's performance of its obligations
      hereunder, August shall pay to ASTIHL (x) a wire transmission of cash in
      the amount of the Cash Portion; (y) a promissory note in the form attached
      hereto as EXHIBIT 2.3 representing the Note Portion; and (z) certificates
      representing the August Common Stock issued as the Stock Portion, in each
      case less the Preliminary Purchase Price Adjustment, if any, and less any
      amounts paid into escrow in accordance with Section 2.6(b) below.

            (b) At Closing, subject to ASTIHL's performance of its obligations
      hereunder, August shall deliver to the Escrow Agent Three Million Seven
      Hundred Fifty Thousand U.S. Dollars ($3,750,000) (the "Escrow Fund") in
      the form of shares from the Stock Portion. The Escrow Agent shall not
      release from escrow to ASTIHL any of the Escrow Fund except in accordance
      with the express terms of this Agreement and the Escrow Agreement. In the
      event of a conflict between the two, the terms of the Escrow Agreement
      shall govern.

      2.7) August Stock Price. The "August Stock Price" shall be based on the
weighted average (rounded to the nearest full cent, with the cents rounded up if
the third decimal place is 5 or more) for all transactions of August Common
Stock as reported on the Nasdaq Stock Market (the "August's Average Stock
Price"), for the sixty (60) consecutive Nasdaq trading days ending on and
including the third trading day prior to the Closing (the "Determination
Period"), determined as follows:

            (a) if August's Average Stock Price for the Determination Period is
      greater than $12.00 and less than $16.00, then the August Stock Price
      shall be August's Average Stock Price;

            (b) if August's Average Stock Price for the Determination Period is
      equal to or less than $12.00, then the August Stock Price shall be $12.00;
      or

            (c) if August's Average Stock Price for the Determination Period is
      equal to or greater than $16.00, then the August Stock Price shall be
      $16.00.

      An appropriate adjustment to the August Stock Price shall be made in the
event that, prior to the Closing Date, the outstanding shares of August Common
Stock, without new consideration, are changed into or exchanged for a different
number of shares or a different class by reason of any reorganization,
reclassification, subdivision, recapitalization, split-up, combination, exchange
of shares, stock dividend or other similar transaction.

      2.8)  Tax Treatment.  ASTIHL agrees to use best efforts to assist
August in understanding and utilizing any and all net operating loss ("NOL")
related to the Business, and ASTI agrees to make any election under the U.S.
Internal Revenue Code Section 338 as requested by August.

                                       10
<PAGE>
                                    ARTICLE 3
                        REPRESENTATIONS AND WARRANTIES OF
                                 STI AND ASTIHL

      STI and ASTIHL jointly and severally represent and warrant to August as
follows, and acknowledges that the same shall be true and correct as of the
Closing Date (as if made at the Closing) and shall be deemed to have been relied
upon by August:

      3.1) Listing of Certain Assets and Data. Attached hereto as Schedules 3.1A
through 3.1M are lists, which are true and complete as of the date hereof, of
the matters set forth in the following subsections (a) through (m).

            (a) Real Property. SCHEDULE 3.1A sets forth a description of all
      real property owned, leased or subject to option, of record or
      beneficially, by STI or otherwise used by STI in the conduct of the
      Business. Prior to the date of this Agreement, STI has delivered to
      August, or given August access to, true and complete copies of the
      purchase agreements, leases, or options relating to such real property.

            (b) Equipment. SCHEDULE 3.1B sets forth a list of all material items
      of machinery, equipment, tools and dies, furniture, fixtures, spare parts,
      vehicles and other similar property and assets owned, leased or otherwise
      used by STI, specifically identifying and describing, those items with an
      original cost to, or total lease payments by STI in excess of $5,000,
      setting forth with respect to all such listed property a summary
      description of all Liens relating thereto (other than liens for taxes due
      but not yet payable), identifying the parties thereto, the rental or other
      payment terms, expiration date and cancellation and renewal terms thereof.
      ASTIHL shall use commercially reasonable efforts to provide to August
      before Closing the list required by the preceding sentence for items with
      an original cost to, or total lease payments by STI in excess of $1,000.
      Prior to the date of this Agreement, STI has delivered to August, or given
      August access to, true and complete copies of all currently effective
      leases, conditional sales agreements or other similar documents concerning
      the items listed in SCHEDULE 3.1B.

            (c) Intellectual Property. ASTIHL has delivered to August a
      confidential SCHEDULE 3.1C setting forth a list of all of the Intellectual
      Property of STI including that owned by or licensed to STI, and any
      licenses pursuant to which any of such Intellectual Property is used
      (except for any software that is licensed to STI under any third-party
      software license for end users generally available to the public at a cost
      of less than $500). Prior to the date of this Agreement, STI has delivered
      to August, or given August access to, true and complete copies of all
      issuances, registrations, applications and certificates regarding such
      Intellectual Property, true and complete copies of all contracts with
      employees or others relating in whole or in part to disclosure, assignment
      or patenting of inventions or discoveries, confidential or proprietary
      information, product formulas or other categories of know-how, and true
      and complete copies of all patent,

                                       11
<PAGE>
      trademark, trade name, copyright, trade secret or other Intellectual
      Property licenses granted at any time by or to STI (except for any
      software that is licensed to STI under any third-party software license
      for end users generally available to the public at a cost of less than
      $500).

            (d) Leases, Agreements, Etc. SCHEDULE 3.1D sets forth a list
      (including, in the case of oral arrangements, a written description of all
      material terms thereof) of each lease, contract, agreement or other
      commitment, written or otherwise, to which STI is a party (other than
      leases, contracts, agreements or commitments furnished pursuant to other
      paragraphs of this Section 3.1) and which have a value in excess of $5,000
      or are material to the operation of the Business, including, but not
      limited to, the following:

                  (i) The purchase of any products, know-how, services, raw
            materials, supplies or equipment including, but not limited to,
            parts, components, systems, subsystems and electronics;

                  (ii) the sale of assets, products or services involving a
            value estimated at more than $5,000, including, but not limited to,
            all outstanding purchase orders or any contract for provision of
            service warranties, sales credits, product returns, or discounts,
            warehouse allowances, advertising allowances or promotional
            services;

                  (iii) any distributor or sales representative or similar
            broker, dealer or agent of products of any of STI; or

                  (iv) any confidentiality, secrecy or non-disclosure agreement
            (whether STI is a beneficiary or obligor thereunder) relating to any
            proprietary or confidential information or similar contract.

      Prior to the date of this Agreement, ASTIHL has delivered to August, or
      given August access to, true and complete copies of all written agreements
      identified in SCHEDULE 3.1D and any written materials supporting,
      clarifying, explaining or otherwise related to oral arrangements.

            (e) Permits, Licenses, Etc. SCHEDULE 3.1E sets forth a list of all
      permits, licenses, approvals or similar permissions, held by STI. Prior to
      the date of this Agreement, STI has delivered to August, or given August
      access to, true and complete copies of all permits, licenses, approvals or
      other documents identified in SCHEDULE 3.1E.

            (f) Banks and Depositories. SCHEDULE 3.1F sets forth a list of each
      bank, broker or other depository with which STI has a cash, cash
      equivalent or investment account or safe deposit box, the names and
      numbers of such accounts or boxes and the names of all persons authorized
      to draw or execute transactions on such accounts.

            (g) Loans and Credit Agreements, Etc. SCHEDULE 3.1G sets forth a
      list of all outstanding mortgages, promissory notes, evidences of
      indebtedness, deeds of trust,

                                       12
<PAGE>
      indentures, loan or credit agreements or similar instruments for money
      borrowed, excluding normal trade credit, to which STI is a party (as
      lender or borrower) or to which STI is a guarantor or indemnitor, written
      or otherwise, and all amendments or modifications, if any, thereof. Prior
      to the date of this Agreement, STI has delivered to August, or given
      August access to, true and complete copies of all documents identified in
      SCHEDULE 3.1G.

            (h) Insurance Policies and Claims. SCHEDULE 3.1H sets forth a list,
      including the term and coverages thereof, of all policies of insurance
      maintained by STI or its Affiliates with respect to STI and covering its
      directors, officers, managers, employees, agents, properties, buildings,
      machinery, equipment, furniture, fixtures or operations and a description
      of each claim made by STI under any such policy of insurance since STI's
      inception, describing such claim and the amount thereof. Prior to the date
      of this Agreement, STI has delivered to August, or given August access to,
      true and complete copies of all policies of insurance identified in
      SCHEDULE 3.1H, and true and complete copies of all documentation regarding
      claims made thereunder.

            (i) Certain Employees. ASTIHL has delivered to August a confidential
      letter as SCHEDULE 3.1I setting forth (i) the name and current annual
      salary rate of each director, officer, employee or consultant of STI,
      together with a summary of the bonuses, additional compensation, options,
      severance payments and other benefits, if any, paid or payable to such
      persons as of the date hereof or in the future; (ii) the name of each
      employee and each individual to whom employment has been offered and who
      has accepted such offer, including scheduled starting date, and (iii) the
      names of all former employees whose employment has terminated either
      voluntarily or involuntarily during the preceding twelve-month period.

            (j) Employee Plans. SCHEDULE 3.1J sets forth a list of all Employee
      Plans and any related insurance contracts and trust and custodial
      agreements to which STI is a party. Prior to the date of this Agreement,
      STI has delivered to August, or given August access to, true and complete
      copies of all the documents related to such items listed in SCHEDULE 3.1J.

            (k) Powers of Attorney. SCHEDULE 3.1K sets forth the names of all
      persons, if any, holding powers of attorney from STI and a description of
      the scope of each such power of attorney.

            (l) Taxes. SCHEDULE 3.1L sets forth a list of (i) all tax,
      assessment or information reports and returns filed by or on behalf of STI
      or its predecessors with any jurisdiction since STI's inception, and (ii)
      a list of all tax or assessment elections of STI in effect. Prior to the
      date of this Agreement, STI has delivered to August, or given August
      access to, true and complete copies of all documents listed in SCHEDULE
      3.1L and all material correspondence to or from taxing authorities since
      STI's inception, and has made available to August for review and copying
      all working papers of persons who prepared any of the documents listed in
      SCHEDULE 3.1L.

                                       13
<PAGE>
            (m) Material Components. ASTIHL will deliver to August a
      confidential SCHEDULE 3.1M setting forth, within twenty one (21) days of
      the date of execution hereof, a bill of materials which shall include, but
      not be limited to, a list of all parts, components, systems, subsystems,
      firmware, software, hardware, electronics, and Intellectual Property for
      each product of STI as well as Die Sort Products (save for the following
      requirement on suppliers and contracts, agreements and other commitments)
      and sets forth a description of the supplier of each item and a list of
      each contract, agreement, or other commitment, written or otherwise (in
      the case of oral arrangements, a written description of all material terms
      thereof) with respect to such items.

      3.2) Organization; Directors and Officers. STI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all necessary power and authority to own its properties and
assets and conduct the business presently being conducted by it. STI is in good
standing and is qualified or licensed to transact business as a foreign
corporation in each other jurisdiction in which the character of its properties
or the nature of its activities makes any such qualification necessary other
than jurisdictions where the failure to be so qualified or licensed would not
result in a Material Adverse Effect. The jurisdictions in which STI is qualified
are listed on SCHEDULE 3.2. SCHEDULE 3.2 also sets forth a list of the directors
and officers (with all titles and positions indicated) of STI. STI has
heretofore delivered to August complete and correct copies of the Certificate of
Incorporation and all amendments thereto, and of the Bylaws and all amendments
thereto and any other governing documents or instruments.

      3.3) Capitalization and Voting Rights. The authorized capital stock of STI
consists, or will consist, immediately prior to the Closing of 10,000 authorized
shares of common stock, par value $.01 per share, of which 1,000 shares are
issued and outstanding (the "Shares"). There are no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of first
refusal) or agreements, orally or in writing, for the purchase or acquisition
from STI of any shares of its capital stock. STI is not a party or subject to
any agreement or understanding, and there is no agreement or understanding
between any persons, which affects or relates to the voting or giving of written
consents with respect to any of STI's securities or the voting by a director of
STI. All outstanding securities of STI were duly and validly authorized and
issued, are fully paid and nonassessable, and were issued in accordance with the
registration or qualification provisions of the Securities Act, and any relevant
state securities laws, including Blue Sky laws, or pursuant to valid exemptions
therefrom, and in accordance with the other applicable provisions of the
Securities Act and the rules and regulations thereunder.

      3.4)  [This section intentionally left blank]

      3.5) Authority of ASTIHL. ASTIHL has full legal and equitable right,
power, and authority (without the consent or approval of any other person other
than ASTIHL's stockholders) to perform all of its obligations under this
Agreement.

      3.6) Ownership of Shares/Status of ASTIHL. ASTIHL is the sole legal and
beneficial owner of the Shares free and clear of any encumbrances or rights of
others (other than the rights of August). There is no agreement, contract,
option, commitment, right or privilege or other

                                       14
<PAGE>
right of another binding upon or which at any time in the future may become
binding upon ASTIHL or STI to sell, transfer, assign, pledge, charge, mortgage
or in any other way dispose of or encumber any of the Shares other than pursuant
to this Agreement. Without limiting the generality of the foregoing, none of the
Shares are subject to any voting trust, shareholders' agreement, voting
agreement or other agreement or understanding with regard to the Shares. Upon
completion of the transactions contemplated by this Agreement, the Shares will
constitute all of the outstanding capital stock of STI and will be owned solely
by August as the owner of record, with good and marketable title thereto. There
has not been filed any petition or application, or any proceedings commenced
which have not been discharged, by or against any of ASTIHL or STI with respect
to any assets under any law, domestic or foreign, relating to bankruptcy,
reorganization, compromise arrangements, insolvency, readjustment of debtor or
creditors' rights, and no assignment for the benefit of creditors has been made
by ASTIHL or STI.

      3.7) Subsidiaries. STI has no ownership or equity interest, direct or
indirect, in any other business, corporation, joint venture, partnership,
proprietorship or similar entity. The business carried on by STI has not been
conducted through any direct or indirect subsidiary or Affiliate of STI or
ASTIHL, except that ASTI Affiliates including STI California, Inc.,
Semiconductor Technologies & Instruments Pte Ltd, Semiconductor Technologies &
Instruments Sdn Bhd, and Semiconductor Technologies & Instruments Phils., Inc.
has performed some of STI's marketing activities, and Semiconductor Technologies
& Instruments Pte Ltd has performed engineering development activities, and all
such rights resulting therefrom are addressed in Section 5.7.

      3.8) Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement and the transactions and agreements contemplated
hereby have been duly and validly authorized and approved by all requisite
corporate action on the part of STI and by all requisite action of ASTIHL,
except that as of the date of this Agreement ASTIHL's Shareholders have not
approved this Agreement and the transactions contemplated hereby. This Agreement
constitutes and, when executed, the agreements contemplated hereby will
constitute, the valid and binding obligations of STI and ASTIHL, enforceable in
accordance with its and their respective terms except as may be limited by laws
affecting creditors rights generally or by judicial limitations on the right to
specific performance or other equitable remedies.

      3.9) Consents Required. Except for (i) any applicable requirements of the
Securities Act, the Exchange Act, and securities laws of the states of the
United States of America; (ii) the Hart Scott Rodino Antitrust Improvements Act
of 1976 and the regulations thereunder (the "HSR Act") and the antitrust,
competition, foreign investment, or similar laws of any foreign countries or
supranational commissions or boards that require pre-transaction notifications
or filings with respect to the transactions contemplated by this Agreement
(collectively, "Foreign Transaction Laws"), (iii) the shareholder approval and
other requirements of the Stock Exchange of Singapore applicable to ASTIHL, and
(iv) any items set forth in SCHEDULE 3.9, the execution and delivery of this
Agreement, the sale and transfer of the Shares and the consummation of the
transactions contemplated hereby in compliance with the terms and provisions
hereof, by ASTIHL and STI will not:

                                       15
<PAGE>
            (a) conflict with or result in a breach of the terms, conditions or
      provisions of or constitute a default under (x) the Certificate of
      Incorporation or Bylaws or other governing instruments of ASTIHL or STI,
      or (y) any material agreement, mortgage, lease, note, judgment, order,
      award, decree or other instrument or restriction to which ASTIHL or STI is
      a party or by which ASTIHL or STI or any of their assets is bound or
      affected;

            (b) violate any statute, rule, regulation, order or decree of any
      federal, state, local or foreign body or authority by which ASTIHL or STI
      or any of their properties or assets may be bound;

            (c) require any affirmative approval, consent, authorization or
      other order or action of any court, governmental authority, regulatory
      body, creditor or any other person; or

            (d) give any party with rights under any such material agreement,
      mortgage, lease, note, judgment, order, award, decree or other instrument
      or restriction the right to accelerate terminate, modify or otherwise
      change the rights or obligations of ASTIHL or STI thereunder.

      3.10) Financial Statements. Attached as SCHEDULE 3.10 is a true and
complete copy of (i) STI's unaudited financial statements for the years ended
December 31, 2000, and December 31, 2001 and (ii) STI's unaudited financial
statements for the three month period ended March 31, 2002 (the "Financial
Statements"). The Financial Statements have been prepared in accordance with
GAAP and fairly represent in all material respects the financial position of STI
as of their respective dates and the results of operations and cash flows for
the applicable periods ended on such dates. The statements of earnings included
within the Financial Statements do not contain any items of special or
nonrecurring income or any other income not earned in the ordinary course of
business except as expressly specified therein. The books of account of STI
accurately reflect STI's items of income and expense and all assets and
liabilities and accruals that properly should have been reflected therein in
accordance with GAAP consistently applied throughout the periods covered
thereby.

      3.11) Taxes. STI has timely filed all tax or assessment reports and tax
returns (including any applicable information returns) that may be required by
any law or regulation of any jurisdiction to be filed, and all such reports and
returns are true, correct and complete in all material respects and listed in
SCHEDULE 3.1L. STI has duly paid, deposited or accrued on its books of account,
all Taxes pursuant to such reports and returns, or assessed against STI, or
which STI is obligated to withhold from amounts owing to any employee or
otherwise. STI has no liability for any Taxes in excess of the amounts stated in
the Financial Statements with respect to all time periods or portions thereof
ending on or before the dates thereof. Neither the assessment of any additional
Taxes that by law should have been reported or paid or in accordance with GAAP
should have been accrued, nor any investigation or audit, is pending, threatened
or expected. No taxing or assessment authority has indicated to STI any intent
to conduct an audit or other investigation or asserted any unresolved
deficiencies with respect to Tax liabilities of STI for any period, and to STI's
and ASTIHL's knowledge there are no facts or

                                       16
<PAGE>
circumstances that would give rise thereto. STI has not waived any statute of
limitations in respect of any Taxes or agreed to any extension of time with
respect to an assessment of deficiency with respect to such Taxes. No tax is
required to be withheld or paid pursuant to Section 1445 of the Code as a result
of the transactions contemplated by this Agreement.

      3.12) Absence of Undisclosed Liabilities. There are no debts, liabilities,
or claims against STI, or to STI's knowledge a legal basis therefor, whether
accrued, absolute, contingent, or otherwise, and whether due or to become due,
including, but not limited to, liabilities on account of Taxes, other
governmental charges, duties, penalties, interest or fines, which are required
to be reflected on the Financial Statements of STI in accordance with GAAP
except:

            (a) liabilities to the extent set forth or reserved against in the
      Financial Statements;

            (b) liabilities incurred in the ordinary course of business (and in
      compliance with this Agreement) since the date of the Financial
      Statements; or

            (c) liabilities disclosed in SCHEDULE 3.12 or other Schedules to
      this Agreement.

      3.13) Absence of Certain Changes and Events.  Except as set forth in
SCHEDULE 3.13, since the date of the most recent Financial Statement:

            (a) There has not been any material adverse change in the business,
      management, net worth or financial condition of STI or any of its assets,
      whether or not covered by insurance, or in the relationships of STI with
      any material suppliers or customers; and each of ASTIHL and STI has
      conducted its business only in the ordinary course.

            (b) STI has not (i) sold or otherwise disposed of any of its real
      property or real property leases, or entered into any renewals or
      extensions of such existing leases or entered into any new leases; (ii)
      made any increase in the compensation or benefits payable or to become
      payable by it to any officers, employees or consultants, or paid or
      accrued any bonus, percentage of compensation, severance, change of
      control, or other like benefit to, or for the credit of, any officer,
      employee or consultant; (iii) entered into, amended, terminated or
      received notice of termination of any material contract, license,
      franchise, commitment or other arrangement other than in the ordinary
      course of business; (iv) altered or revised its accounting principles,
      procedures, methods or practices except as required by law; (v) removed or
      permitted to be removed from any building, facility or real property of
      STI any material item of machinery, equipment, fixture, vehicle, or other
      personal property or parts thereof, except in the ordinary course of
      business, (vi) materially changed its credit policy as to sales of
      inventories, discounts, product returns, warranties or collection of
      receivables; (vii) transferred or otherwise disposed of any material
      assets except inventory in the ordinary course of business; (viii)
      incurred, discharged or satisfied any material liability (absolute or
      contingent), mortgage, lien, security interest or encumbrance other than
      in the ordinary course of business; (ix)

                                       17
<PAGE>
      declared or paid any dividend or other distribution in cash or securities,
      or redeemed, repurchased or otherwise acquired any equity interests of
      STI, as applicable; (x) issued or committed to issue any securities of, or
      other ownership interests in, STI; (xi) made any purchase commitment
      materially in excess of the normal, ordinary and usual requirements of its
      business, or made any change in its selling, pricing, advertising or
      personnel practices inconsistent with its prior practice; (xii) written
      off or down the value of any inventory or other assets as unusable,
      obsolete or below standard quality in excess of stated reserves on the
      Financial Statements; (xiii) written off or down as uncollectible any
      notes or accounts receivable or portion thereof except in amounts that in
      the aggregate are not in excess of preexisting reserves therefor, or
      taken, set aside or increased any reserves or charges on its books against
      earnings or assets or reversed any reserves; (xiv) failed to maintain
      reasonable levels of inventory in view of current levels of business
      activity; (xv) entered into any settlement regarding the breach or
      infringement of any United States or foreign license, patent, trademark,
      trade name, invention or similar rights; (xvi) entered into any compromise
      or settlement of or suffered any judgment in any litigation, proceeding,
      or governmental investigation relating to it or its assets, properties,
      rights or business; (xvii) suffered any material damage, destruction or
      loss whether or not covered by insurance; (xviii) had any material adverse
      change in its relations with its employees, agents, customers or
      suppliers; (xix) made any loans to any shareholders, directors, officers,
      employees or consultants of STI; (xx) repaid any loans or other advances
      from shareholders or Affiliates of STI, or repaid any indebtedness of STI
      for which ASTIHL was a guarantor or was otherwise directly or indirectly
      liable; (xxi) changed or modified the terms or amounts of its insurance
      coverages; (xxii) received any communication from any customer during the
      last full fiscal year to the effect that such customer does not intend to
      continue to purchase merchandise from it in a manner consistent with past
      purchases; (xxiii) made any material capital expenditures or commitment
      therefor; or (xxiv) entered into any written or oral agreement, other than
      this Agreement, to do any of the things enumerated in (i) through (xxiii)
      of this Section 3.13.

      3.14) Assets. The fixtures, equipment, facilities and operating assets of
STI are suitable for the uses for which intended, free from material defects and
in good operating condition (ordinary wear and tear excepted) in all material
respects. All such assets are being and have been properly and regularly
serviced and maintained by STI in a manner that would not void or limit the
coverage of any warranty thereon. STI has good, marketable and insurable title
to, or, in the case of leases, valid and subsisting leasehold interests in, all
assets used in the Business, free and clear of any Liens except Liens for
current taxes or assessments not yet due and payable.

      3.15) Intellectual Property. Except as set forth in SCHEDULE 3.15, all
right, title and interest in and to all Intellectual Property that is necessary
to or used in (i) the Business as presently conducted, and (ii) research and
development programs of ASTIHL or STI relating to the Business, are owned by or
licensed exclusively to, without royalties, on-going fees or commissions, STI,
free and clear of any Liens. Except as set forth in SCHEDULE 3.15 with specific
reference to this sentence, neither STI, the Business, the Intellectual Property
owned by or licensed to STI nor any of the products of STI used in the Business,
infringes, misuses, or conflicts with the rights, including Intellectual
Property rights, of others and, to STI's and ASTIHL's knowledge, there is no
reasonable basis to suspect that such infringement, misuse or

                                       18
<PAGE>
conflict exists. No present or former employee or consultant of STI has violated
any noncompetition, confidentiality, or assignment of inventions covenant or
obligation by reason of such employee's or consultant's employment with or
consulting to ASTIHL or STI. None of the Intellectual Property used by STI was
created using misappropriated Intellectual Property. No present or former
employee or consultant of STI has, by actions taken while an employee or
consultant of STI, violated any covenant or obligation not to solicit the
employees of any other person or entity. The Intellectual Property owned by or
licensed to STI has not been challenged in any judicial or administrative
proceeding. No employee or consultant of STI or an Affiliate of STI has any
rights as an individual in or to any of the Intellectual Property and no
Affiliate of ASTIHL or STI has any rights in or to any of the Intellectual
Property used in the Business. All Intellectual Property necessary to or used in
the Business is listed in SCHEDULE 3.1C and has the status indicated therein and
all applications are still pending in good standing and have not been abandoned.
ASTIHL and STI have taken commercially reasonable steps and appropriate actions
to record their interests, and protect their rights, in the Intellectual
Property. To STI's and ASTIHL's knowledge, no person or entity nor such person's
or entity's business nor any of its products has infringed, misused,
misappropriated or conflicted with the Intellectual Property rights of STI or
currently is infringing, misusing, misappropriating or conflicting with such
rights and there is no reasonable basis to suspect that such infringement,
misuse or conflict exists. Except as set forth on SCHEDULE 3.15, no employee or
consultant of STI is subject to or otherwise restricted by any employment,
nondisclosure, assignment of inventions, nonsolicitation of employees or
noncompetition agreement between such employee or consultant and a third party,
except as set forth in nondisclosure agreements executed on behalf of STI with
third parties. Except as set forth on SCHEDULE 3.15, all employees and
consultants of STI have signed a confidentiality and assignment of inventions
agreement in the form attached hereto as part of SCHEDULE 3.15, and, assuming
due execution on the part of such employee or consultant, each such agreement
is, and after the Closing shall remain, the legal, binding and enforceable
obligation of such employee or consultant.

      3.16) Accounts Receivable. All accounts and notes receivable shown on the
most recent Financial Statement and all accounts and notes receivable created up
to the Closing Date will be collected in the ordinary course of business (net of
the allowance set forth or reflected in the Financial Statements for doubtful
accounts). All accounts and notes receivable shown on the most recent Financial
Statement are, except to the extent already paid, valid and collectible
obligations owing to STI, not subject to any defenses or set-offs. STI has no
notes or accounts receivable due to it from any director, officer, or employee.
With respect to the accounts receivable set forth in the Financial Statements,
neither ASTIHL nor STI has made promises or other commitments which require
additional engineering or modification of products delivered to customers except
as otherwise disclosed in SCHEDULE 3.16.

      3.17) Inventories. All finished goods Inventories of STI consist of items
of merchantable quality and quantity usable or salable in the ordinary course of
the Business, and are salable at prevailing market prices and do not have a
value materially less than the book value amounts thereof. All Inventories of
STI conform to the specifications established therefor and all applicable
regulatory requirements. The quantities of all Inventories (net of allowance for
obsolete or excess inventory consistent with past practice) are not obsolete,
damaged, defective or excessive, and are reasonable in the circumstances of
STI's business. SCHEDULE 3.17

                                       19
<PAGE>
sets forth a complete list of the addresses of all warehouses or other
facilities owned or leased by STI, or at distributor or customer locations, and
in which the Inventories related to the Business are located.

      3.18) Licenses; Compliance with Laws, Regulations, Etc. STI possesses all
permits, licenses and other approvals and authorizations that are necessary for
the conduct of its business as presently conducted, and all of such licenses,
permits and other approvals and authorizations are in good standing, full force
and effect. All such licenses, permits, approvals or authorizations will not be
affected by the transactions contemplated herein. STI and its respective
actions, properties, products, practices and procedures, and any agreements to
which STI is a party or is bound, have complied, and are in compliance, in all
respects with all applicable laws (including common law), statutes, ordinances,
orders, decrees, rules, regulations, interpretations and requirements
promulgated by governmental or other authorities, except to the extent that any
noncompliance would not have a Material Adverse Effect. To the best knowledge of
ASTIHL, no statute, rule, regulation, order or interpretation has been enacted,
entered or deemed applicable by any domestic or foreign government or
governmental or administrative agency or court that would make consummation by
ASTIHL of the transactions contemplated by this Agreement illegal.

      3.19) Litigation. Except as set forth in SCHEDULE 3.19, there is no
action, lawsuit, claim, proceeding, or investigation of any kind pending or
threatened against, by or affecting STI or the Business. STI is not in default
with respect to any order, writ, injunction, or decree of any court or of any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, affecting or relating to
its business or assets. No suit, action or other proceeding is pending or
threatened by or before any court or governmental agency in which it is sought
to restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby, and
no investigation that might result in any such suit, action or other proceeding
is pending or overtly threatened.

      3.20) Warranties. All products manufactured or sold, and all services
provided, by STI have complied, and are in compliance, in all material respects
with all contractual requirements, warranties or covenants, express or implied,
applicable thereto, and with all applicable governmental, trade association or
regulatory specifications therefor or applicable thereto. The warranty reserve
on the Financial Statements is determined in accordance with Singapore GAAP. The
terms of the product and service warranties and product return, discount, demo
sales and credit policies for STI are set forth in SCHEDULE 3.20.

      3.21) Leases, Contracts. STI has performed in all material respects the
obligations required to be performed by it and is not in default under any
lease, contract, mortgage, promissory note, evidence of indebtedness, purchase
order or other agreement or commitment to which STI is a party or by which STI
is bound, and the same are in full force and effect on the date hereof and valid
and enforceable by STI in accordance with their respective terms except as may
be limited by laws affecting creditors' rights generally or by judicial
limitations on the right to specific performance or other equitable remedies;
there has not been any event of default (or any event or condition that with
notice or the lapse of time, both or otherwise, would constitute

                                       20
<PAGE>
an event of default) on the part of STI or, to STI's knowledge, any party to any
thereof; and neither the performance nor the breach by STI of any such lease,
contract, mortgage, promissory note, evidence of indebtedness or other agreement
will have a Material Adverse Effect.

      3.22) Insurance Policies. All policies of insurance listed in SCHEDULE
3.1H are in full force and effect, have been issued, directly or indirectly, for
the benefit of STI by properly licensed reputable insurance carriers, are to
STI's knowledge adequate for the assets, business and operations of STI. STI has
promptly and properly notified its insurance carriers of any and all claims
known to it with respect to its operations or products for which it is insured.
The insurance policies or substantially similar policies applicable to STI have
been in full force and effect since STI's inception.

      3.23) Labor Agreements. STI is not a party to any collective bargaining
agreement with any labor organization or to any other agreement or understanding
containing any severance pay or change of control liabilities or obligations.
STI has not committed any unfair labor practice. There is not currently pending
or threatened a demand for recognition from any labor union with respect to, and
STI has no knowledge of any attempt that has been made or is being made to
organize, any of the persons employed by STI. There has never been and is not
now any strike, slow-down, work stoppage or lockout, or any threat thereof, by
or with respect to any of the employees of STI. To STI's knowledge, there has
never been and is not now any strike, slow-down, work stoppage or lockout, or
any threat thereof, by or with respect to any supplier of STI that has had, or
could reasonably be expected to have, a Material Adverse Effect upon the
Business.

      3.24) Benefit Plans.

            (a) Except as set forth on SCHEDULE 3.1J, STI does not sponsor,
      maintain, contribute to, and, since its inception, has not sponsored,
      maintained or contributed to or been required to contribute to, any
      "employee pension benefit plan" ("Pension Plan"), as such term is defined
      in Section 3(2) of ERISA, including, solely for the purpose of this
      subsection, a plan excluded from coverage by Section 4(b)(5) of ERISA.
      Each such Pension Plan presently maintained by STI is in compliance with
      applicable provisions of ERISA, the Code and other applicable law.

            (b) STI does not sponsor, maintain, contribute to, and, since its
      inception, has not sponsored, maintained or contributed to or been
      required to contribute to, any Pension Plan that is a "Multiemployer Plan"
      within the meaning of Section 4001(a)(3) of ERISA.

            (c) Except as set forth on SCHEDULE 3.1J, STI does not sponsor,
      maintain, contribute to, and, since its inception, has not sponsored,
      maintained, contributed to, or been required to contribute to, any
      "employee welfare benefit plan" ("Welfare Plan"), as such term is defined
      in Section 3(1) of ERISA, whether insured or otherwise. Each such Welfare
      Plan presently maintained by STI is in compliance with the provisions of
      ERISA, the Code and all other applicable laws, including, but not limited
      to, Section 4980B of the Code, the regulations thereunder and Part 6 of
      Title I of ERISA. Except as

                                       21
<PAGE>
      set forth in SCHEDULE 3.1J, STI has not established or contributed to any
      "voluntary employees' beneficiary association" within the meaning of
      Section 501(c)(9) of the Code.

            (d) STI does not sponsor, maintain or contribute to, and, since its
      inception, has not sponsored, maintained or contributed to, a
      "self-insured medical reimbursement plan" within the meaning of Section
      105(h) of the Code and the regulations thereunder.

            (e) Except as set forth in SCHEDULE 3.1J, STI does not currently
      maintain or contribute to any oral or written bonus, profit-sharing,
      compensation (incentive or otherwise), commission, option or other
      equity-based compensation, retirement, severance, change of control,
      vacation, sick or personal leave, dependent care, deferred compensation,
      cafeteria, disability, hospitalization, medical, death, retiree, insurance
      or other benefit or welfare or other similar plan, agreement, trust, fund
      or arrangement providing for the remuneration or benefit of all or any
      employees or members, that is neither a Pension Plan nor a Welfare Plan
      (collectively, the "Compensation Plans").

            (f) Full payment has been made of all amounts that STI is required,
      under applicable law, with respect to any Pension Plan, Welfare Plan or
      Compensation Plan, or any agreement relating to any Pension Plan, Welfare
      Plan or Compensation Plan, to have paid as a contribution to each Pension
      Plan, Welfare Plan or Compensation Plan. To the extent required by GAAP,
      STI has made adequate provisions for reserves to meet contributions that
      have not been made because they are not yet due under the terms of any
      Pension Plan, Welfare Plan or Compensation Plan or related agreements.
      There will be no change on or before the Closing Date in the operation of
      any Pension Plan, Welfare Plan or Compensation Plan or documents under
      which any such plan is maintained that will result in an increase in the
      benefit liabilities under such plan, except as may be required by law. For
      each Pension Plan, Welfare Plan or Compensation Plan that is funded by
      STI, STI has segregated funds in an amount consistent with reasonable
      commercial practices to satisfy the obligations of such plans and has
      obtained stop-loss coverage in reasonable commercial amounts to protect
      against significant claims.

            (g) SCHEDULE 3.1J lists all Pension Plans, Welfare Plans and
      Compensation Plans, and if any Plans are listed thereon, STI has delivered
      to August, or given August access to, complete and accurate copies of all
      of such Pension Plans, Welfare Plans, Compensation Plans.

            (h) Except to the extent specifically disclosed in SCHEDULE 3.1J,
      the execution of, and performance of the transactions contemplated in,
      this Agreement will not (either alone or upon the occurrence of any
      additional or subsequent events) constitute an event under any Pension
      Plan, Welfare Plan, Compensation Plan or other arrangement that will or
      may result in any payment (whether of severance pay or otherwise),
      acceleration, forgiveness of indebtedness, vesting, distribution, increase
      in benefits or obligation to fund benefits. Except to the extent
      specifically disclosed on SCHEDULE 3.1J, no amount that could be received
      (whether in cash or property or the vesting of property) as a result of
      any of the transactions contemplated by this Agreement by any employee,
      officer or director of STI or any of their respective Affiliates who is a
      "disqualified individual" (as

                                       22
<PAGE>
      such term is defined in proposed Treasury Regulations Section 1.280G-1)
      under any Pension Plan, Welfare Plan or Compensation Plan currently in
      effect would be an "excess parachute payment" (as such term is defined in
      Section 280G(b)(1) of the Code).

      3.25) No Finders. No act of ASTIHL or STI has given or will give rise to
any valid claim against any of the parties hereto for a brokerage commission,
finder's fee or other like payment in connection with the transactions
contemplated herein.

      3.26) Contracts with Related Parties. Except as set forth in SCHEDULES
3.1I or 3.26, there are no agreements or contracts between STI and any of its
officers, directors, shareholders or any entity in which any officer, director
or shareholder owns a more than five percent (5%) equity interest and no
agreements or contracts between STI and its Affiliates.

      3.27) Relations with Suppliers and Customers. No current supplier of STI
has cancelled any contract or order for provision of, and, to STI's knowledge,
there has been no threat by any such supplier not to provide, raw materials,
products, supplies, or services to the businesses of STI either prior to or
following the Closing. Except as set forth in SCHEDULE 3.27, STI has not
received any information from any customer to the effect that such customer
intends to materially decrease the amount of business it does with STI either
prior to or following the Closing. ASTIHL agrees to update SCHEDULE 3.27 by
Closing to list all material suppliers to STI of any manufacturing or processing
raw materials, products, supplies, or services, including names and telephone
numbers of contact persons.

      3.28) Product Liability Claims. All products that STI has in Inventory or
has sold have been and are merchantable, free from material defects in material
or workmanship, and suitable for the purpose for which they are sold and meet
the customer specifications or other contractual requirements with respect to
the sales order or purchase order for such product. Except as set forth in
SCHEDULE 3.28, STI has not incurred any uninsured or insured Product Liability
and ASTIHL has not incurred any uninsured or insured Product Liability with
respect to the Die Sort Products. Except as set forth in SCHEDULE 3.28, STI has
not received a claim based upon alleged Product Liability, and, to STI's and
ASTIHL's knowledge, no basis for any such claim exists. Except as set forth in
SCHEDULE 3.28, ASTIHL has not received a claim based upon alleged Product
Liability with respect to the Die Sort Products, and, to STI's and ASTIHL's
knowledge, no basis for any such claim exists. To STI's and ASTIHL's knowledge,
STI has no liability or obligation with respect to any Product Liability,
whether or not heretofore asserted, or product recalls related to products
manufactured, sold, or leased prior the Closing.

      3.29) Environmental Matters. Except as set forth on SCHEDULE 3.29, STI has
obtained, and is in compliance with, all permits, licenses or other approvals
necessary under the Environmental Laws or Regulations with respect to STI's
business or assets, and is in compliance with all Environmental Laws or
Regulations applicable to STI's business or assets, except to the extent that
any noncompliance would not have a Material Adverse Effect. The business and
assets of STI comply with all such Environmental Laws or Regulations. SCHEDULE
3.29 sets forth all Hazardous Substances that have been used, stored,
manufactured, generated, transported, released or disposed of in connection with
or as a result of the business or assets of STI, and such Hazardous Substances
have been used by STI in compliance with applicable

                                       23
<PAGE>
Environmental Laws and Regulations. Neither STI, nor its business, assets or the
real property presently or formerly used by STI in connection therewith, have
been or are subject to, any actual or threatened investigations, administrative
proceedings, litigation, remedial action, regulatory hearings, or other action
threatened, proposed or pending that alleges (i) actual or threatened violation
of or noncompliance with any Environmental Law or Regulation; or (ii) actual or
threatened personal injury, property damage, contamination, responsibility or
liability of any kind resulting from on-site exposures to, off-site treatment,
storage or disposal of, or release or threatened release of a Hazardous
Substance. STI has not taken any action or failed to take any action with
respect to its business, assets or the real property presently or formerly used
by STI in connection therewith that might reasonably be expected to result in
(i) actual or threatened violation of or noncompliance with any Environmental
Law or Regulation; or (ii) actual or threatened personal injury, property
damage, contamination, responsibility or liability of any kind resulting from
on-site exposures to off-site treatment, storage or disposal of, or release or
threatened release of a Hazardous Substance. STI has delivered to August, or
given August access to, true and complete copies of all (if any) reports,
studies or tests in the possession of or initiated by STI that pertain to
Hazardous Substances or other environmental concerns regarding the business or
assets of STI or any real property used by STI in connection with its business
or assets. With respect to the real property presently or formerly used in
connection with the business and assets of STI, (i) no above-ground or
underground storage tanks are or were present on such real property or any
improvements on structures thereon; (ii) such real property is not listed on the
federal CERCLIS or on any local, state or federal list of hazardous waste sites;
and (iii) no Lien in favor of any governmental authority in response to a
release or threatened release of any Hazardous Substance has been filed or
attached to such real property.

      3.30) Location of Real Property. SCHEDULE 3.1A sets forth an address and a
complete and accurate legal description of all the Real Property owned and/or
leased by STI (the "Real Property"). STI legally or beneficially owns or leases,
and has not agreed to acquire or lease any real property or any interest in any
real property, other than the Real Property.

      3.31) Title to Real Property.  STI has the exclusive right to possess,
use and occupy all the Real Property owned or leased by it, free and clear of
all Liens.

      3.32) Business and Marketing Plans. STI has made available to August all
material methods, plans or marketing programs employed by STI in connection with
its business, including, but not limited to, all strategic and long term plans
or goals.

      3.33) Employees.

            (a) Except as set forth in SCHEDULE 3.33, with respect to persons
      who provide services to STI neither STI nor any Affiliate is a party to
      any employment, consulting or severance agreement or any other arrangement
      relating to the business of STI, written or oral, providing for
      compensation for services, and no employee of STI or any Affiliate is
      indebted, and as of the Closing will not be indebted, to STI or any
      Affiliate.

                                       24
<PAGE>
            (b) Except as set forth in SCHEDULE 3.33, the consummation of the
      transactions contemplated by this Agreement will not entitle any employee
      or former employee of STI or any Affiliate to any severance pay,
      unemployment compensation or similar payment or increase the amount, or
      accelerate the time for payment or vesting, of any compensation due to any
      such employee or former employee.

            (c) To the knowledge of STI, no officer or employee of STI or any
      Affiliate is a party to any agreement for the benefit of any person other
      than STI containing any prohibition or restriction on engaging in any
      business, competing or soliciting customers relating to the business of
      STI.

            (d) STI has complied with all applicable laws, regulations, rules,
      judgments, orders and decrees relating to the employment of labor,
      including those related to wages, hours, collective bargaining and the
      payment and withholding of taxes and other sums, and has paid or accrued
      all wages and benefits required by any employment contract or collective
      bargaining agreement, or any applicable law, regulation, rule, judgment,
      order or decree or by the policies or procedures of STI. STI has withheld
      and paid to the appropriate governmental authorities all amounts required
      to be withheld from its employees. STI has properly classified all
      independent contractors. STI has complied with all of its employment
      verification obligations pursuant to INA 274A, 8 USC 1324a, by completing
      Employment Eligibility Verification, Form I-9, for all of its employees
      including an examination of each employee's documentation and verification
      of the employee's eligibility to work in the United States of America.

            (e) All accrued obligations of STI for payments due to trusts or
      other funds or to any governmental agency or authority with respect to
      unemployment compensation benefits, social security benefits or any other
      benefits for their employees have been paid or adequate accruals therefor
      have been made in the most recent Financial Statements.

            (f) All reasonably anticipated obligations of STI for vacation and
      holiday pay, sick pay, bonuses and other forms of compensation payable to
      persons rendering services to STI have been paid or adequate accruals
      therefor have been made in the most recent Financial Statements as
      required by GAAP.

      3.34) Agreements Restricting Business. Except as disclosed in SCHEDULE
3.34, STI is not a party to any agreement or arrangement which restricts the
freedom of STI to carry on its business, including any contract or agreement
which contains covenants by STI not to compete in any line of business with any
other person.

      3.35) Corporate Records. The minute books of STI, copies of which have
been provided to August, contain complete copies of the Certificate of
Incorporation of STI and its By-Laws, together with accurate and complete
minutes of all meetings and resolutions of STI's Board of Directors and
shareholders held or passed, enacted, consented to or adopted since
incorporation. There are no outstanding or pending applications or filings which
would alter in any way the Certificate of Incorporation or corporate status of
STI. All resolutions of STI were duly passed and all meetings of STI were duly
held, and the share certificate books and share

                                       25
<PAGE>
certificate registers are complete and accurate and shall reflect all
transactions contemplated by this Agreement. The corporate records of STI have
been maintained in all material respects in accordance with all applicable
statutory requirements and are complete and accurate.

      3.36) Propriety of Past Payments. No funds or assets of STI have been used
for illegal purposes. Except for intercompany loans to be satisfied or converted
to equity pursuant to Section 5.12, all financial transactions by or on behalf
of STI have been duly and properly recorded and accounted for in STI's books and
records and no false or artificial entry has been made in the books and records
of STI for any reason. No payment has been made by or on behalf of STI with the
understanding that any part of such payment is to be used for any purpose other
than that described in the documents supporting such payment or in the event
that there are no documents supporting such payment, then for valid business
purposes. STI has not made, directly or indirectly, any illegal contributions to
any political party or candidate or government official, either domestic or
foreign.

      3.38) Investment Representations.

            (a) The shares of August Common Stock acquired by ASTIHL will be
      acquired for ASTIHL's own account, for investment and not with a view to,
      or for resale in connection with, any distribution or public offering
      thereof within the meaning of the Securities Act.

            (b) ASTIHL understands that (i) the shares of August Common Stock
      being issued hereunder have not been registered under the Securities Act
      by reason of their issuance in a transaction exempt from the registration
      and prospectus delivery requirements of the Securities Act pursuant to
      Section 4(2) thereof, and (ii) unless a subsequent disposition thereof is
      registered under the Securities Act or is exempt from registration
      thereunder (in accordance with Article 11 hereof or otherwise), such
      shares must be held by ASTIHL indefinitely and ASTIHL must therefore bear
      the economic risk of such shares indefinitely. In accordance with Article
      11 hereof, August agrees to file a registration statement relating to the
      shares of August Common Stock acquired by ASTIHL and use commercially
      reasonable efforts to cause such registration statement to become
      effective with the SEC within 45 days of the Closing Date, knows of no
      reason or circumstance why the shares will not be so registered.

      3.39) Completeness of Disclosures. None of the representations or
warranties made by ASTIHL and STI in this Agreement, and no certificate or
Schedule furnished or to be furnished by or on behalf of STI or ASTIHL to August
pursuant to this Agreement, or in connection with the transactions contemplated
by this Agreement, contains or will contain any untrue statement of a material
fact or omits or will omit any material fact the omission of which would be
misleading in light of the circumstances under which they were made.

      3.40) No Implied Representations. It is the explicit intent of the parties
hereto that STI and ASTIHL are not making any representation or warranties
whatsoever, expressed or implied, except those representations and warranties of
STI and ASTIHL contained in this Agreement, the

                                       26
<PAGE>
Schedules attached hereto, or the certificates to be provided by STI and ASTIHL
pursuant to this Agreement (the "ASTIHL's Certificates").

                                    ARTICLE 4
                    REPRESENTATIONS AND WARRANTIES OF AUGUST

      August represents and warrants to ASTIHL as follows, and acknowledges that
the same shall be true and correct as of the Closing Date (as if made at the
Closing) and shall be deemed to have been relied upon by ASTIHL:

      4.1) Organization. August is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota.

      4.2) Authorization and Binding Obligation. The execution, delivery and
performance by August of this Agreement and the transactions contemplated hereby
has been duly and validly authorized and approved, by all requisite corporate
action on the part of August. August has all requisite power and authority to do
and perform all acts and things required to be done by it under this Agreement
and the agreements contemplated hereby. This Agreement constitutes the valid and
binding obligation of August enforceable in accordance with its terms except as
may be limited by laws affecting creditors' rights generally or by judicial
limitations on the right to specific performance.

      4.3) Consents Required. Except for (i) any applicable requirements of the
Securities Act, the Exchange Act and securities laws of the states of the United
States of America; (ii) the HSR Act and the Foreign Transaction Laws, and (ii)
any items set forth in SCHEDULE 4.3, the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby in
compliance with the terms and provisions hereof by August will not:

            (a) Conflict with or result in a breach of the terms, conditions or
      provisions of or constitute a default under the Articles of Incorporation
      or Bylaws of August, or any material instrument, agreement, mortgage,
      lease, judgment, order, award, decree or other instrument or restriction
      to which August is a party or by which August or any of its assets is
      bound or affected;

            (b) Violate any statute, rule, regulation, order or decree of any
      federal, state, local or foreign body or authority by which August or any
      of its properties or assets may be bound;

            (c) Require any affirmative approval, consent, authorization or
      other order or action of any court, governmental authority, regulatory
      body, creditor or any other person; or

            (d) Give any party with rights under any such material instrument,
      agreement, mortgage, lease, judgment, order, award, decree or other
      instrument or restriction the

                                       27
<PAGE>
      right to terminate, modify or otherwise change the rights or obligations
      of August thereunder.

      4.4) No Finders. To the knowledge of August, no act of August has given or
will give rise to any valid claim against ASTIHL for a brokerage commission,
finder's fee or other like payment in connection with the transactions
contemplated herein.

      4.5) Capital Stock. As of the opening of the market on the date of this
Agreement, the authorized stock of August consists of 45,000,000 shares of
common stock, no par value per share, 13,037,157 of which are issued and
outstanding, validly issued, fully paid, and nonassessable.

      4.6) SEC Documents. August has filed all required reports, schedules,
forms, statements and other documents with the SEC since June 13, 2000 (the
"August SEC Documents"). As of their respective dates, August SEC Documents
complied as to form in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such August SEC
Documents, and none of August SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the extent
that information contained in any August SEC Document has been revised or
superseded by a later-filed August SEC Document, filed and publicly available
prior to the date of this Agreement (the "August Filed SEC Documents"), as of
the date of this Agreement none of August SEC Documents contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of August included in August SEC Documents complied as of their
respective dates of filing with the SEC as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
Exchange Act) applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto) and fairly present the consolidated
financial position of August as of the dates thereof and the consolidated
results of its operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments). Except
as set forth in August Filed SEC Documents, and except for liabilities and
obligations incurred in the ordinary course of business consistent with past
practice, August has no liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) required by GAAP to be set forth on
a consolidated balance sheet of August or in the notes thereto which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on August.

      4.7) Absence of Certain Changes of Events. Except as disclosed in August
Filed SEC Documents, and except as expressly contemplated by this Agreement,
since the date of the most recent financial statements included in August Filed
SEC Documents, August has conducted its business only in the ordinary course,
and there has not been:

                                       28
<PAGE>
            (a) any event, occurrence or development of a state of circumstances
      of facts which has had a Material Adverse Effect on August;

            (b) any declaration, setting aside or payment of any dividend or
      other distribution with respect to any shares of August Common Stock, or
      any repurchase, redemption or other acquisition by August of any
      outstanding shares of August Common Stock or other securities of, or other
      ownership interests in, August;

            (c) any split, combination or reclassification of any of August
      Common Stock or any issuance or the authorization of any issuance of any
      other securities in respect of, in lieu of or in substitution for shares
      of August Common Stock;

            (d) any incurrence, assumption or guarantee by August of any
      indebtedness for borrowed money other than in the ordinary course of
      business and in amounts and on terms consistent with past practices
      (including any such borrowings under its existing bank credit facility);

            (e) any damage, destruction or other casualty loss (whether or not
      covered by insurance) affecting the business assets of August which,
      individually or in the aggregate, has had or would reasonably be expected
      to have a Material Adverse Effect on August;

            (f) any change in any method of accounting or accounting practice by
      August, except for any such change required by reason of a concurrent
      change in generally accepted accounting principles; or

            (g) any agreement to do any of the foregoing.

      4.8) Issuance of August Common Stock. The August Common Stock issued to
ASTIHL pursuant to this Agreement shall be, when issued in accordance with the
terms hereof, duly authorized, validly issued, fully-paid, nonassessable, and
shall share equally in all dividends declared or paid by August after the
Closing Date with the existing issued August Common Stock. The August Common
Stock shall be issued in compliance with all applicable federal and state
securities laws.

      4.9) Completeness of Disclosures. None of the representations or
warranties made by August in this Agreement, and no written statement,
certificate or Schedule furnished or to be furnished by or on behalf of August
to ASTIHL pursuant to this Agreement, or in connection with the transaction
contemplated by this Agreement, contains or will contain any untrue statement of
a material fact or omits or will omit any material fact the omission of which
would be misleading in light of the circumstances under which they were made.

      4.10) No Implied Representations. It is the explicit intent of the parties
hereto that August is not making any representation or warranty whatsoever,
expressed or implied, except those representations and warranties of August
contained in this Agreement, the Schedules attached hereto, or the certificates
to be provided by August pursuant to this Agreement (the "August Certificates").

                                       29
<PAGE>
                                    ARTICLE 5
                              PRE-CLOSING COVENANTS

      5.1) Approvals and Consents. ASTIHL and STI will use all commercially
reasonable efforts to obtain all approvals and consents of all third parties
necessary on the part of ASTIHL and STI to consummate the transactions
contemplated herein. August agrees to cooperate with ASTIHL and STI in
connection with obtaining such approvals and consents. August will use all
commercially reasonable efforts to obtain all approvals and consents of all
third parties necessary on the part of August to consummate the transactions
contemplated herein. ASTIHL agrees to cooperate with August, and to cause STI to
cooperate with August in connection with obtaining such approvals and consents.

      5.2) Preserve Accuracy of Representations and Warranties. ASTIHL and STI
shall refrain from taking any action, except with the prior written consent of
August, that would render any representation, warranty or agreement of ASTIHL in
this Agreement inaccurate or breached as of the Closing (as though made at and
as of the Closing) in any material respect. At all times prior to the Closing,
ASTIHL will promptly inform August in writing with respect to any matters
hereafter arising that, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in the Schedules pursuant
to Article 3. August shall refrain from taking any action, except with the prior
written consent of ASTIHL, that would render any representation, warranty or
agreement of August in this Agreement inaccurate or breached as of the Closing
(as though made at and as of the Closing) in any material respect.

      5.3) Maintain the Business as Going Concern. Except as contemplated by
this Agreement, during the period from the date of this Agreement to the Closing
Date, ASTIHL will conduct the Die Sort Business and STI will conduct its
operations, according to its ordinary and usual course of business and
consistent with past practice, and each of ASTIHL and STI will use all
commercially reasonable efforts, to the extent that it is within its control, to
preserve intact the business organization of STI and the Die Sort Business of
ASTIHL, in each case to maintain its prospects, to keep available the services
of its officers and employees and to maintain satisfactory relationships with
licensors, licensees, suppliers, contractors, distributors, customers and others
having business relationships with it. ASTIHL will promptly advise August orally
and in writing of any materially adverse change in the business, prospects,
properties, results of operations or condition (financial or otherwise) of the
Die Sort Business or STI and permit August to consult with ASTIHL or STI with
respect to any material changes in the Business. Without limiting the generality
of the foregoing, and except as otherwise expressly provided in or contemplated
by this Agreement or to the extent specifically disclosed on the Schedules
hereto, during the period from the date hereof to the Closing Date, STI will
not, without the prior written consent of August:

            (a) amend its Certificate of Incorporation or Bylaws;

            (b) authorize for issuance, issue, sell, or deliver (whether through
      the issuance or granting of options, warrants, commitments, subscriptions,
      rights to purchase or

                                       30
<PAGE>
      otherwise) any shares or other equity of any class or any securities
      convertible into shares or other equity of any class;

            (c) split, combine or reclassify any shares, declare, set aside or
      pay any dividend or other distribution (whether in cash, shares or
      property or any combination thereof) in respect of its outstanding equity;
      or redeem or otherwise acquire any shares or other securities; or amend or
      alter any material term of any of its outstanding securities;

            (d) create, incur or assume any indebtedness for borrowed money, or
      assume, guarantee, endorse or otherwise become liable or responsible
      (whether directly, contingently or otherwise) for the obligations of any
      other person; or make any loans, advances or capital contributions to, or
      investments in, any other person; or create, incur or assume any Lien on
      any material asset;

            (e) (i) increase in any manner the compensation of any of its
      directors, officers, employees, members or consultants, except in the
      ordinary course of business and consistent with past practice or pursuant
      to contractual obligations existing on the date hereof that have been
      fully disclosed to August, or accelerate the payment of any such
      compensation (whether or not any such acceleration is consistent with past
      practice); (ii) pay or accelerate or otherwise modify the payment,
      vesting, exercisability, or other feature or requirement of any pension,
      retirement allowance, severance, change of control, or other employee
      benefit not required by any existing plan, agreement or arrangement or by
      applicable law to any such director, officer, employee, member or
      consultant, whether past or present; or (iii) commit itself to any
      additional pension, profit-sharing, bonus, incentive, deferred
      compensation, stock purchase, stock option, stock appreciation right,
      group insurance, severance, change of control, retirement or other
      employee benefit plan, agreement or arrangement, or to any employment or
      consulting agreement with or for the benefit of any person, or amend any
      of such plans or any of such agreements in existence on the date hereof;

            (f) except in the ordinary course of business and consistent with
      past practice or pursuant to contractual obligations existing on the date
      hereof, (i) sell, transfer, mortgage, or otherwise dispose of or encumber
      any real or personal property, (ii) pay, discharge or satisfy claims,
      liabilities or obligations (absolute, accrued, contingent or otherwise),
      or (iii) cancel any debts or waive any claims or rights, which involve
      payments or commitments to make payments that individually exceeds $2,000
      or, in the aggregate, exceed $10,000;

            (g)   make or agree to make any new material capital expenditure
      or expenditures;

            (h) enter into or terminate or materially amend, extend, renew, or
      otherwise modify (including, but not limited to, by default or by failure
      to act) any joint ventures or any other agreements, commitments or
      contracts that, individually or in the aggregate, are material to STI
      (except agreements, commitments or contracts expressly provided for or
      contemplated by this Agreement or for the purchase, sale or lease of
      goods, services or

                                       31
<PAGE>
      properties in the ordinary course of business, consistent with past
      practice), or otherwise make any material change in the conduct of the
      business or operations of STI;

            (i) enter into or terminate, or amend, extend, renew or otherwise
      modify (including, but not limited to, by default or by failure to act)
      any distribution, OEM, independent sales representative, noncompetition,
      licensing, franchise, research and development, supply or similar
      contract, agreement or understanding (except agreements, commitments or
      contracts expressly provided for or contemplated by this Agreement or for
      the purchase, sale or lease of goods, services or properties in the
      ordinary course of business, consistent with past practice);

            (j) materially change its credit policy as to sales of inventories
      or collection of receivables or its inventory consignment practices;

            (k) remove or permit to be removed from any building, facility or
      real property any machinery, equipment, fixture, vehicle or other personal
      property or parts thereof, except in the ordinary course of business;

            (l)   alter or revise its accounting principles, procedures,
      methods or practices, except as may be required by GAAP;

            (m) institute, settle or compromise any claim, action, suit or
      proceeding pending or threatened by or against it involving amounts in
      excess of $10,000, at law or in equity or before any federal, state,
      local, foreign or other governmental department, commission, board,
      bureau, agency or instrumentality;

            (n) distribute or otherwise circulate any notices, directives or
      other communications directed to all or groups of customers, vendors,
      employees, distributors or others associated with its business (except in
      the ordinary course of business consistent with past practice) without
      consulting with August, giving August reasonable opportunity to comment
      thereon and obtaining prior to distribution August's approval thereof,
      which shall not unreasonably be withheld;

            (o) take any action that would render any representation, warranty,
      covenant or agreement of ASTIHL in this Agreement inaccurate or breached
      as of the Closing Date; or

            (p) agree, whether in writing or otherwise, to do any of the
      foregoing.

      5.4) No Solicitation of Other Offers. Neither ASTIHL nor STI, nor any of
their officers, directors, agents or Affiliates (including Flextech) shall
solicit, entertain, discuss or consider any offer, inquiry or proposal with
respect to the direct or indirect sale, merger or other acquisition or licensing
of the Business (or any material portion or items thereof) or of any outstanding
Shares by any third party other than August. Notwithstanding the foregoing,
Flextech shall not be prohibited from soliciting, negotiating, entering into an
agreement regarding and consummating a transaction for, the sale of any or all
of the shares of capital stock

                                       32
<PAGE>
of ASTIHL to any buyer who is not a competitor of August. Further,
notwithstanding the foregoing, ASTIHL shall not be prohibited from soliciting,
negotiating, entering into an agreement regarding and consummating a transaction
for, the sale, merger or license of any business or assets of ASTIHL not
included in the Business.

      5.5) Access to Information and Records Before Closing. During the period
from the date hereof to the Closing Date, STI shall afford to August, and to
August's accountants, officers, directors, employees, counsel and other
representatives, unencumbered access during normal business hours, to all of its
properties, books, contracts, commitments and records, and, during such period,
ASTIHL and STI shall furnish promptly to August all information concerning the
business, prospects, properties, results of operations, condition (financial or
otherwise) or personnel of STI as August may reasonably request. During the
period from the date hereof to the Closing Date, the parties shall in good faith
meet and correspond on a regular basis for mutual consultation concerning the
conduct of the Business and, in connection therewith, August shall be entitled
to have employees or other representatives present at the offices of STI at all
such times as reasonably deemed necessary by August to protect its interest as a
prospective owner of the Business and to observe, and be kept informed
concerning, the operations and business planning of STI. August shall hold in
confidence all such nonpublic information in accordance with the Confidentiality
Agreement dated February 28, 2002. August agrees to use best efforts to minimize
disruptions to the Corporation, and not to interfere in the management,
operations and business of the Corporation prior to the Closing Date.

      5.6) Approval of ASTIHL. To induce August to enter into this Agreement,
ASTIHL, represents and agrees: (i) this Agreement and the transactions
contemplated hereby require the approval of the board of directors and
shareholders of ASTIHL; (ii) the board of directors of ASTIHL has approved this
Agreement and the transactions contemplated hereby and resolved to submit this
Agreement and the transactions contemplated hereby to a vote of its shareholders
with a recommendation that such shareholders approve this Agreement and the
transactions contemplated hereby; and (iii) ASTIHL agrees to use its best
commercial efforts to convene a general meeting of its shareholders to seek and
obtain the approval of its shareholders of this Agreement and the transactions
contemplated hereby as soon as reasonably practicable and to take any and all
other action as may be necessary or appropriate to obtain such board or
shareholder approval as may be necessary to consummate the transactions
contemplated hereby.

      5.7)  Intellectual Property Transfers.

            (a) On or prior to the Closing Date, ASTIHL shall verify that STI
      owns, and/or shall transfer to STI, all right, title and interest in and
      to, all Intellectual Property necessary to or used in the manufacture, use
      or sale of the products of the Wafer Inspection Business to the
      satisfaction of August (such Intellectual Property shall include that
      listed on SCHEDULE 3.1C), and shall enter into such agreements
      satisfactory to August including, but not limited to, that certain License
      and Noncompetition Agreement attached hereto as EXHIBIT 5.7(A) (the
      "License Agreement") that shall cause ASTIHL and Affiliates to transfer to
      STI all right, title and interest in and to all Intellectual Property
      necessary to or useful to or used in the manufacture, use or sale of the
      products of the Business.

                                       33
<PAGE>
            (b) With respect to the Die Sort Business, on or prior to the
      Closing, ASTIHL shall enter into that certain Die Sort OEM Agreement
      attached hereto as EXHIBIT 5.7(B) (the "Die Sort OEM Agreement").

            (c) With respect to the certain trademarks, ASTIHL and Affiliates or
      such entity as shall be appropriate, shall grant to August on or prior to
      the Closing Date a worldwide, royalty free license to use such trademarks
      for a period of two (2) years following the Closing Date on terms
      acceptable to the parties as set forth in the License Agreement.

      5.8) Transfer by Related Parties. Prior to the Closing Date, all right,
title and interest in and to the Business that is held by an Affiliate of ASTIHL
or an Affiliate of STI or any third party shall be transferred to STI in a form
acceptable to August. Prior to the Closing, all right, title and interest in and
to any assets not relating to the Business that are held by STI shall be
transferred to ASTIHL or an Affiliate of ASTIHL or any third party so designated
by ASTIHL.

      5.9) Additional Financial Statements and Reports. As soon as reasonably
practicable, ASTIHL shall furnish to August copies of all balance sheets and
related statements of income, changes in financial position and changes in
equity of STI that may be regularly prepared in the ordinary course of business,
after the date hereof and prior to the Closing Date, including but not limited
to monthly balance sheets and related statements of income and quarterly balance
sheets and related statements of income, changes in financial position and
changes in equity. Such financial statements will be prepared in conformity with
GAAP applied on a consistent basis and fairly present the financial condition,
results of operations and changes in financial position of STI (subject, in the
case of unaudited financial statements, to the absence of complete footnotes
thereto), as of the dates and for the periods covered by such statements.

      5.10) Certain Notifications. ASTIHL shall promptly notify August in
writing of the occurrence of any event that will or could reasonably be expected
to result in the failure to satisfy any of the conditions specified in Article
6.

      5.11) Intercompany Debts. On or prior to Closing, ASTIHL and STI shall
have caused all of the liabilities of STI to ASTIHL, and their Affiliates to be
satisfied or converted to equity such that ASTIHL remains the sole shareholder
of STI and STI shall have received releases from such parties with respect to
the intercompany loan balances as August may deem appropriate in its sole
discretion. ASTIHL shall take August's instructions on how to achieve this in a
manner which will eliminate any possible tax consequences to STI.

      5.12) Distribution of the Fixed Assets Related to Machining Equipment. On
or prior to Closing Date, STI shall distribute the fixed assets related to the
machining equipment associated with machining and milling parts set forth on the
attached SCHEDULE 5.12 to ASTIHL and/or its Affiliates as a reduction of the
intercompany loan balances based on the net tax basis of such assets.

                                       34
<PAGE>
      5.13) Audit Reports. On or prior to Closing Date, ASTIHL shall provide to
August financial statements of STI prepared in accordance with GAAP, (i) for the
years ended December 31, 2000 and December 31, 2001 audited by a firm of
independent public accountants of recognized international standing and (ii) for
the three months ended March 31, 2002 and 2001, or if closing occurs more than
20 days after June 30, 2002, for the six months ended June 30, 2002 and 2001,
which three or six month statements shall be unaudited financial statements of
STI prepared in accordance with and in a form that will enable August to satisfy
SEC requirements regarding the filing of financial statements of the Business,
as determined by August and August's accountants. ASTIHL acknowledges that the
financial statements required by this Section 5.13 are those necessary for
August to comply with its filing obligations under the rules of the Exchange Act
and that to the extent August notifies ASTIHL in writing referencing this
Section 5.13 that such filing obligations require less or more than the
financial information identified here, (e.g. if August is obligated to file
audited financial statements for only the two most recent fiscal years or if
August is obligated to file financial information for the Die Sort Business as
well as financial information of STI) ASTIHL shall provide to August on or prior
to the Closing such financial information as may be required in accordance with
the Exchange Act rules.

      5.14) Escrow Agreement. On or prior to the Closing Date, August and ASTIHL
shall execute and deliver an Escrow Agreement substantially in the form attached
hereto as EXHIBIT 5.14 (the "Escrow Agreement").

      5.15) Release Agreement. On or prior to the Closing Date, ASTIHL and
Flextech shall execute and deliver a Release and Assurance Agreement
substantially in the form attached hereto as EXHIBIT 5.15 (the "Release
Agreement").

      5.16) Tax Matters.

            (a)   Net Operating Losses.  ASTIHL shall use its best efforts to
      assist August to understand and utilize or plan to utilize following
      the Closing any and all net operating losses related to the Business
      and STI.

            (b) Section 338 Election. ASTIHL agrees to make any Section 338
      Election as may be requested by August as set forth below.

                  (i) Joint Election. At the request of August prior to the
            Closing, each of ASTIHL and August will take any and all action
            necessary to effect a timely and irrevocable election under Section
            338 of the Code (and the Treasury Regulations and administrative
            pronouncements thereunder) and any comparable provision of state,
            local, or foreign tax law (collectively a "Section 338 Election").
            ASTIHL and August shall file all tax returns in a manner consistent
            with the Section 338 Election, if made by August, and will not take
            any position contrary thereto.

                  (ii) Form 8023. At Closing, ASTIHL will deliver to August two
            properly executed (by ASTIHL) and completed copies of Internal
            Revenue Service Form 8023 with respect to STI (collectively, the
            "Form 8023") and, as

                                       35
<PAGE>
            applicable, two properly executed and completed copies of any
            analogous forms required pursuant to state, local, or foreign tax
            law. Prior to the Closing Date, August will provide ASTIHL with the
            information regarding August necessary to enable ASTIHL to complete
            the Form 8023. The Form 8023 that ASTIHL deliver to August at the
            Closing will be complete in all respects and shall reflect all, and
            shall not contradict any, of the allocations set forth below. The
            parties shall be responsible for filing the Form 8023 and such other
            required forms as appropriate in accordance with applicable law.

                  (iii) Allocation of Purchase Price. If the parties make a
            Section 338 Election, the parties agree that the "Adjusted
            Grossed-Up Basis" the "Aggregate Deemed Sale Price", the "Modified
            Aggregate Deemed Sales Price" as such terms are defined in the Code,
            and any other required allocations shall be allocated to the assets
            of STI as may be determined by August and such allocation shall be
            used by the parties with respect to all tax returns filed by the
            parties and in connection with a Section 338 Election.

                  (iv)  Purchase Price.  The parties agree that there shall
            be no adjustment to the Purchase Price resulting from a Section
            338 Election.

                  (v) August's Discretion. August may, in its sole discretion,
            choose not to make a Section 338 Election.

      5.17) Further Actions. Subject to the terms and conditions herein provided
and without being required to waive any conditions herein, each of the parties
hereto agrees to use all reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement. ASTIHL, STI and August will use all reasonable efforts to obtain such
governmental or regulatory approvals as they deem necessary or appropriate for
the consummation of the transactions contemplated hereby.

                                    ARTICLE 6
                               CLOSING CONDITIONS

      6.1) Conditions to Obligations of August and ASTIHL. The respective
obligations of each party to consummate the transactions contemplated by this
Agreement to occur on the Closing Date will be subject to the satisfaction at or
prior to the Closing Date of the following conditions, any or all of which may
be waived by the party for whose benefit such conditions exist, in whole or in
part, to the extent permitted by applicable law:

            (a) This Agreement and the transactions contemplated hereby will
      have been approved by the requisite affirmative vote of the stockholders
      of ASTIHL and Flextech, if required, in accordance with applicable law and
      the memorandum and articles of association of ASTIHL and Flextech on or
      before September 23, 2002.

                                       36
<PAGE>
            (b) No Governmental Entity or court of competent jurisdiction will
      have enacted, issued, promulgated, enforced or entered any law, rule,
      regulation or order which is then in effect and has the effect of making
      the transactions contemplated hereby illegal or otherwise prohibiting
      consummation of such transactions.

            (c) August's issuance of shares of its common stock representing the
      Stock Portion of the Purchase Price shall qualify for an exemption from
      the registration requirements of the Securities Act and August shall have
      received any applicable state securities law or blue sky authorizations
      necessary to carry out the transactions contemplated hereby.

            (d) No suit, action or other proceeding shall be pending or
      threatened by any third party or by or before any court or governmental
      agency in which it is sought to restrain or prohibit or to obtain damages
      or other relief in connection with this Agreement or the consummation of
      the transactions contemplated by this Agreement, and no investigation that
      could reasonably result in any such suit, action or other proceeding shall
      be pending or threatened.

            (e) All consents, approvals, authorizations legally required to be
      obtained to consummate the transactions contemplated by this Agreement
      will have been obtained from all Governmental Entities or persons as
      applicable and will be final (in the case of any consent or waiver from a
      Governmental Entity) and in full force and effect as of the Closing,
      except for such consents, approvals and authorizations the failure of
      which to obtain could not reasonably be expected to have a Material
      Adverse Effect, or after the Effective Time.

      6.2) Conditions to August's Obligations. The obligations of August under
this Agreement shall, at its option, be subject to the satisfaction, on or prior
to the Closing Date, of all of the following additional conditions:

            (a) Truth of Representations and Warranties. The representations and
      warranties of ASTIHL herein without regard to any qualification or
      reference to immateriality or "Material Adverse Effect" shall be true and
      correct on the date hereof and on the Closing Date with the same effect as
      though made at such time (except those representations and warranties that
      address matters as of a particular date shall remain true and correct as
      of such date), except for any inaccuracies that, individually or in the
      aggregate, have not had, and would not have, a Material Adverse Effect.
      ASTIHL shall have delivered to August a certificate in form and substance
      satisfactory to August dated as of the Closing Date to such effect.

            (b) Performance. ASTIHL shall have performed and complied in all
      material respects with all agreements, obligations, and conditions
      required by this Agreement to be performed or complied with by it on or
      prior to the Closing. ASTIHL shall have delivered to August a certificate
      in form and substance satisfactory to August dated as of the Closing Date
      to such effect.

                                       37
<PAGE>
            (c) Intellectual Property Opinions. On the Closing Date, ASTIHL
      shall provide to August a written opinion or opinions dated the Closing
      Date from reputable United States legal counsel for ASTIHL to the effect
      that the existing and proposed technology of ASTIHL and STI in the areas
      of 3D vision technology and white light interferometry inspection do not
      infringe the United States intellectual property rights of other parties,
      which opinions shall be attached as Exhibit 6.2(c).

            (d) Resignations. The officers (as created by statute, by by-laws or
      by election of the Board) and directors of STI shall have tendered their
      respective resignations effective as of the Closing Date.

            (e) Employees. On or prior to the Closing Date, Rajiv Roy shall have
      entered into an employment agreement with August on terms no less
      favorable to Rajiv Roy than August's standard employment agreement for
      senior management personnel and any employment or other similar agreement
      that Rajiv Roy has with ASTIHL and/or its Affiliates shall have been
      terminated.

            (f)   Other Closing Deliveries.  August shall have received the
      additional documents described in Section 7.2.

            (g) Fees and Expenses. ASTIHL warrants that it has or will pay
      ASTIHL's legal counsel and accountants (other than KPMG) and shall not
      require STI to pay any fees and expenses payable to such party in
      connection with the transactions contemplated by this Agreement or
      services rendered related to this Agreement, except for those payments
      which August has agreed to make pursuant to Section 13.7.

      6.3) Conditions to ASTIHL's Obligations. The obligations of ASTIHL under
this Agreement shall, at its option, be subject to the satisfaction, on or prior
to the Closing Date, of all of the following additional conditions:

            (a) Truth of Representations and Warranties. The representations and
      warranties of August herein without regard to any qualification or
      reference to immateriality or "Material Adverse Effect" shall be true and
      correct on the date hereof and on the Closing Date with the same effect as
      though made at such time (except those representations and warranties that
      address matters as of a particular date shall remain true and correct as
      of such date), except for any inaccuracies that, individually or in the
      aggregate, have not had, and would not have, a material adverse effect on
      August. August shall have delivered to ASTIHL a certificate in form and
      substance satisfactory to ASTIHL dated as of the Closing Date to such
      effect.

            (b) Performance. August shall have performed and complied in all
      material respects with all agreements, obligations, and conditions
      required by this Agreement to be performed or complied with by it on or
      prior to the Closing. August shall have delivered to ASTIHL a certificate
      in form and substance satisfactory to ASTIHL dated as of the Closing Date
      to such effect.

                                       38
<PAGE>
            (c) Required Consents. August shall have obtained all permits,
      authorizations, consents and approvals required to be obtained by it
      pursuant to this Agreement, in form and substance satisfactory to ASTIHL,
      and ASTIHL shall have received evidence satisfactory to it of the receipt
      of such permits, authorizations, consents and approvals.

                                    ARTICLE 7
                                     CLOSING

      7.1) Closing Date. The consummation of the transactions provided for
herein (the "Closing") shall take place at 10:00 a.m. (local time) on August 23,
2002(provided the conditions to the parties' obligations are satisfied by such
date), or on such other date and/or at such other time as the parties hereto may
agree upon (the "Closing Date") and neither party may unreasonably object to
such changes so long as it is prior to October 23, 2002. The Closing shall take
place at the offices of STI, or at such other place or in such other manner
(e.g., by telecopy exchange of signature pages with originals to follow by
overnight delivery) as the parties hereto may agree.

      7.2) Closing Deliveries of ASTIHL. In addition to, and without limiting
any other provisions of this Agreement, ASTIHL shall deliver or cause to be
delivered the items listed below, in form reasonably satisfactory to August and
its counsel:

            (a) Certificates representing the Shares together with an assignment
      executed by ASTIHL, in form satisfactory to August, transferring all of
      the Shares to August;

            (b) All of the documents, certificates, instruments and opinions
      required to be delivered to August under Article 6 of this Agreement;

            (c) Such evidence as August may reasonably request in order to
      establish the authority and power of ASTIHL to consummate the transactions
      set forth in this Agreement and the compliance with the conditions set
      forth herein.

      7.3) Closing Deliveries of August. In addition to, and without limiting
any other provisions of this Agreement, August shall deliver or cause to be
delivered the items listed below to ASTIHL and/or the Escrow Agent, as the case
may be, in form reasonably satisfactory to ASTIHL and its counsel:

            (a) The Cash Portion;

            (b) The Note Portion;

            (c) Certificates representing the number of shares of August Common
      Stock equal to the Stock Portion;

                                       39
<PAGE>
            (d) All of the documents, certificates, instruments and opinions
      required to be delivered to ASTIHL under Article 6 of this Agreement;

            (e) Such evidence as ASTIHL may reasonably request in order to
      establish the authority and power of August to consummate the transactions
      set forth in this Agreement and the compliance with the conditions set
      forth herein.

      7.4) Proceedings. All proceedings taken and all documents executed and
delivered by the parties hereto at the Closing shall be deemed to have been
taken and executed simultaneously and no proceedings shall be deemed taken nor
any documents executed or delivered until all have been taken, executed and
delivered.

                                    ARTICLE 8
                             POST-CLOSING COVENANTS

      8.1) Further Assurances. At any time and from time to time after the
Closing Date, each party shall, upon request of the other party, execute,
acknowledge and deliver all such further and other assurances and documents, and
will take such action consistent with the terms of this Agreement as may be
reasonably requested to carry out the transactions contemplated in this
Agreement.

      8.2) Litigation Support. In the event and for so long as any party is
actively contesting or defending against any claim, suit, action or charge,
complaint, or demand in connection with (i) any transaction contemplated under
this Agreement or (ii) any fact, circumstance, status, condition, activity,
practice, occurrence, event, action, failure to act, or transaction on or prior
to the Closing Date involving STI, each of the other parties will cooperate and
make available themselves or their personnel, as applicable, and provide such
testimony and access to their books and records as shall be necessary in
connection with the contest or defense, all at the expense of the party making
the a request for such testimony and access.

      8.3) Insurance. August shall have no obligation to maintain any insurance
coverage with respect to STI or its business.

      8.4) Section 338 Election. Following the Closing, ASTIHL shall take any
further actions as may be requested by August which are required to comply with
the provisions set forth in Section 5.16.

                                    ARTICLE 9
                                 INDEMNIFICATION

      9.1) Indemnification of August. From and after the Closing and subject to
provisions of Section 9.8, ASTIHL shall indemnify, defend and hold harmless
August and each of its Affiliates (including STI), and their officers, directors
and employees (August and such other indemnitees referred to in this Article 9
as "August Affiliates"), from and against and in respect

                                       40
<PAGE>
of any and all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, interest and penalties, costs and expenses
(including, without limitation, reasonable legal fees and disbursements incurred
in connection therewith and in seeking indemnification therefor, and any amounts
or expenses required to be paid or incurred in connection with any action, suit,
proceeding, claim, appeal, demand, assessment or judgment) (collectively,
"Indemnifiable Losses"), resulting from, arising out of, or imposed upon or
incurred by any person to be indemnified hereunder by reason of any of the
following:

                  (i) any breach of any representation, warranty, covenant or
            agreement of STI or ASTIHL contained in this Agreement, any
            agreement delivered pursuant to this Agreement, or any ASTIHL
            Certificate or document executed and delivered by ASTIHL or any of
            its Affiliates pursuant hereto or in connection with any of the
            transactions contemplated by this Agreement, save for ASTIHL shall
            have no liability in respect to any representation, warranty,
            covenant or agreements to the extent that all of the material facts
            and circumstances known to the Corporation giving rise to the claim
            have been disclosed in the Schedules pursuant to this Agreement;

                  (ii) all actual or threatened litigation or claims against STI
            or relating to any of the assets or properties of the Business
            resulting from or arising out of actions of ASTIHL or the operation
            of the Business by ASTIHL and STI prior to the Closing, whether or
            not disclosed on the Schedules;

                  (iii) any failure of ASTIHL or STI to obtain any consent or
            other approval required in order to permit them to consummate the
            transactions contemplated by this Agreement; and

                  (iv) any claims or litigation with respect to a misuse,
            misappropriation or infringement by the Business of the Intellectual
            Property rights of a third party.

      9.2) Indemnification of ASTIHL. August shall indemnify, defend and hold
harmless ASTIHL and its officers, directors and employees for any Indemnifiable
Losses resulting from, arising out of, or imposed upon or incurred by ASTIHL by
reason of any breach of any representation, warranty, covenant or agreement of
August contained in this Agreement or any agreement, certificate or document
executed and delivered by August pursuant hereto or in connection with the
transactions contemplated by this Agreement.

      9.3) Third-Party Claims. If a claim by a third party is made against an
indemnified party and if the indemnified party intends to seek indemnity with
respect thereto under this Article 9, such indemnified party shall promptly
notify the indemnifying party of such claim; provided, however, that failure to
give timely notice shall not affect the rights of the indemnified party so long
as the failure to give timely notice does not adversely affect the indemnifying
party's ability to defend such claim against a third party. The indemnified
party shall not settle such claim without the consent of the indemnifying party,
which consent shall not be unreasonably withheld or delayed. If the indemnifying
party acknowledges in writing its indemnity obligations for Indemnifiable Losses
resulting therefrom, the indemnifying party may

                                       41
<PAGE>
participate at its own cost and expense in the settlement or defense of any
claim for which indemnification is sought; provided that, such settlement or
defense shall be controlled by the indemnified party.

      9.4) Waiver of Subrogation. From and after the Closing, ASTIHL and its
Affiliates shall not have any rights to indemnification, contribution or
subrogation from August, STI or their successors, whether pursuant to August's,
STI's or their successors' Certificate of Incorporation, Bylaws or other
governing instruments, insurance policies or otherwise, with respect to acts or
events that give rise to a claim by August Affiliates under Section 9.1.

      9.5) Cooperation as to Indemnified Liability. Each party hereto shall
cooperate fully with the other parties with respect to reasonable access to
books, records, or other documentation within such party's control, if deemed
reasonably necessary or appropriate by any party in the defense of any claim
that may give rise to indemnification hereunder.

      9.6) Offset. In the event that ASTIHL shall fail to pay to August when due
any amount under this Article 9, August shall have the right to offset such
amount against any amount then owing or thereafter becoming due by August or any
of its Affiliates to ASTIHL or its Affiliates.

      9.7) Release by ASTIHL. Effective as of the Closing Date, ASTIHL shall be
deemed to have released, and hereby releases, STI and its directors, officers,
agents and employees, and discharges them from, any and all obligations and
claims that have arisen or might arise out of facts or actions taken on or prior
to the Closing Date, including those known and unknown, in law or equity, except
obligations or claims that may be made under this Agreement or any instruments
entered into or delivered pursuant to this Agreement.

      9.8)  Limitations on Indemnification.

            (a) Cap. Notwithstanding anything to the contrary in this Agreement,
      ASTIHL shall not have any liability to any August Affiliate for
      Indemnifiable Losses after ASTIHL in the aggregate has paid to August
      Affiliates the Maximum Indemnified Amount (defined below) in cash or
      August Common Stock as indemnity pursuant to claims made under Section 9.1
      for Indemnifiable Losses incurred by August Affiliates. Similarly,
      notwithstanding anything to the contrary in this Agreement, August shall
      not have any liability to ASTIHL or any of its Affiliates for
      Indemnifiable Losses after August in the aggregate has paid to ASTIHL
      Affiliates the Maximum Indemnified Amount (defined below) as indemnity
      pursuant to claims made under Section 9.2 for Indemnifiable Losses
      incurred by August Affiliates. "Maximum Indemnified Amount" means (i)
      $5,000,000 for claims brought on or prior to the first anniversary of the
      Closing Date, and (ii) $2,500,000 for claims brought after the first
      anniversary but prior to the second anniversary of the Closing Date.

            (b) Exclusive Remedy. If the Closing occurs, except for (i) remedies
      based upon fraud, intentional wrongdoing or intentional misrepresentation;
      and (ii) equitable remedies, including injunction and specific
      performance, the remedies provided in this

                                       42
<PAGE>
      Article 9 shall constitute the sole and exclusive remedies for recovery
      against the indemnifying parties based upon the inaccuracy, untruth,
      incompleteness or breach of any representation or warranty of any
      indemnifying party contained herein or in any certificate, Schedule or
      Exhibit furnished by any indemnifying party in connection herewith, or
      based upon the failure of any indemnifying party to perform any covenant,
      agreement or undertaking required by the terms hereof to be performed by
      such indemnifying party.

            (c) Tax Effect and Insurance. The liability of the indemnifying
      parties with respect to any indemnification claim shall be reduced by the
      tax benefit actually realized and any insurance proceeds actually received
      by the indemnified parties as a result of any Indemnifiable Losses upon
      which such indemnification claim is based, net of costs of collection. The
      amount of any such tax benefit shall be determined by taking into account
      the effect, if any and to the extent determinable, of timing differences
      resulting from the acceleration or deferral of items of gain or loss
      resulting from such Losses and shall otherwise be determined so that
      payment by the indemnifying parties of the indemnification claim, as
      adjusted to give effect to any such tax benefit, will make the indemnified
      party as economically whole as is reasonably practical with respect to the
      Indemnifiable Losses upon which the indemnification claim is based. Any
      tax benefit shall be deemed offset by the tax which will be due on, or the
      loss of tax benefits resulting from, amounts received as indemnification
      in accordance with this Article.

            (d) Subrogation. Upon payment in full of any indemnification claim,
      regardless of how such payment is effected, or the payment of any judgment
      or settlement with respect to a third party claim, the indemnifying party
      shall be subrogated to the extent of such payment to the rights of the
      indemnified parties against any person or entity with respect to the
      subject matter of such indemnification claim or third party claim.

            (e) Minimum Claim. No liability shall attach to the Indemnifying
      Party unless the aggregate amount of all claims for which it would, in the
      absence of this provision, be liable shall exceed $10,000 and in such
      event the Indemnifying Party shall only be liable for the excess.

                                   ARTICLE 10
                                   TERMINATION

      10.1) Termination.  This Agreement may be terminated at any time prior
to the Closing Date, only:

            (a) by mutual written consent of August and ASTIHL;

            (b) by either August or ASTIHL if, without fault of such terminating
      party or its Affiliates, the Closing shall not have occurred on or before
      October 23, 2002 ; provided, however, that (i) the terminating party or
      its Affiliates shall not have breached

                                       43
<PAGE>
      in any material respect its obligations under this Agreement in any manner
      that shall have been the proximate cause of, or resulted in, the failure
      to consummate the Closing by such date; and (ii) ASTIHL shall not be
      entitled to terminate pursuant to this paragraph in the event that its
      shareholders or the shareholders of Flextech have not approved the
      transaction contemplated by this Agreement.

            (c) by ASTIHL if any of the conditions specified in Sections 6.1 or
      6.3 hereof has not been waived by ASTIHL and its Affiliates or met at such
      time as such condition can no longer be satisfied;

            (d) by August if any of the conditions specified in Sections 6.1 or
      6.2 hereof has not been waived by August or met at such time as such
      condition can no longer be satisfied; or

            (e) by either August or ASTIHL if the Purchase Price Adjustment
      resulting from Section 2.5(a) decreases the Purchase Price by more than
      $5,000,000 and August does not agree to limit the reduction in Purchase
      Price pursuant to Section 2.5(a) to not more than $5,000,000.

      10.2) Procedure and Effect of Termination. In the event of termination and
abandonment of the transactions contemplated hereby by August or by ASTIHL
pursuant to Section 10.1 hereof, written notice thereof shall immediately be
given to the other party and this Agreement shall terminate and such
transactions shall be abandoned, without further action by any of the parties
hereto. ASTIHL and Affiliates agree that any termination by ASTIHL shall be
conclusively binding upon such parties, whether given expressly on such party's
behalf or not, and August shall have no further obligation with respect to such
party. If this Agreement is terminated as provided herein, Article 9, Article
10, Article 12, Section 13.6 and Section 13.7 shall survive any such termination
and continue in effect thereafter. Notwithstanding anything herein to the
contrary, the following shall apply:

            (a) In recognition of the time, efforts, and expenses expended and
      incurred by August with respect to the Business and the opportunity that
      the acquisition of the Shares presents to August, if this Agreement is
      terminated by ASTIHL pursuant to Section 10.1(c) under Section 6.1(a), or
      pursuant to Section 10.1(b), or by August pursuant to Section 10.1(d)
      (except pursuant to Sections 6.1(b), 6.1(c), 6.1(d), 6.1(e) and 6.2(e)),
      STI and/or ASTIHL, who shall be jointly and severally obligated, shall pay
      to August an amount equal to Two Million Six Hundred Thousand Dollars
      ($2,600,000) in cash or cash equivalent within ten days of the termination
      date by wire transfer of immediately available funds to an account
      designated by August. Notwithstanding the foregoing, ASTIHL and STI shall
      not be obligated to make the payment required by the preceding sentence in
      the event August has terminated this Agreement because one or more
      conditions set forth in Section 6.1 or 6.2 have not been satisfied despite
      the best efforts of ASTIHL due to force majeure, which shall include, but
      not be limited to, fires, floods, riots, terrorist acts, strikes, labor
      disputes, freight embargoes or transportation delays, shortage of labor,
      inability to secure fuel, materials, supplies, equipment or power on
      account of shortages thereof and acts of God or public enemy.

                                       44
<PAGE>
            (b) In further recognition of the time, efforts, and expenses
      expended and incurred by August with respect to the Business and the
      opportunity that the acquisition of the Shares presents to August, if this
      Agreement is terminated by either ASTIHL or August following a breach of
      Section 5.4 and within four months following the termination date, ASTIHL
      sells or merges the Business in any part, in its entirety or as a part of
      other assets, or enters into an agreement to do any of the foregoing, to
      any third party (an "Alternative Transaction"), then within ten days after
      written demand by August after the date of entering into an agreement
      providing for an Alternative Transaction, ASTIHL shall pay to August an
      amount equal to Two Million Six Hundred Thousand Dollars ($2,600,000) in
      cash or cash equivalent by wire transfer of immediately available funds to
      an account designated by August.

            (c) In recognition of the time, efforts, and expenses expended and
      incurred by ASTIHL with respect to the transactions contemplated by this
      Agreement and the opportunity that the sale of the Shares presents to
      ASTIHL, if this Agreement is terminated by August pursuant to Section
      10.1(b) or by ASTIHL pursuant to Section 10.1(c) (except pursuant to
      Sections 6.1(a), 6.1(b), 6.1(d) and 6.1(e)), August shall pay to ASTIHL an
      amount equal to Two Million Six Hundred Thousand Dollars ($2,600,000) in
      cash or cash equivalent within ten days of the termination date by wire
      transfer of immediately available funds to an account designated by
      ASTIHL. Notwithstanding the foregoing, August shall not be obligated to
      make the payment required by the preceding sentence in the event ASTIHL
      has terminated this Agreement because one or more conditions set forth in
      Section 6.3 have not been satisfied despite the best efforts of August due
      to force majeure, which shall include, but not be limited to, fires,
      floods, riots, terrorist acts, strikes, labor disputes, freight embargoes
      or transportation delays, shortage of labor, inability to secure fuel,
      materials, supplies, equipment or power on account of shortages thereof
      and acts of God or public enemy.

            (d) In further recognition of the time, efforts, and expenses
      expended and incurred by August with respect to the Business and the
      opportunity that the acquisition of the Shares presents to August, if this
      Agreement is terminated by ASTIHL or August pursuant to Sections 10.1(e),
      ASTIHL shall pay to August all of August's reasonable costs and expenses
      incurred incident to this Agreement and the preparation for, and
      consummation of, the transactions provided for herein, in cash or cash
      equivalents within ten days of the termination date by wire transfer of
      immediately available funds to an account designated by August.

            (e) The parties acknowledge that the agreements contained in this
      Section 10.2 are an integral part of the transactions contemplated by this
      Agreement and are not a penalty, and that, without these agreements, the
      parties would not enter into this Agreement. If a party fails to pay
      promptly the fee due pursuant to this Section 10.2, the party shall also
      pay to the other party such costs and expenses (including legal fees and
      expenses) in connection with any action, taken to collect payment,
      together with interest on the amount of the unpaid fee under this section,
      accruing from its due date, at an interest rate of 5% per annum.

                                       45
<PAGE>
            (f) The parties agree that the payments provided for in this Section
      shall be the sole and exclusive remedies of the parties upon termination
      of this Agreement pursuant to Section 10.1.

                                   ARTICLE 11
                               REGISTRATION RIGHTS

      11.1) Required Registration. Within 30 days of the Closing Date (the "File
Date"), August shall file a Registration Statement under the Securities Act, in
accordance with the provisions of Form S-3, covering the resale of the shares of
August Common Stock representing the Stock Portion (the "Registrable Stock") and
will use commercially reasonable efforts to have such Registration Statement
become effective with the SEC within 30-45 days of the Closing Date.

      11.2) Registration - General Provisions.  In connection with the
registration of the Registrable Stock under the Securities Act, August will:

            (a) prepare and file with the SEC a registration statement with
      respect to the Registrable Stock, within 30 days of the Closing Date, and
      use commercially reasonable efforts to cause such registration statement
      to become effective within 30-45 days of the Closing Date and keep the
      prospectus which is a part of such Registration Statement current until
      the earlier of the date on which: (i) all Registrable Stock has been sold,
      or (ii) two years after the date it is declared effective by the SEC;

            (b) prepare and file with the SEC such amendments to such
      Registration Statement and supplements to the prospectus contained therein
      as may be necessary to keep such Registration Statement effective for the
      period required by Section 11.2(a) above;

            (c) provide ASTIHL's counsel with reasonable opportunities to review
      and comment on, and otherwise participate in, the preparation of such
      Registration Statement;

            (d) furnish to ASTIHL and to the underwriters of the securities
      being registered, if any, such reasonable number of copies of the
      Registration Statement, preliminary prospectus, final prospectus and such
      other documents as ASTIHL and underwriters may reasonably request in order
      to facilitate the public offering of such securities;

            (e) use its diligent, good faith efforts to register or qualify the
      securities covered by such Registration Statement under such state
      securities or blue sky laws of such jurisdictions as ASTIHL may reasonably
      request, except that August shall not for any purpose be required to
      execute a general consent to service of process or to qualify to do
      business as a foreign corporation in any jurisdiction wherein it is not so
      qualified;

                                       46
<PAGE>
            (f) notify ASTIHL, promptly after it shall receive notice thereof,
      of the time when such Registration Statement has become effective or a
      supplement to any prospectus forming a part of such Registration Statement
      has been filed with the SEC;

            (g)   notify ASTIHL promptly of any request by the SEC for the
      amending or supplementing of such Registration Statement or prospectus
      or for additional information;

            (h) prepare and file with the SEC, promptly upon the request of
      ASTIHL, any amendments or supplements to such Registration Statement or
      prospectus which, in the opinion of counsel for ASTIHL (and concurred in
      by counsel for August), is required under the Securities Act or the rules
      and regulations promulgated thereunder in connection with the distribution
      of the Registrable Shares by August;

            (i) prepare and promptly file with the SEC and promptly notify
      ASTIHL of the filing of such amendment or supplement to such Registration
      Statement or prospectus as may be necessary to correct any statements or
      omissions if, at the time when a prospectus relating to such securities is
      required to be delivered under the Securities Act, any event shall have
      occurred as the result of which any such prospectus or any other
      prospectus as then in effect would include an untrue statement of a
      material fact or omit to state any material fact necessary to make the
      statements therein, in the light of the circumstances in which they were
      made, not misleading;

            (j) advise ASTIHL, and ASTIHL's counsel, if any, promptly after it
      shall receive notice or obtain knowledge thereof, of the issuance of any
      stop order by the SEC suspending the effectiveness of such Registration
      Statement or the initiation or threatening of any proceeding for that
      purpose and promptly use its best efforts to prevent the issuance of any
      stop order or to obtain its withdrawal if such stop order should be
      issued; and

            (k) not file any amendment or supplement to such Registration
      Statement or prospectus to which ASTIHL shall have reasonably objected on
      the grounds that such amendment or supplement does not comply in all
      material respects with the requirements of the Securities Act or the rules
      and regulations promulgated thereunder, after having been furnished with a
      copy thereof at least five business days prior to the filing thereof,
      unless in the opinion of counsel for August the filing of such amendment
      or supplement is reasonably necessary to protect August from any material
      liabilities under any applicable federal or state law and such filing will
      not violate applicable law.

      11.3) Registration Expense. August shall pay all Registration Expenses (as
defined below) in connection with the inclusion of Registrable Shares in any
Registration Statement, or application to register or qualify such shares under
state securities laws, filed by August hereunder, other than as set forth
herein. For purposes of this Agreement, the term "Registration Expenses" means
the filing fees payable to the SEC, any state agency and the NASD; the fees and
expenses of August's legal counsel and independent certified public accountants
in connection with the preparation and filing of the Registration Statement (and
all amendments

                                       47
<PAGE>
and supplements thereto) with the SEC; and all expenses relating to the printing
of the Registration Statement, prospectuses and various agreements executed in
connection with the Registration Statement. ASTIHL will pay the fees and
expenses of any legal counsel ASTIHL may engage, as well as any custodian fees
or discounts which may be payable to any underwriter.

      11.4) Restrictions on Sales. All sales by ASTIHL of Registrable Shares
pursuant to the Registration Statement shall involve one of the three market
makers in August Common Stock determined by August to have the highest trading
volume immediately prior to the time of such sale, either as a August in a
transaction with such market maker as principal or as a broker in a transaction
with a third party as buyer. This limitation shall not apply to any private
sales by ASTIHL pursuant to an exemption from the registration requirements
pursuant to Rule 144 under the Securities Act. August will use commercially
reasonable efforts to assist ASTIHL in transacting such sales.

      11.5) Suspensions on Sales. ASTIHL acknowledges that there may
occasionally be times when August must suspend the use of the prospectus forming
a part of the Registration Statement, when there exists material non-public
information relating to August (including, but not limited to, an acquisition,
merger, recapitalization, consolidation, reorganization or similar transaction
(or negotiations with respect thereto)) which in the reasonable opinion of
August's Board of Directors should not be disclosed. Accordingly, August may
suspend resales pursuant to such Registration Statement for a period not to
exceed sixty (60) days in any twelve (12) month period if August has been
advised by counsel that the information the Board reasonably believes should not
be disclosed is material and therefore the prospectus forming a part of the
Registration Statement is not current. ASTIHL agrees that it shall not sell any
Registrable Shares pursuant to said prospectus during the period commencing at
the time at which August gives ASTIHL notice of the suspension of such
prospectus and ending at the time August gives ASTIHL notice that ASTIHL may
thereafter effect sales pursuant to such prospectus.

      11.6) Lock Up Agreements. ASTIHL understands that August at a future date
may file a registration or offering statement (the "Offering Statement") with
the Securities and Exchange Commission to facilitate a public offering of its
securities. Should such a public offering be made and should the managing
underwriter of such offering require, August may request that ASTIHL execute an
agreement providing that ASTIHL will not, without the prior written consent of
August and such underwriter, during the 90-day period commencing on the
effective date of the Offering Statement (the "Lock-up Period") (i) sell,
transfer or otherwise dispose of, or agree to sell, transfer or otherwise
dispose of any of the shares of August Common Stock beneficially held by ASTIHL
during the Lock-up Period, or (ii) sell or grant, or agree to sell or grant,
options, rights or warrants with respect to any of such shares. ASTIHL shall not
unreasonably refuse to enter into such an agreement provided that ten (10) days
notice is given to ASTIHL.

                                       48
<PAGE>
                                   ARTICLE 12
                         ALTERNATIVE DISPUTE RESOLUTION

      12.1) Arbitration. Commercially reasonable efforts shall be made by the
parties to discuss, negotiate or otherwise resolve amongst themselves all
claims, disputes, controversies, and other matters in question arising out of or
relating to this Agreement, including claims for Indemnifiable Losses and
disputes regarding the making of this Agreement, including claims of fraud in
the inducement, or to the alleged breach hereof. If such resolution is not
achieved within ninety (90) days of written notice by one party to the other of
such matter, then ll claims, disputes, controversies, and other matters in
question arising out of or relating to this Agreement, including claims for
Indemnifiable Losses and disputes regarding the making of this Agreement,
including claims of fraud in the inducement, or to the alleged breach hereof,
shall be settled by binding arbitration in accordance with procedures set forth
in Section 12.2 and 12.3 below.

      12.2) Notice. Notice of demand for binding arbitration shall be given in
writing to the other parties pursuant to Section 13.5. The arbitration shall be
deemed commenced as to any respondent on the date on which notice of arbitration
is received by the respondent or on the date of a return receipt. The notice of
arbitration shall include:

            (a) The full names, descriptions and addresses of the parties;

            (b) A demand that the dispute be referred to arbitration pursuant to
      the commercial arbitration rules of the American Arbitration Association.

            (c) The text of the arbitration clause involved;

            (d) A statement of the general facts giving rise to the claim;

            (e) The relief or remedy sought, including an estimate of damages,
      if available; and

            (f)   The name and address of the arbitrator appointed by the
      claimant.

Within 30 days of receipt of the notice of arbitration, the respondent shall
deliver to the claimant a notice of defense. Failure to deliver a notice of
defense shall not delay the arbitration, but rather shall be deemed as a general
denial by the respondent.

      12.3) Binding Arbitration.  Upon filing of a notice of demand for
binding arbitration by any party hereto, arbitration shall be commenced and
conducted as follows:

            (a) Arbitrators. All claims, disputes, controversies, and other
      matters (collectively "matters") in question shall be referred to and
      decided and settled by a standing panel of three independent arbitrators,
      one selected by each of August's and ASTIHL's representative and the third
      by the two arbitrators so selected. Each arbitrator shall be a neutral
      party, from nationals of any country including the countries of the
      parties, with at least ten years commercial and legal experience in
      mergers and

                                       49
<PAGE>
      acquisitions. Selection of arbitrators shall be made within 30 days after
      the date of the first notice of demand given pursuant to Section 12.2 and
      within 30 days after any resignation, disability or other removal of such
      arbitrator. Following appointment, each arbitrator shall remain a member
      of the standing panel, subject to removal for just cause or resignation or
      disability; provided, however, an arbitrator can be removed by the party
      who appointed the arbitrator, or in the case of the third arbitrator, by
      either party for any reason at any time when no matter is in arbitration.

            (b) Cost of Arbitration. The cost of each arbitration proceeding,
      including without limitation the arbitrators' compensation and expenses,
      hearing room charges, court reporter transcript charges etc., shall be
      borne by the party whom the arbitrators determine has not prevailed in
      such proceeding, or borne equally by the parties if the arbitrators
      determine that neither party has prevailed. The arbitrators shall also
      award the party that prevails substantially in its pre-hearing position
      its reasonable attorneys' fees and costs incurred in connection with the
      arbitration. The arbitrators are specifically instructed to award
      attorneys' fees for instances of abuse of the discovery process.

            (c) Location of Proceedings. All arbitration proceedings shall be
      held in Delaware at a location selected by August unless the parties agree
      otherwise.

            (d) Pre-hearing Discovery. The parties shall have the right to
      conduct and enforce pre-hearing discovery in accordance with the then
      current Rules of the London Court of International Arbitration, subject to
      these limitations: Document discovery and other discovery shall be under
      the control of and enforceable by the arbitrators. The arbitrators shall
      permit and facilitate such other discovery as they shall determine is
      appropriate under the circumstances, taking into account the needs of the
      parties and the desirability of making discovery expeditious and cost
      effective. Discovery disputes shall be decided by the arbitrators. The
      arbitrators are empowered:

                  (i) to issue subpoenas to compel pre-hearing document or
            deposition discovery;

                  (ii)  to enforce the discovery rights and obligations of
            the parties; and

                  (iii) to otherwise control the scheduling and conduct of
            the proceedings.

      Notwithstanding any contrary foregoing provisions, the arbitrators shall
      have the power and authority to, and to the fullest extent practicable
      shall, abbreviate arbitration discovery in a manner that is fair to all
      parties in order to expedite the conclusion of each alternative dispute
      resolution proceeding.

            (e) Pre-hearing Conference. Within 45 days after filing of notice of
      demand for binding arbitration, the arbitrators shall hold a pre-hearing
      conference to establish schedules for completion of discovery, for
      exchange of exhibit and witness lists, for

                                       50
<PAGE>
      arbitration briefs, for the hearing, and to decide procedural matters and
      all other questions that may be presented.

            (f) Hearing Procedures. The hearing shall be conducted to preserve
      its privacy and to allow reasonable procedural due process. Rules of
      evidence need not be strictly followed, and the hearing shall be
      streamlined as follows:

                  (i) Documents shall be self-authenticating, subject to valid
            objection by the opposing party;

                  (ii) Expert reports, witness biographies, depositions, and
            affidavits may be utilized, subject to the opponent's right of a
            live cross-examination of the witness in person;

                  (iii) Charts, graphs, and summaries shall be utilized to
            present voluminous data, provided (i) that the underlying data was
            made available to the opposing party 30 days prior to the hearing,
            and (ii) that the preparer of each chart, graph, or summary is
            available for explanation and live cross-examination in person;

                  (iv)  The hearing should be held on consecutive business
            days without interruption to the maximum extent practicable; and

                  (v) The arbitrators shall establish all other procedural rules
            for the conduct of the arbitration in accordance with the Rules of
            the London Court of International Arbitration.

            (g) Governing Law. This arbitration provision shall be governed by,
      and all rights and obligations specifically enforceable under and pursuant
      to, the Rules of the American Arbitration Association and the law of
      Delaware shall be applied, without reference to the choice of law
      principles thereof, in resolving matters submitted to such arbitration.

            (h) Consolidation. No arbitration shall include, by consolidation,
      joinder, or in any other manner, any additional person not a party to this
      Agreement (other than affiliates of any such party, which affiliates may
      be included in the arbitration), except by written consent of the parties
      hereto containing a specific reference to this Agreement.

            (i) Award. The arbitrators are empowered to render an award of
      general compensatory damages including, but not limited to, consequential
      and indirect damages and equitable relief (including, without limitation,
      injunctive relief), but are not empowered to award punitive damages. The
      award rendered by the arbitrators (1) shall be final; (2) shall not
      constitute a basis for collateral estoppel as to any issue; (3) shall not
      be subject to vacation or modification, except in the event of fraud or
      gross misconduct on the part of the arbitrators; and (4) judgment upon any
      award rendered by the

                                       51
<PAGE>
      arbitrators may be entered in any court of competent jurisdiction,
      including courts in the United States and Singapore.

            (j) Confidentiality. The parties hereto will maintain the substance
      of any proceedings hereunder in confidence and make disclosures to others
      only to the extent necessary to properly conduct the proceedings.

                                   ARTICLE 13
                                OTHER PROVISIONS

      13.1) ASTIHL Agreements. ASTIHL, by executing this Agreement, agrees and
acknowledges this Agreement constitutes such ASTIHL's consent to all approvals,
waivers, amendments, and other actions required to be taken under all documents
and agreements involving STI and ASTIHL in order to consummate the transactions
contemplated by this Agreement.

      13.2) Complete Agreement. The Schedules and Exhibits to this Agreement
shall be construed as an integral part of this Agreement to the same extent as
if they had been set forth verbatim herein. This Agreement and the Schedules and
Exhibits hereto, and all documents entered into pursuant thereto, constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements whether written or oral relating
hereto.

      13.3) Survival of Representations and Warranties. The representations and
warranties contained in Articles 3 and 4 of this Agreement shall survive the
Closing and remain in full force and effect until (i) with respect to matters
not identified on SCHEDULE 13.3, 2 years after the Closing Date, or (ii) with
respect to matters identified on SCHEDULE 13.3, the expiration of all applicable
statutes of limitation or such shorter period specified in such SCHEDULE 13.3
(the "Survival Period"). Expiration of a representation and warranty pursuant to
this Section shall not limit or otherwise affect the right of a party to
indemnification with respect thereto under Article 9 if notice was sent to the
party from whom indemnification is sought of the basis for such claim to
indemnification prior to such expiration. No independent investigation of STI by
August, its counsel, or any of its agents or employees shall in any way limit or
restrict the scope of the representations and warranties made by STI and ASTIHL
in this Agreement or the agreements relating hereto.

      13.4) Waiver, Discharge, Amendment, Etc. The failure of any party hereto
to enforce at any time any of the provisions of this Agreement, including the
election of such party to proceed with the Closing despite a failure of any
condition to such party's closing obligations to occur, shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part thereof or the right of the party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to be a waiver of any other or subsequent breach.
Any amendment to this Agreement shall be in writing and signed by STI and ASTIHL
and August.

                                       52
<PAGE>
      13.5) Notices. All notices or other communications to a party required or
permitted hereunder shall be in writing and shall be delivered personally or by
telecopy to such party (or, in the case of an entity, to an executive officer of
such party) or shall be given by certified mail, postage prepaid with return
receipt requested (or a comparable international delivery), addressed as
follows:

if to August or, after the Closing to STI, to:

      August Technology Corporation
      4900 West 78th Street
      Bloomington, Minnesota 55435
      Attn:  John Vasuta, General Counsel
      Fax:  (952) 820-0060

      with a copy to:

      Robert K. Ranum, Esq.
      Fredrikson & Byron, P.A.
      1100 International Centre
      900 Second Avenue South
      Minneapolis, Minnesota 55402
      Fax:  (612) 347-7077

and if to ASTIHL, STIH or Flextech, or prior to the Closing, to STI, to:

      ASTI Holdings Limited
      Blk 25, Kallang Avenue, #06-01
      Kallang Basin Industrial Estate
      Singapore, 339416
      Attn:  Charles Cher, CEO

      Any party may change the above-specified recipient and/or mailing address
by notice to all other parties given in the manner herein prescribed. All
notices shall be deemed given on the day when actually delivered as provided
above (if delivered personally or by telecopy) or on the day shown on the return
receipt (if delivered by mail).

      13.6) Public Announcement. The parties intend that all future statements
or communications to the public or press regarding this Agreement or the
transactions contemplated hereby will be mutually agreed upon by them. No party
shall, without such mutual agreement or the prior consent of the other, issue
any statement or communication to the public or to the press regarding this
Agreement, or any of the terms, conditions or other matters with respect to this
Agreement, except as required by law or the rules of the Nasdaq Stock Market
and/or Singapore Stock Exchange and then only: (a) upon the advice of such
party's legal counsel; (b) to the extent required by law or the rules of the
Nasdaq Stock Market and/or Singapore Stock Exchange; and (c) following prior
notice to, and consultation with, the other party (which notice

                                       53
<PAGE>
shall include a copy of the proposed statement or communication to be issued to
the press or public).

      13.7) Expenses. Except as provided in Section 10.2(d), August shall pay
its own expenses incident to this Agreement and the preparation for, and
consummation of, the transactions provided for herein. Except as provided in the
following sentence, ASTIHL shall pay any and all expenses of STI and ASTIHL
incident to this Agreement and the preparation for, and consummation of, the
transactions provided for herein. August shall pay up to $150,000 of the fees of
independent public accountants incurred in performing the audit of STI's
financial statements required pursuant to Sections 2.5 and 5.13 and up to
$15,000 of fees of legal counsel incurred in rendering the legal opinion or
opinions required by Section 6.2(c).

      13.8) Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of Delaware, including all matters of construction,
validity, performance and enforcement, without giving effect to principles of
conflict of laws.

      13.9) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and the successors or assigns of the
parties hereto; provided that the rights of STI and ASTIHL herein may not be
assigned and the rights of August may be assigned only to an Affiliate of August
provided August guarantees the obligations of such assignee.

      13.10) Titles and Headings; Construction. The Table of Contents, titles
and headings to the Articles and Sections herein are inserted for the
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement. This Agreement shall be
construed without regard to any presumption or other rule requiring construction
hereof against the party causing this Agreement to be drafted.

      13.11) Benefit. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.

      13.12) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed as original and all of which
together shall constitute one instrument.

      IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in the manner appropriate for each, and to be dated as of the date
first above written.

                                    AUGUST TECHNOLOGY CORPORATION

                                    By: __________________________________

                                      Its: _______________________________

                                       54
<PAGE>
                                    ASTI HOLDINGS LIMITED

                                    By: __________________________________

                                      Its: _______________________________

                                    SEMICONDUCTOR TECHNOLOGIES &
                                       INSTRUMENTS, INC.

                                    By: __________________________________

                                      Its: _______________________________SBS Technologies, Inc.

 

EXHIBIT 10.ac

OFFICE/WAREHOUSE LEASE

     THIS INDENTURE of lease, entered into this 5TH day of SEPTEMBER, 1997, by
and
between LUTHERAN BROTHERHOOD, (A MINNESOTA CORPORATION) hereinafter referred to
as “Lessor”, and BIT 3 COMPUTER CORPORATION, A WHOLLY OWNED SUBSIDIARY OF SBS
TECHNOLOGIES. INC. (A NEW MEXICO CORPORATION) hereinafter referred to as
“Lessee”.

DEFINITIONS:

     “Premises” — That certain real property commonly described as OAKVIEW
BUSINESS CENTER, LOCATED AT 1284 CORPORATE CENTER DRIVE IN THE CITY OF EAGAN,
COUNTY OF DAKOTA AND STATE OF MINNESOTA containing approximately 85,600 square
feet and legally described on Exhibit “A” attached hereto and made a part
hereof, including all buildings and site improvements located thereon.

     “Building” — Those certain office/warehouse buildings containing
approximately
157,428 square feet commonly described as OAKVIEW BUSINESS CENTER I LOCATED AT
1284 CORPORATE CENTER DRIVE AND OAKVIEW BUSINESS CENTER II LOCATED AT 1325
EAGANDALE COURT, BOTH WITHIN THE CITY OF EAGAN, MINNESOTA.

     “Demised Premises” — That certain portion of the Premises located at 1284
CORPORATE CENTER DRIVE and designated as Bays 200 through                    , consisting of
approximately 39,597 square feet (14,813 square feet office space and 24,784
square feet of warehouse space), as measured from the outside walls of the
Demised Premises to the center of the partition wall, as shown on the floor
plan attached hereto as Exhibit “B” and made a part hereof. The Demised
Premises include a non-exclusive easement for access to common areas, as
hereinafter defined, and all licenses and easements appurtenant to the Demised
Premises.

     “Common Areas” — The term “common area” means the entire areas to be used
for
the non-exclusive use by Lessee and other lessees in the Building, including,
but not limited to, corridors, lavatories, driveways, truck docks, parking lots
and landscaped areas. Subject to reasonable rules and regulations promulgated
by Lessor, the common areas are hereby made available to Lessee and its
employees, agents, customers, and invitees for reasonable use in common with
other lessees, their employees, agents, customers and invitees.

 

 

WITNESSETH:

TERM:

1.     For and in consideration of the rents, additional rents, terms, provisions
and covenants herein contained, Lessor hereby lets, leases and demises to
Lessee the Demised Premises for the term of 60 months commencing on the FIRST
day of December, 1997 (sometimes called “the Commencement Date”), subject to
delays in delivery of the Demised Premises on account of changes made by Lessee
to the Plans as referenced in Exhibit D of the Lease, and expiring the LAST day
of NOVEMBER, 2002 (sometimes called “Expiration Date”), unless sooner
terminated as hereinafter provided. To the extent the Commencement Date is
delayed due to changes to the plans shown on Exhibit D made by the Lessee, the
Lessee agrees to extend the Expiration Date of the Lease by the same amount of
days that the Commencement Date was delayed, but in any event the Expiration
Date shall occur on the last day of a month.

BASE RENT:

2.     Lessor reserves and Lessee shall pay Lessor, a total rental of ONE MILLION
ONE HUNDRED SIXTY-SEVEN THOUSAND FOUR HUNDRED NINETY-TWO AND 00/100 Dollars
($1,167,492.00), payable in advance, in equal monthly installments of (SEE
ARTICLE 42) Dollars ($ SEE ARTICLE 42), commencing on the Commencement Date and
continuing on the first day of each and every month thereafter for the next
succeeding months during the balance of the term (sometimes called “Base
Rent”). In the event the Commencement Date falls on a date other than the first
of a month the rental for that month shall be prorated and adjusted
accordingly.

ADDITIONAL RENT:

3.     Lessee shall pay to Lessor throughout the term of this Lease the following:

     a.     Lessee shall pay a sum equal to FORTY-SIX AND 26/100 percent (46.26%)
of the Real Estate taxes. The term “Real Estate Taxes” shall mean all real
estate taxes, all assessments and any taxes in lieu thereof which may be levied
upon or assessed against the Premises of which the Demised Premises are a part.
Lessee, in addition to all other payments to Lessor by Lessee required
hereunder shall pay to Lessor, in each year during the term of this Lease and
any extension or renewal thereof, Lessee’s proportionate share of such real
estate taxes and assessments paid in the first instance by Lessor.

     Any tax year commencing during any lease year shall be deemed to
correspond
to such lease year. In the event the taxing authorities include in such real
estate taxes and assessments the value of any improvements made by Lessee, or
of machinery, equipment, fixtures, inventory or other personal property or
assets of lessee, then Lessee shall pay all the taxes attributable to such
items in addition to its proportionate share of said aforementioned real estate
taxes and assessments. A photostatic copy of the tax statement submitted by
Lessor to Lessee shall be sufficient evidence of the amount of taxes and
assessments assessed or levied against the Premises of which the Demised
Premises are a
part.

 

 

     b.     A sum equal to TWENTY-FIVE AND 15/100 percent (25.15%) of the annual
aggregate operating expenses incurred by Lessor in the operation, maintenance
and repair of the Building. The term “Operating Expenses” shall include but not
be limited to maintenance, repair, replacement and care of all common area
lighting, common area plumbing, parking and landscaped areas, signs, snow
removal, non-structural repair and maintenance of the exterior of the Building,
insurance premiums, management fee, wages and fringe benefits of personnel
employed for such work, costs of equipment purchased and used for such
purposes, and the cost or portion thereof properly allocable to the Building
(amortized over such reasonable period as Lessor shall determine together with
the interest at the rate of TEN percent (10%) per annum on the unamortized
balance) of any capital improvements made to the Building by Lessor after the
Base Year which
result in a reduction of Operating Expenses or made to the Building by Lessor
after the date of this Lease that are required under any governmental law or
regulation that was not applicable to the Building at the time it was
constructed. To the best of Lessor’s knowledge, the Demised Premises and
Building comply with all applicable governmental laws (excluding ADA, the
Americans with Disabilities Act of 1990) and further, to the best of Lessor’s
knowledge, the structural and exterior components of the Building are in
reasonably good condition. The following are expressly excluded from the term
“Operating Expenses”:

	 	1)	 	Any charge for depreciation of the Building or Demised Premises or
any
equipment located thereon, and any interest or other financing charge.
	 
	 	2)	 	All costs relating to activities for the solicitation and execution
of
leases of space in the Building.
	 
	 	3)	 	All costs for which Lessee or any other tenant of the Building is
being charged other than pursuant to the operating expenses clause set
forth in this Lease or comparable operating expenses clauses.
	 
	 	4)	 	The cost of any repair made by Lessor because of the total or partial
destruction of the Building or Demised Premises or the condemnation of
a portion of the Building or Demised Premises.
	 
	 	5)	 	The cost of any items for which Lessor is reimbursed by insurance or
otherwise compensated by parties other than by tenants of the Building
pursuant to an operating expense clause.
	 
	 	6)	 	Any operating expense representing an amount paid to a related
corporation, entity or person which is in excess of the amount would
be paid in the absence of such relationship.
	 
	 	7)	 	The cost of alterations of space in the Building leased to other
tenants.

 

 

	 	8)	 	Any projects Lessor undertakes to make Common Areas of the building
comply with ADA.

     c.     The payment of the sums set forth in this Article 3 shall be in
addition to the Base Rent payable pursuant to Article 2 of this Lease. All sums
due hereunder shall be due and payable within thirty (30) days of delivery of
written certification by Lessor setting forth the computation of the amount due
from Lessee. In the event the lease term shall begin or expire at any time
during the calendar year, the Lessee shall be responsible for his pro-rata
share of Additional Rent under subdivisions a. and b. during the Lease and/or
occupancy time.

     Prior to commencement of this Lease and prior to the commencement of each
calendar year thereafter commencing during the term of this Lease or any
renewal
or extension thereof, Lessor may estimate for each calendar year (i) the total
amount of Real Estate Taxes; (ii) the total amount of Operating Expenses; (iii)
Lessee’s share of Real Estate Taxes for such calendar year; (iv) Lessee’s share
of Operating Expenses for such calendar year; and (v) the computation of the
annual and monthly rental payable during such calendar year as a result of
increases or decreases in Lessee’s share of Real Estate Taxes, and Operating
Expenses. Said estimates will be in writing and will be delivered or mailed to
Lessee.

     The amount of Lessee’s share of Real Estate Taxes, and Operating Expenses
for each calendar year, so estimated, shall be payable as Additional Rent, in
equal monthly installments, in advance, on the first day of each month during
such calendar year at the option of Lessor. In the event that such estimate is
delivered to Lessee before the first day of January of such calendar year, said
amount, so estimated, shall be payable as additional rent in equal monthly
installments, in advance on the first day of each month during such calendar
year. In the event that such estimate is delivered to Lessee after the first
day of January of such calendar year, said amount, so estimated, shall be
payable as
additional rent in equal monthly installments, in advance, on the first day of
each month over the balance of such calendar year, with the number of
installments being equal to the number of full calendar months remaining in
such calendar year.

     Upon completion of each calendar year during the term of this Lease or any
renewal or extension thereof, Lessor shall cause its accountants to determine
the actual amount of the Real Estate Taxes, and Operating Expenses payable in
such calendar year and Lessee’s share thereof and deliver a written
certification of the amounts thereof to Lessee. If Lessee has underpaid its
share of Real Estate Taxes, or Operating Expenses for such calendar year,
Lessee shall pay the balance of its share of same within ten (10) days after
the receipt of such statement. If Lessee has overpaid its share of Real Estate
Taxes, or Operating Expenses for such calendar year, Lessor shall either (i)
refund such excess, or (ii) credit such excess against the most current monthly
installment or installments due Lessor for its estimate of Lessee’s share of
Real Estate Taxes, and Operating Expenses for the next following calendar year.
A prorata adjustment shall be made for a fractional calendar year occurring
during the term of this Lease or any renewal or extension thereof

 

 

based upon the number of days of the term of the Lease during said calendar
year as compared to three hundred sixty-five (365) days and all additional sums
payable by Lessee or credits due Lessee as a result of the provisions of this
Article 3 shall be
adjusted accordingly.

COVENANT TO PAY RENT:

4.     The covenants of Lessee to pay the Base Rent and the Additional Rent are
each independent of any other covenant, condition, provision or agreement
contained in this Lease. All rents are payable to Lessor at:

WELSH COMPANIES, INC.

CM 9660, ST. PAUL, MINNESOTA 55170-9660

UTILITIES:

5.     Lessor shall provide mains and conduits to supply water, gas, electricity
and sanitary sewage to the Premises. Lessee shall pay, when due, all charges
for sewer usage or rental, garbage, disposal, refuse removal, water,
electricity, gas, fuel oil, L.P. gas, telephone and/or other utility services
or energy source furnished to the Demised Premises during the term of this
Lease, or any renewal or extension thereof. If Lessor elects to furnish any of
the foregoing utility services or other services furnished or
caused to be furnished to Lessee, then the rate charged by Lessor shall not
exceed the rate Lessee would be required to pay to a utility company or service
company furnishing any of the foregoing utilities or services. The charges
thereof shall be deemed additional rent in accordance with Article 3.

CARE AND REPAIR OF DEMISED PREMISES:

6.     Lessee shall, at all times throughout the term of this Lease, including
renewals and extensions, and at its sole expense, keep and maintain the Demised
Premises in a clean, safe, sanitary and reasonably good condition and in
compliance with all applicable laws, codes, ordinances, rules and regulations.
Lessee’s obligations hereunder shall include but not be limited to the
maintenance, repair and replacement, if necessary, of heating, air
conditioning fixtures*, equipment, and systems, all lighting and plumbing
fixtures and equipment, fixtures, motors and machinery, all interior walls,
partitions, doors and windows, including the regular painting thereof, all
exterior entrances, windows, doors and docks and the replacement of all broken
glass. When used in this provision, the term “repairs” shall include
replacements or renewals when necessary, and all such repairs made by the
Lessee shall be equal in quality and class to the original work. The Lessee
shall keep and maintain all portions of the Demised Premises and the sidewalk
and areas adjoining the same in a clean and orderly condition.

     If Lessee fails, refuses or neglects to maintain or repair the Demised
Premises as required in this Lease after notice shall have been given Lessee,
in accordance with Article 33 of this Lease, Lessor may make such repairs
without liability to Lessee for any

 

 

loss or damage that may accrue to Lessee’s merchandise, fixtures or other
property or to Lessee’s business by reason thereof, and upon completion
thereof, Lessee shall pay to Lessor all costs plus 15% for overhead incurred by
Lessor in making such repairs upon presentation to Lessee of bill therefor.

     Lessor shall repair, at its expense, the structural portions of the
Building, provided however where structural repairs are required to be made by
reason of the acts of Lessee, the costs thereof shall be borne by Lessee and
payable by Lessee to Lessor upon demand.

     The Lessor shall be responsible for all outside maintenance of the Demised
Premises, including grounds and parking areas. All such maintenance which is
the responsibility of the Lessor shall be provided as reasonably necessary to
the comfortable use and occupancy of Demised Premises during business hours,
except Saturdays, Sundays and holidays, upon the condition that the Lessor
shall not be liable for damages for failure to do so due to causes beyond its
control.

     If Lessor fails, refuses or neglects to perform outside maintenance of the
Demised Premises as required in this Lease after notice shall have been given
to Lessor in accordance with Article 33 of this Lease, Lessee may perform such
maintenance without liability to Lessor for any loss or damage that may accrue
by reason thereof (excepting gross negligence and willful misconduct of
Lessee), and upon completion thereof, Lessor shall pay to Lessee all reasonable
costs plus 10% for overhead incurred by Lessee in performing such maintenance
upon presentation to Lessor of a bill therefor.

     *     The Lessor will be responsible for a semi-annual inspection and
servicing of the heating, ventilating and air conditioning (HVAC) components as
part of the Operating Expenses for the Building. The Lessee will be responsible
for repairs and replacements outside of Lessor’s semi-annual preventative
maintenance. Lessor will also service and certify the existing HVAC components
are in good working condition as of the Commencement of the Lease. The Lessor
will be responsible for any repairs or replacements of any faulty HVAC
components through June 30, 1998.

SIGNS:

7.     Any sign, lettering, picture, notice or advertisement installed on or in
any part of the Premises and visible from the exterior of the Building, or
visible from exterior of the Demised Premises, shall be approved and installed
by Lessor at Lessee’s expense. In the event of a violation of the foregoing by
Lessee, Lessor may remove the same without any liability and may charge the
expense incurred by such removal to Lessee.

ALTERATIONS, INSTALLATION, FIXTURES:

8.     Except as hereinafter provided, Lessee shall not make any alteration,
additions, or improvements in or to the Demised Premises or add, disturb or in
any way change any plumbing or wiring therein without the prior written consent
of the Lessor. In the event alterations are required by any governmental agency
by reason of the use and occupancy

 

 

of the Demised Premises by Lessee, Lessee shall make such alterations at its
own cost and expense after first obtaining Lessor’s approval of plans and
specifications therefor and furnishing such indemnification as Lessor may
reasonably require against liens, costs, damages and expenses arising out of
such alterations. Alterations or additions by Lessee must be built in
compliance with all laws, ordinances and governmental regulations affecting the
Premises and Lessee shall warrant to Lessor that all such alterations,
additions, or improvements shall be in strict compliance with all relevant
laws, ordinances, governmental regulations, and insurance requirements.
Construction of such alterations or additions shall commence only upon Lessee
obtaining and exhibiting to Lessor the requisite approvals, licenses and
permits and indemnification against liens. All alterations, installations,
physical additions or improvements to the Demised Premises made by Lessee shall
at once become the property of Lessor and shall be surrendered to Lessor upon
the termination of this Lease; provided, however, this clause shall not apply
to movable equipment, trade fixtures or furniture owned by Lessee which may be
removed by Lessee at the end of the term of this lease if Lessee is not then in
default.

POSSESSION:

9.     Except as hereinafter provided lessor shall deliver possession of the
Demised Premises to Lessee in the condition required by Article 43 of this
Lease on or before November 1, 1997 (the “Delivery Date”) for the purpose of
installing and moving in Lessee’s equipment and trade fixtures within the
Demised Premises (“Lessee’s Work”). Lessee shall have a period of one full
calendar month beginning on the Delivery Date within which to complete Lessee’s
Work (“Lessee’s Work Period”), but delivery of possession prior to or later
than such Delivery Date shall postpone the Expiration Date by an equal number
of days. If, for example, the Delivery Date falls on November 3,
1997, Lessee’s Work Period shall end on December 31, 1997. The Commencement
Date and the rentals herein reserved shall commence on the later of the first
day of the month following the end of Lessee’s Work Period, or December 1,
1997. Any occupancy of the Demised Premises by Lessee prior to the beginning of
the term shall in all respects be the same as that of a Lessee under this
Lease, except that Lessee shall have no obligation to pay rent prior to the
Commencement Date. Lessor shall have no responsibility or liability for loss or
damages to fixtures, facilities or equipment or installed or left on the
Demised Premises.

SECURITY AND DAMAGE DEPOSIT:

10.     INTENTIONALLY DELETED

USE:

11.     The Demised Premises shall be used and occupied by Lessee solely for
the purposes of office, warehouse, distribution and manufacturing so long as
such use is in compliance with all applicable laws, ordinances and governmental
regulations affecting the Building and Premises. The Demised Premises shall not
be used in such manner that,

 

 

in accordance with any requirement of law or of any public authority, Lessor
shall be obliged on account of the purpose or manner of said use to make any
addition or
alteration to or in the Building. The Demised Premises shall not be used in any
manner which will increase the rates required to be paid for public liability
or for fire and extended coverage insurance covering the Premises. Lessee
shall occupy the Demised Premises, conduct its business and control its agents,
employees, invitees and visitors in such a way as is lawful, and reputable and
will not permit or create any nuisance, noise, odor, or otherwise interfere
with, annoy or disturb any other tenant in the Building
in its normal business operations or Lessor in its management of the Building.
Lessee’s use of the Demised Premises shall conform to all the Lessor’s rules
and regulations as shown on Exhibit C to the Lease relating to the use of the
Premises. Outside storage on the Premises of any type of equipment, property or
materials owned or used on the Premise by Lessee or its customers and suppliers
shall not be permitted.

ACCESS TO DEMISED PREMISES:

12.     The Lessee agrees to permit the Lessor and the authorized
representatives of the Lessor to enter the Demised Premises upon at least
twenty-four (24) hours notice to Lessee, except in the event of an emergency,
during usual business hours for the purpose of inspecting the same and making
any necessary repairs to the Demised Premises and performing any work therein
that may be necessary to comply with any laws, ordinances, rules, regulations
or requirements of any public authority or of the Board of Fire Underwriters or
any similar body or that the Lessor may deem necessary to prevent waste or
deterioration in connection with the Demised Premises. Nothing herein shall
imply any duty upon the part of the Lessor to do any such work which, under any
provision of this Lease, the Lessee may be required to perform and the
performance thereof by the Lessor shall not constitute a waiver of the Lessee’s
default in failing to perform the same. The Lessor may, during the progress of
any work in the Demised Premises, keep and store upon the Demised Premises all
necessary materials, tools and equipment. The Lessor shall not in any event be
liable for reasonable inconvenience, annoyance, disturbance,
loss of business, or other damage of the Lessee by reason of making repairs or
the performance of any work in the Demised Premises, or on account of bringing
materials, supplies and equipment into or through the Demised Premises during
the course thereof and the obligations of the Lessee under this Lease shall not
thereby be affected in any manner whatsoever.

     Lessor reserves the right to enter upon the Demised Premises at any time
in the event of an emergency and at reasonable hours to exhibit the Demised
Premises to prospective purchasers or others; and upon at least twenty-four
(24) hours prior notice to Lessee to exhibit the Demised Premises to
prospective Lessees and to the display “For Lease” or similar signs on windows
or doors in the Demised Premises during the last NINETY (90) days of the term
of this Lease, all without hindrance or molestation by Lessee.

 

 

EMINENT DOMAIN:

13.     In the event of any eminent domain or condemnation proceeding or private
sale in lieu thereof in respect to the Premises during the term thereof, the
following provisions shall apply:

     a.     If the whole of the Premises shall be acquired or condemned by
eminent domain for any public or quasi-public use or purpose, then
the term of this Lease shall cease and terminate as of the date possession shall be taken
in such proceeding and all rentals shall be paid up to that date.

     b.     If any part constituting less than the whole of the Premises shall be
acquired or condemned as aforesaid, and in the event that such partial taking
or condemnation shall materially affect the Demised Premises so as to render
the Demised Premises unsuitable for the business of the Lessee, in the
reasonable opinion of Lessor, then the term of this Lease shall cease and
terminate as of the date possession shall be taken by the
condemning authority and rent shall be paid to the date of such termination.

     In the event of a partial taking or condemnation of the Premises which
shall not materially affect the Demised Premises so as to render the Demised
Premises unsuitable for the business of the Lessee, in the reasonable opinion
of the Lessor, this Lease shall continue in full force and effect but with a
proportionate abatement of the Base Rent and Additional Rent based on the
portion, if any, of the Demised Premises taken. Lessor reserves the right, at
its option, to restore the Building and the Demised Premises to substantially
the same condition as they were prior to such condemnation. In such event,
Lessor shall give written notice to Lessee, within thirty (30) days following
the date possession shall be taken by the condemning authority, of Lessor’s
intention to restore. Upon Lessor’s notice of election to restore, Lessor
shall commence restoration and shall restore the Building and the Demised
Premises with reasonable promptness, subject to delays beyond Lessor’s control
and delays in the making of condemnation or sale proceeds adjustments by
Lessor; and Lessee shall have no right to terminate this Lease except as herein
provided. Upon completion of such restoration, the rent shall be
adjusted based upon the portion, if any, of the Demised Premises restored.

     c.     In the event of any condemnation or taking as aforesaid, whether
whole or partial, the Lessee shall not be entitled to any part of the award
paid for such condemnation and Lessor is to receive the full amount of such
award, the Lessee hereby expressly waiving any right to claim to any part
thereof.

     d.     Although all damages in the event of any condemnation shall belong to
the Lessor whether such damages are awarded as compensation for diminution in
value of the leasehold or to the fee of the Demised Premises, Lessee shall have
the right to claim and recover from the condemning authority, but not from
Lessor, such compensation as may be separately awarded or recoverable by Lessee
in Lessee’s own right on account of any and all damage to Lessee’s business by
reason of the condemnation and for or on
account of any cost or loss to which Lessee might be put in removing Lessee’s
merchandise, furniture, fixtures, leasehold improvements and equipment.
However, Lessee shall have no claim against Lessor or make any claim with the
condemning

 

 

authority for the loss of its leasehold estate, any unexpired term or loss of
any possible renewal or extension of said lease or loss of any possible value
of said lease, any unexpired term renewal or extension of said Lease.

DAMAGE OR DESTRUCTION:

14.     In the event of any damage or destruction to the Premises by fire or
other cause during the term hereof, the following provisions shall apply:

     a.     If the Building is damaged by fire or any other cause to such extent
that the cost of restoration will equal or exceed thirty percent (30%) of the
replacement value of the Building (exclusive of foundations) just prior to the
occurrence of the damage, then Lessor or Lessee may, no later than the sixtieth
(60th) day following the damage, give written notice to the other of its
election to terminate this Lease.

     b.     INTENTIONALLY DELETED

     c.     If the cost of restoration shall amount to less than thirty percent
(30%) of said replacement value of the Building, or if, despite the cost,
neither Lessor nor Lessee has elected to terminate this Lease, Lessor shall
restore the Building and the Demised Premises with reasonable promptness,
subject to delays beyond Lessor’s control and delays in the making of insurance
adjustments by Lessor; and Lessor shall not be
responsible for restoring or repairing leasehold improvements of the Lessee.

     d.     In the event of either of the elections to terminate, this Lease
shall be deemed to terminate on the date of the receipt of the notice of
election and all rents shall be paid up to that date. Lessee shall have no
claim against Lessor for the value of any unexpired term of this Lease.

     e.     In any case where damage to the Building shall materially affect the
Demised Premises so as to render them unsuitable in whole or in part for the
purposes for which they are demised hereunder, then, unless such destruction
was wholly or partially caused by the negligence or breach of the terms of this
Lease by Lessee, its employees, contractors or licensees, a portion of the rent
based upon the amount of the extent which the Demised Premises are rendered
unsuitable shall be abated until repaired or restored. If the destruction or
damage was wholly or partially caused by negligence or breach
of the terms of this Lease by Lessee as aforesaid and if Lessor shall elect to
rebuild, the rent shall not abate and the Lessee shall remain liable for the
same.

CASUALTY INSURANCE:

15.     a. Lessor shall at all times during the term of this Lease, at its
expense, maintain a policy or policies of insurance with premiums paid in
advance issued by an insurance company licensed to do business in the State of
Minnesota insuring the Building against loss or damage by fire, explosion or
other insurance hazards and contingencies for the full replacement value,
provided that Lessor shall not be obligated to insure any furniture,

 

 

equipment, machinery, goods or supplies not covered by this Lease which Lessee
may bring upon the Demised Premises or any additional improvements which Lessee
may construct or install on the Demised Premises.

     b.     Lessee shall not carry any stock of goods or do anything in or about
the Demised Premises which will in any way impair or invalidate the obligation
of the insurer under any policy of insurance required by this Lease.

     c.     Lessor hereby waives and releases all claims, liability and causes of
action against Lessee and its agents, servants and employees for loss or damage
to, or destruction of, the Premises or any portion thereof, including the
buildings and other improvements situated thereon, resulting from fire,
explosion and other perils included in standard extended coverage insurance,
whether caused by the negligence of any of said persons or otherwise. Likewise,
Lessee hereby waives and releases all claims, liabilities and causes of action
against Lessor and its agents, servants and employees for loss or damage to, or
destruction of, any of the improvements, fixtures, equipment, supplies,
merchandise and other property, whether that of Lessee or of others in, upon or
about the Premises resulting from fire, explosion or the other perils included
in standard extended coverage insurance, whether caused by the negligence of
any of said persons or
otherwise. The waiver shall remain in force whether or not the Lessee’s insurer
shall consent thereto.

     d.     In the event that the use of the Demised Premises by Lessee increases
the premium rate for insurance carried by Lessor on the improvements of which
the Demised Premises are a part, Lessee shall pay Lessor, upon demand, the
amount of such premium increase. If Lessee installs any electrical equipment
that overloads the power lines to the building or its wiring, Lessee shall, at
its own expense, make whatever changes are
necessary to comply with the requirements of the insurance underwriter,
insurance rating bureau and governmental authorities having jurisdiction.

PUBLIC LIABILITY INSURANCE:

16.     Lessee shall during the term hereof, keep in full force and effect at
its expense a policy or policies of public liability insurance with respect to
the Demised Premises and the business of Lessee, on terms with companies
approved in writing by Lessor, in which both Lessee and Lessor shall be covered
by being named as insured parties under reasonable limits of liability not less
than: $500,000 for injury/death to any one person;
$1,000,000 for injury/death to more than one person, and $500,000 with respect
to damage to property. Such policy or policies shall provide that ten (10) days
written notice must be given to Lessor prior to cancellation thereof. Lessee
shall furnish evidence satisfactory to Lessor at the time this Lease is
executed that such coverage is in full force and effect.

 

 

DEFAULT OF LESSEE:

17.     a. In the event of any failure of Lessee to pay any rental due
hereunder within ten (10) days after the same shall be due, or any failure to
perform any other of the terms, conditions or covenants of this Lease to be
observed or performed by Lessee for more than thirty (30) days after written
notice of such failure shall have been given to Lessee, or if Lessee or an
agent of Lessee shall falsify any report required to be furnished to Lessor
pursuant to the terms of this Lease, or if Lessee or any guarantor of this
Lease shall become bankrupt or insolvent, or file any debtor proceedings or any
person shall take or have against Lessee or any guarantor of this Lease in any
court pursuant to any statute either of the United States or of any state a
petition in bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee of all or a portion of Lessee’s or any
such guarantor’s property, or if Lessee or any such guarantor makes an
assignment for the benefit of creditors, or petitions for or enters into an
arrangement, or if Lessee shall abandon the Demised Premises or suffer this
Lease to be taken under any writ of execution, then in any such event Lessee
shall be in default hereunder, and Lessor, in addition to their rights or
remedies it may have, shall have the immediate right of re-entry and may remove
all persons and property from the Demised Premises and such property may be
removed and stored in a public warehouse or elsewhere at the cost of, and for
the account of Lessee, as provided in Minnesota Statutes Chapter 566.

     b.     Should Lessor elect to re-enter the Demises Premises, as herein
provided, or should it take possession of the Demised Premises pursuant to
legal proceedings or pursuant to any notice provided for by law, it may either
terminate this Lease or it may from time to time, without terminating this
Lease, make such alterations and repairs as may be necessary in order to relet
the Demised Premises, and relet the Demised Premises or any part thereof upon
such term or terms (which may be for a term extending beyond the term of this
Lease) and at such rental or rentals and upon such other terms and conditions
as Lessor in its sole discretion may deem advisable. Upon each such reletting
all rentals received by the Lessor from such reletting shall be applied first
to the payment of any indebtedness other than rent due hereunder from Lessee to
Lessor; second, to the payment of any costs and expenses of such reletting,
including brokerage fees and attorney’s fees and costs of such alterations and
repairs; third, to the payment of the rent due and unpaid payment of future
rent as the same may become due and payable
hereunder. If such rentals received from such reletting during any month be
less than that to be paid during that month by Lessee hereunder, Lessee, upon
demand, shall pay any such deficiency to Lessor. No such re-entry or taking
possession of the Demised Premises by Lessor shall be construed as an election
on its part to terminate this Lease unless a written notice of such intention
be given to Lessee or unless the termination thereof be decreed by a court of
competent jurisdiction. Notwithstanding any such reletting without
termination, Lessor may at any time after such re-entry and reletting elect to
terminate this Lease for any such breach, in addition to any other remedies it
may have, it may recover from Lessee all damages it may incur by reason of such
breach, including the cost of recovering the Demised Premises, reasonable
attorney’s fees, and including the worth at the time of such termination of the
excess, if any, of the amount of rent and charges equivalent to rent reserved
in this Lease for the remainder of the stated

 

 

term over the then reasonable rental value of the Demised Premises for the
remainder of the stated term, all of which amounts shall be immediately due and
payable from Lessee to Lessor.

     c.     Lessor may, at its option, instead of exercising any other rights or
remedies available to it in this Lease or otherwise by law, statute or equity,
spend such money as is reasonably necessary to cure any default of Lessee
herein and the amount so spent, and costs incurred, including attorney’s fees
in curing such default, shall be paid by Lessee, as additional rent, upon
demand.

     d.     In the event suit shall be brought for recovery of possession of the
Demised Premises, for the recovery of rent or any other amount due under the
provisions of this Lease, or because of the breach of any other covenant herein
contained on the part of Lessee to be kept or performed, and a breach shall be
established, Lessee shall pay to Lessor all expenses incurred therefor,
including a reasonable attorney’s fee, together with interest on all such
expenses at the rate of ten percent (10%) per annum from the date of such
breach of the covenants of this Lease.

     e.     INTENTIONALLY DELETED

     f.     No remedy herein or elsewhere in this Lease or otherwise by law,
statute or equity, conferred upon or reserved to Lessor or Lessee shall be
exclusive of any other remedy, but shall be cumulative, and may be exercised
from time to time and as often as the occasion may arise.

17.1 In the event of any failure of Lessor to perform any of the terms,
conditions or covenants of this Lease to be observed or performed by Lessor for
more than thirty (30) days after written notice of such failure shall have been
given to Lessor, then in any event, Lessor shall be in default hereunder, and
Lessee may, in addition to exercising any other rights or remedies available to
it in this Lease or otherwise by law, statute or equity, spend such money as is
reasonably necessary to cure any default of Lessor herein and the amount so
spent, and costs incurred, including attorneys fees in curing such default,
shall be paid by Lessor to Lessee upon written demand. Upon completion of any
such work by Lessee and payment by Lessor of the same, Lessor shall be deemed
to have cured such default.

COVENANTS TO HOLD HARMLESS:

18.     Unless the liability for damage or loss is caused by the gross
negligence or intentional act of Lessor, its agents or employees, Lessee shall
hold harmless Lessor from any liability for damages to any person or property
in or upon the Building or Demised Premises, and to the person and the property
of Lessee and its employees and all other persons in the Building at its or
their invitation or sufferance, and from all damages
resulting from Lessee’s failure to perform the covenants of this Lease. All
property kept, maintained or stored on the Demised Premises shall be so kept,
maintained or stored at the sole risk of Lessee. Lessee agrees to pay all sums
of money in respect of any labor,

 

 

service, materials, supplies or equipment furnished or alleged to have been
furnished to Lessee in or about the Premises, and not furnished on order of
Lessor, which may be secured by any Mechanic’s Materialmen’s or other lien to
be discharged at the time
performance of any obligation secured thereby matures, provided that Lessee
may contest such lien, but if such lien is reduced to final judgment and if
such judgment or process thereon is not stayed, or if stayed and said stay
expires, then and in each such event, Lessee shall forthwith pay and discharge
said judgment. Lessor shall have the right to post and maintain on the Demised
Premises, notices of non-responsibility under the laws of the State of
Minnesota.

NON-LIABILITY:

19.     Subject to the terms and conditions of Article 14 hereof, Lessor shall
not be liable for damage to any property of Lessee or of others located on the
Premises, nor for the loss of or damage to any property of Lessee or of others
by theft or otherwise. Lessor shall not be liable for any injury or damage to
persons or property resulting from fire, explosion, any injury or damage to
persons or property resulting from fire, explosion, falling plaster, steam,
gas, electricity, water, rain or snow or leaks from any part
of the Premises or from the pipes, appliances, or plumbing works or from the
roof, street or subsurface or from any other place or by dampness or by any
such damage caused by other Lessees or persons in the Premises, occupants of
adjacent property, of the buildings, or the public or caused by operations in
construction of any private, public or quasi-public work. Lessor shall not be
liable for any latent defect in the Demised Premises. All property of Lessee
kept or stored on the Demised Premises shall be so kept or stored at the risk
of Lessee only and Lessee shall hold Lessor harmless from any claims arising
out of damage to the same, including subrogation claims by Lessee’s insurance
carrier.

SUBORDINATION:

20.     This Lease shall be subordinated to any mortgages that may not exist or
that may hereafter be placed upon the Demised Premises and to any and all
advances made thereunder, and to the interest upon the indebtedness evidenced
by such mortgages, and to all renewals, replacements and extensions thereof. In
the event of execution by Lessor after the date of this Lease of any such
mortgage, renewal, replacement or extension, Lessee agrees to execute a
subordination agreement with the holder thereof which agreement shall provide
that:

     a.     Such holder shall not disturb the possession and other rights of
Lessee under this Lease so long as Lessee is not in default hereunder,

     b.     In the event of acquisition of title to the Demised Premises by such
holder, such holder shall accept the Lessee as Lessee of the Demised Premises
under the terms and conditions of this Lease and shall perform all the
obligations of Lessor hereunder, and

     c.     The Lessee shall recognize such holder as Lessor hereunder.

 

 

     Lessee shall, upon receipt of a request from Lessor therefor, execute and
deliver to Lessor or to any proposed holder of a mortgage or trust deed or to
any proposed purchaser of the Premises, a certificate in recordable form,
certifying that this Lease is in full force and effect, and that there are no
offsets against rent nor defenses to Lessee’s performance under this Lease, or
setting forth any such offsets or defenses claimed by Lessee as the case may
be.

ASSIGNMENT OR SUBLETTING: See Article 47

21.     Lessee agrees to use and occupy the Demised Premises throughout the
entire term hereof for the purpose of purposes herein specified and for no
other purposes, in the manner and to substantially the extent now intended, and
not to transfer or assign this Lease or sublet said Demised Premises, or any
part thereof, whether by voluntary act, operation of law, or otherwise, without
obtaining the prior written consent of Lessor in each instance. Lessee shall
seek such consent of Lessor by a written request therefor,
setting forth such information as Lessor may deem necessary. Lessor agrees not
to withhold consent unreasonably. Consent by Lessor to any assignment of this
Lease or to any subletting of the Demised Premises shall not be a waiver of
Lessor’s rights under this Article as to any subsequent assignment or
subletting. Lessor’s rights to assign this Lease are and shall remain
unqualified. No such assignment or subleasing shall relieve the Lessee from any
of Lessee’s obligations in this Lease contained, nor shall any assignment
or sublease or other transfer of this Lease be effective unless the assignee,
sublessee or transferee shall at the time of such assignment, sublease or
transfer, assume in writing for the benefit of Lessor, its successors or
assigns, all of the terms, covenants and conditions of this Lease thereafter to
be performed by Lessee and shall agree in writing to be bound thereby.

ATTORNMENT:

22.     In the event of a sale or assignment of Lessor’s interest, in the
Premises, or the Building in which the Demised Premises are located, or this
Lease, or if the Premises come into custody or possession of a mortgagee or any
other party whether because of a mortgage foreclosure, or otherwise, Lessee
shall attorn to such assignee or other party and recognize such party as Lessor
hereunder; provided, however, Lessee’s peaceable possession will not be
disturbed so long as Lessee faithfully performs its obligations under this
Lease. Lessee shall execute, on demand, any attornment agreement
required by any such party to be executed, containing such provisions and such
other provisions as such party may require.

NOVATION IN THE EVENT OF SALE:

23.     In the event of the sale of the Demised Premises, Lessor shall be and
hereby is relieved of all of the covenants and obligations created hereby
accruing from and after the date of sale, and such sale shall result
automatically in the purchaser assuming and

 

 

agreeing to carry out all the covenants and obligations of Lessor herein.
Notwithstanding the foregoing provisions of this Article, Lessor, in the event
of a sale of the Demised
Premises, shall cause to be included in this agreement of sale and purchase a
covenant whereby the purchase of the Demised Premises assumes and agrees to
carry out all of the covenants and obligations of Lessor herein.

     The Lessee agrees at any time and from time to time upon not less than ten
(10) days prior written request by the Lessor to execute, acknowledge and
deliver to the Lessor a statement in writing certifying that this Lease is
unmodified and in full force and effect as modified and stating the
modifications, and the dates to which the basic rent and other charges have
been paid in advance, if any, it being intended that any such statement
delivered pursuant to this paragraph may be relied upon by any prospective
purchaser of the fee or mortgagee or assignee of any mortgage upon the fee of
the Demised Premises.

SUCCESSORS AND ASSIGNS:

24.     The terms, covenants and conditions hereof shall be binding upon and
inure to the successors and assigns of the parties hereto.

REMOVAL OF FIXTURES:

25.     INTENTIONALLY DELETED

QUIET ENJOYMENT:

26.     Lessor warrants that it has full right to execute and to perform this
Lease and to grant the estate demised, and that Lessee, upon payment of the
rents and other amounts due and the performance of all the terms, conditions,
covenant and agreements on Lessee’s part to be observed and performed under
this Lease, may peaceably and quietly enjoy the Demised Premises for the
business uses permitted hereunder, subject, nevertheless, to the terms and
conditions of this Lease.

RECORDING:

27.     Lessee shall not record this Lease without the written consent of
Lessor. However, upon the request of either party hereto, the other party shall
join in the execution of the Memorandum lease for the purposes of recordation.
Said Memorandum lease shall describe the parties, the Demised Premises and the
term of the Lease and shall incorporate this Lease by reference. This Article
27 shall not be construed to limit Lessor’s right to file this Lease under
Article 22 of this Lease.

OVERDUE PAYMENTS:

28.     All monies due under this Lease from Lessee to Lessor shall be due on
demand, unless otherwise specified and if not paid within ten (10) days of when
due, shall result in

 

 

the imposition of a service charge for such late payment in the amount of five
percent (5%) of the amount due.

SURRENDER:

29.     On the Expiration Date or upon the termination hereof upon a day other
than the Expiration Date, Lessee shall peaceably surrender the Demised
Premises broom-clean in good order, condition and repair, reasonable wear and
tear only excepted. On or before the Expiration Date or upon termination of
this Lease on a day other than the Expiration Date, Lessee shall, at its
expense, remove all trade fixtures, personal property and equipment and signs
from the Demised Premises and any property not removed shall be deemed to have
been abandoned. Any damage caused in the removal of such items shall be
repaired by Lessee and at its expense. All alterations, additions, improvements
and fixtures (other than trade fixtures) which shall have been made or
installed by Lessor or Lessee upon the Demised Premises and all floor covering
so installed shall remain upon and be surrendered with the Demised Premises as
a part thereof, without disturbance, molestation or injury, and without charge,
at the expiration of termination of this Lease. If the Demised Premises are not
surrendered on the Expiration Date or the date of
termination, Lessee shall indemnify Lessor against loss or liability, claims,
without
limitation, made by any succeeding Lessee founded on such delay. Lessee shall
promptly surrender all keys for the Demised Premises to Lessor at the place
then fixed for payment of rent and shall inform Lessor of combinations of any
locks and safes on the Demised Premises.

HOLDING OVER:

30.     In the event of a holding over by Lessee after expiration or termination
of this Lease without the consent in writing of Lessor, Lessee shall be deemed
a Lessee at sufferance and shall pay rent for such occupancy at the rate of one
hundred fifty (150%) percent of the last-current aggregate Base and Additional
Rent, prorated for the entire holdover period, plus all attorney’s fees and
expenses incurred by Lessor in enforcing its rights
hereunder, plus any other damages occasioned by such holding over. Except as
otherwise agreed, any holding over with the written consent of Lessor shall
constitute Lessee a month-to-month lessee.

ABANDONMENT:

31.     In the event Lessee shall remove its fixtures, equipment or machinery or
shall vacate the Demised Premises or any part thereof prior to the Expiration
Date of this Lease, or shall discontinue or suspend the operation of its
business conducted on the Demised Premises for a period of more than thirty
(30) consecutive days (except during any time when the Demised Premises may be
rendered untenantable by reason of fire or other casualty), and the Lessee has
simultaneously defaulted on any other terms of the Lease, then in any such
event Lessee shall be deemed to have abandoned the Demised Premises and Lessee
shall be in default under the terms of this Lease.

 

 

CONSENTS BY LESSOR:

32.     Whenever provision is made under this Lease for Lessee securing the
consent or approval by Lessor, such consent or approval shall only be in
writing.

NOTICES:

33.     Any notice required or permitted under this Lease shall be deemed
sufficiently given or secured if sent by registered or certified return receipt
mail to Lessee at 1284 Corporate Center Drive, Suite 200, Eagan, MN 55121 with
a copy to:

	 	Bit 3 Computer Corporation

c/o SBS Technologies, Inc.

2400 Louisiana Boulevard NE

AFC Building

Albuquerque NM 87110-4316

ATTN: Jim Dixon (or current CFO)

and:

	 	Bit 3 Computer Corporation

c/o SBS Technologies, Inc.

2265 Camino Vida Roble

Carlsbad CA 92009

ATTN: Steve Cooper (or current President)

and to Lessor at:

	 	Lutheran Brotherhood

625 Fourth Avenue, Suite 1400

Minneapolis, MN 55415

Attn: R.E. Asset Management

and either party may by like written notice at any time designate a different
address to which notices shall subsequently be sent or rent to be paid.

RULES AND REGULATIONS:

34.     Lessee shall observe and comply with the rules and regulations as set
forth in Exhibit C, on written notice to Lessee for the safety, care and
cleanliness of the Building.

INTENT OF PARTIES:

35.     Except as otherwise provided herein, the Lessee covenants and agrees
that if it shall any time fail to pay any such cost or expense, or fail to take
out, pay for, maintain or deliver any of the insurance policies above required,
or fail to make any other payment or perform any other act on its part to be
made or performed as in this Lease provided, then the Lessor may, but shall not
be obligated so to do, and without notice to or demand upon the Lessee and
without waiving or releasing the Lessee from any obligations of the

 

 

Lessee in this Lease contained, pay any such cost or expense, effect any such
insurance coverage and pay premiums therefor, and may make any other payment or
perform any other act on the part of the Lessee to be made and performed as in
this Lease provided, in such manner and to such extent as the Lessor may deem
desirable, and in exercising any such right, to also pay all necessary and
incidental costs and expenses, employ counsel and incur and pay reasonable
attorneys’ fees. All sums so paid by Lessor and all necessary and incidental
costs and expenses in connection with the performance of any such act by the
Lessor, together with interest thereon at the rate of ten percent (10%) per
annum from the date of making of such expenditure, by Lessor, shall be deemed
additional rent hereunder, and shall be payable to Lessor on demand. Lessee
covenants to pay any such sum or sums with interest as aforesaid and the Lessor
shall have the same rights and remedies in the event of the nonpayment thereof
by Lessee as in the case of default by Lessee in the payment of the Base Rent
payable under this Lease.

GENERAL:

36.     The Lease does not create the relationship of principal agent or of
partnership or of joint venture or of any association between Lessor and
Lessee, the sole relationship between the parties hereto being that of Lessor
and Lessee.

     No waiver of any default of Lessee hereunder shall be implied from any
omission by Lessor to take any action on account of such default if such
default persists or is repeated, and no express waiver shall affect any default
other than the default specified in the express waiver and that only for the
time and to the extent therein stated. One or more waivers by Lessor shall not
then be construed as a waiver of a subsequent breach of the same covenant, term
or condition. The consent to or approval by Lessor of any act
by Lessee requiring Lessor’s consent or approval shall not waive or render
unnecessary Lessor’s consent to or approval of any subsequent similar act by
Lessee shall be construed to be both a covenant and a condition. No action
required or permitted to be taken by or on behalf of Lessor under the terms or
provisions of this Lease shall be deemed to constitute an eviction or
disturbance of Lessee’s possession of the Demised Premises. All preliminary
negotiations are merged into and incorporated in this Lease. The laws of the
State of Minnesota shall govern the validity, performance and enforcement of
this Lease.

     a.     This Lease and the exhibits, if any, attached hereto and forming a
part hereof, constitute the entire agreement between Lessor and Lessee
affecting the Demised Premises and there are no other agreements, subsequent
alteration, amendment, change or addition to this Lease shall be binding upon
Lessor or Lessee unless reduced to writing and executed in the same form and
manner in which this Lease is executed.

     b.     If any agreement, covenant or condition of this Lease or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such agreement, covenant or condition to persons or circumstances other than
those as to which it is held invalid or unenforceable,

 

 

shall not be affected thereby and each agreement, covenant or condition of this
Lease shall be valid and be enforced to the fullest extent permitted by law.

HAZARDOUS MATERIAL: See Article 48

37.     a. The Demised Premises hereby leased shall be used by and/or at the
sufferance of Lessee only for the purpose set forth in Article 11 above and for
no other purposes. Lessee shall not use or permit the use of the Demised
Premises in any manner that will tend to create waste or a nuisance, or will
tend to unreasonably disturb other Lessees in the Building or the Premises.
Lessee, its employees and all person visiting or doing business with Lessee in
the Demised Premises shall be bound by and shall observe the reasonable rules
and regulations made by Lessor relating to the Demised Premises, the Building
or the Premises of which notice in writing shall be given to the Lessee, and
all
such rules and regulations shall be deemed to be incorporated into and form a
part of this Lease.

     b.     Lessee covenants through the Lease Term, at Lessee’s sole cost and
expense, promptly to comply with all laws and ordinances and the orders, rules
and regulations and requirements of all federal, state and municipal
governments and appropriate departments, commission, boards, and officers
thereof, and the orders, rules and regulations of the Board of Fire
Underwriters where the Demised Premises are situated, or any other body now or
hereafter as well as extraordinary, and whether or not the same require
structural repairs or alterations, which may be applicable to the Demised
Premises, or the use or manner of use of the Demised Premises. Lessee will
likewise observe and comply with the requirements of all policies of public
liability, fire and all other policies of insurance at any time in force with
respect to the building and improvements on the Demised Premises and the
equipment thereof.

CAPTIONS:

38.     The captions are inserted only as a matter of convenience and for
reference, and in no way define, limit or describe the scope of this Lease nor
the intent or any provision thereof.

ATTACHMENTS:

39.     See also rider attached hereto and made a part hereof containing
articles 42 through 49 inclusive as well as Exhibits A through F, inclusive,
which Exhibits are attached hereto and made a part hereof.

	 	 	 
	Exhibit	 	Description
	
	 	

	Exhibit A	 	
Legal Description
	Exhibit B	 	
Demised Premises
	Exhibit C	 	
Building Rules and Regulations
	Exhibit D	 	
Improvements
	Exhibit E	 	
Sign Criteria
	Exhibit F	 	
Guarantee of Lease

 

 

SUBMISSION:

40.     Submission of this instrument to Lessee or proposed Lessee or his agents
or attorneys for examination, review, consideration or signature does not
constitute or imply an offer to lease reservation of space, or option to lease,
and this instrument shall have no binding legal effect until execution hereof
by both Lessor/Owner and Lessee or its agents.

REPRESENTATION:

41.     It is agreed and understood that Brian Doyle and Todd McGinley, agent or
broker with Welsh Companies, Inc. is representing Lutheran Brotherhood, Lessor,
and Scott Frederiksen, agent or broker with Welsh Companies, Inc., is
representing Bit 3 Computer Corporation, a wholly owned subsidiary of SBS
Technologies, Inc., Lessee.

IN WITNESS WHEREOF, the Lessor and the Lessee have caused these presents to be
executed in form and manner sufficient to bind them at law, as of the day and
year first above written.

	 	 	 
	Lessee:	 	
Lessor:
	Bit 3 Computer Corporation,	 	
Lutheran Brotherhood
	a wholly owned subsidiary of	 	
(a Minnesota corporation)
	SBS Technologies, Inc. (a New Mexico corporation)	 	 

	 	 	 	 	 	 	 
	
/s/ Philip M. Vukovic	 	 	 	 
	
	 	 	 	 
	By:	 	
Philip M. Vukovic 9/22/97	 	By:	 	/s/ Clifford W. Habeck
	 	 	
	 	 	 	

	 	 	 	 	 	 	Clifford W. Habeck
	Its:	 	President	 	Its:	 	Vice President
	 	 	
	 	 	 	

STATE OF MINNESOTA

COUNTY OF HENNEPIN ss.:

On this 22nd day of September, 1997, personally came before me, a Notary Public
within and for said County, Philip M. Vukovic and                     , to me well
known to be the same persons described in and who executed the foregoing
instrument, and acknowledged that they executed the same as their free act and
deed.

	 	 	 	 	 
	 	/s/ Janet Day	 	 
	 	
	 	 
	 	Notary Public	 	 
	 	My commission expires:	1/31/00
	 	 	 	
	 
	[NOTARY SEAL]	 	 	 	 

 

 

STATE OF MINNESOTA

COUNTY OF HENNEPIN ss.:

On this 23rd day of September, 1997, personally came before me, a Notary Public
within and for said County, Clifford W. Habeck and      , to me well
known to be the same persons described in and who executed the foregoing
instrument, and acknowledged that they executed the same as their free act and
deed.

	 	 	 	 	 
	 	/s/ Alice P Hertel	 	 
	 	
	 	 
	 	Notary Public	 	 
	 	My commission expires:	January 31, 2000
	 	 	 	

	[NOTARY SEAL]	 	 	 	 

 

 

RIDER TO LEASE

DATED SEPTEMBER 5, 1997

BY AND BETWEEN

LUTHERAN BROTHERHOOD, A MINNESOTA CORPORATION, AS LESSOR AND BIT 3

COMPUTER CORPORATION, A WHOLLY OWNED SUBSIDIARY OF SBS TECHNOLOGIES, INC., A

NEW MEXICO CORPORATION, AS LESSEE

ARTICLE 42 — BASE RENT

     The following is hereby added to and made a part of Article 2, Base Rent,
and Article 3, Additional Rent of this Lease:

	 	 	 	 	 	 	 	 	 	 
	Period	 	Net Monthly Rent	 	Total Period Base Rent
	
	 	
	 	

	November 1, 1997 through and
including October 31, 2000	 	$	18,469.00	 	 	$	664,884.00	 
	November 1, 2000 through and
including October 31, 2002	 	$	20,942.00	 	 	$	502,608.00	 
	 	TOTAL BASE RENT
	 	 	 	 	 	$	1,167,492.00	 

ARTICLE 43 — IMPROVEMENTS

     Lessor shall fit-up the Demised Premises as set forth in Exhibit D. Lessor
is under no obligation to make any structural or other alterations, decoration,
additions or improvements in or to the Demised Premises except as expressly set
forth in Exhibit D. By taking occupancy of the Demised Premises, Lessee shall
be deemed to have acknowledged that Lessor has completed all of its obligations
for improvements to the Demised Premises, subject to the following. Promptly
following substantial completion, as determined by Lessor, representatives of
Lessor and Lessee shall inspect the Demised Premises and jointly prepare a
punch list of incomplete and defective items. Such punch list shall be signed
by both parties and Lessor shall diligently pursue completion of its punch list
items. Lessee shall also have thirty (30) days after the Commencement Date to
notify Lessor of any additional items it has identified that constitute defects
in
construction and materials related to the improvements and Lessor shall
also repair such items, except in circumstances in which the defect was caused
by or resulted from the use or damage to the Demised Premises by Lessee. Lessor
shall also be responsible for repair of any structural latent defects not
reasonably discoverable upon diligent inspection by
Lessee, to the extent that the Lessee notifies Lessor thereof within one (1)
year after the Commencement Date.

ARTICLE 44 — FIRST OPPORTUNITY TO LEASE

     A.     So long as there is no uncured default by Lessee then existing under
the Lease, Lessee shall have the first right of refusal to lease 32,197 square
feet currently demised as Suite 100 or the 13,822 square feet currently
demised as Suite 300 in their entirety (the “First Opportunity to Lease”).

 

 

     B.     Upon notification in writing by Lessor that such space is available,
Lessee shall have five (5) business days in which to elect in writing so to
lease such space in which event the lease for same shall commence not more than
thirty (30) days after such space becomes vacant and shall be coterminous with
this Lease and shall be at the Base Rent then in affect under the Lease, unless
otherwise agreed upon.

     C.     In the event Lessee declines or fails to elect so to lease such
space, then the First Opportunity to Lease hereby granted shall automatically
terminate and shall thereafter be null and void as to such space.

     D.     It is understood that this First Opportunity to Lease shall not be
construed to prevent any lessee in the Building from extending or renewing its
lease.

     E.     The First Opportunity to Lease hereby granted is personal to Lessee
and Guarantor (as defined in Exhibit “F”) and is not transferable; in the event
of any assignment or subletting under this Lease, this First Opportunity to
Lease shall automatically terminate and shall thereafter be null and void.

ARTICLE 45 — OPTION TO EXTEND

     A.     So long as there is no uncured default by Lessee then existing under
the Lease, Lessee shall have the option to extend the Term of this Lease
(hereinafter, the “Option”) for one consecutive period of twenty-four (24) to
thirty-six (36) months upon the same terms and conditions, except for the
Monthly Base Rent shall be $20,623.44 and upon the following further terms and
conditions.

     B.     Lessee shall exercise said Option only by giving written notice to
Lessor of its intent to extend not less than nine (9) months prior to such
termination date.

     C.     It is understood and agreed that this Option is personal to Lessee
and Guarantor (as defined in Exhibit “F”) and is not transferable; in the event
of any assignment or subleasing of any or all of the Demised Premises said
Option shall be null and void.

ARTICLE 46 — OPTION TO TERMINATE

     A.     So long as there is no uncured default by Lessee then existing under
the Lease, Lessee shall have the one time option to terminate the Term of this
Lease (hereinafter, the “Option to Terminate”) at the end of the thirty-sixth
(36th) month of the lease term and upon the following further terms and
conditions.

     B.     Lessee can exercise said Option to Terminate only by giving written
notice to Lessor not later than nine (9) months prior to said termination date.
Said notice to Lessor must be accompanied by a termination fee in the amount of
$233,292.25 in certified funds.

     C.     It is understood and agreed that this Option to Terminate is personal
to Lessee and Guarantor (as defined in Exhibit “F”), and is not transferable;
in the event of any

 

 

assignment or subleasing of any or all of the Demised Premises said Option to
Terminate shall be null and void.

ARTICLE 47 — ASSIGNMENT & SUBLETTING

     Any consent required for assignment or subletting shall not be
unreasonably
withheld nor delayed by Lessor. Lessor will have no recapture rights and
Lessee and Guarantor (as defined in Exhibit “F”) shall retain any and all
profits. Lessee and Guarantor (as defined in Exhibit “F”) shall have the right
to sublet or assign to a parent or, subsidiary or affiliate of equal or greater
net worth throughout the lease term, without the Lessor’s consent. In the
event of a subletting or assignment, Lessee and Guarantor
(as defined in Exhibit “F”) shall remain fully responsible for the performance
of all obligations hereunder throughout the term of the Lease.

ARTICLE 48 — HAZARDOUS MATERIALS

     To the best of Lessor’s knowledge, there are no Hazardous Substances
presently located in, on or under the real property commonly described as
Oakview Business Center I and II (the “Property”) and such knowledge is based
solely on the Phase I report currently in Lessee’s possession prepared by Nova
Environmental Services and dated November 16, 1995. The term “Hazardous
Substances” as used in this Lease shall mean pollutants, contaminants, toxic or
hazardous wastes, or any other substances, the
removal of which is required
or the use of which is restricted, prohibited or penalized by and
“Environmental Law”, which term shall mean any federal, state or local law or
ordinance relating to pollution or protection of the environment. Lessee hereby
agrees that (i) no activity will be conducted on the Demised Premises that
will produce any Hazardous Substance, except for such activities that are part
of the ordinary course of Lessee’s business activities (the “Permitted
Activities”) provided said Permitted Activities are conducted in accordance
with all Environmental Laws and have been
approved in advance in writing by Lessor; (ii) the Demised Premises will
not be used in any manner for the storage of any Hazardous Substances except
for the temporary storage of such materials that are used in the ordinary
course of Lessee’s business (the “Permitted Material”) provided such Permitted
Materials are properly stored in a manner and location meeting all
Environmental Laws and approved in advance in writing by
Lessor; (iii) no
portion of the Demised Premises will be used as a landfill or a dump; (iv)
Lessee will not install any underground tanks of any type; (v) Lessee will not
allow any surface or subsurface conditions to exist or to come into existence
that constitute, or with the passage of time may constitute, a public or
private nuisance; (vi) Lessee will not permit any Hazardous Substances to be
brought onto the Demised Premises, except for the Permitted Materials described
above, and if so brought or found located thereon the same shall be immediately
removed, with proper disposal, and all required cleanup
procedures shall be
diligently undertaken pursuant to all Environmental Laws. If at any time during
or after the term of this Lease, the Demised Premises is found to be so
contaminated, or subject to said conditions, solely by action or inaction of
Lessee, its agents, employees, contractors or invitees, Lessee agrees to
defend, indemnify and hold Lessor harmless from all claims, demands, actions,
liabilities, costs, expenses, damages
and obligations or any nature arising from or as a result of the use of the
Demised Premises by Lessee. The foregoing indemnification shall survive the
termination or

 

 

expiration of this Lease, but the foregoing indemnification shall not apply to
(a) any action or inaction of Lessor, its agents, employees, contractors or
other third parties acting at the direction of or with the permission of
Lessor; or (b) Hazardous Substances originating on property not owned by Lessor
adjacent to the Property; or (c) any action or
inaction of any other Lessee
of the Property.

     Lessor shall indemnify, defend and hold Lessee harmless from and against
any and all loss, damage, expense or cost, including all attorney’s fees
incurred in connection with the defense of any court action or administrative
proceeding against the Lessee, arising out of Lessor’s breach of any of the
terms set forth in this Article 48. This Article shall
survive the expiration or termination of this Lease for the benefit of Lessee
and any successors and assigns of this Lease.

ARTICLE 49 — ADA

     Lessee shall be responsible for ADA requirements and regulations within
the
Demised Premises. The Lessor shall be responsible for ADA requirements and
regulations for all non-tenant spaces and common areas of the Building.

	 	 	 
	Lessee:	 	
Lessor:
	Bit 3 Computer Corporation,

a wholly owned subsidiary of	 	
Lutheran Brotherhood
	SBS Technologies, Inc.	 	
(a Minnesota corporation)
	(a New Mexico corporation)	 	 

	 	 	 	 	 	 	 
	By:	 	
/s/ Philip M. Vukovic
	 	By:
	 	/s/ Clifford W. Habeck
	 	 	

	 	 	 	

	 	 	 	 	 	 	Clifford Habeck
	 	 	 	 	 	 	 
	Its:	 	
President 9/22/97
	 	Its:
	 	Vice President
	 	 	

	 	 	 	

EXHIBIT “B”

[FLOOR PLAN]

Exhibit C

Building Rules and Regulations

     l.     Any sign, lettering, picture, notice, or advertisement installed on or
in any part of the Premises and visible from the exterior of the Premises shall
be installed at Lessee’s sole cost and expense, and in such manner, character,
and style as Lessor may approve in advance in writing. In the event of a
violation of the foregoing by Lessee, Lessor may remove the same without any
liability and may charge the expense incurred by such removal to Lessee.

 

 

     2.     No awning or other projection shall be attached to the outside walls of
the Office-Warehouse Complex. No curtains, blinds, shades, or screens visible
from the exterior of the Premises shall be attached to or hung in, or used in
connection with any window or door of the Premises without the prior written
consent of Landlord. Such curtains, blinds, shades, screens, or other fixtures
must be of a quality, type, design, and color and attached in the manner
approved in advance by Lessor.

     3.     Lessee, its servants, employees, customers, invitees, and guests shall
not obstruct sidewalks, entrances, passages, corridors, vestibules, or halls in
and about the Office-Warehouse Complex which are used in common with other
tenants and their servants, employees, customers, guests and invitees, and
which are not a part of the Premises of Lessee.

     4.     Lessee shall not make excessive noises, cause disturbances or
vibrations, or use or operate any electrical or mechanical devices that emit
excessive sound or other waves or disturbances or create obnoxious odors, any
of which may be offensive to the other tenants and occupants of the
Office-Warehouse Complex.

     5.     Lessee assumes full responsibility for protecting its space from theft,
robbery, and pilferage; which includes keeping doors locked and other means of
entry to the Premises closed and secured after normal business hours.

     6.     In no event shall Lessee bring into the Office-Warehouse Complex
inflammables, such as gasoline, kerosene, naptha, and benzine, or explosives or
any other article of intrinsically dangerous nature. If, by reason of the
failure of Lessee to comply with the provisions of this subparagraph, any
insurance premium for all or any part of the Office-Warehouse Complex shall at
any time be increased, Lessee shall be required to make immediate payment of
the whole of the increased insurance premiums.

     7.     The water and wash closets, drinking fountains and other plumbing
fixtures shall not be used for any purpose other than those for which they were
constructed, and no sweepings, rubbish, rags, coffee grounds, or other
substances shall be thrown therein. All damages resulting from any misuse of
the fixtures shall be borne by the Lessee who, or in whose servants, employees,
agents, visitors, or licensees, shall have caused the same. No person shall
waste water by interfering or tampering with the faucets or otherwise.

     8.     Lessee shall keep the Premises at a temperature sufficiently high to
prevent freezing of water in pipes and fixtures.

     9.     The outside areas immediately adjoining the Premises shall be kept
clean by Tenant and Tenant shall not place or permit any obstructions or
merchandise in such areas.

     10.     The use of parking shall be subject to reasonable regulations as
Landlord may promulgate from time to time uniformly to all lessees. Lessee
agrees that it will not use more than its prescribed number of stalls at any
one time, and will not use or permit the

 

 

use by its employees of the parking area for the overnight storage of
automobiles or other vehicles. There will not be any assigned exclusive parking
spaces available to any tenant of the building except with prior, written
consent of the Lessor.

     11.     Lessee and its servants, employees, agents, visitors, and licensees
shall observe faithfully and comply strictly with the foregoing rules and
regulations and such other and further appropriate rules and regulations as
Landlord or its agent may from time to time adopt. Lessor shall give written
notice of any additional rules and regulations.

     12.     Lessor reserves the right at any time and from time to time as
reasonably necessary to rescind, alter, or waive, in whole or in part, any of
these Rules and Regulations when it is deemed necessary, desirable, or proper,
in Lessor’s reasonable judgment, for its best interest or for the best interest
of the tenants of the Office-Warehouse Complex.

EXHIBIT D

	I.	 	DEFINITIONS

     “Lessee’s Improvement Allowance” means $350,000.00

     “Lessor’s Improvements” means all improvements, alterations and
installations shown in the Plans.

     “Plans” means the plans and specifications for the Lessor’s Improvements
to be completed in the Demised Premises by Lessor, a copy of which is attached
hereto.

     “Price” means the bid or quotation for Lessor’s Improvements submitted by
Lessor to Lessee and approved by Lessee as adjusted pursuant to Article
IV.

	II.	 	CONSTRUCTION OF LESSOR’S IMPROVEMENTS

     A.     Lessor shall be fully responsible for all matters that must be
accomplished to perform, furnish and completely install the Lessor’s
Improvements (in operating condition to manufacturer’s specifications, if
applicable) in accordance with provisions herein and in the Lease. Lessor shall
use its best efforts to complete Lessor’s Improvements on or before October 31,
1997. Lessor’s obligations hereunder shall include furnishing all labor,
materials and equipment; filing plans and other required
documentation with the proper governmental authorities; demolishing all
existing improvements as necessary; securing all necessary permits; supervising
all details of construction; obtaining the certificate of occupancy; engaging
and supervising all contractors and subcontractors; removing debris from the
Demised Premises caused by Lessor’s trades; obtaining insurance coverage, and
providing utility and building
services. Lessee shall have the right to inspect Lessor’s Improvements as they
are being installed and to require Lessor to correct, at Lessor’s expense, any
aspect of lessor’s

 

 

Improvements that have not been installed in compliance with the Plans or
agreed upon changes.

     B.     Lessee shall not be liable for any injury to persons (including
death) or damage to property within the building during performance of Lessor’s
Improvement work, unless caused by the active negligence or willful misconduct
of Lessee, its employees, agents, or contractors. Lessor will indemnify and
save Lessee harmless from, and defend it against any such liability, and any
costs or charges (including reasonable attorney’s fees and court costs) which
Lessee may incur on account of any such injury, death or damage. Lessor shall
carry commercial general liability insurance which shall include coverage of
the foregoing contractual liability.

     C.     Lessee shall not be responsible for any expenses relating to
abatement with respect to any existing Hazardous Substances (as defined in
Article 48) in the Demised Premises.

	III.	 	PRICING LESSOR’S IMPROVEMENTS

     A.     Lessor shall obtain competitive bids for Lessor’s Improvements,
including bids from one fully licensed, bonded and insured general contractor
selected by Lessee. (Subsequent changes shall be priced in accordance with
Article IV below.)

     B.     Lessor will submit all bids obtained for Lessor’s Work to Lessee
with an indication of Lessor’s intent to contract with a particular general
contractor. Lessee will have five (5) days in which to provide Lessor with
written notice objecting to Lessor’s decision, and in the event such objection
is made, Lessee shall indicate the basis of such
objection. In the event Lessor and Lessee cannot agree to a resolution
within five (5) days following Lessee’s notice of objection, Lessee will be
required to notify Lessor that either Lessor may proceed and Lessee will waive
such objection, or that Lessee has elected to contract for all of Lessor’s work
and Lessor will provide Lessee with payment of Lessor’s Improvement Allowance
upon completion of the work as evidenced by paid
invoices accompanied by
lien waivers from Lessee’s contractor. In the event Lessee elects the latter
option, Lessee will be bound by the same terms and conditions of Exhibit D to
Lessor, as if Lessor had performed the work.

	IV.	 	CHANGES

     A.     From time to time, Lessee may make changes to the Plans or request
changes to Lessor’s Improvements already installed.

     B.     Within five (5) business days after Lessee notifies Lessor of the
change or request thereof, Lessor shall submit to Lessee in writing an analysis
of the additional charges or savings involved, and the period of time, if any,
that the change will materially and adversely affect the completion of Lessor’s
Improvements. If the additional construction costs resulting from changes
approved by Lessee cause the Price to exceed the Lessee’s Improvement
Allowance, Lessee shall pay the excess as provided in Article

 

 

V. In the event such changes delay the Commencement Date, the Expiration Date
of the Lease will be extended by the same amount of days that the Commencement
Date was delayed, but in any event the Expiration Date shall occur on the last
day of a month.

     C.     If Lessee shall fail to approve in writing the proposal made by
Lessor pursuant to Paragraph B above within three (3) business days following
receipt thereof, the same shall be deemed disapproved in all respects by
Lessee and Lessor shall not make the change. If Lessee approves in writing the
additional charges or savings, if any, Lessor
shall cause the approved
changes to be made. All savings or additional charges shall be substantiated to
Lessee’s reasonable satisfaction.

	V.	 	PAYMENT OF THE PRICE

     A.     Lessor and Lessee shall pay the Price as follows:

     (1)  If the price does not exceed Lessee’s Improvement Allowance, Lessor
shall pay all of the Price. Any unused allowance shall be amortized using five
(5%) percent annual interest rate and the lesser of sixty (60) monthly payments
or the remaining lease term and applied as a credit to reduce the monthly Base
Rent under the Lease.

     (2)  If the Price exceeds Lessee’s Improvement Allowance, Lessee shall
pay, subject to any reasonable retainage based on the punch list, the excess
within ten (10) days after completion and receipt of written certification by
Lessor’s architect that Lessor’s Improvements have been completed in compliance
with the provisions of the Lease, including this Exhibit D. Lessor agrees that
acceptance of final payment is a waiver and release of Lessee from any further
claims under this Exhibit D.

     (3)  Lessor shall, or shall cause its general contractor to pay everyone
who has worked on Lessor’s Improvements the full amount due each under its
respective contract with Lessor or its general contractor.

     (4)  Lessor shall maintain a reasonable accounting of all costs of the
improvements which will be submitted to the Lessee at the completion of the
work and the Lessee will have the right, with prior written notice to Lessor,
to review the progress or the work and costs at the offices of the general
contractor.

EXHIBIT E

SIGN CRITERIA

OAKVIEW BUSINESS CENTER

1284 CORPORATE CENTER DRIVE

1325 EAGANDALE COURT

EAGAN, MN 55121

 

 

1.     TENANT IDENTIFICATION SIGNAGE: Tenant will be allowed a maximum of 15
individual letters to be mounted on a solid colored sign band, color to
match the accent color on the building. Letters shall be a maximum 12” height,
be white in color, and be Helvetica or Optima type style.

2.     FRONT DOOR SIGN: Tenant will be allowed to install one 2’ x 4’ sign to
the right side of the primary entrance door. Size and style of type used for
tenant name and address may be at tenant’s discretion. Field color of sign
panel shall match the accent color band on the building and lettering shall be
white.

3.     MONUMENT SIGN: Tenant shall be allowed to install one line of type on the
monument sign facing Corporate Center Drive. Lettering shall match the
type style and color used for Office Plan and shall be no larger than 4”
height.

4.     DOCK SIGNS: Tenant identification signs will be allowed above each
overhead dock or drive in door and on one walk-in man door. Sign placards shall
be a maximum 8” high x 24” long, be the same color as the accent color on the
building, have maximum 4” white lettering, and shall be glued to the building.
Signage mounted directly to the man door shall be maximum 2” high white vinyl
lettering.

5.     No signage may be erected until a scaled layout has been approved by the
Lessor.

6.     All letters and signage shall be non-illuminated.

EXHIBIT F

GUARANTY OF LEASE

1.     GUARANTY

     SBS Technologies, Inc., a New Mexico corporation, (“Guarantor”), whose
address is 2400 Louisiana Boulevard NE, Albuquerque, New Mexico, 87110, as a
material inducement to and in consideration of Lutheran Brotherhood (“Lessor”)
entering into a written lease (the “Lease”) with Bit 3 Computer Corporation
(“Lessee”), dated the same date as this Guaranty, unconditionally guarantees
and promises to and for the benefit of Lessor that Lessee shall perform the
provisions of the Lease that Lessee is to perform. If, at any time, default
shall be made by Lessee in the performance or observance of any of the terms,
covenants or conditions in the Lease contained on the Lessee’s part to be kept,
performed or observed, the Guarantor will keep, perform and observe the same,
as
the case may be, in place and stead of the Lessee.

     If the Lease shall be renewed, or its term extended, or if the Lessee
holds over beyond the term of the Lease, the obligations hereunder of Guarantor
shall extend and apply with respect to the full and faithful performance and
observance of all of the covenants, terms, and conditions of the Lease and of
any such modification thereof.

 

 

2.     INDEPENDENT OBLIGATIONS

     If there is more than one guarantor, Guarantor’s obligations are joint and
several with those of any other guarantor and are independent of Lessee’s
obligations. A separate action may be brought or prosecuted against the
Guarantor whether the actions brought or prosecuted against any other Guarantor
or Lessee, or all, or whether any other Guarantor or Lessee, or all, are joined
in the action.

3.     CHANGES TO LEASE

     The provisions of the Lease may be changed by written agreement between
Lessor and Lessee at any time, with the consent of Guarantor. This Guaranty
shall guarantee the performance of the Lease as changed. Assignment of the
Lease (as may be permitted by the Lease) shall not affect this Guaranty.

4.     SECURITY FOR LESSEE’S PERFORMANCE

     The obligations of the Guarantor hereunder shall not be released by
Lessor’s receipt, application or release of security given for Lessee’s
performance and observance of covenants and conditions in the Lease; nor by any
modification of such Lease, but in case of any such modification, the liability
of Guarantor shall be deemed modified in accordance with the terms of such
modification of the Lease.

5.     LESSEE’S ABILITY TO PERFORM

     Guarantor assumes full responsibility for keeping fully informed of the
financial condition of Lessee and all other circumstances affecting Lessee’s
ability to perform its obligations to Lessor, and agrees that Lessor shall have
no duty to report to any Guarantor any information which Lessor receives about
Lessee’s financial condition or any circumstances bearing on Lessee’s ability
to perform.

6.     DELAY

     This Guaranty shall not be affected by Lessor’s failure or delay to
enforce any of its rights.

7.     NOTICE OF LESSEE DEFAULT

     Lessor agrees to give Guarantor ten (10) days written notice of any breach
or default by Lessee, which notice shall be deemed delivered twenty-four (24)
hours after the same is deposited in the United States mail, postage prepaid,
addressed to Guarantor at the address set forth above.

8.     DEFAULT

     If Lessee defaults under the Lease, Lessor may proceed immediately against
Guarantor or Lessee, or both, subject to any existing cure period Lessee is
entitled to under the Lease or Lessor may enforce against Guarantor or Lessee,
or both, any rights that it has under the Lease, or pursuant to applicable
laws, but if Lessor chooses to proceed against both, such proceeding need not
be simultaneous but can be against Guarantor after proceeding against Lessee or
vice versa. If the lease terminates and

 

 

Lessor has any rights it can enforce against Lessee after termination, Lessor
can enforce those rights against Guarantor without giving previous notice to
Lessee or Guarantor, or
without making any demand on either of them.

9.     WAIVER OF DEFENSES

     Guarantor hereby waives the right to require Lessor to (a) proceed against
Lessee (except as otherwise provided herein); (b) proceed against or exhaust
any security that Lessor holds from Lessee; or (c) pursue any other remedy in
Lessor’s power. Until all of Lessee’s obligations to Lessor have been
discharged in full, Guarantor has no right to subrogation against Lessee.
Guarantor waives its right to enforce any remedies that Lessor now has, or
later may have, against Lessee. Guarantor waives any right to participate in
any security now or later held by Lessor. Guarantor waives all presentments,
protests, notices of protest, notices of dishonor and notices of acceptance of
this Guaranty, and except as otherwise provided herein waives all notice of the
existence, creation, or incurring of the new or additional obligations.

     The liability of Guarantor hereunder shall in no way be affected by (a)
the release or discharge of the Lessee in any bankruptcy, receivership or other
proceedings; (b) the impairment, limitation or modification of the liability of
Lessee or the estate of Lessee in bankruptcy, or of any remedy for the
enforcement of Lessee’s said liability under the Lease, resulting from the
operation of any present or future provision of the bankruptcy laws or other
statutes or from the decisions of any court; (c) the rejection or disaffirmance
of the Lease in any proceeding; (d) the assignment or transfer of the Lease by
Lessee; (e) any disability or other defense of Lessee; or (f) the cessation
from any cause whatsoever of the liability of Lessee.

10.     ATTORNEY’S FEES

     If Lessor is required to enforce Guarantor’s obligations by legal
proceeding, Guarantor shall pay to Lessor all costs incurred, including,
without limitation, reasonable attorneys’ fees and costs of suits.

11.     ASSIGNMENT

     This Guaranty may be assigned and/or pledged without Guarantor’s prior
consent and shall inure to the benefit of any successor in interest of Lessor.
Guarantor’s obligations under this Guaranty shall be binding on Guarantor’s
successors and legal representatives.

12.     SEVERABILITY

     The enforceability, invalidity or illegality of any provision shall not
render the other provisions unenforceable, invalid or illegal.

13.     STATE LAW

     The Lease and this Guaranty shall be governed by the laws of the State of
Minnesota.

 

 

     IN WITNESS WHEREOF, the Guarantor has hereunto set his hand this 19th day
of Sept, 1997.

	 	 	 
	Guarantor:
	
SBS TECHNOLOGIES, INC.
	
(a New Mexico corporation)
	 	 	 
	By:	 	
/s/ Steve Cooper
	 	 	

	Its:	 	
President & COO
	 	 	

	 	 
	STATE OF CA	)
	 	) ss.
	COUNTY OF SAN DIEGO	)

On this the 19th day of Sept, 1997, before me, Julie Ann Shannon, the
undersigned notary Public, personally appeared Steve Cooper, personally known
to me or proved to me on the basis of satisfactory evidence to be the person
whose name is subscribed to the within instrument, and acknowledged that he
executed it.

WITNESS my hand and official seal.

	 
	/s/ Julie Ann Shannon

	

	Notary Public

[NOTARY PUBLIC SEAL]

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