Document:

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                                                                   Exhibit 10.4

                          AUGUST TECHNOLOGY CORPORATION

                            INTERNATIONAL DISTRIBUTOR
                                    AGREEMENT

This Agreement is made as of the 23rd day of September, 1996, between AUGUST
TECHNOLOGY CORPORATION, a Minnesota (USA) corporation with a principal place of
business at 5237 Edina Industrial Blvd., Edina, Minnesota 55439, USA, and QUASYS
AG, an entity organized and existing under the laws of Switzerland, having its
principal place of business at Alte Steinhauserstrasse 21, P.O. Box, CH-6330
Cham, Switzerland.

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

The following are the terms and conditions under which August Technology sells
and licenses its image capture technology, vision system controlled
manufacturing tools, licensed software programs, and related spare parts
specified in Exhibit-A (hereinafter jointly referred to as "Product" or "
Products"). Quasys wishes to purchase all or selected Products for resale and
commits to actively provide its customers the necessary service and support to
successfully market and maintain the Products.

1.       DEFINITIONS

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

         1.1      "AGREEMENT" will mean this International Distributor Agreement
                  and all Exhibits.

         1.2      "COMPETITIVE PRODUCTS" will mean image capture technology,
                  vision system controlled manufacturing tools, licensed
                  software programs, and related spare parts, of substantially
                  the same functionality as August Technology's Products.

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

         1.4      "TERRITORY" will mean the countries specified in Exhibit-D.

2.       APPOINTMENT AS DISTRIBUTOR

         August Technology hereby appoints Quasys as an authorized, independent,
         exclusive Distributor for the Products, for the purpose of reselling
         and servicing the Products directly to its customers in the Territory
         (except to those customers listed in Exhibit-C, which are consider
         exclusive August Technology accounts). Quasys agrees that it will
         re-sell Products directly, without the use of any dealers, sub-agents,
         and the like, unless agreed to in writing by August Technology.

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3.       TERM OF AGREEMENT

         This Agreement will begin on the date an authorized officer of August
         Technology executes the Agreement and will continue in full force and
         effect until terminated as provided in this Agreement.

4.       TERRITORY

         Quasys will have the exclusive right to actively market, sell, and
         promote the Products in the Territory (see Exhibit-D).

5.       RESTRICTIONS

         5.1      Quasys agrees not to make any sale, transfer, exchange, or
                  other conveyance of any Products whatsoever to any person that
                  Quasys knows, or has reason to know, is purchasing such
                  Products for the purpose of resale without first notifying
                  August Technology for written approval.

         5.2      Quasys will have no rights to the Products, any software
                  included in the Products, or any improvements in the Products.
                  Quasys agrees not to copy, manufacture, re-manufacture, or
                  otherwise modify any Products without the written consent from
                  August Technology (signed by an officer of the company). If
                  Quasys is permitted to modify Products to conform to customer
                  requests or specifications, such modifications must not
                  degrade the original August Technology operating
                  specifications or impede the reliability of the Products. Any
                  modifications performed in violation of this Section 5.2 will
                  void all warranties.

         5.3      Quasys agrees not to promote, market, or sell any Competitive
                  Products or services, directly or indirectly, within the
                  Territory. Quasys agrees not to establish a branch office or
                  other entity or association with plans to distribute Products
                  outside the Territory, or to appoint any sub-distributor
                  outside the Territory.

6.       PRICE, PAYMENT, TAXES, DUTY & COMMISSION

         6.1      Prices for the Products purchased under this Agreement will be
                  as specified in Exhibit-B. August Technology will have the
                  right at any time to change its prices and must provide Quasys
                  with a sixty (60) day advance written notice of any pricing
                  changes. Price changes will not apply to unfilled purchase
                  orders that have been accepted by August Technology prior to
                  the effective date of the price change.

         6.2      Payment will be made by the wire transfer of funds in U.S.
                  Dollars from Quasys to August Technology's bank account in the
                  United States.

         6.3      Product prices are to be stated in U.S. Dollars and are
                  Ex-works (as defined by Incoterms 1990) exclusive of all
                  sales, use, and like taxes. Quasys agrees to pay

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                  all freight, storage fees, bank transfer fees, and all taxes
                  and duties associated with the sale of Products purchased
                  under this Agreement.

         6.4      All risk of loss to Products will pass to Quasys upon
                  surrender by August Technology to the carrier at the point of
                  shipment (Edina, Minnesota, USA). Quasys agrees to make all
                  arrangements for export, select the carrier, and insure
                  Products against loss, damage, their or destruction upon
                  surrender to the carrier at August Technology's facility.

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

<TABLE>
<CAPTION>
TABLE-1: Equipment Discount Schedule

------------------------- ---------------------- ----------------------- ---------------------- ----------------------
         ORDER               LOCATION WHERE          LOCATION WHERE         LOCATION WHERE          %OF STANDARD
      POSSIBILITY           PROJECT SPECIFIED         P.O. ISSUED          EQUIP. INSTALLED        EQUIP. DISCOUNT
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
<S>                       <C>                    <C>                     <C>                    <C>
           1                    Territory              Territory               Territory                 100%
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
           2                    Territory              Territory           Not in Territory               66 1/3%
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
           3                     Not in                Territory               Territory                  66 1/3%
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
           4                    Territory           Not in Territory           Territory                  66 1/3%
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
           5                    Territory           Not in Territory       Not in Territory               33 1/3%
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
           6                Not in Territory           Territory           Not in Territory               33 1/3
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
           7                Not in Territory        Not in Territory           Territory                  33 1/3%
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
           8                Not in Territory        Not in Territory       Not in Territory                0%
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
</TABLE>

7.       PURCHASE ORDERS, SHIPMENTS, CANCELLATIONS & CHANGES

         7.1      In order to receive Products, Quasys agrees to deliver to
                  August Technology a hard copy purchase order. All Quasys
                  purchase orders are subject to acceptance at August
                  Technology. All purchase orders issued by Quasys will included
                  in the following information:

                  (a)      Final customer's name (end-user), location, and
                           official purchase order (P.O.) number
                  (b)      Quasys purchase order number
                  (c)      "Ship To" location (generally Quasys address)
                  (d)      "Bill To" location (generally Quasys address) and
                           accounts payable contact person
                  (e)      Method of shipment, including contact person and
                           telephone number
                  (f)      Quantity and description of each item being purchased
                  (g)      Details of any options purchased
                  (h)      Pricing
                  (i)      Requested ship date(s)
                  (j)      Power requirements

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                  (k)      Environmental requirements - if any (such as
                           cleanroom specifications)
                  (l)      Any other special requirements

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

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

         7.3      In no event will August Technology accept purchase orders from
                  any Person other than Quasys. All purchase orders must
                  originate from Quasys.

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

                  7.4.1    Rescheduling (Later Delivery)

                           Quasys may reschedule shipment of Products for a
                           later date by up to sixty (60) days, on a one-time
                           basis per purchase order, without cost or liability.
                           Rescheduling of shipments can not occur within
                           fifteen (15) days of the original shipment date on
                           the purchase order. Quasys agrees to immediately
                           provide August Technology with a written notice of
                           any rescheduling.

                  7.4.2    Rescheduling (Earlier Delivery)

                           Quasys may request early delivery without cost at any
                           time, and August Technology agrees to use its best
                           efforts to comply with this request.

                  7.4.3    Cancellation

                           All cancellation notices are considered official once
                           August Technology receives written notification from
                           Quasys. Quasys has the right to cancel any purchase
                           order, subject to the following:

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

                           (b)      The following charges will apply to Quasys
                                    for order cancellation:

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

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

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

                                 GRAPHIC OMITTED

                           NOTE: All cancellation charges are payable by
                                 Quasys within thirty (30) days from the date
                                 of receipt of August Technology's invoice.

         7.5      August Technology agrees to use its best efforts to meet
                  scheduled shipment dates. However, as an equipment
                  manufacturer, August Technology is subject to possible delays
                  in equipment part delivery from its suppliers worldwide.
                  Therefore, August Technology will not be liable for delay in
                  meeting a scheduled shipment date due to circumstance beyond
                  its reasonable control, such as equipment part delivery delays
                  and acts of God (such as floods, fires, earthquakes, and the
                  like). If a scheduled shipment date is delayed for more than
                  thirty (30) days without reasonable cause, Quasys will have
                  the right to cancel the specific order without any cost. If
                  Products are in short supply, August Technology will allocate
                  them equitably, at August Technology's discretion, among
                  Quasys and all other resale channels. August Technology will
                  only ship an entire order unless otherwise agreed to in
                  writing by Quasys.

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

         7.7      All Products will be considered delivered to Quasys Ex-works
                  (in accordance with Incoterms 1990) upon transfer to a common
                  carrier by August Technology at the point of shipment (Edina,
                  Minnesota, USA).

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8.       RELATIONSHIP

         8.1      Quasys' relationship to August Technology will be that of an
                  independent contractor engaged in purchasing and licensing
                  Products for resale to Quasys customers. Nothing in this
                  Agreement will be understood to give either party any power to
                  direct or control the day-to-day activities of the other. All
                  financial obligations associated with Quasys' business are the
                  sole responsibility of Quasys. Quasys will be solely
                  responsible for and agrees to indemnify and hold August
                  Technology harmless from any claims, damages or lawsuits
                  arising out of acts of Quasys, its employees, and agents.
                  Quasys, its employees and agents, are not agents or legal
                  representatives of August Technology for any purpose, and have
                  no authority to act for, bind, or commit August Technology.
                  Quasys and August Technology agree that this Agreement does
                  not establish a franchise, joint venture, or partnership.

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

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

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

9.       PRODUCT ACCEPTANCE

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

10.      OBLIGATIONS

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

         10.1     August Technology agrees to offer for sale to Quasys Products
                  required by Quasys to perform its duties as described in this
                  Agreement.

         10.2     August Technology agrees to keep Quasys informed of its
                  progress in the conduct of its marketing, sales, and service
                  activities in the USA, as well as international

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                  markets (including new applications discovered, major
                  customers, competitor activities, and other trends). August
                  Technology agrees to identify Quasys as its active, exclusive
                  distributor in the Territory for Products in appropriate
                  advertising and other promotions.

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

                  (a)      August Technology will provide factory training at a
                           minimum of one (1) time per year. August Technology
                           will pay for all training material, personnel, local
                           transportation, and meals. All other expenses,
                           including air travel and hotel accommodations, will
                           be paid for by Quasys.

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

         10.4     August Technology agrees to provide reasonable technical
                  advice to Quasys.

         10.5     August Technology agrees to provide a reasonable amount of
                  technical literature that may be necessary to promote Products
                  (such as brochures, video tapes, technical reports, and other
                  data subject to the confidentiality provisions of this
                  Agreement). All technical material and promotional material
                  will be provided in English.

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

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

         10.7     Quasys agrees to use its best efforts in good faith to
                  promote, demonstrate, and sell Products on a face-to-face
                  basis and in an end-user environment within the Territory.
                  Quasys agrees to ensure the highest quality of pre-sale and
                  post-sale support to the customers, and to promote the
                  goodwill, name and interest of August Technology and its
                  Products.

         10.8     Quasys agrees to purchase demonstration Products, within sixty
                  (60) days of this Agreement to be used to actively promote,
                  demonstrate, and sell Products to the customers. A
                  demonstration unit may be purchased for each Product at a
                  special discount of 25% off published list pricing. This
                  demonstration discount is available one-time per year,
                  beginning from the date of first demonstration equipment
                  purchase. Quasys has the right to re-sell the demonstration
                  equipment at any time, provided that it is immediately
                  replaced (physically) with another similar or functionally
                  enhanced unit (replacement of the demonstration equipment will
                  be at the standard Quasys Products discount price if the
                  replacement occurs before the one-time per year special
                  discount period expires).

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                  Demonstration Products must meet applicable safety and related
                  equipment standards as accepted by the European Community.

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

         10.10    Quasys agrees to promptly handle customer complaints,
                  inquiries and orders, and will provide Territory based related
                  services such as applications assistance, operation and
                  maintenance training, start-up and proof-of-performance
                  acceptance testing, warranty labor services, post-warranty
                  spares and service support, systems retrofits, up-grade kit
                  installation, and the like. Quasys agrees to stock adequate
                  spare parts for Products to meet the requirements of this
                  Agreement.

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

         10.12    Quasys agrees to conduct its marketing, sales, and service
                  activities in compliance with local customs, traditions, laws,
                  regulations, and customer expectations at the high quality
                  level consistent with that established by August Technology in
                  the USA. Quasys agrees to clearly identify August Technology
                  as the original source of the Products and as the beneficial
                  owner of all Products rights in all advertising, literature,
                  marking, or labeling, including the use of August Technology's
                  official trademarks and logo.

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

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

         10.15    Quasys agrees to, at its expense, arrange for the translation
                  of any documentation for the use and operation of the Products
                  in the Territory (as required or determined to be necessary by
                  Quasys). Quasys will make every reasonable effort to make any
                  translation accurate so that they completely represent August
                  Technology's English version.

11.      WARRANTY

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         11.1     Hardware Products - August Technology warrants that it will
                  repair or replace, at its option, hardware Products which are
                  found to be defective in material or workmanship. August
                  Technology must receive written notification of any defect
                  within thirteen (13) months from date of shipment. All
                  transportation charges associated with hardware Products
                  warranty will be arranged and paid for by August Technology.

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

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

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

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

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

12.      POST-WARRANTY SPARE PARTS SUPPORT

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

13.      WARRANTY PROCEDURES

         Quasys agrees to request approval from August Technology before
         returning any defective Products. Once approval is granted, August
         Technology will provide Quasys with a Return Material Authorization
         (RMA) number to be displayed on the shipping container of the defective
         Products. Once August Technology approves the return of any defective
         Product, Quasys agrees to ship the Products to August Technology's
         factory using an August Technology approved shipping method. August
         Technology will make all necessary repairs or replacements, and will
         ship the Products back to Quasys or its customer, freight prepaid. To
         expedite warranty service, Quasys and August Technology agree to make
         every effort to supply the customer with immediate replacement Product
         (or parts) while the defective Product (or part) is being tested and
         repaired at August Technology's factory. After repair or replacement is
         completed, August Technology will determine if warranty applies and
         will invoice Quasys for Product (or parts) if warranty does not apply
         (see Section 11.3 for list of non-warranty conditions).

14.      LIMITATION OF LIABILITY

         14.1     Except as stated in this Agreement, August Technology will not
                  be liable for any loss or damages claimed to have resulted
                  from the use, operation, or performance of the Products.

         14.2     AUGUST TECHNOLOGY will in no way be liable to QUASYS for any
                  special, indirect, incidental, or consequential damages, or
                  for any damages from loss of use or profits.

15.      TRADE

         From time to time, August Technology may designate one or more August
         Technology trademarks or trade names as available for Quasys' use, and
         will provide standards for that use in August Technology material.
         August Technology authorizes Quasys to use these designated trademarks
         only as follows:

         (a)      Quasys agrees to use the designated trademarks and trade names
                  in accordance with August Technology's standards solely in
                  advertising and promoting Products, in good taste, and in a
                  manner that preserves their value and August Technology's
                  rights in them.

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         (b)      Quasys agrees not to use any August Technology trademark or
                  trade name on its letterhead or in a way that implies Quasys
                  is an agency or branch of August Technology. Quasys will
                  immediately change or discontinue any trademark or trade name
                  use when requested in writing by August Technology.

16.      PROPRIETARY RIGHTS INDEMNITY

         16.1     August Technology will, except as otherwise provided below,
                  defend or settle any claim made, or suit, or proceeding
                  brought against Quasys so far as it is based on a claim that
                  the use or sale of Products sold under this Agreement
                  infringes a U.S. patent or trademark. August Technology must
                  be immediately notified in writing and given information,
                  assistance, and sole authority to defend or settle claims, at
                  August Technology's expense. Also, August Technology will pay
                  all damages and costs finally awarded against Quasys. If any
                  such Product is determined to infringe, and its use is
                  enjoined, or in case of a settlement, August Technology will
                  have the option, at August Technology's expense, to replace
                  Products with a non-infringing Products, or modify Products so
                  it becomes non-infringing, or repurchase Products from Quasys
                  at the original purchase price. August Technology will have no
                  liability to Quasys for any infringement, or claim thereof,
                  based upon use of any Products in combination with any
                  equipment device, software, or data not supplied by August
                  Technology.

         16.2     This Section states August Technology's entire liability for
                  proprietary rights infringement by Products furnished under
                  this Agreement.

17.      TERMINATION

         17.1     Either Quasys or August Technology may terminate this
                  Agreement, to be effective upon receipt of written notice,
                  based on the occurrence of any of the following events:

                  (a)      If the other party commits a breach of any obligation
                           in this Agreement.
                  (b)      The commencement by either party of a voluntary
                           action under the federal bankruptcy laws, or any
                           other applicable federal, state, or foreign
                           bankruptcy, insolvency, or other similar laws.
                  (c)      The consent of either party to the appointment of a
                           receiver, assignee, or trustee (or other similar
                           official).
                  (d)      The admission by either party of its inability to pay
                           its debts as they become due.
                  (e)      If Quasys is acquired, or its ownership changes
                           substantially.
                  (f)      The nationalization of either party's assets or
                           business.
                  (g)      The passage of any legislation by a country, or
                           subdivision of a country, granting Quasys' extra
                           contractual compensation upon termination or
                           non-renewal of this Agreement.
                  (h)      By mutual consent at any time and with a written
                           notice of termination signed by both parties.

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         17.2     August Technology or Quasys may terminate this Agreement, to
                  be effective upon receipt of written notice, in the event that
                  either party fails to meet its obligations as described in
                  this Agreement.

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

         17.4     Upon termination of this Agreement for any reason, Quasys
                  agrees to immediately cease to be an authorized August
                  Technology distributor and will immediately stop representing
                  itself as an August Technology distributor, and from using any
                  August Technology trademark or trade name. Quasys also agrees
                  to return any and all sales and marketing material (and
                  equipment) at the written request of August Technology,
                  shipment pre-paid.

         17.5     Upon termination of this Agreement for any reason, Quasys
                  agrees to continue to provide service support to existing
                  customers in the Territory in return for the compensation
                  already received by Quasys for this service (compensation in
                  the form of discounted Products pricing). Quasys agrees to
                  continue to provide existing customers with professional
                  service support for ninety (90) days following the effective
                  termination date.

18.      POST TERMINATION COOPERATION

         Both Quasys and August Technology agree to fully cooperate to carry out
         an orderly transition in the marketing, sales, and service of Products
         in the Territory. Upon receiving a written notice of termination by
         either party, until the effective date of the termination, both parties
         agree to fully cooperate in supporting existing customers in the
         Territory (see Section 17.5 for further agreement on service support
         following termination).

19.      CONFIDENTIALITY & PROPRIETARY RIGHTS

         19.1     Quasys recognizes that certain information to be provided by
                  August Technology during the term of this Agreement,
                  including, designs, specifications, drawings, engineering
                  details, software, and information concerning August
                  Technology's customers, business, procedures, methods, and
                  Products, are proprietary to August Technology. Quasys agrees
                  not to attempt to reverse compile or engineer the Products or
                  software associated with them.

         19.2     Quasys agrees to keep confidential, and to utilize its best
                  efforts to prevent and protect from unauthorized use or
                  disclosure, any information provided to Quasys by August
                  Technology during the term of this Agreement (which is
                  designated by August Technology as confidential or
                  proprietary).

<PAGE>

         19.3     Quasys agrees that unauthorized disclosure or use of any
                  proprietary information is a material breach of this
                  Agreement.

         19.4     Quasys agrees not to make, or have made, additional copies of
                  documents containing confidential or proprietary information
                  unless they are necessary for Quasys to perform its
                  obligations of this Agreement. Quasys agrees to include on any
                  copies of confidential or proprietary information a
                  "Confidential Notice" the same manner as the original August
                  Technology document.

         19.5     Upon termination of this Agreement, Quasys will return to
                  August Technology, or will destroy and certify in writing to
                  August Technology that it has destroyed, all copies of
                  documentation and other forms of confidential or proprietary
                  information.

         19.6     Quasys' obligations under this Section will continue following
                  termination of this Agreement.

20.      DISTRIBUTOR'S REPRESENTATIONS

         Quasys represents and warrants that in performing under this Agreement
         it will in no way compromise any rights or trust relationships between
         any other party and itself, or create a conflict of interest for Quasys
         or August Technology. Quasys agrees to conduct business in a manner
         that will enhance the image an reputation of August Technology and the
         Products. Quasys hereby represents and warrants that it will comply
         with all applicable laws and regulations, and avoid deceptive,
         misleading, unethical, and illegal practices.

         Quasys acknowledges that it may be necessary for August Technology to
         disclose the fact of Quasys' appointment, the duties performed by
         Quasys, and the compensation paid should there be a proper inquiry from
         an authorized U.S. government agency.

21.      FORCE MAJEURE

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

22.      MODIFICATIONS & IMPROVEMENTS OF PRODUCTS

         If any modifications or improvements to the Products are developed by
         Quasys or August Technology, such modifications or improvements will be
         the exclusive property of

<PAGE>

         August Technology, which will have the full right to patent or
         copyright such modifications or improvements at its sole cost and
         expense.

23.      GOVERNMENT EXPORT RESTRICTIONS

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

24.      NOTICES

         Unless otherwise agreed to by both parties, all notices required under
         this Agreement will be made by fax, and all notices will be addressed
         to the attention of the party executing the Agreement, or his or her
         successor.

25.      GENERAL PROVISIONS

         25.1     Neither party may assign or transfer this Agreement. Any
                  attempted assignment or transfer will be void. Both parties
                  agree to advise each other of any change in ownership,
                  control, or operating arrangements.

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

         25.3     This Agreement, including the attached Exhibits, contains the
                  entire and only understanding between the parties, and
                  supersedes all prior agreements either written or oral
                  relating to the subject matter of this Agreement. No
                  modifications of this Agreement will be binding on either
                  party, unless made in writing and signed by persons authorized
                  to, sign agreements on behalf of Quasys and August Technology.

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

         25.5     If during the term of this Agreement, or at any time after its
                  termination, either August Technology or Quasys commences a
                  suit, action, or other legal proceedings against the other
                  arising out of or in connection with this Agreement, such
                  action will be brought in the state or federal courts located
                  in the State of Minnesota, USA.

         25.6     This Agreement will be governed by the laws of the State of
                  Minnesota, USA and specifically excludes the United States
                  Convention on Contracts of International Sales of Goods. Any
                  disputes or claims arising out of this Agreement or its

<PAGE>

                  interpretation, creation, termination, or performance will be
                  settled by binding arbitration in Minnesota, -under the Rules
                  of Arbitration of the International Chamber of Commerce.

         25.7     This Agreement will be effective only upon its execution by
                  August Technology at its Corporate Headquarters. This
                  Agreement will be binding upon, and will insure the benefit of
                  the parties, and their respective heirs, executors,
                  representatives, and successors in interest.

         25.8     The prevailing party in any arbitration, or other legal action
                  brought by one party against the other arising out of this
                  Agreement, will be entitled, in addition to any other rights
                  and remedies it may have, to reimbursement for its expenses,
                  including court costs and attorneys' fees.

26.      AUTHORITY

         If Quasys is a partner or corporation, the person executing this
         Agreement represents that he or she is either a general partner or a
         duly authorized corporate officer, and that he or she has full
         authority to enter into this Agreement on behalf of Quasys.

DISTRIBUTOR:                                 ACCEPTED BY:

Quasys AG                                    August Technology Corporation

-----------------------------------          ----------------------------------
Authorized Signature                         Authorized Signature

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

<PAGE>

EXHIBIT-A:  PRODUCTS

Quasys is granted the right to distribute the following August Technology
Products under the terms of this

Agreement.

(1)      LV SERIES - SEMI-AUTOMATIC LEAD & PACKAGE INSPECTION SYSTEMS

NOTES:

(a)      It is August Technology's intent to also provide Quasys the right to
         distribute the NSX-80 - AUTOMATED DIE DEFECT INSPECTION SYSTEM
         (POST-PROBE). Note that the NSX-80 will be in development at the time
         this Agreement is signed. Consequently, August Technology feels that it
         would not be appropriate at this time to include this proposed future
         product within the Agreement.

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

<PAGE>

EXHIBIT-B:  PRICING, DISCOUNT, AND TERMS

Quasys agrees to pay August Technology for Products purchased based on a set
discount from official published Price Lists, or a set discount from special
pricing quoted by August Technology for mutually agreed to custom projects. The
current applicable Price List for Products and spare parts are attached to this
Exhibit.

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

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

Quasys' set discount from official published Price Lists will be:  17.5%

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

         (1)      For Product with Distributor purchase price of.- Less than
                  $75,000

                  [a]      100% net 30 days from shipment.

         (2)      For Product with Distributor purchase price of.- Greater than
                  $75,000

                  [a]      1/3 on order, net 30 days.

                  [b]      1/3 on shipment, net 30 days.

                  [c]      1/3 on "commission of equipment" or within 20 days of
                           receipt of equipment (whichever occurs first), net 30
                           days.

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

         Direct wire transfer to August Technology's bank. Detailed bank account
         information is: Norwest Bank, Minnesota, N.A., Transit Routing
         #091000019, Account #3972985397.

PLEASE NOTE-

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

<PAGE>

                       **LV9200 PRICE LIST OR QUOTE Here*

<PAGE>

                        **LV 9200 SPARE PARTS List Here**

<PAGE>

EXHIBIT-C:  SPECIAL ACCOUNTS

The following customers who have offices, facilities, factories, fabs, or any
other business facilities within the Territory will be considered Special
Accounts, which will remain exclusive to August Technology regarding all
business activities (including, but not limited to, sales, marketing, and
service support): None

<PAGE>

EXHIBIT-D:  TERRITORY

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

         -        Switzerland

         -        Germany

         -        Austria

         -        Italy

         -        Portugal

         -        France (see Note I below)

NOTE:    (1) France will be considered a non-exclusive territory (all other
         countries show are exclusive to Quasys) for the term of this Agreement.<PAGE>

                                                                   Exhibit 10.5

                          AUGUST TECHNOLOGY CORPORATION
                         INTERNATIONAL SALES DISTRIBUTOR
                                    AGREEMENT

This Agreement is made as of the 3rd day of September , 1996, between August
Technology Corporation, a Minnesota (USA) corporation with a principal place of
business at 5237 Edina Industrial Blvd., Edina, Minnesota 55439, USA, and Firfax
Systems Ltd., (Firfax), an entity organized and existing under the laws of
England, having its principal place of business at Avening Mill, Avening, Glos.
GL8 8LU, UK.

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

The following are the terms and conditions under which August Technology sells
and licenses its image capture technology, vision system controlled
manufacturing tools, licensed software programs, and related spare parts
specified in Exhibit-A (hereinafter jointly referred to as "Product" or
"Products"). Firfax wishes to purchase all or selected Products for resale and
commits to actively provide its customers the necessary service and support to
successfully market and maintain the Products.

1.       DEFINITIONS.

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

         1.1      "AGREEMENT" will mean this International Sales Distributor
                  Agreement and all Exhibits.

         1.2      "COMPETITIVE PRODUCTS" will mean image capture technology,
                  vision system controlled manufacturing tools, licensed
                  software programs, and related spare parts, of substantially
                  the same functionality as August Technology's Products.

         1.3      "Price List" will mean the published prices that August
                  Technology shall issue from time to time.

         1.4      "TERRITORY" will mean the countries specified in Exhibit-D.

2.       APPOINTMENT AS DISTRIBUTOR

         August Technology hereby appoints Firfax as an authorized, independent,
         exclusive Distributor for the Products, for the purpose of reselling
         and servicing the Products directly to its customers in the Territory
         (except to those customers listed in Exhibit-C, which are consider
         exclusive August Technology accounts). Fir-fax agrees that it will
         re-sell Products directly, without the use of any dealers, sub-agents,
         and the like, unless agreed to in writing by August Technology.

3.       TERM OF AGREEMENT

<PAGE>

         This Agreement will begin on the date an authorized officer of August
         Technology executes the Agreement and will continue in full force and
         effect until terminated as provided in this Agreement.

4.       TERRITORY

         Firfax will have the exclusive right to actively market, sell, and
         promote the Products in the Territory (see Exhibit-D).

5.       RESTRICTIONS

         5.1      Firfax agrees not to make any sale, transfer, exchange, or
                  other conveyance of any Products whatsoever to any person that
                  Firfax knows, or has reason to know, is purchasing such
                  Products for the purpose of resale without first notifying
                  August Technology for written approval.

         5.2      Firfax will have no rights to the Products, any software
                  included in the Products, or any improvements in the Products.
                  Firfax agrees not to copy, manufacture, re-manufacture, or
                  otherwise modify any Products without the written consent from
                  August Technology (signed by an officer of the company). If
                  Firfax is permitted to modify Products to conform to customer
                  requests or specifications, such modifications must not
                  degrade the original August Technology operating
                  specifications or impede the reliability of the Products. Any
                  modifications performed in violation of this Section 5.2 will
                  void all warranties.

         5.3      Firfax agrees not to promote, market, or sell any Competitive
                  Products or services, directly or indirectly, within the
                  Territory. Firfax agrees not to establish a branch office or
                  other entity or association with plans to distribute Products
                  outside the Territory, or to appoint any sub-distributor
                  outside the Territory.

6.       PRICE, PAYMENT, TAXES, DUTY & COMMISSION

         6.1      Prices for the Products purchased under this Agreement will be
                  as specified in Exhibit-B. August Technology will have the
                  right at any time to change its prices and must provide Firfax
                  with a thirty (30) day advance written notice of any pricing
                  changes. Price changes will not apply to unfilled purchase
                  orders that have been accepted by August Technology prior to
                  the effective date of the price change.

         6.2      Payment will be made by the wire transfer of funds in U.S.
                  Dollars from Firfax to August Technology's bank account in the
                  United States.

         6.3      Product prices are to be stated in U.S. Dollars and are
                  Ex-works (as defined by Incoterms 1990) exclusive of all
                  sales, use, and like taxes. Firfax agrees to pay all freight
                  storage fees, bank transfer fees, and all taxes and duties
                  associated with the sale of Products purchased under this
                  Agreement.

                                       2
<PAGE>

         6.4      All risk of loss to Products will pass to Firfax upon
                  surrender by August Technology to the carrier at the point of
                  shipment (Edina, Minnesota, USA). Firfax agrees to make all
                  arrangements for export, select the carrier, and insure
                  Products against loss, damage, theft, or destruction upon
                  surrender to the carrier at August Technology's facility.

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

TABLE 1:  Equipment Discount Schedule

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
ORDER                        LOCATION WHERE         LOCATION WHERE          LOCATION WHERE         % OF STANDARD
POSSIBILITY                  PROJECT SPECIFIC       P.O. ISSUED             EQUIP. INSTALLED       EQUIP.DISCOUNT
----------------------------------------------------------------------------------------------------------------------
<S>                       <C>                    <C>                     <C>                    <C>
           1                    Territory              Territory               Territory                100%
----------------------------------------------------------------------------------------------------------------------
           2                    Territory              Territory           Not In Territory            6-1/3%
----------------------------------------------------------------------------------------------------------------------
           3                Not in Territory           Territory               Territory               66-1/3%
----------------------------------------------------------------------------------------------------------------------
           4                    Territory           Not in Territory           Territory               66-1/3%
----------------------------------------------------------------------------------------------------------------------
           5                    Territory           Not in Territory       Not in Territory            33-1/3%
----------------------------------------------------------------------------------------------------------------------
           6                Not in Territory           Territory           Not in Territory            33-1/3%
----------------------------------------------------------------------------------------------------------------------
           7                Not in Territory        Not in Territory           Territory               33-1/3%
----------------------------------------------------------------------------------------------------------------------
           8                Not in Territory        Not in Territory       Not in Territory              0%
----------------------------------------------------------------------------------------------------------------------
</TABLE>

7.       PURCHASE ORDERS, SHIPMENTS, CANCELLATIONS & CHANGES

         7.1      In order to receive Products, Firfax agrees to deliver to
                  August Technology a hard copy purchase order. All Firfax
                  purchase orders are subject to acceptance at August
                  Technology. All purchase orders issued by Firfax will included
                  in the following information:

                  (a)      Final customer's name (end-user), location, and
                           official purchase order (P.O.) number

                  (b)      Firfax purchase order number

                  (c)      "Ship To" location (generally Firfax address)

                                       3
<PAGE>

                  (d)      "Bill To" location (generally Firfax address) and
                           accounts payable contact person

                  (e)      Method of shipment, including contact person and
                           telephone number

                  (f)      Quantity and description of each item being purchased

                  (g)      Details of any options purchased

                  (h)      Pricing

                  (i)      Requested ship date(s) power requirements

                  (k)      Environmental requirements - if any (such as
                           cleanroom specifications)

                  (l)      Any other special requirements

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

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

         7.2      In no event will August Technology accept purchase orders from
                  any Person other than Firfax. All purchase orders must
                  originate from Firfax.

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

                  7.4.1    Rescheduling (Later Delivery)

                           Firfax may reschedule shipment of Products for a
                           later date by up to sixty (60) days, on a one-time
                           basis per purchase order, without cost or liability.
                           Rescheduling of shipments can not occur within
                           fifteen (15) days of the original shipment date on
                           the purchase order. Firfax agrees to

                                       4
<PAGE>

                           immediately provide August Technology with a written
                           notice of any rescheduling.

                  7.4.2    Rescheduling (Earlier Delivery)

                           Firfax may request early delivery without cost at any
                           time, and August Technology agrees to use its best
                           efforts to comply with this request.

                  7.4.3    Cancellation

                           All cancellation notices are considered official once
                           August Technology receives written notification from
                           Firfax. Firfax has the right to cancel any purchase
                           order, subject to the following:

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

                           (b)      The following charges will apply to Firfax
                                    for order cancellation:

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

                                    -        If cancellation occurs during the
                                             middle 1/3 of the quoted delivery
                                             schedule, the charge will be 17.5%
                                             of the total purchase order amount.

                                    -        If cancellation occurs during the
                                             first 1/3 of the quoted delivery
                                             schedule, no charge will apply.

[GRAPHIC OMITTED]

                           NOTE: All cancellation charges are payable by Firfax
                           within thirty (30) days from the date of receipt of
                           August Technology's invoice.

         7.5      August Technology agrees to use its best efforts to meet
                  scheduled shipment dates. However, August Technology will not
                  be liable for delay in meeting a scheduled shipment date. If
                  Products are in shortly, August Technology will allocate them
                  equitably, at August Technology's discretion, among Firfax and
                  all other resale channels. August Technology will only ship an
                  entire order unless otherwise agreed to in writing by Firfax.

         7.6      August Technology may refuse to ship, or delay the shipment,
                  of any Products on order, if Firfax becomes delinquent in
                  performance of its obligations or fails to

                                       5
<PAGE>

                  meet other credit or financial requirements established by
                  August Technology. No such cancellation, refusal, or delay
                  will be deemed a termination of this Agreement by August
                  Technology, unless August Technology advises Firfax.

         7.7      All Products will be considered delivered to Firfax Ex-works
                  (in accordance with Incoterms 1990) upon transfer to a common
                  carrier by August Technology at the point of shipment (Edina,
                  Minnesota, USA).

8.       RELATIONSHIP

         8.1      Firfax's relationship to August Technology will be that of an
                  independent contractor engaged in purchasing and licensing
                  Products for resale to Firfax customers. Nothing in this
                  Agreement will be understood to give either party any power to
                  direct or control the day-to-day activities of the other. All
                  financial obligations associated with Firfax's business are
                  the sole responsibility of Firfax. Firfax will be solely
                  responsible for and agrees to indemnify and hold August
                  Technology harmless from any claims, damages or lawsuits
                  arising out of acts of Firfax, its employees, and agents.
                  Firfax, its employees and agents, are not agents or legal
                  representatives of August Technology for any purpose, and have
                  no authority to act for, bind, or commit August Technology.
                  Firfax and August Technology agree that this Agreement does
                  not establish a franchise, joint venture, or partnership.

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

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

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

9.       PRODUCT ACCEPTANCE

         Firfax agrees to inspect all Products immediately upon receipt at their
         facility, and may reject any Products that fail to meet the August
         Technology published specifications. Any Products not rejected within
         thirty (30) days after receipt by Firfax will be considered accepted.
         Firfax agrees to provide a detailed written notification to August
         Technology of any and all reasons for rejection. Upon receipt of
         rejection notification, August Technology will promptly determine an
         appropriate course of action to be taken regarding the rejected
         Products. All returns of rejected Products to August Technology will
         require prior written approval by August Technology.

10.      OBLIGATIONS

                                       6
<PAGE>

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

         10.1     August Technology agrees to offer for sale to Firfax Products
                  required by Firfax to perform its duties as described in this
                  Agreement.

         10.2     August Technology agrees to keep Firfax informed of its
                  progress in the conduct of its marketing, sales, and service
                  activities in the USA, as well as international markets
                  (including new applications discovered, major customers,
                  competitor activities, and other trends). August Technology
                  agrees to identify Firfax as its active, exclusive distributor
                  in the Territory for Products in appropriate advertising and
                  other promotions.

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

                  (a)      August Technology will provide factory training at a
                           minimum of one (1) time per year. August Technology
                           will pay for all training material, personnel, local
                           transportation, and meals. All other expenses,
                           including air travel and hotel accommodations, will
                           be paid for by Firfax.

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

         10.4     August Technology agrees to provide reasonable technical
                  advice to Firfax.

         10.5     August Technology agrees to provide a reasonable amount of
                  technical literature that may be necessary to promote Products
                  (such as brochures, video tapes, technical reports, and other
                  data subject to the confidentiality provisions of this
                  Agreement). All technical material and promotional material
                  will be provided in English.

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

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

         10.7     Firfax agrees to use its best efforts in good faith to
                  promote, demonstrate, and sell Products on a face-to face
                  basis and in an end-user environment within the Territory.
                  Firfax agrees to ensure the highest quality of pre-sale and
                  post-sale support to the customers, and to promote the
                  goodwill, name and interest of August Technology and its
                  Products.

         10.8     Firfax agrees to purchase demonstration Products if the demo
                  purchase price is less than $75,000; within sixty (60) days of
                  this Agreement, to be used to actively promote, demonstrate,
                  and sell Products to the customers. Demonstration

                                       7
<PAGE>

                  Products with a demo purchase price greater than $75,000 can
                  be purchased at Firfax's option, so long as Firfax can
                  adequately support the market need for demonstration Products
                  via other means (e.g., trade shows, factory borrowed
                  equipment, etc.). If demonstration Products are borrowed from
                  the factory, the duration will be negotiated on a case-by-case
                  basis between Firfax and August Technology. Demonstration
                  Products with a demo purchase price greater than $75,000 will
                  be provided on a temporary basis at the discretion of August
                  Technology and generally with no equipment charge to Firfax
                  (Firfax agrees to pay for all charges relating to freight,
                  taxes, duties, and related charges that result from borrowing
                  the demonstration Products). A demonstration unit may be
                  purchased for each Product at a special discount of 25% off
                  published list pricing. This demonstration discount is
                  available one-time per year, beginning from the date of first
                  demonstration equipment purchase. Firfax has the right to
                  re-sell the demonstration equipment at any time, provided that
                  it is immediately replaced (physically) with another similar
                  or functionally enhanced unit (replacement of the
                  demonstration equipment will be at the standard Firfax
                  Products discount price if the replacement occurs before the
                  onetime per year special discount period expires).

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

         10.10    Firfax agrees to promptly handle customer complaints,
                  inquiries and orders, and will provide Territory based related
                  services such as applications assistance, operation and
                  maintenance training, start-up and proof-of-performance
                  acceptance testing, warranty labor services, post-warranty
                  spares and service support, systems retrofits, up-grade kit
                  installation, and the like. Firfax agrees to stock adequate
                  spare parts for Products to meet the requirements of this
                  Agreement.

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

         10.12    Firfax agrees to conduct its marketing, sales, and service
                  activities in compliance with local customs, traditions, laws,
                  regulations, and customer expectations at the high quality
                  level consistent with that established by August Technology in
                  the USA. Firfax agrees to clearly identify August Technology
                  as the original source of the Products and as the beneficial
                  owner of all Products rights in all advertising, literature,
                  marking, or labeling, including the use of August Technology's
                  official trademarks and logo.

         10.13    Firfax agrees to bear all of its operating expenses during the
                  term of this Agreement. Firfax will maintain sufficient net
                  worth and working capital, and

                                       8
<PAGE>

                  devote sufficient financial resources to allow Firfax to
                  perform its obligation as outlined in this Agreement.

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

         10.15    Firfax agrees to, at its expense, arrange for the translation
                  of any documentation for the use and operation of the Products
                  in the Territory (as required or determined to be necessary by
                  Firfax). Firfax will make every reasonable effort to make any
                  translation accurate so that they completely represent August
                  Technology's English version.

11.      WARRANTY

         11.1     Hardware Products - August Technology warrants that it will
                  repair or replace, at its option, hardware Products which are
                  found to be defective in material or workmanship. August
                  Technology must receive written notification of any defect
                  within thirteen (13) months from date of shipment. All
                  transportation charges associated with hardware Products
                  warranty will be arranged and paid for by August Technology.

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

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

                  (a)      Normal wear and tear, or items subject to
                           deterioration, breakage, or burnout through use.

                  (b)      Installation or maintenance by customer or any third
                           party (other than Firfax).

                  (c)      Modifications or alterations made by customer or any
                           third party without August Technology's written
                           consent.

                  (d)      Misuse or abuse.

                  (e)      Failure of customer to maintain the equipment, site,
                           and environmental conditions as required for the
                           normal operation of the Products.

                                       9
<PAGE>

                  (f)      Causes beyond August Technology's reasonable control.

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

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

12.      POST-WARRANTY SPARE PARTS SUPPORT

         Due to the rapid pace of the technologies included in the Products,
         August Technology agrees to use its best efforts to maintain the
         ability to provide spare parts and documentation for any Products
         shipped to the Territory for as long as technologically and
         economically feasible.

13.      WARRANTY PROCEDURES

         Firfax agrees to request approval from August Technology before
returning any defective Products. Once approval is granted, August Technology
will provide Firfax with a Return Material Authorization (RMA) number to be
displayed on the shipping container of the defective Products. Once August
Technology approves the return of any defective Product, Firfax agrees to ship
the Products to August Technology's factory using an August Technology approved
shipping method. August Technology will make all necessary repairs or
replacements, and will ship the Products back to Firfax or its customer, freight
prepaid. To expedite warranty service, Firfax and August Technology agree to
make every effort to supply the customer with immediate replacement Product (or
parts) while the defective Product (or part) is being tested and repaired at
August Technology's factory. After repair or replacement is completed, August
Technology will determine if warranty applies and will invoice Firfax for
Product (or parts) if warranty does not apply (see Section 1 1.3 for list of
nonwarranty conditions).

14.      LIMITATION OF LIABILITY

         14.1     Except as stated in this Agreement, August Technology will not
                  be liable for any loss or damages claimed to have resulted
                  from the use, operation, or performance of the Products.

         14.2     August Technology will in no way be liable to Firfax for any
                  special, indirect, incidental, or consequential damages, or
                  for any damages from loss of use or profits.

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<PAGE>

15.      TRADE

         From time to time, August Technology may designate one or more August
         Technology trademarks or trade names as available for Firfax's use, and
         will provide standards for that use in August Technology material.
         August Technology authorizes Firfax to use these designated trademarks
         only as follows:

                  (a)      Firfax agrees to use the designated trademarks and
                           trade names in accordance with August Technology's
                           standards solely in advertising and promoting
                           Products, in good taste, and in a manner that
                           preserves their value and August Technology's rights
                           in them.

                  (b)      Firfax agrees not to use any August Technology
                           trademark or trade name on its letterhead or in a way
                           that implies Firfax is an agency or branch of August
                           Technology. Firfax will immediately change or
                           discontinue any trademark or trade name use when
                           requested in writing by August Technology.

16.      PROPRIETARY RIGHTS INDEMNITY

         16.1     August Technology will, except as otherwise provided below,
                  defend or settle any claim made, or suit, or proceeding
                  brought against Firfax so far as it is based on a claim that
                  the use or sale of Products sold under this Agreement
                  infringes a U.S. patent or trademark. August Technology must
                  be immediately notified in writing and given information,
                  assistance, and sole authority to defend or settle claims, at
                  August Technology's expense. Also, August Technology will pay
                  all damages and costs formally awarded against Firfax. If any
                  such Product is determined to infringe, and its use is
                  enjoined, or in case of a settlement, August Technology will
                  have the option, at August Technology's expense, to replace
                  Products with a non-infringing Products, or modify Products so
                  it becomes non-infringing, or repurchase Products from Firfax
                  at the original purchase price. August Technology will have no
                  liability to Firfax for any infringement, or claim thereof,
                  based upon use of any Products in combination with any
                  equipment, device, software, or data not supplied by August
                  Technology.

         16.2     This Section states August Technology's entire liability for
                  proprietary. rights infringement by Products furnished under
                  this Agreement.

17.      TERMINATION

         17.1     Either Firfax or August Technology may terminate this
                  Agreement, to be effective upon receipt of written notice,
                  based on the occurrence of any of the following events:

                  (a)      If the other party corm-nits a breach of any
                           obligation in this Agreement.

                                       11
<PAGE>

                  (b)      The commencement by either party of a voluntary
                           action under the federal bankruptcy laws, or any
                           other applicable federal, state, or foreign
                           bankruptcy, insolvency, or other similar laws.

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

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

                  (e)      If Firfax is acquired, or its ownership changes
                           substantially.

                  (f)      The nationalization of either party's assets or
                           business.

                  (g)      The passage of any legislation by a country, or
                           subdivision of a country, granting Firfax extra
                           contractual compensation upon termination or
                           non-renewal of this Agreement.

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

         17.2     August Technology or Firfax may terminate this Agreement, to
                  be effective upon receipt of written notice, m the event that
                  either party fails to meet its obligations as described in
                  this Agreement.

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

         17.4     Upon termination of this Agreement for any reason, Firfax
                  agrees to immediately cease to be an authorized August
                  Technology distributor and will immediately stop representing
                  itself as an August Technology distributor, and from using any
                  August Technology trademark or trade name. Firfax also agrees
                  to return any and all sales and marketing material (and
                  equipment) at the written request of August Technology,
                  shipment pre-paid.

         17.5     Upon termination of this Agreement for any reason, Firfax
                  agrees to continue to provide service support to existing
                  customers in the Territory in return for the compensation
                  already received by Firfax for this service (compensation in
                  the form of discounted Products pricing). Firfax agrees to
                  continue to provide existing customers with professional
                  service support for ninety (90) days following the effective
                  termination date.

                                       12
<PAGE>

         17.6     Upon termination of this Agreement by August Technology,
                  August Technology agrees to repurchase any demonstration
                  Products that were purchased by Firfax within one-hundred
                  twenty (120) days from date of official termination notice.
                  The repurchase price for demonstration Products will be the
                  original purchase price for Products returned to August
                  Technology in "as new" condition (demonstration Products not
                  returned in "as new" condition will be discounted based on
                  negotiations between Firfax and August Technology). Firfax
                  agrees to pay for all charges relating to freight, taxes,
                  duties, and related charges that result from the return of
                  demonstration Products.

18.      POST TERMINATION COOPERATION

         Both Firfax and August Technology agree to fully cooperate to carry out
         an orderly transition in the marketing, sales, and service of Products
         in the Territory. Upon receiving a written notice of termination by
         either party, until the effective date of the termination, both parties
         agree to fully cooperate in supporting existing customers in the
         Territory (see Section 17.5 for further agreement on service support
         following termination).

19.      CONFIDENTIALITY & PROPRIETARY RIGHTS

         19.1     Firfax recognizes that certain information to be provided by
                  August Technology during the term of this Agreement,
                  including, designs, specifications, drawings, engineering
                  details, software, and information concerning August
                  Technology's customers, business, procedures, methods, and
                  Products, are proprietary to August Technology. Firfax agrees
                  not to attempt to reverse compile or engineer the Products or
                  software associated with them.

         19.2     Firfax agrees to keep confidential, and to utilize its best
                  efforts to prevent and protect from unauthorized use or
                  disclosure, any information provided to Firfax by August
                  Technology during the term of this Agreement (which is
                  designated by August Technology as confidential or
                  proprietary).

         19.3     Firfax agrees that unauthorized disclosure or use of any
                  proprietary information is a material breach of this
                  Agreement.

         19.4     Firfax agrees not to make, or have made, additional copies of
                  documents containing confidential or proprietary information
                  unless they are necessary for Firfax to perform its
                  obligations of this Agreement. Firfax agrees to include on any
                  copies of confidential or proprietary information a
                  "Confidential Notice" the same manner as the original August
                  Technology document.

         19.5     Upon termination of this Agreement, Firfax will return to
                  August Technology, or will destroy and certify in writing to
                  August Technology that it has destroyed, all copies of
                  documentation and other forms of confidential or proprietary
                  information.

                                       13
<PAGE>

         19.6     Firfax's obligations under this Section will continue
                  following termination of this Agreement.

20.      DISTRIBUTOR'S REPRESENTATIONS

         Firfax represents and warrants that in performing under this Agreement
         it will in no way compromise any rights or trust relationships between
         any other party and itself, or create a conflict of interest for Firfax
         or August Technology. Firfax agrees to conduct business in a manner
         that will enhance the image an reputation of August Technology and the
         Products. Firfax hereby represents and warrants that it will comply
         with all applicable laws and regulations, and avoid deceptive,
         misleading, unethical, and illegal practices.

         Firfax acknowledges that it may be necessary for August Technology to
         disclose the fact of Firfax's appointment, the duties performed by
         Firfax, and the compensation paid should there be a proper inquiry from
         an authorized U.S government agency.

21.      FORCE MAJEURE

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

22.      MODIFICATIONS & IMPROVEMENTS OF PRODUCTS

         If any modifications or improvements to the Products are developed by
         Firfax or August Technology, such modifications or improvements will be
         the exclusive property of August Technology, which will have the full
         right to patent or copyright such modifications or improvements at its
         sole cost and expense.

23.      GOVERNMENT EXPORT RESTRICTIONS

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

24.      NOTICES

         Unless otherwise agreed to by both parties, all notices required under
         this Agreement will be made by fax, and all notices will be addressed
         to the attention of the party executing the Agreement, or his or her
         successor.

                                       14
<PAGE>

25.      GENERAL PROVISIONS

         25.1     Neither party may assign or transfer this Agreement. Any
                  attempted assignment or transfer will be void. Both parties
                  agree to advise each other of any change in ownership,
                  control, or operating arrangements.

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

         25.3     This Agreement, including the attached Exhibits, contains the
                  entire and only understanding between the parties, and
                  supersedes all prior agreements either written or-oral
                  relating to the subject matter of this Agreement. No
                  modifications of this Agreement will be binding on either
                  party, unless made in writing and signed by persons authorized
                  to sign agreements on behalf of Firfax and August Technology.

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

         25.5     If during the term of this Agreement, or at any time after its
                  termination, either August Technology or Firfax commences a
                  suit, action, or other legal proceedings against the other
                  arising out of or in connection with this Agreement, such
                  action will be brought in the state or federal courts located
                  in the State of Minnesota, USA.

         25.6     This Agreement will be governed by the laws of the State of
                  Minnesota, USA and specifically excludes the United States
                  Convention on Contracts of International Sales of Goods. Any
                  disputes or claims arising out of this Agreement or its
                  interpretation, creation, termination, or performance will be
                  settled by binding arbitration in Minnesota, under the Rules
                  of Arbitration of the International Chamber of Commerce.

         25.7     This Agreement will be effective only upon its execution by
                  August Technology at its Corporate Headquarters. This
                  Agreement will be binding upon, and will insure the benefit of
                  the parties, and their respective heirs, executors,
                  representatives, and successors in interest.

         25.8     The prevailing party in any arbitration, or other legal action
                  brought by one party against the other arising out of this
                  Agreement, will be entitled, in addition to any other rights
                  and remedies it may have, to reimbursement for its expenses,
                  including court costs and attorneys' fees.

26.      AUTHORITY

                                       15
<PAGE>

         If Firfax is a partner or corporation, the person executing this
         Agreement represents that he or she is either a general partner or a
         duly authorized corporate officer, and that he or she has full
         authority to enter into this Agreement on behalf of Firfax.

DISTRIBUTOR:                                 ACCEPTED BY:

Firfax Systems Ltd.                          August Technology Corporation

----------------------------------           -----------------------------------
Authorized Signature                         Authorized Signature

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

                                       16

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