Settlement Agreement Dated August 12, 1997

EXHIBIT 10.1


SETTLEMENT AGREEMENT


This Settlement Agreement is entered into this 12th day of August, 1997 among ADVANCED MACHINE VISION CORPORATION ("AMV"), CREDIT SUISSE, a corporation existing under the laws of Switzerland, SWISS AMERICAN SECURITIES, INC. ("SWISS AMERICAN"), ILVERTON INTERNATIONAL, INC., a corporation existing under the laws of the British Virgin Islands ("ILVERTON"), KONRAD MEYER ("MEYER") and MAX KHAN ("KHAN").
R E C I T A L S


WHEREAS AMV fka ARC Capital is the plaintiff in an action against CREDIT SUISSE, ILVERTON, KHAN and MEYER now pending in the United States District Court for the District of Oregon as Case No. 97-3307-CO related to a Subscription Agreement dated May 14, 1996 ("Subscription Agreement Litigation");


WHEREAS AMV is the plaintiff in an action against SWISS AMERICAN and ILVERTON now pending in the United States District Court for the District of Oregon as Case No. CV 97-3039-CO related to a Pledge and Security Agreement dated April 13, 1995, and in which SWISS AMERICAN has filed an interpleader, ("Security Agreement Litigation"); and


WHEREAS the parties or participant to this Settlement Agreement desire to resolve all disputes among them that relate to the Subscription Agreement Litigation and/or the Security Agreement Litigation.


IT IS HEREBY AGREED AS FOLLOWS:


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1. Dismissal of Litigation.


1.1 By AMV. Upon delivery of the securities as set forth in
Sections 4 and 5 of this Settlement Agreement, AMV will dismiss
with prejudice its complaints in the Subscription Agreement
Litigation and the Security Agreement Litigation against the
PARTIES SIGNING THIS SETTLEMENT AGREEMENT.


1.2 By CREDIT SUISSE. Upon delivery of the securities as set
forth in Sections 4 and 5 of this Settlement Agreement, CREDIT
SUISSE will dismiss with prejudice its counterclaim filed in the
Subscription Agreement Litigation.


1.3 By SWISS AMERICAN. Upon delivery of the securities as
set forth in Sections 4 and 5 of this Settlement Agreement, SWISS
AMERICAN will dismiss with prejudice its claim for interpleader
filed in the Security Agreement Litigation.


2. Release of Claims.


2.1 By AMV. Conditioned on and effective upon the delivery
of the securities as set forth in Sections 4 and 5 of this
Settlement Agreement, AMV releases and absolutely and forever
discharges CREDIT SUISSE, SWISS AMERICAN, ILVERTON, MEYER and
KHAN, but only if such PARTY HAS SIGNED THIS SETTLEMENT
AGREEMENT, and each of their respective current officers,
directors and agents of and from any and all claims, demands,
damages, debts, liens, actions and causes of action of every kind
and nature whatsoever, whether now known or unknown, suspected or
unsuspected, which it might have had, shall or may hereafter
have, upon or arising out of


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any matter, cause, fact, thing, act or omission whatsoever
occurring or existing at any time through and including the date
of this Settlement Agreement and including without limitation any
theory recited in the Subscription Agreement Litigation and/or
the Security Agreement Litigation.


2.2 By Remaining Parties. Conditioned on and effective upon
the delivery of the securities as set forth in Sections 4 and 5
of this Settlement Agreement, CREDIT SUISSE, SWISS AMERICAN,
ILVERTON, MEYER and KHAN hereby release and absolutely and
forever discharge AMV and its subsidiaries and each of their
current officers, directors and agents of and from any and all
claims, demands, damages, debts, liens, actions and causes of
action of every kind and nature whatsoever, whether now known or
unknown, suspected or unsuspected, which any of them had, shall
or may hereafter have, upon or arising out of any matter, cause,
fact, thing, act or omission whatsoever occurring or existing at
any time through and including the date of this Settlement
Agreement and including without limitation any theory recited in
the Subscription Agreement Litigation and/or the Security
Agreement Litigation.


2.3 Nonsigners: Notwithstanding the release of claims
provided in Sections 2.1 and 2.2 of this Settlement Agreement,
the provisions of Sections 2.1 and 2.2 shall not apply to any
party not signing the Settlement Agreement.


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3. Convertible Subordinated Bonds.


3.1 Description of Bonds. AMV is the issuer of $3.4 million
of convertible subordinated bonds sold on April 17, 1996, and
remains the obligor under such bonds until paid by AMV according
to the terms of the bonds.


3.2 Repurchase of Convertible Subordinated Bonds. ILVERTON,
MEYER, KHAN and CREDIT SUISSE shall have the right to "put" to
AMV up to a maximum of $3.4 million face value of bonds issued
pursuant to AMV's $3.4 million Convertible Secured Note dated
April 17, 1996. The bonds shall be purchased by AMV at face value
without prepayment penalty, but with interest accrued as of the
date of the repurchase. This "put" shall terminate thirty days
following execution of this Settlement Agreement. AMV shall have
no obligation to repurchase bonds in the event this Settlement
Agreement is not executed, the delivery of the securities
required by Sections 4 and 5 of this Settlement Agreement is not
timely completed, or in the event such redemption would require
filings by AMV with the Securities and Exchange Commission or
would otherwise violate the laws of the United ...