Rudolph and August sign definitive merger agreement

June 29, 2005 – Rudolph Technologies Inc. has signed a definitive merger agreement with August Technology Corp. The transaction has been unanimously approved by the board of directors of both companies, is subject to customary regulatory approvals and shareholder vote of each company, and is expected to close in the 4Q05.

The combined company, which will continue to be known as Rudolph Technologies Inc., will be one of the largest semiconductor inspection and metrology companies.

Under the terms of the agreement, each August shareholder will receive either $10.50/share in cash or in Rudolph stock (based upon the exchange ratio pursuant to the agreement of 0.7625x and the closing price of Rudolph stock on June 27, 2005), reflecting aggregate consideration of approximately $193 million.

After the closing of the merger, Rudolph’s Paul McLaughlin will continue as chairman and CEO and Steven Roth will remain CFO. Jeff O’Dell, current CEO of August, will join Rudolph’s Board of Directors, and Stan Piekos, current CFO of August, will become Rudolph’s chief corporate development officer. The company’s board will increase to 12 people, including 8 members from Rudolph, 3 members from August, and 1 additional board member to be jointly appointed.

“We believe this merger creates exciting upside opportunities for our customers, our shareholders and our employees,” said McLaughlin.

“As a combined entity, we are better positioned to offer our customers complete inspection and metrology solutions for front-end and back-end wafer processing. The merger also strengthens our financial position as we expect to enjoy substantial cost efficiencies and revenue synergies, while leveraging increased scale and a stronger market presence.”

Commenting on the merger agreement, Jeff O’Dell, August Technology’s co-founder, chairman and CEO, added, “After thorough due-diligence, we believe a merger with Rudolph will drive the greatest value for all stakeholders. As a combined entity, we are stronger and more efficient, and our prospects for growth are increased. This is a unique opportunity for the shareholders of August and Rudolph to participate in the upside potential of a new leader in metrology and inspection solutions. I am very pleased with today’s merger and excited about the prospects for The New Rudolph.”

Stan Piekos, August Technology CFO, added, “The significant role of the August management team will provide continuity for August’s customers and our employees. This transaction allows our shareholders a greater ability to participate in the accelerated growth potential of the combined company. These are some of the compelling reasons for merging with Rudolph, which we believe would not be available from other potential opportunities, including KLA-Tencor.”

Piekos concluded, “August is concerned that an August/KLA-Tencor transaction would involve significant antitrust risk, including a lengthy investigation by the Department of Justice, which in turn could prevent any proposed transaction from closing. This could cause substantial uncertainty for August, its customers, employees and vendors, and ultimately hurt shareholder value.”

The New Rudolph will be headquartered in Flanders, NJ and maintain two centers of excellence; the inspection business based in Bloomington, MN and the metrology business based in New Jersey.

On a pro forma basis, the combined company would have trailing twelve month ended March 31, 2005 revenues of approximately $160 million and a base of approximately 600 employees. The merger is expected to be accretive to Rudolph’s earnings within the first year.


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