FORM OF CERTIFICATE OF DESIGNATION

                      SERIES B CONVERTIBLE PREFERRED STOCK

                              KEY TECHNOLOGY, INC.





     Key Technology, Inc., an Oregon corporation (the "Corporation"), certifies

that pursuant to the authority contained in Article II of its Restated Articles

of Incorporation, and in accordance with the provisions of Section 60.134 of the

Oregon Revised Statutes, its Board of Directors has adopted the following

resolution creating a series of its $.0001 par Preferred Stock:



     RESOLVED, that, pursuant to authority conferred upon the Board of Directors

by the Articles of Incorporation of the Corporation, the Board of Directors

hereby authorizes the issuance of Series B Convertible Preferred Stock of the

Corporation and hereby designates, pursuant to Section 60.134 of the Oregon

Revised Statutes, the rights, preferences, privileges, restrictions and other

matters relating to such Series B Preferred Stock as follows



     1. DESIGNATION AND AMOUNT. [ ] shares of the Corporation's authorized

Preferred Stock are hereby designated as the Series B Convertible Preferred

Stock (the "Series B Preferred Stock").



     2. DIVIDENDS. No dividends shall be declared and set aside for any shares

of the Series B Preferred Stock except in the event that the Board of Directors

of the Corporation shall declare a dividend payable upon the then outstanding

shares of the Common Stock of the Corporation, in which event the holders of the

Series B Preferred Stock shall be entitled to the amount of dividends per share

of Series B Preferred Stock as would be declared payable on the largest number

of whole shares of Common Stock into which each share of Series B Preferred

Stock held by each holder thereof could be converted pursuant to the provisions

of Section 5 hereof (such number determined as of the record date for the

determination of holders of Common Stock entitled to receive such dividend).



     3. LIQUIDATION, DISSOLUTION OR WINDING UP



          3.1 PREFERENCE. In the event of any liquidation, dissolution or

winding up of the Corporation, whether voluntary or involuntary, holders of each

share of Series B Preferred Stock shall be entitled to be paid first out of the

assets of the Corporation available for distribution to holders of the

Corporation's capital stock of all classes (whether such assets are capital,

surplus or earnings) before any sums shall be paid or any assets distributed

among the holders of Common Stock, an amount equal to Ten dollars ($10) per

share of Series B Preferred Stock plus an amount equal to all accrued and unpaid

dividends thereon, if any, computed up to and including the date full payment

shall be tendered to the holders of the Series B Preferred Stock with respect to

such liquidation, dissolution or winding up.



          If the assets of the Corporation shall be insufficient to permit the

payment in full to holders of the Series B Preferred Stock of the amount thus

distributable, then the entire assets of the Corporation available for such

distribution shall be distributed ratably among the holders of the Series B

Preferred Stock.



          3.2 DISTRIBUTIONS OTHER THAN CASH. Whenever the distribution provided

for in this Section 3 shall be paid in property other than cash, the value of

such distribution shall be the fair market value of such property as

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