Exhibit 10.13

                           LOAN MODIFICATION AGREEMENT


BETWEEN:  Pacific Aerospace & Electronics, Inc., a Washington corporation,
          successor by merger to PCT Holdings, Inc., a Nevada corporation;
          Ceramic Devices, Inc., a Washington corporation; Cashmere
          Manufacturing Co., Inc., a Washington corporation; Pacific Coast
          Technologies, Inc., a Washington corporation; and Seismic Safety
          Products, Inc., a Washington corporation (each, a "Borrower," and
          collectively, the Borrowers"), whose address is c/o Pacific Aerospace
          & Electronics, Inc., 434 Olds Station Road, Wenatchee, WA 98801;

AND:      Silicon Valley Bank ("Silicon") whose address is 3003 Tasman Drive,
          Santa Clara, California 95054;

DATE:     January 31, 1997.

     This Loan Modification Agreement ("Agreement") is entered into on the above
date by Borrowers and Silicon.

     1. Background. The Borrowers listed above other than Seismic Safety
Products, Inc. entered into a Loan and Security Agreement with accompanying
Schedule with Silicon in April 1995 (as amended from time to time, the "Loan
Agreement"). Capitalized terms used in this Loan Modification Agreement shall,
unless otherwise defined in this Agreement, have the meaning given to such terms
in the Loan Agreement.

     2. Modifications to Loan Agreement and Schedule.

          a. PCT Holdings, Inc. merged with and into Pacific Aerospace &
Electronics, Inc., with the survivor of the merger being Pacific Aerospace &
Electronics, Inc.

          b. Effective the date hereof, the interest rate applicable to the
Secured Accounts Receivable Line of Credit has been changed from a rate equal to
the "Prime Rate" in effect from time to time, plus 2.0% per annum, to a rate
equal to the "Prime Rate" in effect from time to time, plus 0.75% per annum.

          c. The "Financial Statements and Reports" section of the Schedule is
modified to provide as follows:

          "Financial Statements and Reports. Notwithstanding any other
          provision of the Loan Agreement, the Borrowers shall provide
          Silicon: (a) within 30 days after the end of each month, a
          monthly


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          financial statement (consisting of a income statement and a
          balance sheet) prepared by the Borrowers in accordance with
          generally accepted accounting principles; (b) within 20 days
          after the last day of each month, an accounts receivable
          report and an accounts payable report for the prior period,
          in such form as Silicon shall reasonably specify; (c) within
          20 days after the end of each month, an inventory report in
          such form as Silicon shall reasonably specify; (d) within 20
          days after the last day of each month, a Borrowing Base
          Certificate in the form attached to this Agreement as
          Exhibit A, as Silicon may reasonably modify such Certificate
          from time to time, signed by the Chief Financial Officer or
          President of PCT Holdings, Inc.; (e) within 50 days after
          the end of each quarter, a Compliance Certificate in such
          form as Silicon shall reasonably specify, signed by the
          Chief Financial Officer or President of Pacific Aerospace &
          Electronics, Inc., setting forth calculations showing
          compliance (at the end of each such calendar quarter) with
          the financial covenants set forth on the Schedule, and
          certifying that throughout such quarter the Borrowers were
          in full compliance with all other terms and conditions of
          this Agreement and the Schedule, and providing such other
          information as Silicon shall reasonably request; (f) within
          120 days following the end of the Borrowers' fiscal year,
          complete annual CPA-audited financial statements, such audit
          being conducted by independent certified public accountants
          reasonably acceptable to Silicon, together with an
          unqualified opinion of such accountants; and (g) within five
          days after filing, a copy of all IOQ and 10K filings and
          other filings made by any Borrower with the Securities
          Exchange Commission."

     3. No Other Modifications: No Defenses. Except as expressly modified by
this Loan Modification Agreement, the terms of the Loan Agreement shall remain
unchanged and in full force and effect. Silicon's agreement to modify the Loan
Agreement pursuant to this Loan Modification Agreement shall not obligate
Silicon to make any future modifications to the Loan Agreement or any other loan
document. Nothing in this Loan Modification Agreement shall constitute a
satisfaction of any indebtedness of any Borrower to Silicon. It is the intention
of Silicon and Borrowers to retain as liable parties all makers and endorsers of
the Loan Agreement or any other loan document. No maker, endorser, or guarantor
shall be released by virtue of this Loan Modification Agreement. The terms of
this paragraph shall apply not only to this Loan Modification Agreement, but
also to all subsequent loan modification agreements. Borrowers agree that they
have no defenses against the obligations to pay any amounts of the Obligations.


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     4. Representations and Warranties.

          a. Each Borrower represents and warrants to Silicon that the
execution, delivery and performance of this Agreement are within such Borrower's
corporate powers, and have been duly authorized and are not in contravention of
law or the terms of such Borrower's charter, bylaws or other incorporation
papers, or of any undertaking to which such Borrower is a party or by which such
Borrower is bound.

          b. Each Borrower understands and agrees that in entering into this
Agreement, Silicon is relying upon the Borrowers' representations, warranties
and agreements as set forth in the Loan Agreement and other loan documents. Each
Borrower jointly and severally represents and warrants to Silicon that the
representations and warranties stated in the Loan Agreement and Schedule are
true as of the date of this Agreement, and will continue to be true during the
term of the Loan Agreement, with respect to each Borrower.

                        Borrowers:  PACIFIC AEROSPACE &
                                    ELECTRONICS, INC.


                                    By: /s/ DONALD A. WRIGHT
                                        ----------------------------------------
                                    Title: President / CEO
                                           -------------------------------------


                                    CERAMIC DEVICES, INC.


                                    By: /s/ DONALD A. WRIGHT
                                        ----------------------------------------
                                    Title: Exec. V.P.
                                           -------------------------------------


                                    CASHMERE MANUFACTURING CO., INC.


                                    By: /s/ Donald A. Wright
                                        ----------------------------------------
                                    Title: Exec. V.P.
                                           -------------------------------------


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                                    PACIFIC COAST TECHNOLOGIES, INC.


                                    By: /s/ DONALD A. WRIGHT
                                        ----------------------------------------
                                    Title: Exec. V.P.
                                           -------------------------------------


                                    SEISMIC SAFETY PRODUCTS, INC.


                                    By: /s/ DONALD A. WRIGHT
                                        ----------------------------------------
                                    Title: Exec. V.P.
                                           -------------------------------------


                          Silicon:  SILICON VALLEY BANK


                                    By: /s/ RON SHERMAN
                                        ----------------------------------------
                                    Title: VP
                                           -------------------------------------


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