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Exhibit 10.8  


 
  EXECUTIVE EMPLOYMENT AGREEMENT
  CASCADE MICROTECH, INC.    
    



	PARTIES:	 	Cascade Microtech, Inc.
 2430 NW 206th Ave

Beaverton, Or 97006	 	("CMI")
	

 	
 	

and	
 	

 
	

 	
 	
Eric I. Blachno
 2604 NW Palazza Way

Hillsboro, OR 97124	
 	

("Mr. Blachno" or

"Executive")
	
DATE:	
 	
February 19, 2004	
 	

("Effective Date")




RECITALS  



	A.
	Mr. Blachno
has served as CMI's Chief Financial Officer and in other capacities since on or about July 14, 2003 under the terms of a letter agreement; and



	B.
	Mr. Blachno
has been a valued contributor to CMI and the Board believes his continued employment is crucial to CMI's continued success; and



	C.
	In
order to induce Mr. Blachno to stay with the company and to motivate him during this critical period, and in order to create a more formal and comprehensive employment
agreement to replace the existing letter agreement, CMI offers the benefits provided in this Agreement; and



	D.
	Mr. Blachno
desires to continue to serve as CMI's Chief Financial Officer pursuant to the terms and conditions of this Agreement: 



AGREEMENT  


        NOW, THEREFORE, for valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 


ARTICLE 1.
  EMPLOYMENT, DUTIES AND TERM  


        1.1   Employment. Mr. Blachno is employed in the position of Vice President of Finance, Chief
Financial Officer, and Corporate Secretary and Treasurer of CMI reporting to the Chief Executive Officer. 



        1.2   Duties. Mr. Blachno shall devote his full-time and best efforts to CMI and to
fulfilling the duties of his position, which duties may from time to time be assigned him by the CMI Board of Directors ("Board") or the Chief Executive Officer. Such duties shall include, without
limitation, contributing to the development and execution of corporate strategy and providing leadership in furthering CMI's growth and financial success. 



        A.    Mr. Blachno agrees to abide by all By-laws, policies, practices, procedures or rules of CMI to the
extent they are not inconsistent with this Agreement, in which case the provisions of this Agreement prevail. 


        B.    Mr. Blachno shall not divert for his own or another's advantage any business opportunities meeting the following
criteria: (a) the opportunity may benefit CMI; (b) Mr. Blachno 



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learns
of the opportunity during his employment with CMI; and, (c) Mr. Blachno learns of the opportunity in connection with his work for CMI. All material facts regarding such
opportunities must be promptly reported to the Board for consideration by CMI. This provision is in addition to common law protections available to CMI regarding corporate opportunities. 




        1.3   Term. The Term of this Agreement shall begin on the Effective Date and
extend until the earlier to occur of the following events, after which this Agreement shall end unless expressly extended in a writing signed by the parties hereto: (i) termination pursuant to
Article 3 of this Agreement; or (ii) the three (3)-year anniversary of the Effective Date, provided, however, that if a Change in Control, as defined in Section 3.6
occurs prior to the three-year anniversary, the Agreement shall extend until the earlier to occur of: (i) termination pursuant to Article 3 or (ii) one year after the
Change in Control. 


        1.4   Cooperation. Mr. Blachno agrees that both during his employment
with CMI and after his employment ends he shall, at the request of CMI, render all reasonable assistance and perform all lawful acts that CMI reasonably considers necessary or advisable in connection
with any litigation involving CMI or any director, officer, employee, shareholder, agent, representative, consultant, client or vendor of CMI; provided, however, that if such assistance or performance
occurs after his employment with CMI has ended, Mr. Blachno shall be compensated for his time at an hourly rate commensurate with his Base Salary pay rate on the date his CMI employment ended
and all reasonable efforts will be made to accommodate Mr. Blachno's schedule. 


ARTICLE 2.
  COMPENSATION  



        2.1   Base Salary. For all services rendered under this Agreement, CMI shall
pay Mr. Blachno an initial base salary of $6,923.08 bi-weekly (a rate of $180,000 annually), payable in accordance with CMI's usual payroll practices ("Base Salary").
Mr. Blachno's Base Salary shall be reviewed annually. If Mr. Blachno's Base Salary is increased from time to time, the increased amount shall be the Base Salary for the remainder of the
Term. Mr. Blachno's Base Salary may be reduced as part of, and as consistent in all material respects with, a group reduction applicable generally to the senior executives of CMI. All
compensation provided to Mr. Blachno by CMI, whether by way of Base Salary, bonus, severance or otherwise, shall be reduced by such amounts as are required to be withheld by law. CMI shall pay
interest on any amounts it fails to pay Mr. Blachno when due. Interest shall accrue only if Mr. Blachno shall have, within 30 days of the date the amount first became due, made
written demand to CMI for payment and CMI fails to pay the amount due in full within ten days of such notice. Interest shall accrue at the rate of 8% APR from the date the amount first becomes due
until paid in full. 


        2.2   Bonus Plan. Mr. Blachno shall be eligible to participate in an
executive Bonus Plan. The Bonus Plan provides the opportunity to receive pay in addition to Base Salary. The amount of the bonus, if any, will be determined by the Board based on measures of CMI's and
Mr. Blachno's performance. The target bonus ("Target Bonus") shall be set at the annual rate of at least 50% of Mr. Blachno's Base Salary
at the time the Target Bonus is declared. The Target Bonus shall be calculated and paid to Mr. Blachno semi-annually. Mr. Blachno must be employed on the date the Target
Bonus is awarded in order to be eligible for the Target Bonus. 


        2.3   Benefit Plans. Mr. Blachno shall be entitled to participate in any
and all employee benefit plans established by CMI from time to time for the benefit of all employees of CMI. Mr. Blachno shall be required to comply with the conditions attendant to coverage by
such plans and shall comply with and be entitled to benefits only in accordance with the terms and conditions of such plans as they may be amended from time to time. CMI's employee benefits currently
include a 401(k) plan, long-term disability insurance, life insurance, and health insurance. 


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        2.4   Business Expenses. CMI shall, in accordance with, and to the extent of,
its policies in effect from time to time, reimburse all ordinary and necessary business expenses reasonably incurred by Mr. Blachno, including travel and travel-related expenses, necessary
business entertainment, cell phone, internet access and long distance, in performing his duties as an employee of CMI, provided that Mr. Blachno accounts promptly for such expenses to CMI in
the manner prescribed by CMI. 


        2.5   Paid Time Off. Mr. Blachno shall be entitled to 20 days
Paid Time Off ("PTO") annually under the terms and conditions of CMI's PTO policy. PTO is paid out at less than full value upon termination according to CMI policy. 


        2.6   Registration. In the event CMI files a registration statement with the Securities Exchange
Commission with respect to an Initial Public Offering, then after the effective date of such registration and the completion of the Initial Public Offering, CMI shall use its best efforts to file with
the Securities Exchange Commission a registration statement on Form S-8 under the Securities Act with respect to the shares underlying all then-unexercised options to
purchase CMI stock. 


ARTICLE 3.
  TERMINATION  


        3.1   General. This Article 3 governs termination of this Agreement and
termination of Mr. Blachno's employment with CMI. Except as otherwise stated in this Agreement, termination of this Agreement also means termination of Mr. Blachno's employment. At all
times herein, Mr. Blachno's employment is at-will meaning that CMI or Mr. Blachno can terminate the employment relationship at any time for any reason, subject to any
obligation to pay severance or give notice as may be provided below. 



        A.    Release of Claims. No provision of this Agreement that requires CMI to pay Mr. Blachno severance, option
acceleration, or any other compensation or benefit associated with the termination of Mr. Blachno's employment (except accrued Base Salary and PTO and as required by law), shall be effective
unless and until Mr. Blachno and CMI shall have executed, delivered, and not revoked (in the event the release contains a revocation period), a mutual release of claims in the form attached
hereto as Exhibit A (the "Release"). 


        B.    Method of Payment. In the event CMI is obligated to pay Mr. Blachno severance after termination, payment shall be
made in a lump sum within 30 days after both of the following have occurred: (i) the termination date has passed and (ii) the Release has become effective. 


        C.    Benefits. Except as expressly stated in this Article 3, upon termination of employment Mr. Blachno shall be
entitled to Mr. Blachno's rights under CMI's benefit plans, including without limitation any 401K plan, as such plans, by their provisions, apply upon Mr. Blachno's termination. 




        3.2   Termination for Cause by CMI, or Executive's Resignation. CMI may
terminate this Agreement immediately for "Cause" as that term is defined herein, upon written notice to Mr. Blachno. Mr. Blachno may terminate (i.e. resign) his employment upon four
(4) weeks' written notice. 



        A.    Payment Upon Termination For Cause by CMI or Resignation by Mr. Blachno. If CMI terminates this Agreement for
Cause, or Mr. Blachno resigns his employment, Mr. Blachno shall be entitled to his accrued but unpaid Base Salary and pay out of up to 75% of his accrued but unused PTO according to CMI
policy. "Cause" means the Board's determination that Mr. Blachno has engaged in any one or more of the following: (a) willful and repeated failure to comply with the lawful instructions
of the Board or the Chief Executive Officer, (b) gross negligence or willful misconduct in the performance of duties to CMI, (c) commission of any act of fraud against CMI or the
misappropriation of material CMI property, or (d) conviction of, or plea of guilty or nolo contendre to, a felony or other crime that is, or may be, materially injurious to the business or
reputation of CMI. 



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        Except
as expressly stated in this Section 3.2 and as required by law, Mr. Blachno shall be entitled to no other or further compensation or benefits of any kind. 


        3.3   Termination Without Cause by CMI. CMI may terminate this Agreement without Cause upon four weeks
written notice; provided, however, that CMI shall have the right to make termination effective immediately upon notice, in which case Mr. Blachno shall be paid his Base Salary for a
four-week notice period. 



        A.    Payment Upon Termination Without Cause by CMI. If CMI terminates Mr. Blachno without Cause, subject to the
release-of-claims requirement, Mr. Blachno shall be entitled to: 



           i)  Base Salary: Pay-out of accrued but unpaid Base Salary through the termination date and pay-out
of up to 75% of accrued but unused PTO according to CMI policy. 


          ii)  Severance Pay: Severance pay in the amount of twelve months' Base Salary. 


         iii)  Stock Options: The stock options held by Executive that would have vested had Executive remained employed for twelve
months after the termination date shall accelerate and become immediately exercisable. Executive's vested stock options shall remain exercisable for a one-year period after the termination
date. 





        Except
as expressly stated in this Section 3.3 and as required by law, Mr. Blachno shall be entitled to no other or further compensation or benefits of any kind. 


        3.4   Termination in The Event of Death or Disability. This Agreement shall
terminate immediately in the event of Executive's death and may be terminated by the Board in the event of Disability. 



        A.    Death or Disability Termination Payment. In the event of Executive's death or termination due to Disability, as defined
below, (subject to the release of claims requirement only in the event of Disability), Mr. Blachno shall be entitled to his accrued but unpaid Base Salary through the termination date and
pay-out of up to 75% of accrued but unused PTO according to CMI policy. 


        B.    "Disability" shall mean, as reasonably determined in the Board's discretion, after consultation with a physician selected
by the Board, the inability of Mr. Blachno to perform, with reasonable accommodation if necessary, any essential function of his position because of physical or mental incapacity for a period
of sixty (60) days in the aggregate during any twelve-month period. Mr. Blachno shall cooperate in any physical examination and shall produce such medical records as may assist the Board
in making a determination regarding Disability. 




        Except
as expressly stated in this Section 3.4 and as required by law, Mr. Blachno shall be entitled to no other or further compensation or benefits of any kind. Amounts
owed to Mr. Blachno following Mr. Blachno's death, if any, shall be paid in accordance with State law. 


        3.5   Termination For Willful Breach. Mr. Blachno may terminate his
employment due to CMI's Willful Breach, as defined below. 



        A.    Payment Upon Termination For Willful Breach: In the event Mr. Blachno terminates his employment due to CMI's
Willful Breach, subject to the release-of-claims requirement, Mr. Blachno shall be entitled to: 



           i)  Base Salary: Pay-out of accrued but unpaid Base Salary through the termination date and pay-out
of up to 75% of accrued but unused PTO according to CMI policy. 


          ii)  Severance Pay: Severance pay in the amount of twelve months' Base Salary. 


         iii)  Stock Options: The stock options held by Executive that would have vested had Executive remained employed for twelve
months after the termination date shall accelerate 




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and
become immediately exercisable. Executive's vested stock options shall remain exercisable for a one-year period after the termination date. 




        B.    "Willful Breach" shall mean CMI's willful breach of a material obligation under this Agreement; provided, however, that
Mr. Blachno has given written notice of such breach to the CMI Board and thirty (30) days shall have passed with no cure having been made. 




        Except
as expressly stated in this Section 3.5 and as required by law, Mr. Blachno shall be entitled to no other or further compensation or benefits of any kind. 


        3.6   Change in Control Termination. This Section governs CMI's termination of Mr. Blachno's
employment without Cause after a Change in Control or Mr. Blachno's termination for Good Reason, as defined below, after a Change in Control. This Section shall not apply in the case of
Executive's Death, termination due to Disability, termination for Cause, resignation, or termination for Willful Breach. 



        A.    Payment in the Event of A Change In Control Termination. In the event of a Change in Control Termination, as defined
below, subject to the release-of-claims requirement, Mr. Blachno shall be entitled to: 



           i)  Base Salary: Pay-out of accrued but unpaid Base Salary through the termination date and pay-out
of up to 75% of accrued but unused PTO pursuant to CMI policy. 


          ii)  Severance Pay: Severance pay in the amount of twelve months' Base Salary. 



         iii)  Stock Options: All of the stock options held by Executive shall accelerate and become immediately exercisable and shall
remain exercisable for a one-year period after the termination date. 




        B.    "Change of Control" shall mean any of the following events: (i) the stockholders approve a plan of complete
liquidation of CMI; or (ii) the consummation of the sale or disposition by CMI of all or substantially all CMI's assets; or (iii) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 or 13d-5 under said Act), directly or indirectly, of securities of CMI representing 50% or more of the total voting power represented by CMI's then
outstanding voting securities; or (iv) the date of the consummation of a merger or consolidation of CMI with any other corporation that has been approved by the stockholders of CMI, other than
a merger or consolidation which would result in persons who were the direct or indirect owners of voting securities of CMI outstanding immediately prior to the consummation of such merger or
consolidation becoming, immediately after such consummation, the direct or indirect owners of voting securities representing more than fifty percent (50%) of the total voting power represented by the
then-outstanding voting securities of the surviving corporation, in substantially the same respective proportions as such persons' ownership of the voting securities of CMI immediately
before such consummation. A transaction shall not constitute a Change of Control if its sole purpose is to change the state of CMI's incorporation or to create a holding company that will be owned in
substantially the same proportions by the persons who held CMI's securities immediately before such transaction. 


        C.    "Change of Control Termination" shall mean either one of the following effective during the one-year period
after a Change in Control: (i) CMI's termination of Mr. Blachno's employment without Cause and not for death or Disability; or, (ii) Mr. Blachno's resignation for "Good
Reason", as defined below. 


        D.    "Good Reason" means any of the following occurring without Mr. Blachno's consent provided, however,
Mr. Blachno has given written notice of such event to the CMI Board and 30 days shall have passed with no cure having been made: (i) the assignment to Mr. Blachno of 



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duties
materially inconsistent with the position of Chief Financial Officer and other positions held by Mr. Blachno prior to the Change in Control; (ii) requiring Mr. Blachno to
be based more than 50 miles from CMI's location on the date of the Change in Control; (iii) a reduction in Base Salary below $180,000 per year, or any other reduction in Base Salary, unless
such other reduction is part of and is consistent in all material respects with a group reduction applicable generally to the senior executives of CMI; (iv) failure of CMI to allow
Mr. Blachno to participate in all of CMI's benefits plans for which he is eligible at coverage levels at least as great as other CMI executives with the same or lesser levels of responsibility. 




        Except
as expressly stated in this Section 3.6, Mr. Blachno shall be entitled to no other or further compensation or benefits of any kind. 


        3.7   Entire Termination Payment. The compensation provided for in this
Article 3 shall constitute Mr. Blachno's sole remedy for termination or breach of this Agreement. In no event shall Mr. Blachno receive severance pay, benefits continuation,
option acceleration or any other compensation or consideration upon termination under more than one subsection of this Agreement. 


ARTICLE 4.
  GENERAL PROVISIONS  


        4.1   Board Approval. This Agreement is subject to the approval of the Board. 


        4.2   Notices. All notices, requests and demands given to or made pursuant
hereto shall, except as otherwise specified herein, be in writing and be delivered or mailed to any such party at its address as set forth at the beginning of this Agreement. Either party may change
its address, by notice to the other party given in the manner set forth in this Section. Any notice, if mailed properly addressed, postage prepaid, registered or certified mail, shall be deemed
dispatched on the registered date or that stamped on the certified mail receipt, and shall be deemed received on the third business day thereafter or when it is actually received, whichever is sooner. 


        4.3   Caption. The various headings or captions in this Agreement are for
convenience only and shall not affect the meaning or interpretation of this Agreement. 



        4.4   Governing Law. The validity, construction and performance of this
Agreement shall be governed by the laws of the State of Oregon, and adjudicated in the courts of Washington County, Oregon or the appropriate United States District Court in Oregon without regard to
the conflicts of law rules thereof. 


        4.5   Arbitration. Any dispute concerning the interpretation, construction, breach or enforcement of
this Agreement or arising in any way from Mr. Blachno's employment with CMI or the termination of Mr. Blachno's employment shall be submitted to final and binding arbitration. Such
arbitration is to be before a single arbitrator in Washington County, Oregon and shall be conducted under the then-current rules of the American Arbitration Association applicable to
employment disputes. The prevailing party, as determined by the Arbitrator, shall be entitled to recover its reasonable attorneys fees and costs. The party not prevailing, as determined by the
Arbitrator, shall pay the cost of the arbitration. Judgment on the award rendered may be entered in any court of competent jurisdiction. Except for an action for a temporary or preliminary injunction,
the procedures outlined in this subsection are the exclusive method of dispute resolution. 


        4.6   Construction. Wherever possible, each provision of this Agreement,
including without limitation the arbitration provision, shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid or unenforceable, under applicable law, such provision shall be modified or eliminated only to the extent of such prohibition, invalidity, or unenforceability without
invalidating the remainder of such provision or the remaining provisions of this Agreement, which shall remain in effect according to their terms. 


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        4.7   Waivers. No failure on the part of either party to exercise, and no delay
in exercising, any right or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof
or the exercise of any other right or remedy granted hereby or by any related document or by law. 


        4.8   Assignment. This Agreement shall be binding upon and inure to the benefit
of CMI and its successors and assigns, and shall be binding upon Mr. Blachno, his administrators, executors, legatees, and heirs. This Agreement, which is a personal services contract, shall
not be assigned by Mr. Blachno. 


        4.9   Modification. This Agreement may not be and shall not be modified or
amended except by a written instrument signed by the parties hereto. 


        4.10 Entire Agreement. Except for the "Executive Invention and
Confidentiality Agreement" dated October 9, 2003 previously entered into by Executive, and the "Notice of Grant of Stock Options and Option Agreement" relating to Mr. Blachno's options
dated August 8, 2003, which remain in full force and effect, this Agreement constitutes the entire agreement and understanding between the parties hereto in reference to all the matters herein
agreed upon. This Agreement replaces and supersedes all prior and contemporaneous employment agreements or understandings of the parties hereto including without limitation, the letter from
Mr. Strid to Mr. Blachno dated July 31, 2003 setting forth the agreed terms of employment. The provisions of this Agreement shall not be construed for or against any party, as the
parties are sophisticated and had the opportunity to obtain legal counsel. 


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        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. 



	ERIC I. BLACHNO	 	CASCADE MICROTECH, INC.
	

/s/  ERIC I. BLACHNO      
	
 	

/s/  ERIC W. STRID      

	 	 	 	By: Eric Strid
	 	 	 	Its: Chairman and Chief Executive Officer
	Date:	2/19/04
	 	Date: Feb. 19, 2004

	

 	

 	
 	

 	

 



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EXECUTIVE EMPLOYMENT AGREEMENT CASCADE MICROTECH, INC.