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                                                                    Exhibit 10.5

                             CASCADE MICROTECH, INC.

                         EXECUTIVE EMPLOYMENT AGREEMENT

PARTIES:                   CASCADE MICROTECH, INC. ("COMPANY")
                           2430 N.W. 206th Avenue
                           Beaverton, Oregon 97006

                           CRAIG M. SWANSON ("EXECUTIVE")
                           17580 Tree Top Way
                           Lake Oswego, Oregon 97034

DATE:                      October 11, 1999


                                     RECITAL

         Company wishes to obtain the services of Executive for the term of this
Agreement, and Executive wishes to provide his services for such period, all
upon the terms and conditions set out in this Agreement.

                                    AGREEMENT

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

                                   ARTICLE 1.
                                   DEFINITIONS

         1.1      "BASE SALARY" shall mean regular cash compensation paid to
Executive on a periodic basis exclusive of benefit, bonuses or incentive
payments.

         1.2      "BOARD" shall mean the Board of Directors of Cascade
Microtech, Inc.

         1.3      "DISABILITY" shall mean, as reasonably determined by the Board
after consultation with a qualified physician selected by the Board, the
inability of Executive to perform, with reasonable accommodation, an essential
function of his position under this


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Agreement because of physical or mental incapacity for a period of three (3)
months, and the determination that such inability is likely to continue for at
least two (2) additional months. Executive shall cooperate in any physical
examination and shall produce such medical records as may assist the Board in
making a determination regarding disability.

         1.4      "COMPANY" shall mean Cascade Microtech, Inc., and, any
successor in interest by way of consolidation, operation of law, merger or
otherwise.

                                   ARTICLE 2.
                           EMPLOYMENT, DUTIES AND TERM

         2.1      EMPLOYMENT. Upon the terms and conditions set forth in this
Agreement, Company hereby employs Executive in the positions of (a) Vice
President, Finance and (b) Chief Financial Officer, and Executive accepts such
employment.

         2.2      DUTIES. Executive shall devote his full-time and best efforts
to Company and to fulfilling the duties of his position which shall include such
duties as may from time to time be assigned him by the Chief Executive Officer.
As part of his duties, Executive shall comply with Company's policies and
procedures to the extent they are not inconsistent with this Agreement, in which
case the provisions of this Agreement prevail.

         2.3      TERM. This Agreement shall remain in effect until the earlier
of: (i) termination pursuant to Article 4 or Article 6 of this Agreement or,
(ii) two (2) years from the date of this Agreement.

                                   ARTICLE 3.
                                  COMPENSATION

         3.1      BASE SALARY. For all services rendered under this Agreement,
Company shall pay Executive an initial annual Base Salary of One Hundred
Seventy-Five Thousand and 00/100 Dollars ($175,000). If Executive's salary is
increased from time to time during the term of this Agreement, the increased
amount shall be the Base Salary for the remainder of the term. All amounts
payable to Executive under this Agreement, whether by way of Base Salary, bonus,
severance or otherwise, shall be reduced by such amounts as are required to be
withheld by law.

         3.2      SIGNING BONUS. Company shall pay Executive a signing bonus of
$32,000 payable on the first regular payroll date following Executive's first
day of employment with Company. If Executive's employment with Company
terminates for any reason prior to the first anniversary of this Agreement,
Executive shall promptly, but in no event later than 90 days following such
termination, repay the entire signing bonus to Company.

         3.3      BONUS AND INCENTIVE. Beginning in fiscal year 2000, Executive
shall be eligible to participate in any Executive Bonus Plan that is generally
applicable to comparable executives


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of Company. Executive's target bonus for fiscal year 2000 shall be 40% of
Executive's Base Salary. Notwithstanding any other provision of this Agreement,
Company shall have the right to alter, amend or eliminate all or any part of the
Executive Bonus Plan, without compensation to Executive.

         3.4      STOCK OPTIONS. Subject to approval by the Board, Company shall
grant Executive options to purchase up to 120,000 shares of Company stock at an
exercise price equal to the fair market value on the date of the grant (the
"Options"). The Options shall vest ratably at the rate of 10% every six months
over the five-year period following the date of hire; provided, however, that as
of: (a) the date of an initial underwritten public offering of Company's common
stock pursuant to which shares of Company's Preferred Stock shall automatically
convert into shares of Common Stock in accordance with Article V, Section
5.2(B)(4)(b) of Company's Articles of Incorporation ("IPO"), or (b) the date of
a Change of Control Termination, as defined in Section 6.1.2 below, the lesser
of: (i) 24,000 unvested Options or (ii) the entire remaining unvested Options
held by Executive as of the date of the IPO or Change of Control Termination,
shall vest and become immediately exercisable. The Options shall be subject to
the terms and conditions of the Cascade Microtech, Inc. 1993 Stock Incentive
Plan.

         3.5      EXECUTIVE BENEFIT PLANS. Executive shall have the right to
enroll and participate in any of Company's employee benefit plans from time to
time established by Company for the benefit of its executives generally. The
cost to Executive for these plans shall be consistent with the terms of the
plans. Such benefits may be modified or eliminated at Company's discretion,
without compensation to Executive.

         3.6      BUSINESS EXPENSES. Company 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 Executive in performing
his duties as an employee of Company, provided that Executive accounts promptly
for such expenses to Company in the manner prescribed by Company.

                                   ARTICLE 4.
                                   TERMINATION

         4.1      TERMINATION. This Article 4 governs termination of this
Agreement at any time during the term of the Agreement; provided, however, that
this Article shall not govern a "Change of Control Termination" as defined in
Article 6, which is governed by the provisions of Article 6.

         4.2      TERMINATION FOR CAUSE. Company may terminate this Agreement
and Executive's employment immediately for "Cause" as that term is defined
herein, upon written notice to Executive.


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                  4.2.1    DEFINITION OF CAUSE. "Cause" means any one of the
following by Executive: (a) fraud, (b) misrepresentation, (c) theft or
embezzlement of Company assets, (d) intentional violations of law involving
moral turpitude, (e) the continued failure to satisfactorily perform his duties
as reasonably assigned to Executive pursuant to Section 2.2 of this Agreement
for a period of thirty (30) days after a written demand for such satisfactory
performance which specifically and with reasonable detail identifies the manner
in which it is alleged Executive has not satisfactorily performed such duties,
or (f) any material breach of this Agreement.

                  4.2.2    PAYMENT UPON TERMINATION FOR CAUSE. In the event of
termination for Cause pursuant to this Section 4.2, Executive shall be paid his
Base Salary through the date of termination specified in any notice of
termination. Executive will not be entitled to any bonuses or incentives which
are not earned and payable at the time of the termination and will not be
entitled to any severance pay or benefits continuation or any other compensation
of any kind.

         4.3      TERMINATION WITHOUT CAUSE. Either Executive or Company may
terminate this Agreement and Executive's employment without Cause by providing
at least two weeks written notice; provided, however, that Company shall have
the option of making termination of the Agreement and termination of Executive's
employment effective immediately upon notice, in which case Executive shall be
paid his Base Salary through a notice period of two weeks. This Section 4.3
shall not be applicable where Cause for termination exists.

                  4.3.1    BY COMPANY. If the notice of termination is given by
Company, upon Executive's execution and delivery to Company of a full release of
all claims satisfactory to Company, Company shall:

                           4.3.1.1  pay Executive an amount equal to one year's
Base Salary payable at Company's sole discretion in either a lump sum or in
approximately equal installments over a period of 12 months following
Executive's termination; and,

                           4.3.1.2  reimburse Executive for the premiums
Executive pays to maintain group health coverage pursuant to the Consolidated
Omnibus Reconciliation Act of 1985 ("COBRA") until the earlier of: (i) 12 months
following termination or (ii) the date Executive is no longer eligible for COBRA
continuation coverage, and, provided Executive is eligible for and properly
elects continuation of such coverage.

                           4.3.1.3  reimburse Executive for the reasonable and
necessary expenses of executive outplacement assistance until the earlier of:
(i) 12 months following the date of termination or (ii) the date Executive
secures full time employment; provided, however, in no event shall such total
reimbursements exceed $23,000.

                  4.3.2    BY EXECUTIVE. If the notice of termination is given
by Executive, Company shall pay Executive his Base Salary through the date of
termination, subject to termination for


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Cause in the interim. Company shall have no obligation to pay Executive a
pro-rata portion of any bonus or incentive or severance pay or any other
compensation of any kind.

         4.4      TERMINATION IN THE EVENT OF DEATH OR DISABILITY. This
Agreement and Executive's employment shall terminate immediately in the event of
death and may be terminated in the event of Disability. In the event of
termination due to death or Disability, Executive shall be entitled to receive
his Base Salary until the date of termination and shall be entitled to no
further severance or bonus compensation or benefits of any kind under this
Agreement.

         4.5      ENTIRE TERMINATION PAYMENT. The compensation provided for in
this Article 4 shall constitute Executive's sole remedy for termination pursuant
to this Article.

                                   ARTICLE 5.
                                CHANGE OF CONTROL

         5.1      DEFINITIONS. For purposes of this Article 6, the following
definitions shall be applied:

                  5.1.1    "CHANGE OF CONTROL" shall mean (a) a consolidation or
merger of Company with or into another Company or other entity or person
(excluding any merger effected exclusively for the purpose of changing Company's
state of domicile), or any other corporate reorganization or other transaction
or series of related transactions by Company, in any such case, in which more
than 50 percent of the voting power of Company is transferred, or (b) a sale,
conveyance or disposition of all or substantially all of the assets of Company.

                  5.1.2    "CHANGE OF CONTROL TERMINATION" shall mean, with
respect to Executive, any of the following events occurring within twelve months
after the earliest Change of Control event:

                           6.1.2.1  Termination of Executive's employment by
Company for any reason other than death, disability, or for Cause, as Cause is
defined in Section 4.2 of this Agreement.

                           6.1.2.2  Termination of employment with Company by
Executive pursuant to Section 6.2 of this Article 6.

                  6.1.3    "GOOD REASON" shall mean that any one or more of the
following events has occurred without Executive's express written consent, after
a Change of Control, and Company's failure to correct such occurrence for a
period of thirty (30) days following Executive's written notice to Company
identifying the event alleged to provide Good Reason and stating Executive's
intent to invoke Section 6.2 of this Article 6.


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                           6.1.3.1  A change in Executive's titles or offices as
in effect immediately prior to the Change of Control, or any removal of
Executive from, or any failure to re-elect Executive to, any of such positions,
which has the effect of materially diminishing Executive's responsibility or
authority;

                           6.1.3.3  A requirement by Company that Executive be
based anywhere other than within twenty-five (25) miles of Executive's job
location at the time of the Change of Control;

                           6.1.3.4  Unless applicable to all executives of
Company: (i) a material diminishment of Executive's Base Salary, pension, bonus,
incentive, stock ownership, purchase, option, life insurance, health, accident,
disability, or any other employee compensation or benefit plan, program or
arrangement and/or any membership (collectively, "Benefit Plans"), in which
Executive is participating immediately prior to a Change of Control; or (ii) the
taking of any action by Company that would materially adversely affect
Executive's participation or materially reduce Executive's benefits under any
Benefit Plans or Benefit Plan;

         5.2      CHANGE OF CONTROL TERMINATION RIGHT. For a period of twelve
months following a Change of Control, Executive shall have the right to
terminate employment with Company for Good Reason. Such termination shall be
accomplished by, and effective upon, Executive giving written notice to Company
of Executive's decision to terminate.

         5.3      CHANGE OF CONTROL TERMINATION PAYMENT. In the event of a
Change of Control Termination as defined in Section 6.1.2 and upon Executive's
execution and delivery to Company of a full release of all claims satisfactory
to Company the following shall occur:

                  6.3.1    SEVERANCE PAY. Within thirty (30) days of Executive's
termination, Company shall pay Executive an amount equal to one year's Base
Salary payable at Company's sole discretion in either a lump sum or in
approximately equal installments over a period of 12 months following
Executive's termination; and,

                  6.3.2    COBRA CONTINUATION. Company shall reimburse Executive
for the premiums Executive pays to maintain group health coverage pursuant to
the Consolidated Omnibus Reconciliation Act of 1985 ("COBRA") until the earlier
of: (i) 12 months following termination or (ii) the date Executive is no longer
eligible for COBRA continuation coverage, and, provided Executive is eligible
for and properly elects continuation of such coverage.

                  6.3.3    OPTION ACCELERATION. As of the date of the Change in
Control Termination, the lesser of: (i) 24,000 unvested Options held by
Executive or (ii) the entire remaining unvested Options held by Executive, shall
vest and become immediately exercisable.

                  6.3.4    OUTPLACEMENT. Company shall reimburse Executive for
the reasonable and necessary expenses of executive outplacement assistance until
the earlier of: (i) 12 months


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following the date of termination or (ii) the date Executive secures full time
employment; provided, however, in no event shall such total reimbursements
exceed $23,000.

                                   ARTICLE 6.
                               GENERAL PROVISIONS

         6.1      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 within the third business day
thereafter or when it is actually received, whichever is sooner.

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

         6.3      GOVERNING LAW. The validity, construction and performance of
this Agreement shall be governed by the laws of the State of Oregon.

         6.4      MEDIATION. In case of any dispute arising under this Agreement
which cannot be settled by reasonable discussion, the parties agree that, prior
to commencing any arbitration proceeding as contemplated by Section 7.5 they
will first engage the services of a professional mediator agreed upon by the
parties and attempt in good faith to resolve the dispute through confidential
non-binding mediation. Each party shall bear one-half (1/2) of the mediator's
fees and expenses and shall pay all of its own attorneys' fees and expenses
related to the mediation.

         6.5      ARBITRATION. Any dispute concerning the interpretation,
construction, breach or enforcement of this Agreement or arising in any way from
Executive's employment with Company or termination of employment shall be
submitted to final and binding arbitration. Such arbitration is to be before a
single arbitrator in Portland, Oregon. In the event the parties are unable to
agree upon an arbitrator, an arbitrator shall be appointed by the court pursuant
to ORS 36.320. The arbitration shall be conducted pursuant to the American
Arbitration Association ("AAA") Employment Dispute Resolution Rules. Executive
and Company agree that, except as provided in Section 7.6 below, the procedures
outlined in Section 7.4 and 7.5 are the exclusive method of dispute resolution.

         6.6      CONSENT TO INJUNCTION. Executive agrees that Company will or
would suffer an irreparable injury if Executive were to violate the provisions
of Article 5 hereto and that Company would by reason of such violation be
entitled to injunctive relief in a court of appropriate jurisdiction and
Executive stipulates to the entering of such injunctive relief.


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         6.7      ATTORNEY FEES. If any action at law, in equity or by
arbitration is taken to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled, including fees and expenses on appeal.

         6.8      CONSTRUCTION. Wherever possible, each provision of this
Agreement 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 under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

         6.9      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.

         6.10     ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of Company and its successors and assigns, and shall be binding upon
Executive, his administrators, executors, legatees, and heirs, In that this
Agreement is a personal services contract, it shall not be assigned by
Executive.

         6.11     MODIFICATION. This Agreement may not be and shall not be
modified or amended except by written instrument signed by the parties hereto.

         6.12     ENTIRE AGREEMENT. This Agreement together with the Executive
Invention and Confidentiality Agreement executed contemporaneously herewith
constitute(s) 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 employment agreements or understandings of the parties
hereto; provided, however, that the Executive Invention and Confidentiality
Agreement continues in full force and effect according to its terms.

         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.

EXECUTIVE                                   CASCADE MICROTECH, INC.

    /s/ Craig M. Swanson                       /s/ Eric W. Strid
-------------------------------------       ------------------------------------
Craig M. Swanson                            Eric W. Strid
                                            CEO / Chairman


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