Document:

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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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                                                                    Exhibit 10.6

                               SILICON VALLEY BANK

                           LOAN AND SECURITY AGREEMENT

Borrower:               Cascade Microtech, Inc.

Address:                14255 S.W. Brigadoon Court
                        Beaverton, OR  97005

Date:                   February 19, 1998

         THIS LOAN AND SECURITY AGREEMENT is entered into on the above date
between SILICON VALLEY BANK ("Silicon"), whose address is 3003 Tasman Drive,
Santa Clara, California 95054 and the borrower named above (the "Borrower"),
whose chief executive office is located at the above address ("Borrower's
Address").

1.       LOANS.

         1.1.     LOANS. Silicon will make one or more loans to the Borrower
(the "Loans") up to the amounts (the "Credit Limits") shown on the Schedule to
this Agreement (the "Schedule") as the Credit Limit for such loans. The terms of
the Loans are stated in this Agreement and in the Schedule. The terms of the
Schedule are incorporated into this Agreement. The Borrower is responsible for
monitoring the total amount of Loans and other Obligations outstanding from time
to time, and the Borrower shall not permit the amount of any Loan to exceed at
any time the applicable Credit Limit for such Loan. The Borrower shall not
permit the total amount of Loans and all other obligations to exceed at any time
the aggregate Credit Limit for the Loans. If at any time the total of all
outstanding Loans and all other Obligations exceeds the aggregate Credit Limit,
the Borrower shall immediately pay the amount of the excess to Silicon, without
notice or demand.

         Borrower and Silicon may also enter into a Loan and Security Agreement
(EXIM Program) and related documents (collectively, the "EXIM Documents")
relating to an Export-Import Bank of the United States credit facility (the
"EXIM Loan"). The form of such documents is attached to this Agreement. As of
the date of execution of this Agreement, the Borrower had not supplied Silicon
with all documentation necessary for the Borrower to qualify for the EXIM Loan.
No advances shall be allowed under the EXIM Loan until such documentation has
been provided to Silicon. Within five business days after Borrower's receipt of
a letter from Silicon to the effect that Silicon is prepared to activated the
EXIM Loan, the Borrower shall execute and deliver to Silicon the EXIM Documents.

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         1.2.     INTEREST: DEBT TO DEPOSIT ACCOUNTS. All Loans and all other
monetary Obligations shall bear interest at the applicable rates shown on the
Schedule. Interest shall be payable monthly on the due date shown on the monthly
billing from Silicon to the Borrower. The Borrower shall regularly deposit all
funds received from its business activities in accounts maintained by the
Borrower at Silicon. The Borrower hereby requests and authorizes Silicon to
debit any of the Borrower's accounts with Silicon, including without limitation
account no. 3300066372, for payments of interest and principal due on the Loans
and all other obligations owing by the Borrower to Silicon. Silicon shall
promptly notify the Borrower of all debits which Silicon makes against the
Borrower's accounts. Any such debit against the Borrower's accounts shall in no
way be deemed a setoff by Silicon.

         1.3.     FEES. The Borrower shall pay to Silicon at closing a
commitment fee and other fees in the amounts shown on the Schedule. These fees
are in addition to all interest and other sums payable to Silicon and are not
refundable.

         1.4.     ADDITIONAL COSTS. In case of any law, regulation, treaty or
official directive or the interpretation or application thereof by any court or
any governmental authority charged with the administration thereof or the
compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law) which:

                  (a)      subjects Silicon to any tax with respect to payments
of principal or interest or any other amounts payable hereunder by the Borrower
or otherwise with respect to the transactions contemplated hereby (except for
taxes on the overall net income of Silicon imposed by the United States of
America or any political subdivision thereof);

                  (b)      imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement against assets held
by, or deposits in or for the account of, or loans by, Silicon; or

                  (c)      imposes upon Silicon any other condition with respect
to its performance under this Agreement,

and the results of any of the foregoing is to increase the cost to Silicon,
reduce the income receivable by Silicon or impose any expense upon Silicon with
respect to any loans, Silicon shall notify the Borrower thereof. Borrower agrees
to pay to Silicon the amount to such increase in cost, reduction in income or
additional expense as and when such cost, reduction or expense is incurred or
determined, upon presentation by Silicon of a statement of the amount and
setting forth Silicon's calculation thereof, all in reasonable detail.

2.       GRANT OF SECURITY INTEREST.

         2.1.     OBLIGATIONS. The term "Obligations" as used in this Agreement
means the following: the obligation to pay all Loans and all interest on the
Loans when due, and to pay and perform when due all other present and future
indebtedness (including but not limited to any

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amount outstanding under the EXIM Loan), liabilities, obligations, guarantees,
covenants, agreements, warranties and representations of the Borrower to
Silicon, whether joint or several, monetary or non-monetary, and whether created
pursuant to this Agreement, the EXIM Documents or any other present or future
agreement (such as future agreements relating to letters of credit issued by
Silicon) or otherwise. Silicon may, in its discretion, require that the Borrower
pay monetary Obligations in cash to Silicon, or charge them to the Borrower's
Loan account, in which event they shall bear interest at the rates applicable to
the Loan to which such amounts are charged.

         2.2.     COLLATERAL. As security for all Obligations, the Borrower
hereby grants Silicon a continuing security interest in all of the Borrower's
assets, including but not limited to all of the Borrower's interest in the types
of property described below, whether now owned or hereafter acquired, and
wherever located (collectively, the "Collateral"): (a) all accounts, contract
rights, chattel paper, letters of credit, documents, securities, money, and
instruments, and all other obligations now or in the future owing to the
Borrower; (b) all inventory, goods, merchandise, materials, raw materials, work
in process. finished goods, farm products, advertising, packaging and shipping
materials, supplies, and all other tangible personal property which is held for
sale or lease or furnished under contracts of service or consumed in the
Borrower's business, and all warehouse receipts and other documents; (c) all
equipment, including without limitation all machinery, fixtures, trade fixtures,
vehicles, furnishing, furniture, materials, tools, machine tools, office
equipment, computers, and peripheral devices, appliances, apparatus, parts,
dies, and jigs; (d) all general intangibles including, but not limited to,
deposit accounts, goodwill, names, trade names, trademarks and the goodwill of
the business symbolized thereby, trademark applications, trade secrets,
drawings, blueprints, customer lists, patents, patent applications, copyrights,
copyright applications, security deposits, loan commitment fees, federal, state
and local tax refunds and claims, all rights in all litigation presently or
hereafter arising therefrom, all rights to purchase or sell real or personal
property, all rights as a licenser or licensee of any kind, all royalties,
licenses, processes, telephone numbers, proprietary information, purchase
orders, and all insurance policies and claims (including without limitation
credit, liability, property and other insurance), and all other rights,
privileges and franchise of every kind; (e) all books and records, whether
stored on computers or otherwise maintained; (f) all of the Borrower's cash; and
(g) all substitutions, additions and accessions to any of the foregoing, and all
products, proceeds and insurance proceeds of the foregoing, and all guaranties
of and security for the foregoing; and all books and records relating to any of
the foregoing. Silicon's security interest in any present or future technology
(including patents, trade secrets, and other technology) shall be subject to any
license or rights now or in the future granted by the Borrower to any third
parties in the ordinary course of the Borrower's business; provided that if the
Borrower proposes to sell, license or grant any other rights with respect to any
technology in a transaction that, in substance, conveys a major part of the
economic value of that technology, Silicon shall first be requested to release
its security interest, and Silicon may withhold such release in its reasonable
discretion. The Borrower shall not, either directly or through any agent,
employee, license or designee, file any assignment of any patent, trademark, or
copyright which the Borrower may acquire from a third party with the U.S. Patent
and Trademark Office, the U.S. Copyright Office, or any similar office or agency
in any other country, state, or political subdivision (the "Offices") unless the
Borrower shall, on or prior to the date of such filing, notify Silicon of such
filing, and upon request of

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Silicon, execute and deliver any and all assignments, agreements, instruments,
documents and papers as Silicon may request to evidence Silicon's interest such
patents, trademarks, or copyrights, as the case may be, including the goodwill
and general intangibles of the Borrower relating thereto or represented thereby.
The Borrower authorizes Silicon to amend any applicable notice of security
interest or assignment executed pursuant to SECTION 4.9 of this Agreement
without first obtaining the Borrower's approval of or signature to such
amendment and to record such assignment with one or more of the Offices.

         2.3.     COLLATERAL DEFINITIONS. Notwithstanding SECTION 2.2, for
purposes of this Agreement, the intellectual property comprising the
Collateral may be further defined to include the following:

                  (a)      Any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held, including without limitation those set forth in EXHIBIT A
attached to the Intellectual Property Security Agreement (collectively, the
"Copyrights");

                  (b)      All patents, patent applications and like protections
including without limitation improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same, including without
limitation the patents and patent applications set forth on EXHIBIT B attached
to the Intellectual Property Security Agreement (collectively, the "Patents");

                  (c)      Any trademark and servicemark rights, whether
registered or not, applications to register and registrations of the same and
like protections, and the entire goodwill of the business of Borrower connected
with and symbolized by such trademarks, including without limitation those set
forth on EXHIBIT C attached to the Intellectual Property Security Agreement
(collectively, the "Trademarks"); and

                  (d)      Any series of related images, however fixed or
encoded (i) having or representing the predetermined, three-dimensional pattern
of metallic, insulating or semiconductor material present or removed from the
layers of a semiconductor chip product; and (ii) in which series the relation of
the images to one another is that each image has the pattern of the surface of
one form of the semiconductor chip product, including without limitation those
set forth on EXHIBIT D attached to the Intellectual Property Security Agreement
(collectively, the "Mask Works").

3.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.

         The Borrower represents and warrants to Silicon as follows, and the
Borrower covenants that the following representations shall continue to be true,
and that the Borrower shall comply with all of the following covenants:

         3.1.     CORPORATE EXISTENCE AND AUTHORITY. The Borrower is and shall
continue to be

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<PAGE>

duly authorized, validly existing and in good standing under the laws of the
state of its incorporation, as identified on the copy of the Borrower's Articles
of Incorporation delivered to Silicon. The Borrower is and shall continue to be
qualified and licensed to do business in all jurisdictions in which any failure
to do so would have a material adverse effect on the Borrower. The execution,
delivery and performance by the Borrower of the Agreement, and all other
documents executed by the Borrower in connection with the Loans have been duly
and validly authorized, are enforceable against the Borrower in accordance with
their terms, and do not violate any law or any provision of, and are not grounds
for acceleration under, and agreement or instrument that is binding upon the
Borrower.

         3.2.     NAME, TRADE NAMES AND STYLES. The name of the Borrower set
forth in the heading to this Agreement is its correct name. Listed on an Exhibit
to the Schedule are all prior names of the Borrower and all of the Borrower's
present and prior trade names. The Borrower shall give Silicon 15 days' prior
written notice before changing its name or doing business under any other name.
The Borrower has complied, and shall in the future comply, with all laws
relating to the conduct of business under a fictitious business name.

         3.3.     PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set
forth in the heading to this Agreement is the chief executive office for the
Borrower. In addition, the Borrower has places of business only at, and
Collateral of the Borrower is located only at the locations set forth on the
Schedule. The Borrower shall give silicon at least 15 days' prior written notice
before changing its chief executive office or moving Collateral (other than
inventory sold in the ordinary course of business) to any location other than a
location listed on the Schedule.

         3.4.     TITLE OF COLLATERAL; PERMITTED LIENS. The Borrower is now, and
shall at all times in the future be, the sole owner of all the Collateral,
except for items of equipment that are leased by the Borrower and general
intangibles subject to nonexclusive licenses granted by Borrower to its
customers in charges, security interests, encumbrances and adverse claims,
except of the following ("Permitted Liens"): (a) purchase money security
interests in specific items of equipment financed by the Loans; (b) leases of
specific items of equipment; (c) liens for taxes not yet payable; (d) additional
security interests and liens consented to in writing by Silicon in its sole
discretion; and (e) security interests being terminated substantially
concurrently with this Agreement. Silicon shall have the right to require, as a
condition to its consent under subparagraph (d) above, that the holder of the
additional security interest or lien sign and intercreditor agreement on terms
satisfactory to Silicon in its sole discretion, acknowledge that the holder's
security interest is subordinate to Silicon's security interest. Silicon now
has, and shall continue to have, a first priority, perfected and enforceable
security interest in all of the Collateral. The Collateral shall not be subject
to any other liens or security interests of any type except for the Permitted
Liens. The Borrower shall at all times defend Silicon and the Collateral against
all claims of others. None of the Collateral now is or shall be affixed to any
real property in such a manner, or with such intent, as to become a fixture.

         3.5.     MAINTENANCE OF COLLATERAL. The Borrower shall maintain the
Collateral in good working condition. The Borrower shall not use the Collateral
for any unlawful purpose.

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<PAGE>

         3.6.     BOOKS AND RECORDS. The Borrower has maintained and shall
maintain at the Borrower's Address complete and accurate books and records,
comprising an accounting system in accordance with generally accepted accounting
principles.

         3.7.     FINANCIAL CONDITION AND STATEMENTS. All financial statements
now or in the future delivered to Silicon have been, and shall be, prepared in
conformity with generally accepted accounting principles and now and in the
future shall completely and accurately reflect the financial condition of the
Borrower, at the times and for the periods therein stated. Since the last date
covered by any such statement, there has been no material adverse change in the
financial condition or business of the Borrower. The Borrower is now and shall
continue to be solvent.

         3.8.     TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. The Borrower
has timely filed, and shall timely file, all tax returns and reports required by
foreign, federal, state and local law. The Borrower has timely paid, and shall
timely pay, all foreign, federal, state and local taxes, assessments, deposits
and contributions now or in the future owned by the Borrower. The Borrower may,
however, defer payment of any contested taxes, provided that the Borrower (a) in
good faith contests the Borrower's obligation to pay the taxes by appropriate
proceedings promptly and diligently instituted and conducted, (b) notifies
Silicon in writing of the commencement of, and any material development in, the
proceedings, and (c) posts bonds or takes any other steps required to keep the
contested taxes from becoming a lien upon any of the Collateral. The Borrower is
unaware of any claims or adjustments proposed for any of the Borrower's prior
tax years which could result in additional taxes becoming due and payable by the
Borrower. The Borrower has paid, and shall continue to pay all amounts necessary
to fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms. The Borrower has not and shall not
withdraw from participation in, permit partial or complete termination of, or
permit the occurrence of any other event with respect to, any such plan which
could result in any liability of the Borrower, including, without limitation,
any liability to the Pension Benefit Guaranty Corporation or its successors or
any other governmental agency.

         3.9.     COMPLIANCE WITH LAW. The Borrower has complied, and shall
comply, in all material respects, with all provisions of all foreign, federal,
state and local laws and regulations relating to the Borrower, including, but
not limited to, those relating to ownership of real or personal property,
conduct and licensing of the Borrower's business, and environmental matters.

         3.10.    LITIGATION. Except as disclosed in the Schedule, there is no
claim, suit, litigation, proceeding or investigation pending or (to best of the
Borrower's knowledge) threatened by or against or affecting the Borrower in any
court or before any governmental agency (or any basis therefore known to the
Borrower) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of the Borrower,
or in any material impairment in the ability of the Borrower shall promptly
inform Silicon in writing of any claim, proceeding, litigation or investigations
in the future threatened or instituted by or against the Borrower involving
amounts in excess of $100,000.

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<PAGE>

         3.11.    USE OF PROCEEDS. All proceeds of all Loans shall be used
solely for lawful business purposes.

         3.12.    NO PATENTS OR TRADEMARKS. The Borrower does not own, and the
Borrower does not have pending any application for the registration of, any
patent or trademark with the U.S. Patent and Trademark Office or any similar
office or agency of any state of the United States of America or of any foreign
jurisdiction, except as disclosed in the Schedule.

         3.13.    HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous
substance," "disposal," "release," and "threatened release," as used in this
Agreement, shall have the same meanings as set forth in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. 9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization
Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation
Act, 49 U.S.C. 1801, et seq., the Resource Conservation and Recovery Act, 49
U.S.C. 6901, et seq., or other applicable state or Federal laws, rules, or
regulations adopted pursuant to any of the foregoing. The Borrower represents
and warrants that: (a) the Borrower has no knowledge of (i) any use, generation,
manufacture, storage, treatment, disposal, release, or threatened release of any
hazardous waste or substance by any prior owners or occupants of any of the real
properties owned or operated by the Borrower, or (ii) any actual or threatened
litigation or claims of any kind by any person relating to such matters; (b)
neither the Borrower nor any subtenant, contractor, agent or other user
authorized by Borrower of any of the real properties shall use, generate,
manufacture, store, treat, dispose of, or release any hazardous waste or
substance on, under or about any of the real properties owned or operated by the
borrower except in compliance with all laws, regulations and ordinances
described above. The Borrower authorizes Silicon and its agents, upon 24 hours'
prior notice (which need not be in writing), to enter upon the real properties
to make such inspections and tests as Silicon may deem appropriate to determine
compliance of the real properties owned or operated by the Borrower with this
Section of the Agreement. Any inspections or test made by Silicon shall be at
Silicon's expense and for Silicon's purpose only, with such expense to be
reimbursed by Borrower if an environmental condition or hazard is discovered,
and shall not be construed to create any responsibility or liability on the part
of Silicon to the Borrower or to any other person unless Silicon or its agents
create or exacerbate an environmental hazard. The Borrower hereby (a) release
and waives any future claims against Silicon for indemnity or contribution in
the event the Borrower becomes liable for cleanup or other costs under any such
laws, and (b) agrees to indemnify and hold harmless Silicon against any and all
claims, losses, liabilities, damages, penalties, and expenses which Silicon may
directly or indirectly sustain or suffer resulting form a breach of this Section
of the Agreement or as a consequence of any use, generation, manufacture,
storage, disposal, release or threatened release occurring prior to the
Borrower's ownership or interest in the real properties, whether or not the same
was or should have been by the negligence or willful misconduct of Silicon. The
provisions of this Section of the Agreement, including the obligation to
indemnify, shall survive the payment of the obligations and the termination or
expiration of this Agreement and shall not be affected by Silicon's acquisition
of any interest in

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<PAGE>

any of the real properties, whether by foreclosure or otherwise.

         3.14.    NO CONFLICTS. Performance of this Agreement does not conflict
with or result in a breach of any agreement to which Borrower is a party or by
which Borrower is bound, except to the extent that certain intellectual property
agreements prohibit the assignment of the rights thereunder to a third party
without the licensor's or other party's consent and this Agreement constitutes
an assignment.

         3.15.    NO TRANSFERS OR ENCUMBRANCES. During the term of this
Agreement, Borrower will not transfer or otherwise encumber any interest in the
Collateral, except for non-exclusive licenses granted by Borrower in the
ordinary course of business or as set forth in this Agreement and the Permitted
Liens.

         3.16.    VALIDITY OF PATENTS. To its knowledge, each of the Patents,
patent applications and like provisions are valid and enforceable, and no part
of the Collateral has been judged invalid or unenforceable, in whole or in part,
and no claim has been made that any part of the Collateral violates the rights
of any third party.

         3.17.    NOTICE OF CHANGE IN COMPOSITION. Borrower shall promptly
advise Silicon of any material change in the composition of the Collateral,
including but not limited to any subsequent ownership right of the Borrower in
or to any Trademark, Patent or Copyright not specified in this Agreement.

         3.18.    DUTY TO PROTECT AND DEFEND. Borrower shall (i) protect, defend
and maintain the validity and enforceability of the Trademarks, Patents and
Copyrights, (ii) use its best efforts to detect infringements of the Trademarks,
Patents and Copyrights and advise Silicon in writing on a quarterly basis of
material infringements detected, and (iii) not allow any Trademarks, Patents or
Copyrights to be abandoned, forfeited or dedicated to the public without the
written consent of Silicon, which shall not be unreasonably withheld, unless
Borrower determines that reasonable business practices suggest that abandonment
is appropriate.

         3.19.    AFTER ACQUIRED COLLATERAL. This Agreement creates, and in the
case of after acquired Collateral, this Agreement will create at the time
Borrower first has rights in such after acquired Collateral, in favor of Silicon
a valid and perfected first priority security interest in the Collateral in the
United States securing the payment and performance of the obligations evidenced
by the Loan Agreement upon making the filings refereed to in clause 3.20 below.

         3.20.    NO AUTHORIZATION NECESSARY TO PLEDGE. To its knowledge, except
for, and upon, the filing with the United States Patent and Trademark office
with respect to the pledged Patents and Trademarks and the Register of
Copyrights with respect to the pledged Copyrights necessary to perfect the
security interests and assignment created hereunder, and except as has been
already made or obtained, no authorization, approval or other action by, and no
notice to or filing with, any U.S. governmental authority or U.S. regulatory
body is required either (i) for the grant by Borrower of the security interest
granted hereby or for the execution, delivery or performance of this Agreement
by Borrower in the U.S., or (ii) for the perfection in the United States or the

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<PAGE>

exercise by Silicon of its rights and remedies hereunder.

         3.21.    ACCURATE INFORMATION. All information heretofore, herein or
hereafter supplied to Silicon by or on behalf of Borrower with respect to the
Collateral is accurate and complete in all material respects.

         3.22.    NO CONFLICTING AGREEMENT. Borrower shall not enter into any
agreement that would materially impair or conflict with Borrower's obligations
hereunder without Silicon's prior written consent, which consent shall not be
unreasonably withheld. Borrower shall not permit the inclusion in any material
contract to which it becomes a party of any provisions that could or might in
any way prevent the creation of a security interest in Borrower's rights and
interests in any property included within the definition of the Collateral
acquired under such contracts, except that certain contracts may contain
anti-assignment provisions that could in effect prohibit the creation of a
security interest in such contracts.

         3.23.    NOTICE OF IMPAIRMENT OF VALUE. Upon any executive officer of
Borrower obtaining actual knowledge thereof, Borrower will promptly notify
Silicon in writing of any event that materially adversely affects the value of
any Collateral, the ability of Borrower to dispose of any Collateral or the
rights and remedies of Silicon in relation thereto, including the levy of any
legal process against any of the Collateral.

4.       ADDITIONAL DUTIES OF THE BORROWER

         4.1.     FINANCIAL AND OTHER COVENANTS. The Borrower shall at all times
comply with the financial and other covenants set forth in the Schedule.

         4.2.     OVERADVANCE; PROCEEDS OF ACCOUNTS. If for any reason the total
of all outstanding Loans and all other Obligations exceeds the total Credit
Limit, as stated in the Schedule, the Borrower will pay Silicon the amount
necessary to cure such over advance within two banking days of written or oral
notice form Silicon to Borrower that such over advance exists. If Borrower does
not make the full payment described in the preceding sentence within the time
provided, then, without limiting Silicon's other remedies, and whether or not
Silicon declares an Event of Default, the Borrower shall remit to Silicon all
checks and other proceeds of the Borrower's accounts and general intangibles, in
the same form as received by the Borrower, within one day after the Borrower's
receipt of the same, to be applied to the Obligation in order as Silicon shall
determine in its discretion.

         4.3.     INSURANCE. The Borrower shall at all times insure all of the
tangible personal property Collateral and carry such other business insurance,
with insurers reasonably acceptable to Silicon, in such form and amounts as
Silicon may reasonably require. All such insurance policies shall name Silicon
as an additional loss payee, and shall contain a lenders loss payee endorsement
in form reasonably acceptable to Silicon. Unless an Event of Default has
occurred, Silicon shall release to the Borrower insurance proceeds with respect
to equipment totaling less

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<PAGE>

than $100,000, which shall be utilized by the Borrower for the replacement of
the equipment with respect to which the insurance proceeds were paid. Silicon
may require reasonable assurance that the insurance proceeds so released shall
be so used. If the Borrower fails to provide or pay for any insurance, Silicon
may, but is not obligated to, obtain the same at the Borrower's expense. The
Borrower shall promptly deliver to Silicon copies of all reports made to
insurance companies. Statutory notice regarding insurance:

                                     WARNING

         Unless you provide us with evidence of the insurance coverage as
required by our contract or loan agreement, we may purchase insurance at your
expense to protect our interest. This insurance may, but need not, also protect
your interest. If the collateral becomes damaged, the coverage we purchase may
not pay any claim you make or any claim made against you. You may later cancel
this coverage by providing evidence that you have obtained property coverage
elsewhere.

         You are responsible for the cost of any insurance purchased by us. The
cost of this insurance may be added to your contract or loan balance. If the
cost is added to your contract or loan balance, the interest rate on the
underlying contract or loan will apply to this added amount. The effective date
of coverage may be the date your prior coverage lapsed or the date you failed to
provide proof of coverage.

         This coverage we purchase may be considerably more expensive than
insurance you can obtain on your own and may not satisfy any need for property
damage coverage or any mandatory liability insurance requirements imposed by
applicable law.

         4.4.     REPORT. The Borrower shall provide Silicon with such written
reports with respect to the Borrower as Silicon shall from time to time
reasonably specify, including but not limited to the financial reports required
as stated in the Schedule.

         4.5.     ACCESS TO COLLATERAL, BOOKS AND RECORDS. At all reasonable
times, and upon one business day notice, Silicon, or its agents, shall have the
right to inspect the Collateral, and the right to audit and copy the Borrower's
accounting books, records, ledgers, journals, or registers and the Borrower's
books and records relating to the Collateral, provided that no prior notice is
required upon the occurrence and continuation of an Event of Default. Silicon
shall take reasonable steps to keep confidential all information obtained in any
such inspection or audit, but Silicon shall have the right to disclose any such
information to its auditors, regulatory agencies and attorneys, and pursuant to
any subpoena or other legal process. Silicon will provide notice and an
opportunity for Borrower to object to such disclosures in those instances when
Silicon, in its sole discretion, determines that such notice and opportunity to
object are feasible. Silicon shall treat such confidential information with the
same degree of care it would its own confidential information. The Borrower
shall reimburse Silicon for Silicon's actual costs for conducting two such
audits per year, in an amount not to exceed $1,250 per audit. Silicon may

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<PAGE>

debit the Borrower's deposit accounts with Silicon for the cost of such audits,
in which event Silicon shall send notification thereof to the Borrower.

         4.6.     NEGATIVE COVENANTS. Except as may be expressly permitted in
the Schedule, the Borrower shall not, without Silicon's prior written consent,
do any of the following: (a) merge or consolidate with another corporation,
except that the Borrower may merge or consolidate with another corporation if
the Borrower is the surviving corporation in the merger and the aggregate value
of the assets acquired in the merger does not exceed 25% of the Borrower's
Tangible Net Worth (as defined in the Schedule) as of the end of the month prior
to the effective date of the merger, and the assets of the corporation acquired
in the merger are not subject to any liens or encumbrances, except Permitted
Liens; (b) acquire any assets, including stock of any other entity, outside the
ordinary course of business for an aggregate purchase price (whether paid in
cash, in stock of the Borrower or other consideration) exceeding 25% of the
Borrower's Tangible Net Worth (as defined in the Schedule) as of the end of the
month prior to the effective date of the acquisition; (c) enter into any other
transaction outside the ordinary course of business (except as permitted by the
other provisions of this Section); (d) sell or transfer any Collateral, except
for the sale of finished inventory in the ordinary course of the Borrower's
business; (e) make any loans of any money or any other assets to shareholders,
employees or any other person except in the ordinary course of business; (f)
incur any debts that are outside the ordinary course of business or that would
have a material, adverse effect on the Borrower or on the prospect of repayment
of the Obligations; (g) guarantee or otherwise become liable with respect to the
obligations of another party or entity; (h) pay or declare any dividends on the
stock of the Borrower (except for dividends payable solely in stock of the
Borrower); (i) make any change in the Borrower's capital structure which has a
material adverse effect on that Borrower or on the prospect of repayment of the
Obligations; or (k) dissolve or elect to dissolve. Transactions permitted by the
foregoing provisions of this Section are only permitted if no Event of Default
and no event which (with notice or passage of time or both) would constitute an
Event of Default would occur as a result of such transaction. Borrower will not
unreasonably withhold consent with respect to clause (a) or clause (b) above.

         4.7.     LITIGATION COOPERATION. Should any third-party suit or
proceeding be instituted by or against Silicon with respect to any Collateral or
in any manner relating to the Borrower, the Borrower shall, without expense to
Silicon, make available the Borrower and its officers, employees and agents and
the Borrower's books and records to the extent that Silicon may deem reasonably
necessary in order to prosecute or defend any such suit or proceeding.

         4.8.     VERIFICATION. Silicon may, from time to time, following prior
notification to the Borrower, verify directly with the respective account
debtors the validity, amount and other matters relating to the Borrower's
accounts, by means of mail, telephone or otherwise, either in the name of the
Borrower or Silicon or such other name as Silicon may reasonably choose,
provided that no prior notification shall be required following an Event of
Default. Silicon shall not be required to obtain the Borrower's consent prior to
any such verification of accounts, whether or not an Event of Default has
occurred.

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<PAGE>

         4.9.     EXECUTE ADDITIONAL DOCUMENTATION. The Borrower agrees, as its
expense, on request by Silicon, to execute from time to time all documents in
form satisfactory to Silicon, as Silicon may deem reasonably necessary or useful
in order to perfect and maintain Silicon's perfected security interest in the
Collateral, and in order to fully consummate all of the transactions
contemplated by this Agreement.

         4.10.    REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS. The Borrower
shall register or cause to be registered (to the extent not already registered)
with the United States Patent and Trademark Office or the United States
Copyright Office, as applicable, those intellectual property rights listed on an
exhibit to the Intellectual Property Security Agreement delivered to Silicon by
the Borrower in connection with this Agreement within thirty (30) days of the
date of this Agreement. Borrower shall register or cause to be registered with
the United States Patent and Trademark Office or the United States Copyright
Office, as applicable, those additional intellectual property rights developed
or acquired by Borrower from time to time in connection with any product prior
to the sale or licensing of such product to any third party, including without
limitation revisions or additions to the intellectual property rights listed on
such exhibit to instruments and documents from time to time as Silicon shall
reasonably request to perfect Silicon's security interest in such additional
intellectual property rights.

5.       TERM.

         5.1.     MATURITY DATE. This Agreement shall continue in effect until
the payment in full of the Obligations, provided, however, that the Borrower
shall repay in full each Loan described on the Schedule, with all accrued but
unpaid interest on that Loan, on or before the Maturity Date stated on the
Schedule for such Loan.

         5.2.     EARLY TERMINATION. Subject to SECTION 5.3, this Agreement may
be terminated, without penalty, prior to the Maturity Date as follows: (a) by
the Borrower, effective three business days after written notice of termination
is given to Silicon; or (b) by Silicon at any time after the occurrence of an
Event of Default, without notice, effective immediately.

         5.3.     PAYMENT OF OBLIGATION. On the due dates stated in the
Schedule, or on any earlier effective date of termination, the Borrower shall
pay and perform in full all Obligations, whether evidenced by installment notes
or otherwise, and whether or not all or any part of such Obligations are
otherwise then due and payable. Notwithstanding any termination of this
Agreement, all of Silicon's security interests in all of the Collateral and all
of the terms and provisions of this Agreement shall continue in full force and
effect until all Obligations have been paid and performed in full; provided that
Silicon may, in its sole discretion, refuse to make any further Loans after
termination. No termination shall in any way affect or impair any right or
remedy of Silicon, nor shall any such termination relieve the Borrower of any
Obligation to Silicon, until all of the Obligations have been paid and performed
in full. Upon payment and performance in full of all the Obligations, Silicon
shall promptly deliver to the Borrower termination statements, requests for
reconveyances and such other documents as may be required to fully terminate any
of Silicon's security interests.

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6.       EVENTS OF DEFAULT AND REMEDIES.

         6.1.     EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an "Event of Default" under this Agreement, and the
Borrower shall give Silicon immediate written notice thereof: (a) any warranty,
representation, statement, report or certificate made or delivered to Silicon by
the Borrower or any of the Borrower's officers or employees, now or in the
future, shall be untrue or misleading in any material respect; or (b) the
Borrower shall fail to pay when due any Loan or any interest thereon or any
other monetary Obligation, including without limitation to the EXIM Loan; or (c)
the total outstanding balance of any Loan exceeds the applicable Credit Limit,
or the total Loans and other Obligations outstanding at any time exceed the
aggregate Credit Limit for all Loans; or (d) the Borrower shall fail to comply
with any of the financial covenants set forth in the Schedule or shall fail to
perform any other non-monetary Obligation which by its nature cannot be cured;
or (e) the Borrower shall fail to pay or perform any other non-monetary
Obligation, under this Agreement or any other agreement or document relating to
the Loans or under the EXIM Documents relating to the EXIM Loan; or (f) any
levy, assessment, attachment, seizure, lien or encumbrance is made on all or any
part of the Collateral; or (g) dissolution, termination of existence, insolvency
or business failure of the Borrower, or appointment of a receiver, trustee or
custodian for all or any part of the property of , assignment for the benefit of
creditors by, or the commencement of any proceeding by the Borrower under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect; or (h) the commencement of any proceeding against the Borrower
or any guarantor of any of the Obligations under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect, which is not cured
by the dismissal thereof within 90 days after the date commenced, or (i)
revocation or termination of, or limitation of liability upon, any guaranty of
the Obligations; or (j) commencement of proceedings by any guarantor of any of
the Obligations under any bankruptcy or insolvency law; or (k) the Borrower
makes any payment on account of any indebtedness or obligation which has been
subordinated to the Obligations, unless such payment is permitted in the
applicable subordination agreement, or if any person who has subordinated such
indebtedness or obligations terminates or in any way limits his subordination
agreement; or (l) the Borrower shall generally not pay its debts as they become
due; or the Borrower shall conceal, remove or transfer any part of its property
which may be fraudulent under any bankruptcy, fraudulent conveyance or similar
law; or (m) either the Borrower or any other party thereto shall breach any
subordination agreement executed in connection with the Loans; or (n) the
current common and preferred shareholders of the Borrower shall cease to own
more than 50% of the outstanding common stock of the Borrower other than as the
result of an initial public offering of securities by Borrower. If any of the
foregoing defaults, other than a failure to pay money and breach of a financial
covenant set forth in Schedule, is curable, it may be cured (and no Event of
Default shall have occurred) if the Borrower cures the default within thirty
days (or within ninety days in the case of clause (h) of this SECTION 6.1).
Silicon may cease making any Loans hereunder during the above cure periods, and
thereafter if an Event of Default has occurred.

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         6.2.     REMEDIES. Upon the occurrence of any Event of Default and the
expiration of any applicable cure period under SECTION 6.1, and at any time
thereafter, Silicon, at its option, and without notice or demand of any kind
(all of which are hereby expressly waived by the Borrower), may do any one or
more of the following: (a) cease making Loans or otherwise extending credit to
the Borrower under this Agreement or any other document or agreement; (b)
accelerate and declare all or any part of the Obligations to be immediately due,
payable, and performable, notwithstanding any deferred or installment payments
allowed by any instrument evidencing or relating to any Obligation; (c) take
possession of any or all of the Collateral wherever it may be found, and for
that purpose the Borrower hereby authorizes Silicon without judicial process to
enter onto any of the Borrower's premises without interference to search for,
take possession of, keep, store, or remove any of the Collateral, and remain on
the premises or cause a custodian to remain on the premises in exclusive control
thereof without charge for so long as Silicon deems it reasonably necessary in
order to complete the enforcement of its rights under this Agreement or any
other agreement; provided, however, that should Silicon seek to take possession
of any or all of the Collateral by Court process, the Borrower hereby
irrevocably waives: (i) any bond and any surety or security relating thereto
required by any statute, court rule or otherwise as an incident to such
possession; (ii) any demand for possession prior to the commencement of any suit
or action to recover possession thereof; and (iii) any requirement that Silicon
retain possession of and not dispose of any such Collateral until after trial or
final judgment; (d) require the Borrower to assemble any or all of the
Collateral and make it available to Silicon at places designated by Silicon
which are reasonably convenient to Silicon and the Borrower, and to remove the
Collateral to such locations as Silicon may deem advisable; (e) require the
Borrower to deliver to Silicon, in kind, all checks and other payments received
with respect to all accounts and general intangibles, together with any
necessary endorsements, within one day after the date received by the Borrower;
(f) complete the processing, manufacturing or repair of any Collateral prior to
a disposition thereof and, for such purpose and for the purpose of removal,
Silicon shall have the right to use the Borrower's premises, vehicles, hoist,
lifts, cranes, equipment and all other property without charge; (g) sell, lease
or otherwise dispose of any of the Collateral in its condition at the time
Silicon obtains possession of it or after further manufacturing, processing or
repair, at any one or more public and/or private sales, in lots or in bulk, for
cash, exchange or other property, or on credit and to adjourn any such sale from
time to time without notice other than oral announcement at the time scheduled
for sale; Silicon shall have the right to conduct such disposition on the
Borrower's premises without charge, for such time or times as Silicon deems
reasonable, or on Silicon's premises, or elsewhere and the Collateral need not
be located at the place of disposition; Silicon may directly or through any
affiliated company purchase or lease any Collateral at any such public
disposition, and if permissible under applicable law, at any private
disposition; any sale or other disposition of Collateral shall not relieve the
Borrower of any liability the Borrower may have if any Collateral is defective
as to title or physical condition or otherwise at the time of sale; (h) demand
payment of, and collect any accounts and general intangibles comprising
Collateral and, in connection therewith, the Borrower irrevocably authorizes
Silicon to endorse or sign the Borrower's name on all collections, receipts,
instruments and other documents, to take possession of and open mail addressed
to the Borrower and remove therefrom payments made with respect to any item of
the Collateral or proceeds thereof, and, in Silicon's sole discretion, to grant
extensions of time to pay, compromise claims and settle accounts and the like
for less than face value; (i) offset

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<PAGE>

against any sums in any general, special or other deposit accounts maintained by
the Borrower with Silicon; and (j) demand and receive possession of any of the
Borrower's federal and state income tax returns and the books and records
utilized in the preparation thereof or referring thereto. All reasonable fees of
professionals (including attorney's fees, (expenses, costs, liabilities and
obligations incurred by Silicon with respect to the foregoing shall be added to
and become part of the Obligations, shall be due on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of the
Obligations. Without limiting any of Silicon's rights and remedies, from and
after the occurrence of any Event of Default, the interest rate applicable to
the Obligations shall be increased by an additional two percent per annum above
the rate otherwise applicable.

         6.3.     STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. The
Borrower and Silicon agree that a sale or other disposition (collectively,
"Sale") of any Collateral which complies with the following standards shall
conclusively be deemed to be commercially reasonable: (a) notice of the Sale is
given to the Borrower at least seven days prior to the Sale, and, in the case of
a public Sale, notice of the Sale is published at least seven days before the
Sale in a newspaper of general circulation in the country where the Sale is to
be conducted; (b) notice of the Sale describes the Collateral in general,
non-specific terms; (c) the Sale is conducted at the place designated by
Silicon, with or without the Collateral being present; (d) the Sale commences at
any time between 8:00 a.m. and 6:00 p.m.; (e) payment of the purchase price in
cash or by cashier's check or wire transfer is required; (f) with respect to any
Sale of any of the Collateral, Silicon may (but is not obligated to) direct any
prospective purchaser to ascertain directly from the Borrower any and all
information concerning the same. Silicon may employ other methods of noticing
and selling the Collateral, in its discretion, if they are commercially
reasonable.

         6.4.     POWER OF ATTORNEY. Effective only upon the occurrence and
during the continuance of an Event of Default, the Borrower hereby irrevocably
appoints Silicon (and any of Silicon's designated officers, or employees) as the
Borrower's true and lawful attorney to: (a) send requests for verification of
accounts or notify account debtors of Silicon's security interest in the
accounts; (b) endorse the Borrower's name on any checks or other forms of
payment or security that may come into Silicon's possession; (c) sign the
Borrower's name on any invoice or bill of lading relating to any account, drafts
against account debtors, schedules and assignments of accounts, verifications of
amounts, and notices to account debtors; (d) make, settle, and adjust all claims
under and decisions with respect to the Borrower's policies of insurance; and
(e) settle and adjust disputes and claims respecting the accounts directly with
account debtors, for amounts and upon terms which Silicon determines to be
reasonable; provided Silicon may exercise such power of attorney to sign the
name of the Borrower on any of the documents described in SECTION 4.9 regardless
of whether an Event of Default has occurred. The appointment of Silicon as the
Borrower's attorney in fact, and each and every one of Silicon's rights and
powers, being coupled with an interest, is irrevocable until all of the
Obligations have been fully repaid and performed and Silicon's obligation to
provide advances hereunder is terminated.

         6.5.     APPLICATION OF PROCEEDS. All proceeds realized as the result
of any Sale of the Collateral shall be applied by Silicon first to the costs,
expenses, liabilities, obligations and

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<PAGE>

attorneys' fees incurred by Silicon in the exercise of its rights under this
Agreement, second to the interest due upon any of the Obligations, and third to
the principal of the Obligations, in such order as Silicon shall determine in
its sole discretion. Any surplus shall be paid to the Borrower or other persons
legally entitled thereto; the Borrower shall remain liable to Silicon for any
deficiency. If Silicon, in its sole discretion, directly or indirectly enters
into a deferred payment or other credit transaction with any purchaser at any
Sale or other disposition of Collateral, Silicon shall have the option,
exercisable at any time, in its sole discretion, of either reducing the
Obligations by the principal amount or purchase price or deferring the reduction
of the Obligations until the actual receipt by Silicon of the cash therefor.

         6.6.     REMEDIES CUMULATIVE. In addition to the rights and remedies
set forth in this Agreement, Silicon shall have all the other rights and
remedies accorded a secured party under the Uniform Commercial Code of Oregon
and each state in which any Collateral is located, and under all other
applicable laws, and under the EXIM Documents and any other instrument or
agreement now or in the future entered into between Silicon and the Borrower,
and all of such rights and remedies are cumulative and none is deemed an
election, nor bar Silicon from subsequent exercise or partial exercise of any
other rights or remedies. The failure or delay of Silicon to exercise any other
rights or remedies shall not operate as a waiver thereof, but all rights and
remedies shall continue in full force and effect until all of the Obligations
have been fully paid and performed.

7.       GENERAL PROVISIONS.

         7.1.     NOTICES. All notices to be given under this Agreement shall be
in writing and shall be given either personally or by regular first-class mail,
or certified mail return receipt requested, addressed to Silicon or the Borrower
at the addressees shown in the heading to this Agreement, or at any other
address designated in writing by one party to the other party. In addition,
Borrower shall send a copy of any notice to Silicon to the following address:
11000 S.W. Stratus, Suite 170, Beaverton, OR 97008-7113, Attn: Art Hiemstra. All
notices shall be deemed to have been given upon delivery in the case of notices
personally delivered to the Borrower or to Silicon, or at the expiration of two
business days following the deposit thereof in the United States mail, with
postage paid.

         7.2.     SEVERABILITY. Should any provisions of this Agreement be held
by any court of competent jurisdiction to be void or unenforceable, such defect
shall not affect the remainder of this Agreement, which shall continue in full
force and effect.

         7.3.     INTEGRATION. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between the Borrower and Silicon and
supersede all prior and contemporaneous negotiations and oral representations
and agreements, all of which are merged and integrated in this Agreement. ORAL
AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW. UNDER
OREGON LAW, MOST

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<PAGE>

AGREEMENTS, PROMISES AND COMMITMENTS MADE BY SILICON AFTER OCTOBER 3, 1989,
CONCERNIGN LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY
OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN
WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY SILICON TO BE ENFORCEABLE.

         7.4.     WAIVERS. The failure of Silicon at any time or times to
require the Borrower to strictly comply with any of the provisions of this
Agreement or any other present or future agreement between the Borrower and
Silicon shall not waive or diminish any right of Silicon later to demand and
receive strict compliance therewith. Any waiver of any default shall not waive
or affect any other default, whether prior or subsequent thereto. None of the
provisions of this Agreement or any other agreement now or in the future
executed by the Borrower and delivered to Silicon shall be deemed to have been
waived by any act or knowledge of Silicon or its agents or employees, but only
by a specific written waiver signed by an officer of Silicon and delivered to
the Borrower. The Borrower waives demand, protest, notice of protest and notice
of default or dishonor, notice of payment and nonpayment, release, compromise,
settlement, extension or renewal of any commercial paper, instrument, account,
general intangible, document or guaranty at any time held by Silicon on which
the Borrower is or may in any way be liable, and notice of any action taken by
Silicon, unless expressly required by this Agreement.

         7.5.     NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Silicon, nor any
of its directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Silicon shall be liable for any claims, demands,
losses or damages, of any kind whatsoever, made, claimed, incurred or suffered
by the Borrower or any other party through the ordinary negligence of Silicon,
or any of its directors, officers, employees, agents, attorneys or any other
person affiliated with or representing Silicon.

         7.6.     AMENDMENT. The terms and provisions of this Agreement may not
be waived or amended, except in a writing executed by the Borrower and a duly
authorized officer of Silicon.

         7.7      TIME OF ESSENCE. Time is of the essence in the performance by
the Borrower of each and every obligation under this Agreement.

         7.8.     ATTORNEY'S FEES AND COSTS. The Borrower shall reimburse
Silicon for all reasonable attorney's fees and fees of other professionals, and
all filing, recording, search, title insurance, appraisal, audit, and other
reasonable costs incurred by Silicon, pursuant to, or in connection with, or
relating to this Agreement (whether or not a lawsuit is filed), including, but
not limited to, any reasonable attorney's fees and costs Silicon incurs in order
to do the following: prepare and negotiate this Agreement and the documents
relating to this Agreement; obtain legal advice in connection with this
Agreement; enforce, or seek to enforce, any of its rights; prosecute actions
against, or defend actions by, account debtors; commence, intervene in, or
defend any action or proceeding (including any appeal or review); initiate any
complaint to be relieved of the automatic stay in bankruptcy; file or prosecute
any probate claim, bankruptcy claim, third-party claim, or other claim; examine,
audit, copy, and inspect any of the Collateral or any of the Borrower's books
and records; or protect, obtain possession of, lease, dispose of, or

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<PAGE>

otherwise enforce Silicon's security interest in, the Collateral and otherwise
represent Silicon in any litigation relating to the Borrower. If either Silicon
or the Borrower files any lawsuit against the other predicated on a breach of
this Agreement, the prevailing party in such action shall be entitled to recover
its reasonable costs and professionals' fees, including (but not limited to)
reasonable attorneys' fees and costs incurred in the enforcement of, execution
upon or defense of any order, decree, award or judgment, and in any appeal or
review by an appellate court. All fees and costs to which Silicon may be
entitled pursuant to this Section shall immediately become part of the
Borrower's Obligations, shall be due on demand, and shall bear interest at a
rate equal to the highest interest rate applicable to any of the Obligations.

         7.9.     BENEFIT OF AGREEMENT. The provisions of this Agreement shall
be binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of the parties hereto; provided,
however, that the Borrower may not assign or transfer any of its rights under
this Agreement without the prior written consent of Silicon, and any prohibited
assignment shall be void. No consent by Silicon to any assignment shall release
the Borrower from its liability for the Obligations. The Borrower agrees and
consents to Silicon's sale or transfer, whether now or later, of one or more
participation interests in the Loans to one or more purchasers, whether now or
later, of one or more participation interests in the Loans to one or more
purchasers, whether related to unrelated to Silicon. Silicon may provide,
without any limitation whatsoever, to any one or more purchasers, or potential
purchasers, any information or knowledge Silicon may have about the Borrower or
about any other matter relating to the Loans and the Borrower hereby waives any
rights to privacy it may have with respect to such matters. Silicon shall
require any such purchasers or potential purchasers to enter into a
confidentiality agreement, in such form as Silicon may specify in its sole
discretion, and such confidentiality agreement shall by its terms be enforceable
by Borrower. The Borrower additionally waives any and all notices of sale of
participation interests, as well as all notices of any repurchase of such
participation interests. Silicon shall sell participation interests only to
financial institutions it deems financially sound and responsible. The Borrower
also agrees that the purchaser of any such participation interests shall be
considered as the absolute owners of such interest in the Loans and shall have
all the rights granted under the participation agreement or agreements governing
the sale of such participation interests.

         7.10.    SECTION HEADINGS; CONSTRUCTION. Section headings are only used
in this Agreement for convenience. The Borrower acknowledges that the headings
may not describe completely the subject matter of the applicable section, and
the headings shall not be used in any manner to construe, limit, define or
interpret any term or provision of this Agreement. This Agreement has been fully
reviewed and negotiated between the parties and no uncertainty or ambiguity in
any term or provision of this Agreement shall be construed strictly against
Silicon or the Borrower under any rule of construction or otherwise.

         7.11.    MUTUAL WAIVER OF JURY TRIAL. The Borrower and Silicon each
hereby waive the right to trial by jury in any action or proceeding based upon,
arising out of, or in any way relating to, this Agreement or any other present
or future instrument or agreement between Silicon and the Borrower, or any
conduct, acts or omissions of Silicon or the Borrower or any of their

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<PAGE>

directors, officers, employees, agents, attorneys or any other person affiliated
with Silicon or the Borrower, in all of the foregoing cases, whether sounding in
contract or tort or otherwise.

         7.12.    GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all
acts and transactions hereunder and all rights and obligations of Silicon and
the Borrower shall be governed by, and construed in accordance with, the laws of
the State of Oregon. Any undefined term used in this Agreement that is defined
in the Oregon Uniform Commercial Code shall have the meaning assigned to that
term in the Oregon Uniform Commercial Code. As a material part of the
consideration to Silicon to enter into this Agreement, the Borrower (i) agrees
that all actions and proceedings relating directly or indirectly hereto shall at
Silicon's option, be litigated in courts located within Oregon, and that the
exclusive venue therefor shall be, at Silicon's option, Washington County or
Multnomah County, Oregon; (ii) consents to the jurisdiction and venue of any
such court and consents to service of process in any such action or proceeding
by personal delivery or any other method permitted by law; and (iii) waives any
and all rights the Borrower may have to object to the jurisdiction of any such
court, or to transfer or change the venue of any such action or proceeding.

         7.13.    OTHER LOAN. Silicon has been informed that a subsidiary of
Borrower, Cascade Microtech, Japan has borrowed 130,000,000 yen from Bank of
Tokyo - Mitsubishi Ltd., which is guaranteed by Cascade Microtech, Inc.

                      BORROWER:

                             CASCADE MICROTECH, INC.

                             By:      /s/  Randall Sadewic
                                -----------------------------------------

                             Title:   CFO
                                   --------------------------------------

                      SILICON:

                             SILICON VALLEY BANK

                             By:      /s/  Bruce Helberg
                                -----------------------------------------
                             Title:        Vice- President
                                   --------------------------------------

Page 19 - LOAN AND SECURITY AGREEMENT
<PAGE>

                     SCHEDULE TO LOAN AND SECURITY AGREEMENT

BORROWER:         Cascade Microtech, Inc.

SECURED ACCOUNTS RECEIVABLE LINE OF CREDIT

CREDIT LIMIT:              An amount not to exceed the lesser of: (i) $4,000,000
                           at any one time outstanding; or (ii) the amount of
                           the "Borrowing Base", as defined below. For purposes
                           of this Schedule, the "Borrowing Base" shall mean the
                           sum of 80% of the Net Amount of Borrower's eligible
                           accounts receivable. With respect to Borrower's
                           accounts, "Net Amount" means the gross amount of the
                           account, minus all applicable sales, use, excise and
                           other similar taxes and minus all discounts, credits
                           and allowances of any nature granted or claimed. All
                           Letters of Credit and Exchange Contracts issued under
                           this Secured Accounts Receivable Line of Credit shall
                           reduce dollar for dollar the amount otherwise
                           available for borrowing under this Loan.

                           Without limiting the fact that the determination of
                           which accounts are eligible for borrowing is a matter
                           of Silicon's discretion, the following shall not be
                           deemed eligible for borrowing: accounts in which
                           Silicon does not have a first priority, perfected
                           security interest; accounts outstanding for more than
                           90 days from the invoice date, accounts subject to
                           any contingencies, accounts owing from an account
                           debtor outside the United States (except as approved
                           in writing by Silicon), accounts owing from
                           governmental agencies in excess of $500,000, accounts
                           owing form one account debtor to the extent they
                           exceed 25% of total eligible accounts owing from an
                           account debtor to whom the Borrower is or may be
                           liable for goods purchased from such account debtor
                           or otherwise ("Contra Accounts"). Contra Accounts
                           shall be eligible to the extent of the net difference
                           between the account receivable and the account
                           payable; however, if the account payable exceeds the
                           account receivable, the entire account receivable
                           shall be ineligible. In addition, if more than 50% of
                           the total dollar amount of accounts owing from an
                           account debtor are outstanding more than 90 days from
                           the invoice date or are otherwise not eligible
                           accounts, then all accounts owing from that account
                           debtor shall be deemed ineligible for borrowing.
                           Account owing from a debtor outside of the United
                           States may, in Silicon's sole discretion, be
                           considered eligible for borrowing if they are
                           supported by letters of credit from foreign banks
                           acceptable to Silicon.

INTEREST RATE:             The interest rate applicable to this Loan shall be a
                           rate

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<PAGE>

                           equal to the "Prime Rate" in effect from time to
                           time, plus 0.255 per annum. Interest calculations
                           shall be made on the basis of a 360-day year and the
                           actual number of days elapsed. "Prime Rate" means the
                           rate announced from time to time by Silicon as its
                           "prime rate", it is a base rate upon which other
                           rates charged by Silicon are based, and it is not
                           necessarily the best rate available at Silicon. The
                           interest rate applicable to the Obligations shall
                           change on each date there is a change in the Prime
                           Rate.

COMMITMENT FEE:            One-quarter of one percent per annum of the maximum
                           commitment amount of $6,000,000 or $15,000, which
                           fully earned and payable at closing. (Any Commitment
                           Fee previously paid by the Borrower in connection
                           with this loan shall be credited against this Fee.)

MATURITY DATE:             February 18, 2000, at which time all unpaid principal
                           and accrued but unpaid interest shall be due and
                           payable.

LETTERS OF CREDIT:         Subject to the terms of this Agreement, as amended
                           from time to time, Silicon shall issue or cause to be
                           issued under the Credit Limit standby and commercial
                           letters of credit for the account of Borrower in an
                           aggregate face amount not to exceed the Credit Limit.
                           Each such standby letter of credit that has an expire
                           date later than the Maturity Date shall be secured by
                           cash in Silicon's possession on and after the
                           Maturity Date in an amount equal to the face amount
                           of such letter of credit. All such letters of credit
                           shall be, in form and substance, acceptable to
                           Silicon in its sole discretion and shall be subject
                           to the terms and conditions of Silicon's form
                           application and letter of credit agreement.

FOREIGN EXCHANGE
SUBLIMIT:                  Borrower may utilize up to the Credit Limit for spot
                           and future foreign exchange contracts (the "Exchange
                           Contracts"). Exchange Contracts that provide for
                           delivery of settlement after the Maturity Date in an
                           amount equal to 10% of the gross amount of such
                           Exchange Contracts that provide for delivery of
                           settlement after the Maturity Date. The limit
                           available at any time shall be reduced by the
                           following amounts (the "Foreign Exchange Reserve") on
                           each day (the "Determination date"): (i) on all
                           outstanding Exchange Contracts on which delivery is
                           to be effected or settlement allowed more than two
                           business days from the determination Date, 10% of the
                           gross amount of the Exchange Contracts; plus (ii) on
                           all outstanding Exchange Contracts on which delivery
                           is to be effected or settlement allowed within two
                           business days after the Determination Date, 100% of
                           the gross amount of the Exchange Contract, the
                           Borrower may request that Silicon debit the
                           Borrower's bank account with Silicon for such amount,
                           provided Borrower has immediately available funds in
                           such amounts in its bank account.

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<PAGE>

                           Whenever Borrower desires an advance, Borrower will
                           notify Silicon by facsimile transmission or by
                           telephone not later than 11:00 a.m. California time,
                           two business days before the advance is to be made.
                           Each such notification shall be promptly confirmed by
                           a borrowing base certificate. Silicon shall be
                           entitled to rely on any such telephone notice given
                           by any person who Silicon reasonably believes to be
                           an officer of Borrower, and Borrower shall indemnify
                           and hold Silicon harmless for any damages or loss
                           suffered by Silicon as a result of such reliance.

                           Silicon may, in its discretion, terminate the
                           Exchange Contracts at any time (a) that an Event of
                           Default occurs or (b) that there is no sufficient
                           availability under the Credit Limit and Borrower does
                           not have available funds in its bank account to
                           satisfy the Foreign Exchange Reserve. If Silicon
                           terminates the Exchange Contracts, and without
                           limitation of the FX Indemnity Provisions (as
                           referred to below), Borrower agrees to reimburse
                           Silicon for any and all fees, costs and expenses
                           relating thereto or arising in connection therewith.

                           Borrower shall not permit the total gross amount of
                           all Exchange Contracts on which delivery is to be
                           effected and settlement allowed in any two business
                           day period to be more than the Credit Limit, nor
                           shall Borrower permit the total gross amount of all
                           Exchange Contracts of which Borrower is a party,
                           outstanding at any one time, to exceed the Credit
                           Limit.

                           The Borrower shall execute all standard form
                           applications and agreements of Silicon in connection
                           with the Exchange Contracts, and without limiting any
                           of the terms of such applications and agreements the
                           Borrower will pay all standard fees and charges of
                           Silicon in connection with Exchange Contracts.

                           Without limiting any of the other terms of this
                           Agreement or any such standard form applications and
                           agreement of Silicon, Borrower agrees to indemnify
                           Silicon and hold it harmless, from and against any
                           and all claims, debts, liabilities, demands,
                           obligations, actions, costs and expenses (including,
                           without limitation, attorneys fees of counsel of
                           Silicon's choice), of every nature and description
                           which it may sustain or incur, based upon, arising
                           out of, or in any way relating to any of the Exchange
                           Contracts or any transactions relating thereto or
                           contemplated thereby (collectively referred to as the
                           "FX Indemnity Provisions").

Page 23 - LOAN AND SECURITY AGREEMENT
<PAGE>

SECURED TERM LOAN NO. 1

CREDIT LIMIT:              An amount not to exceed $2,150,000 at any one time
                           outstanding

                           Once the maximum amount of the principal has been
                           advanced under this Secured Term Loan No. 1,
                           Borrower is no longer entitled to further advances
                           on this Loan. Borrower shall not have the right to
                           reborrow any amount on this Secured Term Loan No.
                           1 that has been repaid by Borrower. Advances may
                           be requested in writing by Borrower or an
                           authorized person. Silicon may, but need not,
                           require that all oral requests be confirmed in
                           writing. The unpaid principal balance owing on
                           this Secured Term Loan No. 1 at any time may be
                           evidenced by Silicon's internal records, including
                           daily computer print-outs (which Silicon shall
                           provide to Borrower periodically).

PURPOSE:                   Borrowers shall use the proceeds of this Secured Term
                           Loan No. 1 to repay the existing term loan payable to
                           Bank of America.

INTEREST RATE:             The interest rate applicable to the Secured Term Loan
                           No.1 shall be a fixed rate of 7.71% per annum.
                           Interest calculations shall be made on the basis of a
                           360-day year and the actual number of days elapsed.

AMORTIZATION:              Borrower shall pay Silicon on the last day of each
                           month, commencing with March, 1998, payments of
                           principal and interest in the amount necessary to
                           repay fully the amount of the Secured Term Loan No. 1
                           in 48 equal month payments.

MATURITY DATE:             February 28, 2002, at which time all unpaid principal
                           and accrued but unpaid interest, fees and other
                           charges shall be due and payable.

COMMITMENT
FEE:                       None.

SECURED EQUIPMENT TERM LOAN NO.2

CREDIT LIMIT:              An amount not to exceed the lesser of (i) $1,500,000
                           at any one time outstanding; or (ii) the amount of
                           the "Equipment Borrowing Base", as defined below. For
                           purposes of this Schedule, the "Equipment Borrowing
                           Base" shall mean 100% of the invoice value of
                           equipment purchased by Borrower after December 1,
                           1997. Silicon will make advances against

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<PAGE>

                           software and leasehold improvements in an amount not
                           to exceed 35% of the commitment amount of this Loan.
                           Silicon shall have no obligation to advance against
                           taxes, freight charges, installation charges or other
                           similar amounts relating to Borrower's equipment,
                           whether or not such amounts are identified on the
                           invoices submitted to Silicon. Equipment to be
                           included in the Equipment Borrowing Base must be new
                           equipment, at the time of purchase by Borrower, owned
                           by Borrower, in good working order, must not be
                           subject to any liens in favor of any person or entity
                           other than Silicon, and must be subject to a first
                           priority, perfected security interest in favor of
                           Silicon. Silicon shall have no obligation to make
                           advances against non-standard equipment. Silicon
                           shall have no obligation to make advances on this
                           Secured Equipment Term Loan No. 2 after that date
                           which is one year from the date of execution of this
                           Agreement. Advances under this Secured Equipment Term
                           Loan No. 2 will not be made until the third quarter
                           of 1998 and at such time as Borrower has provided
                           sufficient evidence, in Silicon's sole discretion,
                           that Borrower will be in compliance with the Debt
                           Service Coverage Ratio covenant set forth below. At
                           that time, Silicon shall make advances under this
                           Secured Equipment Term Loan NO. 2 from time to time,
                           based on invoices and other documentation as shall be
                           requested by Silicon to support such advances. The
                           Borrower's indebtedness to Silicon with respect to
                           this Schedule and the Loan Agreement, not by a
                           separate promissory note unless required by Silicon.

                           Borrower shall submit to Silicon such invoices,
                           advance requests and other information, in form
                           acceptable to Silicon, as Silicon shall reasonably
                           require from time to time.

                           Once the maximum amount of the principal has been
                           advanced under this Secured Equipment Term Loan No.
                           2, Borrower is no longer entitled to further advances
                           on this Loan. Borrower shall not have the right to
                           reborrow any amount on this Secured Equipment Term
                           Loan No. 2 that has been repaid by Borrower. Advances
                           may be requested in writing by Borrower or an
                           authorized person. Silicon may, but need not, require
                           that all oral requests be confirmed in writing. The
                           unpaid principal balance owing on this Secured
                           Equipment Term Loan No. 2 at any time may be
                           evidenced by Silicon's internal records, including
                           daily computer print-outs (which Silicon shall
                           provide to Borrower periodically).

PURPOSE:                   Borrowers shall use the proceeds of this Secured
                           Equipment Term Loan No. 2 to finance the purchase of
                           new equipment, software and leasehold improvements.

INTEREST RATE:             The interest rate applicable to the Secured Equipment
                           Term Loan No. 2 shall be a rate equal to the "Prime
                           Rate" (as defined above) in effect from

Page 25 - LOAN AND SECURITY AGREEMENT
<PAGE>

                           time to time, plus 0.50% per annum. Interest
                           calculations shall be made on the basis of a 360-day
                           year and the actual number of days elapsed. The
                           interest rate applicable to the Obligations shall
                           change on each date there is a change in the Prime
                           Rate. At the conclusion of the advance period, a
                           fixed rate alternative (set at 275 basis points in
                           excess of the yield of U.S. Treasury Bills of similar
                           maturity, as publicly announced in the Wall Street
                           Journal or other public source) will be made
                           available to Borrower by Silicon.

AMORTIZATION:              Borrower shall pay Silicon monthly payments of
                           interest only on the last day each month commencing
                           with March, 1998. In addition, Borrower shall pay
                           Silicon on the last day of each month, commencing
                           with March 31, 1999, the amount necessary to repay
                           fully the amount of the Secured Equipment Term Loan
                           No. 2 in 36 monthly payments.

MATURITY DATE:             February 28, 2002, at which time all unpaid principal
                           and accrued but unpaid interest, fees and other
                           charges shall be due and payable.

COMMITMENT
FEE:                       $5,000 payable at closing. This fee is fully earned
                           at closing and is non-refundable. (Any Commitment Fee
                           previously paid by the Borrower in connection with
                           this loan shall be credited against this Fee.)

PRIOR NAMES OF
BORROWER:                  See attached Exhibit B

TRADE NAMES OF
BORROWER:                  See attached Exhibit B

TRADEMARKS OF
BORROWER:                  See attached Exhibit B

OTHER LOCATIONS
AND ADDRESSES:             See attached Exhibit B

MATERIAL ADVERSE
LITIGATION:                See attached Exhibit B

FINANCIAL
COVENANTS:                 The Borrower shall at all time comply with all of the
                           following covenants, all of which shall be determined
                           and measured on a quarterly basis in accordance with
                           generally accepted accounting principles, on a
                           consolidated basis with any subsidiary of Borrower,
                           except as otherwise stated below:

Page 26 - LOAN AND SECURITY AGREEMENT
<PAGE>

TANGIBLE NET
WORTH:                     Borrower shall at all times maintain a Tangible Net
                           Worth of not less than $9,000,000.

DEBT TO TANGIBLE
NET WORTH RATIO:           Borrower shall at all times maintain a ratio of total
                           liabilities to Tangible Net Worth of not more than
                           1.50:1.00. For purposes of this calculation, total
                           liabilities shall exclude deferred revenues and debt,
                           if any, that has been subordinated to the Loans in a
                           written subordination agreement on terms satisfactory
                           to Silicon.

QUICK RATIO:               Borrower shall maintain a ratio of Quick Assets
                           (defined below) to current liabilities less deferred
                           revenue of not less than .85:1.00 for the quarter
                           ending March 31, 1999 increasing to 1.00:1.00
                           beginning with the quarter following Borrower's
                           receipt of new equity in an amount not less than
                           $2,000,000 as reflected on Borrower's financial
                           statement (2/18/99).

DEBT SERVICE
COVERAGE RATIO:            Borrower shall maintain (2/18/99) on a quarterly
                           basis, a Debt Service Coverage Ratio of not less than
                           1.50:1.00 measured on an annualized basis as of the
                           end of each fiscal quarter or Minimum Liquidity
                           Coverage. Borrower shall maintain on a quarterly
                           basis, a ratio of unrestricted cash (and equivalents)
                           plus not availability under the Revolving Facility
                           divided by all outstandings under Secured Term Loan
                           No. 1.

DEFINITIONS:               "Quick Assets" means cash on hand or on deposit in
                           banks, readily marketable securities issued by the
                           United States, readily marketable commercial paper
                           rated "A-1" by Standard & Poor's Corporation (or a
                           similar rating by a similar rating organization),
                           certificates of deposit and banker's acceptances, and
                           accounts receivable (net of allowance for doubtful
                           accounts).

                           "Tangible Net Worth" means stockholders' equity plus
                           debt, if any, that has been subordinated to the Loans
                           in a written subordination agreement on terms of
                           satisfactory to Silicon, and accrued interest
                           thereon, less goodwill, patents, capitalized software
                           costs, deferred organizational costs, tradenames,
                           trademarks, and all other assets which would be
                           classified as intangible assets under generally
                           accepted accounting principles.

                           "Debt Service Coverage Ratio" means Earnings Before
                           Interest, Taxes, Depreciation and Amortization
                           (EBITDA), divided by the Current Maturities of
                           Long-Term Debt (CMLTD) plus interest, on an
                           annualized basis. For quarterly calculations,
                           quarterly EBITDA is matched against 25% of CMLTD plus
                           interest.

Page 27 - LOAN AND SECURITY AGREEMENT
<PAGE>

OTHER COVENANTS:           Borrower shall at all times comply with all of the
                           following additional covenants:

                           BANKING RELATIONSHIP. Borrower and its subsidiaries
                           shall at all times maintain their primary banking
                           relationship with Silicon. Neither Borrower nor its
                           subsidiaries shall establish any deposit accounts of
                           any type with any bank or other financial institution
                           other than Silicon without Silicon's prior written
                           consent.

                           FINANCIAL STATEMENTS AND REPORTS. The Borrower shall
                           provided Silicon: (a) within 30 days after the end of
                           each month, a monthly financial statement (consisting
                           of a income statement and a balance sheet) prepared
                           by the Borrower in accordance with generally accepted
                           accounting principles; (b) within 20 days after the
                           end of each moth, an accounts receivable aging report
                           and an accounts payable aging report, in such form as
                           silicon shall reasonably specify; (c) within 20 days
                           after the end 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 of the Borrower only at such times
                           as (i) there are outstandings under the Revolving
                           Facility and prior to a disbursement when there are
                           no outstandings, or (ii) exposure under the Foreign
                           Exchange sublimit is greater than $500,000.(5/7/99);
                           (d) within 30 days after the end of each quarter, a
                           Compliance Certificate in such form as Silicon shall
                           reasonably specify, signed by the Chief Financial
                           Officer of the Borrower, 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 Borrower was 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; (e) within 90 days
                           following the end of the Borrower's 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 (f) within 30 days after the end of
                           each quarter, an updated list of all Borrower's
                           Patents, Trademarks, Copyrights and Mask Works and a
                           report of material infringement claims under Section
                           3.18.

CONDITIONS TO
CLOSING:                   Before requesting any such advance, the Borrower
                           shall satisfy each of the following conditions:

1. LOAN DOCUMENTS:

Page 28 - LOAN AND SECURITY AGREEMENT
<PAGE>

                           Silicon shall have received this Agreement, the
                           Schedule, an Intellectual Property Security Agreement
                           if requested by Silicon, executed by the Borrower,
                           and such other loan documents as Silicon shall
                           require, each duly executed and delivered by the
                           parties thereto.

2.  DOCUMENTS RELATING
TO AUTHORITY, ETC.:

                           Silicon shall have received each of the following in
                           form and substance satisfactory to it:

                           (a)      Certified Copies of the Articles of
                           Incorporation and Bylaws of the Borrower;

                           (b)      A Certificate of Good Standing issued by the
                           Secretary of State of the Borrower's state of
                           incorporation and such other states as Silicon may
                           reasonably request with respect to the Borrower;

                           (c)      A certified copy of a Resolution adopted by
                           the Board of Directors of the Borrower authorizing
                           the execution, delivery and performance of this
                           Agreement, and any other documents or certificates to
                           be executed by the Borrower in connection with this
                           transaction; and

                           (d)      Incumbency Certificates describing the
                           office and identifying the specimen signatures of the
                           individuals signing all such loan documents on behalf
                           of the Borrower.

3.  PERFECTION AND
PRIORITY OF SECURITY:

                           Silicon shall have received evidence satisfactory to
                           it that its security interest in the Collateral has
                           been duly perfected and that such security interest
                           is prior to all other liens, charges, security
                           interests, encumbrances and adverse claims in or to
                           the Collateral other than Permitted Liens, which
                           evidence shall include, without limitation, a
                           certificate from the appropriate state agencies
                           showing the due filing and first priority of the UCC
                           Financing Statements to be signed by the Borrower
                           covering the Collateral, and evidence of the due
                           filing of any Intellectual Property Security
                           Agreement with the U.S. Copyright Office or other
                           security documents required by Silicon.

4. INSURANCE:              Silicon shall have received evidence satisfactory to
                           it that all insurance

Page 29 - LOAN AND SECURITY AGREEMENT
<PAGE>

                           required by this Agreement is in full force and
                           effect, with loss payee designations and additional
                           insured designations as required by this Agreement.

5. OTHER INFORMATION:

                           Silicon shall have received such other statements,
                           certificates, documents and information with respect
                           to matters contemplated by this Agreement as it may
                           reasonably request, all of which must be acceptable
                           to Silicon.

                           Silicon shall have conducted an examination of the
                           Borrower's books, records, ledgers, journals, and
                           registers, as Silicon may deem necessary, and shall
                           be satisfied with the results of such examination in
                           its reasonable discretion.

         Silicon and the Borrower agree that the terms of this Schedule
supplement the Loan and Security Agreement between Silicon and the Borrower and
agree to be bound by the terms of this Schedule:

                                    BORROWER:

                                    CASCADE MICROTECH, INC.

                                    By: /s/ Randy Sadewic
                                       -----------------------------------------
                                    TITLE:   CFO
                                          --------------------------------------

                                    SILICON:

                                    SILICON VALLEY BANK

                                    By: /s/  Bruce Helberg
                                       -----------------------------------------
                                    Title:    VICE - PRESIDENT
                                          --------------------------------------

Page 30 - LOAN AND SECURITY AGREEMENT
<PAGE>

                                    EXHIBIT A

                       [INSERT BORROWING BASE CERTIFICATE]

Page 31 - LOAN AND SECURITY AGREEMENT
<PAGE>

                             Cascade Microtech, Inc.
              B O R R O W I N G   B A S E   C E R T I F I C A T E
--------------------------------------------------------------------------------

                          ACCOUNTS RECEIVABLE ACTIVITY

1.       Accounts Receivable Balance as of _____________           $____________

2.       Minus: Ineligible Acccounts

            a.   Amounts over 90 days                 $_________
            b.   Cross Aging over 50%                 __________
            c.   Excess 25% concentration             __________
            d.   Credit Balances over 90 days         __________
            e.   Foreign accounts                     __________
            f.   Governmental accounts                __________
            g.   Contra Accounts                      __________
            h.   Intercompany/Employee Accounts       __________
            i.   Other: ______________                __________

3.          Eligible Accounts Receivable (Line 1 minus Line 2)     $____________

4.          Funds Available                                        $____________
            (The lesser of Line 3 multiplied by 80% or $6,000,000)

                                  LOAN ACTIVITY

5.          Total funds Available:
            (Line 4)                                               $____________

6.          Loan Balance as of ___________________                 $____________

7.          Less any L/C's outstanding                             $____________

8.          Foreign Exchange Contracts outstanding $____________

8a.         Foreign Exchange Reserve (Line 8 multiplied by 10%)    $____________

9.          Reserve Position (Line 5 minus Line 6,7 & Line 8a)     $____________

--------------------------------------------------------------------------------

The above listed collateral is subject to a security interest in favor of
SILICON VALLEY BANK pursuant to the terms of a Loan and Security Agreement
executed between the Bank and the undersigned.

Submitted By:                             Accepted  By:

Page 32 - LOAN AND SECURITY AGREEMENT
<PAGE>

CASCADE MICROTECH, INC.                   SILICON VALLEY BANK

----------------------------              ---------------------------

                                    EXHIBIT B

                                   TRADENAMES

                                   PRIOR NAMES

                                   TRADEMARKS

                          OTHER LOCATIONS AND ADDRESSES

                           MATERIAL ADVERSE LITIGATION

                               [OTHER DISCLOSURES]

Page 33 - LOAN AND SECURITY AGREEMENT
<PAGE>

                                    EXHIBIT B

HEADQUARTERS

Cascade Microtech, Inc.
14255 SW Brigadoon Court
Beaverton, OR  97005
(503) 626-8245
(503) 626-4466 Fax

REGIONAL SALES OFFICES

Cascade Microtech, Inc.
43196 Christy Street
Fremont, CA  94538
(510) 440-8117
(510) 440-1742 Fax

Cascade Microtech, Inc.
4000 Barranca Parkway, Suite 250
Irvine, CA  92714
(714) 262-3224
(714) 262-3255 Fax

WHOLLY-OWNED SUBSIDIARIES

Cascade Microtech, Ltd. Europe
3 Somerville Court
Banbury Business Park
Adderbury
Oxon OX17 3 SN UK
011-44-1295-81-28-28
001-44-1295-81-28-29 Fax

Cascade Microtech Japan
Sumitomo Aobadai Hills Bldg. Rm 1F
7-7 Aobadai 4-chome
Meguro-ku, Tokyo 153 Japan
011-81-3-5478-6100
011-81-3-5478-6105 Fax

CURRENT LITIGATION

Micromanipulator Company

Page 34 - LOAN AND SECURITY AGREEMENT
<PAGE>

Carson City, Nevada

Page 35 - LOAN AND SECURITY AGREEMENT
<PAGE>

                           LOAN MODIFICATION AGREEMENT

         This Loan Modification Agreement is entered into as of February 18,
1999, by and between Cascade Microtech, Inc. ("Borrower") and Silicon Valley
Bank ("Silicon").

1.       DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which
may be owing by Borrower to Silicon, Borrower is indebted to Silicon pursuant
to, among other documents, a Loan and Security Agreement, dated February 19,
1998, as may be amended from time to time, together with any and all Schedules
attached thereto (the "Domestic Loan Agreement"). The Domestic Loan Agreement
provided for, among other things, a Secured Accounts Receivable Line of Credit
in the original principal amount if Six Million Dollars ($6,000,000) ("Revolving
Facility"), a Secured Term Loan No. 1 in the original principal amount of Two
Million One Hundred Fifty Thousand Dollars ($2,150,000) ("Term Loan 1") and a
Secured Equipment Term Loan No. 2 in the original principal amount of One
Million Five Hundred Thousand Dollars ($1,500,000) ("Term Loan 2"). The
revolving Facility was modified pursuant to, among other documents, a Loan
Modification Agreement dated March 17, 1998, pursuant to which, among other
things, the Revolving Facility was decreased to Four Million Five Hundred
Thousand Dollars ($4,500,000). Furthermore, Borrower is indebted to Silicon
pursuant to, among other documents, a Loan and Security Agreement (Exim Program)
dated February 19, 1998, as may be amended from time to time, together with any
and all Schedules attached thereto, (the "Exim Loan Agreement"). The Exim Loan
Agreement provided for, among other things, and Export Line of Credit in the
original principal amount of One Million Five Hundred Thousand Dollars
($1,500,000) (the "Exim Revolving Facility"). The Exim Revolving Facility was
modified pursuant to, amount other documents, a Loan Modification Agreement
dated March 17, 1998, pursuant to which, among other things, the Exim Revolving
Facility was increased to Three Million Dollars ($3,00,000). The Domestic Loan
Agreement and the Exim Loan Agreement shall be collectively referred to as the
"Loan Agreements." Defined terms used but not otherwise defined herein shall
have the same meanings as in the Loan Agreements.

Hereinafter, all indebtedness owing by Borrower to Silicon shall be referred to
as the "Indebtedness."

2.       DESCRIPTION OF COLLATERAL AND GUARANTEES. Repayment of the indebtedness
is secured by the Collateral as described in the Loan Agreements and by the
Intellectual Property Collateral as described in the Intellectual Property
Security Agreement. Additionally, repayment of the Exim Revolving Facility is
guaranteed by the Export-Import Bank of the United States.

Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".

<PAGE>

3.       DESCRIPTION OF CHANGE IN TERMS.

         A.       MODIFICATION(S) TO DOMESTIC LOAN AGREEMENT (AND SCHEDULE
                  THERETO).

         1.       The first sentence of the Section entitled "Credit Limit" is
                  hereby amended to read as follows:

                  An amount not to exceed the lesser of: (I) $4,000,000 at any
                  one time outstanding of (ii) the amount of the "Borrowing
                  Base" as defined therein.

         2.       The second paragraph of the Section entitled "Credit Limit" is
                  hereby amended in part to read as follows:

                  Without limiting the fact that the determination of which
                  accounts are eligible for borrowing is a matter of Silicon's
                  discretion, the following shall not be deemed eligible for
                  borrowing: accounts in which Silicon does not have a first
                  priority, perfected security interest; accounts outstanding
                  for more than 90 days from the invoice date, accounts subject
                  to any contingencies, accounts owing from an account debtor
                  outside the United States (except as approved in writing by
                  Silicon), accounts owing from governmental agencies in excess
                  of $500,000, accounts owing from one account debtor to the
                  extent they exceed 25% of total eligible accounts outstanding,
                  accounts owing from an affiliate of Borrower, and accounts
                  owing from an account debtor to whom the Borrower is or may be
                  liable for goods purchased from such account debtor or
                  otherwise ("Contra Accounts").

         3.       The section entitled "Maturity Date" is hereby amended in its
                  entirety to read as follows:

                  February 18, 2000, at which time all unpaid principal and
                  accrued but unpaid interest shall be due and payable.

B.       MODIFICATION(S) TO EXIM LOAN AGREEMENT.

         1.       The first paragraph of the Section entitled "Credit Limit" is
                  hereby amended to read as follows:

                  An amount not to exceed the lesser of : (I) $2,500,000 at any
                  one time outstanding or (ii) a total of 90% of the value of
                  the Borrower's eligible export receivables, which are eligible
                  of borrowing as provided in the EXIM Documents, plus 70% of
                  the value of Borrower's exportable inventory which is eligible
                  for

<PAGE>

                  borrowing as provided in the EXIM Documents, which Silicon in
                  its reasonable discretion deems eligible for borrowing.

         2.       The section entitled "Maturity Date" is hereby amended in its
                  entirety to read as follows:

                  February 18, 2000, at which time all unpaid principal and
                  accrued but unpaid interest shall be due and payable.

C.       MODIFICATION(S) TO LOAN AGREEMENTS.

         1.       The section entitled "Financial Covenants" is hereby amended
                  in part to read as follows:

                  QUICK RATIO. Borrower shall maintain on a quarterly basis, a
                  ration of Quick Assets (as defined therein) to current
                  liabilities less defered revenue of not less than 0.85 to 1.00
                  beginning with the quarter ending March 31, 1999, increasing
                  to 1.00 to 1.00 beginning with the quarter following
                  Borrower's receipt of new equity in an amount not less than
                  $2,000,000 as reflected on Borrower's financial statement.

         2.       Debt Service Coverage Ratio. Borrower shall maintain on a
                  quarterly basis, a Debt Service Coverage Ratio (as defined
                  therein) of not less than 1.50 to 1.00 measured on an
                  annualized basis as of the end of each fiscal quarter;

                                             OR

                  MINIMUM LIQUIDITY COVERAGE. Borrower shall maintain on a
                  quarterly basis, a ratio of unrestricted cash (and
                  equivalents) plus net availability under the Revolving
                  Facility divided by all outstandings under Secured Term Loan
                  No. 1 of not less than 2.00 to 1.00.

4.       CONSISTENT CHANGES. The existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.

5.       PAYMENT OF LOAN FEES. Borrower shall pay to Silicon a fee in the amount
of Ten Thousand Dollars ($10,000) (the "Domestic Loan Fee") and a fee in the
amount of Thirty Seven Thousand Five Hundred Dollars ($37,500) (the "Exim Loan
Fee") and collectively, the "Loan Fees", plus all out-of-pocket expenses.

6.       NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor
signing below) agrees that, as of the date hereof, it has no defenses against
the obligations to pay any amounts under the Indebtedness.

<PAGE>

7.       CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
below) understands and agrees that in modifying the existing Indebtedness,
Silicon is relying upon Borrower's representations, warranties, and agreements,
as set forth in the Existing Loan Documents. Except as expressly modified
pursuant to this Loan Modification Agreement, the terms of the Existing Loan
Documents remain unchanged and in full force and effect. Silicon's agreement to
modifications to the existing Indebtedness pursuant to this Loan Modification
Agreement in no way shall obligate Silicon to make any future modifications to
the Indebtedness. Nothing in this Loan Modification Agreement shall constitute a
satisfaction of the Indebtedness. It is the intention of Silicon and Borrower to
retain as liable parties all makers and endorsers of Existing Loan Documents,
unless the party is expressly released by Silicon in writing. No maker,
endorser, or guarantor will be released by virtue of this Loan Modification
Agreement. The terms of this paragraph apply not only to this Loan Modification
Agreement, but also to all subsequent loan modification agreements.

8.       CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon (I) Borrower's payment of the Loan Fees and (ii) Bank's receipt
of the Exim Borrower Agreement, fully executed by the Borrower.

         This Loan Modification Agreement is executed as of the date first
written above.

BORROWER:                                   SILICON:

CASCADE MICROTECH, INC.                     SILICON VALLEY BANK

By:    /s/ Randall Sadewic                  By:   /s/  Bruce Helberg
   ---------------------------------           ---------------------------------
Name:  Randall Sadewic                      Name:      Bruce Helberg
     -------------------------------             -------------------------------
Title: CFO                                  Title:     VP
      ------------------------------              ------------------------------

<PAGE>

                           LOAN MODIFICATION AGREEMENT

         This Loan Modification Agreement is entered into as of May 7, 1999, by
and between Cascade Microtech, Inc. ("Borrower") and Silicon Valley Bank
("Silicon").

1.       DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which
may be owing by Borrower to Silicon, Borrower is indebted to Silicon pursuant
to, among other documents, a Loan and Security Agreement, dated February 19,
1998, as may be amended from time to time, together with any and all Schedules
attached thereto (the "Domestic Loan Agreement"). The Domestic Loan Agreement
provided for, among other things, a Secured Accounts Receivable Line of Credit
in the original principal amount of Six Million Dollars ($6,00,000) ("Revolving
Facility"), a Secured Term Loan No. 1 in the original principal amount of Two
Million One Hundred Fifty Thousand Dollars ($2,150,000) ("Term Loan 1") and a
Secured Equipment Term Loan No. 2 in the original principal amount of One
Million Five Hundred Thousand Dollars ($1,500,000) ("Term Loan 2"). The
Revolving Facility was modified pursuant to among other documents, a loan
Modification Agreement dated February 18, 1999, pursuant to which, among other
things, the Revolving Facility was decreased to Four Million Dollars
($4,000,000). Furthermore, Borrower is indebted to Silicon pursuant to, among
other documents, a Loan and Security Agreement (Exim Program) dated February 19,
1998, as may be amended from time to time, together with any and all Schedules
attached thereto, (the "Exim Loan Agreement").The Exim Loan Agreement provided
for, among other things, an Export Line of Credit in the original principal
amount of One Million Five Hundred Thousand Dollars ($1,500,000) (the "Exim
Revolving Facility"). The Exim Revolving Facility was modified pursuant to,
among other documents, a Loan Modification Agreement dated February 18,1999,
pursuant to which, among other things, the Exim Revolving Facility was increased
to Two Million Five Hundred Thousand Dollars ($2,500,000). The Domestic Loan
Agreement and the Exim Loan Agreement shall be collectively referred to as the
"Loan Agreements." Defined terms used but not otherwise defined herein shall
have the same meanings as in the Loan Agreements. Hereinafter, all indebtedness
owing by Borrower to Silicon shall be referred to as the "Indebtedness."

2.       DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness
is secured by the Collateral as described in the Loan Agreements and by the
Intellectual Property Collateral as described in the Intellectual Property
Security Agreement. Additionally, repayment of the Exim Revolving Facility is
guaranteed by the Export-Import Bank of the United States.

Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".

<PAGE>

3.       DESCRIPTION OF CHANGE IN TERMS.

         A.       MODIFICATION(S) TO DOMESTIC LOAN AGREEMENT (AND SCHEDULE
                  THERETO).

                  1.       The paragraph entitled "Financial Statements and
                           Reports" under the section entitled "Other Covenants"
                           is hereby amended in part to provide that Borrower
                           shall be required to provide Silicon a Borrowing Base
                           Certificate only at such times as (i)there are
                           outstandings under the Revolving Facility and prior
                           to a disbursement when there are no outstandings, or
                           (ii) exposure under the Foreign Exchange Sublimit is
                           greater than $500,000.

         B.       MODIFICATION(S) TO EXIM LOAN AGREEMENT (AND SCHEDULES
                  THERETO).

                  1.       The paragraph entitled "Financial Statements and
                           Reports" under the section entitled "Other Covenants"
                           is hereby amended in part ot provide that Borrower
                           shall be required to provide Silicon a Borrowing Base
                           Certificate within 5 days of a request of
                           disbursement of funds, only at such times as (I)
                           there are outstandings under the Exim Revolving
                           Facility and prior to a disbursement when there are
                           no outstandings, or (ii) exposure under the Foreign
                           Exchange Sublimit (under the Domestic Loan Agreement)
                           is greater that $500,000.

4.       CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.

5.       NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor
signing below) agrees that, as of the date hereof, it has no defenses against
the obligations to pay any amounts under the Indebtedness.

6.       CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
below) understands and agrees that in modifying the existing Indebtedness,
Silicon is relying upon Borrower's representations, warranties, and agreements,
as set forth in the Existing Loan Documents. Except as expressly modified
pursuant to this Loan Modification Agreement, the terms of the Existing Loan
Documents remain unchanged and in full force and effect. Silicon's agreement to
modifications to the existing Indebtedness pursuant to this Loan Modification
Agreement in no way shall obligate Silicon to make any future modifications to
the Indebtedness. Nothing in this Load Modification Agreement shall constitute a
satisfaction of the Indebtedness. It is the intention of Silicon and Borrower to
retain as liable parties all makers and endorsers of Existing Loan Documents,
unless the party is expressly released by Silicon in writing. No maker,
endorser, or guarantor will be release by virtue of this Loan Modification

<PAGE>

Agreement. The terms of this paragraph apply not only to this Loan Modification
Agreement, but also to all subsequent loan modification agreements.

         This Loan Modification Agreement is executed as of the date first
written above.

BORROWER:                                   SILICON:

CASCADE MICROTECH, INC.                     SILICON VALLEY BANK

By:    /s/ Randall Sadewic                  By:
   ---------------------------------           ---------------------------------
Name:  Randall Sadewic                      Name:
     -------------------------------             -------------------------------
Title: CFO                                  Title:
      ------------------------------              ------------------------------

<PAGE>

                           LOAN MODIFICATION AGREEMENT

         This Loan Modification Agreement is entered into as of June 14, 1999,
by and between Cascade Microtech, Inc. ("Borrower") and Silicon Valley Bank
(Silicon").

1.       DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which
may be owing by Borrower to Silicon, Borrower is indebted to Silicon pursuant
to, among other documents, a Loan and Security Agreement, dated February 19,
1998, as may be amended from time to time, together with any and Schedules
attached thereto (the "Domestic Loan Agreement"). The Domestic Loan Agreement
provided for, among other things, a Secured Accounts Receivable Line of Credit
in the original principal amount of Six Million Dollars ($6,000,000) ("Revolving
Facility"), a Secured Term Loan No. 1 in the original principal amount of Two
Million One Hundred Fifty Thousand Dollars ($2,150,000) ("Term Loan 1"). The
Revolving Facility was modified pursuant to, among other documents, a Loan
Modification Agreement dated February 18, 1999, pursuant to which, among other
things, the Revolving Facility was decreased to Four Million Dollars
($4,000,000). Furthermore, Borrower is indebted to Silicon pursuant to, among
other documents, a Loan and Security Agreement (Exim Program) dated February 19,
1998, as may be amended from time to time, together with any and all Schedules
attached thereto, (the "Exim Loan Agreeement"). The Exim Loan Agreement provided
for, among other things, an Export Line of Credit in the original principal
amount of One Million Five Hundred Thousand Dollars ($1,500,000) (the "Exim
Revolving Facility"). The Exim Revolving Facility was modified pursuant to,
among other documents, a Loan Modification Agreement dated February 19, 1999,
pursuant to which, among other things, the Exim Revolving Facility was increased
to Two Million Five Hundred Thousand Dollars ($2,500,000). The Domestic Loan
Agreement and the Exim Loan Agreement shall be collectively referred to as the
"Loan Agreements." Defined terms used but not otherwise defined herein shall
have the same meanings as in the Loan Agreements. Hereinafter, all indebtedness
owing by Borrower to Silicon shall be referred to as the "Indebtedness."

2.       DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness
is secured by the Collateral as described in the Loan Agreements and by the
Intellectual Property Collateral as described in the Intellectual Property
Security Agreement. Additionally, repayment of the Exim Revolving Facility in
guaranteed by the Export-Import Bank of the United States.

Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".

<PAGE>

3.       DESCRIPTION OF CHANGE IN TERMS.

         A.       MODIFICATION(S) TO LOAN AGREEMENTS (AND SCHEDULE THERETO).

                  1.       The paragraph entitled "Minimum Liquidity Coverage"
                           is hereby amended in its entirety to read as follow:

                           Borrower shall maintain on a quarterly basis, a ratio
                           of unrestricted case (and equivalents) plus met
                           availability under the Revolving Facility divided by
                           all outstandings under Secure Term Loan No. 1 of not
                           less than 1.75 to 1.00.

         B.       MODIFICATION(S) TO DOMESTIC LOAN AGREEMENT (AND SCHEDULE
                  THERETO).

                  1.       The following paragraphs entitled "Equipment
                           Advances" are incorporated in to the Loan Agreement
                           Schedule to read as follows:

                           EQUIPMENT ADVANCES.

                           (a)      Through December 14, 1999(the "Equipment
                           Availability End Date"), Silicon will make advances
                           ("Equipment Advance" and, collectively, "Equipment
                           Advances") not exceeding $500,000. The Equipment
                           Advances may only be used to purchase Equipment
                           purchased on or after 180 days before the requested
                           Equipment Advance and may not exceed 100% of the
                           equipment invoice, excluding taxes, shipping,
                           warranty charges, freight discounts and installation
                           expense. Each Equipment Advance must be for minimum
                           of $50,000 and the maximum number of Equipment
                           Advances that will be made is 6.

                           (b)      Interest rate. Equipment Advances accrue
                           interest on the outstanding principal balance at a
                           per annum rate of 0.50 percentage points above the
                           Prime Rate. At Borrower's option, the outstanding
                           Equipment Advances as of the Equipment Availability
                           End Date may accrue interest on the outstanding
                           principal balance through the Equipment Loan Maturity
                           Date either (I) at a rate per annum of 0.50
                           percentage point above the Prime Rate or (ii) at a
                           per annum fixed rate of equal to the Treasury Rate,
                           as described below. Such fixed rate is subject to a
                           Prepayment Fee, as described below. After an Event of
                           Default, Obligations accrue interest at 5 percent
                           above the rate effective immediately before the Event
                           of Default. The interest rate increases or decreases
                           when the Prime Rate changes. Interest is computed on
                           a 360

<PAGE>

                           day year for the actual number of days elapsed and is
                           payable monthly until the Equipment Availability End
                           Date occurs. Equipment Advances outstanding on the
                           Equipment Availability End Date are payable in 36
                           equal monthly installments of principal, plus accrued
                           interest, beginning on the 14th day of each month
                           following the Equipment Availability End Date and
                           ending on December 14, 2002 the (Equipment Loan
                           Maturity Date). Equipment Advances when repaid may
                           not be reborrowed.

                           (c)      To obtain an Equipment Advance, Borrower
                           must notify Silicon (the notice is irrevocable) by
                           facsimile no later than 3:00 p.m. Pacific time 1
                           Business Day before the day on which the Equipment
                           Advance is to be made. The notice in the form of
                           Exhibit B (Payment/Advance Form) must be signed by a
                           Responsible Officer or designee and include a copy of
                           the invoice for the Equipment being financed.

                           "Prepayment Fee" is a fee on any portion of the
                           Obligations with a fixed interest rate (the "Fixed
                           Obligations") paid before the payment due date. "Base
                           Interest Rate" means Bank's initial cost of funding
                           the Fixed Obligations. The Prepayment Fee is
                           calculated as follows: First, Silicon determines a
                           "Current Market Rate" based on what the Silicon would
                           receive if it loaned the remaining amount on the
                           prepayment date in a wholesale funding market
                           matching maturity, remaining principal and interest
                           amounts and principal and interest payment dates (the
                           aggregate payments received are the "Current Market
                           Rate Amount"). Silicon may select any wholesale
                           funding market rate as the Current Market Rate.
                           Second, Silicon will take the prepayment amount and
                           calculate the present value of each remaining
                           principal and interest payment which, without
                           prepayment, the Silicon would have received during
                           the term of the Fixed Obligations using the Base
                           Interest Rate. The sum of the present value
                           calculations is the "Mark to Market Amount." Third,
                           the Silicon will subtract the Mark to Market Amount
                           form the Current Market Rate Amount. Any amount
                           greater than zero is the Prepayment Fee.

                           "Treasury Rate" is as of the Equipment Availability
                           End Date, the per annum rate of interest (based on a
                           year of 360 days) equal to the sum of (a ) the U.S.
                           Treasury Note yield to maturity for a 36 months
                           Treasury Note as quoted in The Wall Street Journal,
                           plus (b) 275 basis points.

4.       CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.

5.       PAYMENT OF LOAN FEE. Borrower shall pay to Silicon a fee in the amount
of Five Hundred Dollars ($500) (the "Loan Fee") plus all out-of-pocket expenses.

<PAGE>

6.       NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor
signing below) agrees that, as of the date herof, it has no defenses against the
obligations to pay any amounts under the Indebtedness.

7.       CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
below) understands and agres that in modifying the existing Indebtedness,
Silicon is relying upon Borrower's representations, warrantes, and agreements,
as set forth is the Existing Loan Documents. Except as expressly modified
pursuant to this Loan Modification Agreement, the terms of the Existing Loan
Documents remain unchanged and in full force and effect. Silicon's agreement to
modifications to the existing Indebtedness pursuant to this Loan Modification
Agreement in no way shall obligate Silicon to make any future modifications to
the Indebtedness. Nothing in this Loan Modification Agreement shall constitute a
satisfaction of the Indebtedness. It is the intention of Silicon and Borrower to
retain as liable parties all makers and endorsers of Existing Loan Documents,
unless the party is expressly released by Silicon in writing. No maker,
endorser, or guarantor will be released by virtue of this Loan Modification
Agreement. The terms of this paragraph apply not only to this Loan Modification
Agreement, but also to all subsequent loan modification agreements.

8.       CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon Borrower's payment of the Loan Fee.

         This Loan Modification Agreement is executed as of the date first
written above.

BORROWER:                                   SILICON:

CASCADE MICROTECH, INC.                     SILICON VALLEY BANK

By:_____________________________            By:___________________________
Name:___________________________            Name:_________________________
Title:__________________________            Title:________________________

<PAGE>

                               SILICON VALLEY BANK

                       PRO FORMA INVOICE FOR LOAN CHARGES

BORROWER:                           CASCADE MICROTECH, INC.

LOAN OFFICER:                       BRUCE HELBERG

DATE:                               JUNE 14, 1999

<TABLE>
                                    <S>                                 <C>
                                    LOAN FEE                            $500.00
                                    DOCUMENTATION FEE                   $250.00

                                    TOTAL FEES DUE                      $750.00
                                                                        -------
</TABLE>

         { }  A CHECK FOR THE TOTAL AMOUNT IS ATTACHED.

         { }  DEBIT DDA#______________FOR THE TOTAL AMOUNT.

         { }  LOAN PROCEEDS

BORROWER

-----------------------------------------
AUTHORIZED SIGNER                  (DATE)

-----------------------------------------
SILICON VALLEY BANK                (DATE)
ACCOUNT OFFICER'S SIGNATURE

<PAGE>

                           LOAN MODIFICATION AGREEMENT

         This Loan Modification is entered into as of March 17, 1998, by and
between Cascade Microtech, Inc. ("Borrower") whose address is 14255 SW Brigadoon
Court, Beaverton, OR 97005 and Silicon Valley Bank ("Silicon") whose address is
3003 Tasman Drive, Santa Clara, CA 95054.

1.       DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which
may be owing by Borrower to Silicon, Borrower is indebted to Silicon pursuant
to, among other documents, a Loan and Security Agreement, dated February 19,
1998, as may be amended from time to time, together with any and all Schedules
attached thereto (the "Domestic Loan Agreement"). The Domestic Loan Agreement
provided for, among other things, a Secured Accounts Receivable Line of Credit
in the original principal amount of Six Million Dollars ($6,000,000) (the
"Revolving Facility"). Furthermore, Borrower is indebted to Silicon pursuant to,
among other documents, a Loan and Security Agreement (Exim Program) dated
February 19, 1998, as may be amended from time to time, together with any and
all Schedules attached thereto, (the "Exim Loan Agreement"). The Exim Loan
Agreement provided for, among other things, an Export Line of Credit in the
original principal amount of One Million Five Hundred Thousand Dollars
(1,500,000) (the "Exim Revolving Facility"). The Domestic Loan Agreement and the
Exim Loan Agreement shall be collectively referred to as the "Loan Agreements.
Defined terms used but not otherwise defined herein shall have the same meanings
as in the Loan Agreements.

Hereinafter, all indebtedness owing by Borrower to Silicon shall be referred to
as the "Indebtedness."

2.       DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the indebtedness
is secured by the Collateral as described in the Loan Agreements and by the
Intellectual Property Collateral as described in the Intellectual Property
Security Agreement.

Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing of securing the Indebtedness shall
be referred to as the "Existing Loan Documents".

3.       DESCRIPTION OF CHANGE IN TERMS.

         A.       MODIFICATION(S) TO DOMESTIC LOAN AGREEMENT

                  1.       The first sentence in the Section entitled "Credit
                           Limit" under the Schedule to Loan and Security
                           Agreement is hereby amended to read as follows:

<PAGE>

                           An amount not to exceed the lesser of : (I)
                           $4,500,000 at any one time outstanding; or (ii) the
                           amount of the "Borrowing Base", as defined below.

         B.       MODIFICATION(S) TO EXIM LOAN AGREEMENT

                  1.       The first two paragraphs in the Section entitled
                           "Credit Limit" under the Schedule to Loan and
                           Security Agreement (Exim Program) is hereby amended
                           to read as follows:

                           An amount not to exceed the lesser of: (I) $3,000,000
                           at any one time outstanding; or (ii) a total of 90%
                           of the value of Borrower's eligible export
                           receivables, which are eligible for borrowing as
                           provided below and in the EXIM Documents, plus 70% of
                           the value of Borrower's exportable inventory which is
                           eligible for borrowing as provided below and in the
                           EXIM Documents, which Silicon in its reasonable
                           discretion deems eligible for borrowing.

                           Without limiting the fact that the determination of
                           which accounts are eligible for borrowing is a matter
                           of Silicon's reasonable discretion, the following
                           shall not be deemed eligible for borrowing: accounts
                           in which Silicon does not have a first priority,
                           perfected security interest; accounts outstanding for
                           more than 60 days from the due date of the invoice,
                           accounts subject to any contingencies, accounts in
                           excess of $10,000 owing from an account debtor
                           outside the United States (except as approve in
                           writing by Silicon), accounts owing from governmental
                           agencies, and accounts owing from an account debtor
                           to whom the Borrower is or may be liable for goods
                           purchased from such account debtor or otherwise
                           ("Contra Accounts"). Contra Accounts shall be
                           eligible to the extent of the net difference between
                           the account receivable and the account payable;
                           however, if the account payable exceeds the account
                           receivable, the entire account receivable shall be
                           ineligible. In addition, if more than 50% of the
                           total dollar amount of accounts owing from an account
                           debtor are outstanding more than 60 days from the due
                           date of the invoice or are otherwise not eligible
                           accounts, then all accounts owing from that account
                           debtor shall be deemed ineligible for borrowing.

4.       CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.

5.       NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor
signing below) agrees that, as of the date hereof, it has no defenses against
the obligations to pay any amounts under the Indebtedness.

<PAGE>

6.       CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
below) understands and agrees that in modifying the existing Indebtedness,
Silicon is relying upon Borrower's representations, warranties, and agreements,
as set forth in the Existing Loan Documents. Except as expressly modified
pursuant to this Loan Modification Agreement, the terms of the Existing Loan
Documents remain unchanged and in full force and effect. Silicon's agreement to
modifications to the existing Indebtedness pursuant to this Loan Modification
Agreement in no way shall obligate Silicon to make any future modifications to
the Indebtedness. Nothing in this loan Modification Agreement shall constitute a
satisfaction of the Indebtedness. It is the intention of Silicon and Borrower to
retain as liable parties all makers and endorsers of Existing Loan Documents,
unless the party is expressly released by Silicon in writing. No maker,
endorser, or guarantor will be released by virtue of this Loan Modification
Agreement. The terms of this paragraph apply not only to this Loan Modification
Agreement, but also to all subsequent loan modification agreements.

         This Loan Modification Agreement is executed as of the date first
written above.

BORROWER:                                   SILICON:

CASCADE MICROTECH, INC.                     SILICON VALLEY BANK

By:    /s/ Randall Sadewic                  By:   /s/  Bruce Helberg
   ---------------------------------           ---------------------------------
Name:  Randall Sadewic                      Name:      Bruce Helberg
     -------------------------------             -------------------------------
Title: CFO                                  Title:     VP
      ------------------------------              ------------------------------

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