<PAGE>
                                                                   EXHIBIT 10.34

                      BUSINESS LOAN AGREEMENT (ASSET BASED)

<TABLE>
<CAPTION>
  Principal       Loan Date      Maturity       Loan No       Call/Coll      Account       Officer       Initials
-----------------------------------------------------------------------------------------------------------------
<S>               <C>           <C>            <C>            <C>            <C>           <C>
$2,000,000.00     12-21-2001    05-30-2003     89000103         3025          307877         076
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.

      Any item above "***" has been omitted due to text length limitations.


Borrower:      microHelix, Inc.     Lender:      WEST COAST BANK
               16125 SW 72nd Ave                 Portland Metro Business Banking
               Tigard, OR 97224                  1000 SW Broadway, Suite 1100
                                                 Portland, OR 97205

THIS BUSINESS LOAN AGREEMENT (ASSET BASED) dated December 21, 2001, is made and
executed between microHelix, Inc. ("Borrower') and WEST COAST BANK ("Lender") on
the following terms and conditions, Borrower has received prior commercial loans
from Lender or has applied to Lender for a commercial loan or loans or other
financial accommodations, Including those which may be described on any exhibit
or schedule attached to this Agreement ("Loan"). Borrower understands and agrees
that: (A) in granting, renewing, or extending any Loan, Lender is relying upon
Borrower's representations, warranties, and agreements as set forth in this
Agreement, and (B) all such Loans shall be and remain subject to the terms and
conditions of this Agreement.

TERM. This Agreement shall be effective as of December 21, 2001, and shall
continue in full force and effect until such time as all of Borrower's Loans in
favor of Lender have been paid in full, Including principal, interest, costs,
expenses, attorneys' fees, and other fees and charges, or until such time as the
parties may agree in writing to terminate this Agreement.

ADVANCE AUTHORITY. The following persons currently are authorized to request
advances and authorize payments under the line of credit until Lender receives
from Borrower, at Lender's address shown above, written notice of revocation of
their authority: Richard G Sass, President of microHelix, Inc.; Jane K Conner,
Treasurer of microHelix, Inc.; Terrence A Rixford, CFO of microHelix, Inc.;
Tyram H Pettit, COO of microHelix, Inc.; and Kimberly Edwards, Controller of
microHelix, Inc.

LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time
from the date of this Agreement to the Expiration Date, provided the aggregate
amount of such Advances outstanding at any time does not exceed the Borrowing
Base. Within the foregoing limits, Borrower may borrow, partially or wholly
prepay, and reborrow under this Agreement as follows:

         Conditions Precedent to Each Advance. Lender's obligation to make any
         Advance to or for the account of Borrower under this Agreement is
         subject to the following conditions precedent, with all documents,
         instruments, opinions, reports, and other items required under this
         Agreement to be in form and substance satisfactory to Lender:

                  (1) Lender shall have received evidence that this Agreement
                  and all Related Documents have been duly authorized, executed,
                  and delivered by Borrower to Lender,

                  (2) Lender shall have received such opinions of counsel,
                  supplemental opinions, and documents as Lender may request.

                  (3) The security interests in the Collateral shall have been
                  duly authorized, created, and perfected with first lien
                  priority and shall be in full force and effect.

                  (4) All guaranties required by Lender for the credit
                  facility(ies) shall have been executed by each Guarantor,
                  delivered to Lender, and be in full force and effect.

                  (5) Lender, at its option and for its sole benefit, shall have
                  conducted an audit of Borrower's Accounts, inventory, books,
                  records, and operations, and Lender shall be satisfied as to
                  their condition.

                  (6) Borrower shall have paid to Lender all fees, costs, and
                  expenses specified in this Agreement and the Related Documents
                  as are then due and payable.

                  (7) There shall not exist at the time of any Advance a
                  condition which would constitute an Event of Default under
                  this Agreement, and Borrower shall have delivered to Lender
                  the compliance certificate called for in the paragraph below
                  titled "Compliance Certificate."

         Making Loan Advances. Advances under this credit facility, as well as
         directions for payment from Borrower's accounts, may be requested
         orally or in writing by authorized persons. Lender may, but need not,
         require that all oral requests be confirmed in writing. Each Advance
         shall be conclusively deemed to have been made at the request of and
         for the benefit of Borrower (1) when credited to any deposit account of
         Borrower maintained with Lender or (2) when advanced in accordance with
         the instructions of an authorized person. Lender, at its option, may
         set a cutoff time, after which all requests for Advances will be
         treated as having been requested on the next succeeding Business Day.

         Mandatory Loan Repayments. If at any time the aggregate principal
         amount of the outstanding Advances shall exceed the applicable
         Borrowing Base, Borrower, immediately upon written or oral notice from
         Lender, shall pay to Lender an amount equal to the difference between
         the outstanding principal balance of the Advances and the Borrowing
         Base. On the Expiration Date, Borrower shall pay to Lender in full the
         aggregate unpaid principal amount of all Advances then outstanding and
         all accrued unpaid interest, together with all other applicable fees,
         costs and charges, if any, not yet paid.
<PAGE>
         Loan Account. Lender shall maintain on its books a record of account in
         which Lender shall make entries for each Advance and such other debits
         and credits as shall be appropriate in connection with the credit
         facility. Lender shall provide Borrower with periodic statements of
         Borrower's account, which statements shall be considered to be correct
         and conclusively binding on Borrower unless Borrower notifies Lender to
         the contrary within thirty (30) days after Borrower's receipt of any
         such Statement which Borrower deems to be Incorrect.

COLLATERAL. To secure payment of the Primary Credit Facility and performance of
all other Loan, obligations and duties owed by Borrower to Lender, Borrower (and
others, if required) shall grant to Lender Security Interests in such property
and assets as Lender may require. Lender's Security Interests in the Collateral
shall be continuing liens and shall Include the proceeds and products of the
Collateral, Including without limitation the proceeds of any insurance. With
respect to the Collateral, Borrower agrees and represents and warrants to
lender;

         Perfection of Security Interests. Borrower agrees to execute financing
         statements and all documents perfecting Lender's Security Interest and
         to take whatever other actions are requested by Lender to perfect and
         continue Lender's Security Interests in the Collateral. Upon request of
         Lender, Borrower will deliver to Lender any and all of the documents
         evidencing or constituting the Collateral, and Borrower will note
         Lender's interest upon any and all chattel paper and instruments if not
         delivered to Lender for possession by Lender. Contemporaneous with the
         execution of this Agreement, Borrower will execute one or more UCC
         financing statements and any similar statements as may be required by
         applicable law, and Lender will file such financing statements and all
         such similar statements in the appropriate location or locations.
         Borrower hereby appoints Lender as its irrevocable attorney-in-fact for
         the purpose of executing any documents necessary to perfect or to
         continue any Security Interest. Lender may at any time, and without
         further authorization from Borrower, file a carbon, photograph,
         facsimile, or other reproduction of any financing statement for use as
         a financing statement. Borrower will reimburse Lender for all expenses
         for the perfection, termination, and the continuation of the perfection
         of Lender's security interest in the Collateral. Borrower promptly will
         notify Lender before any change in Borrower's name Including any change
         to the assumed business names of Borrower. Borrower also promptly will
         notify Lender before any change in Borrower's Social Security Number or
         Employer identification Number. Borrower further agrees to notify
         Lender in writing prior to any change in address or location of
         Borrower's principal governance office or should Borrower merge or
         consolidate with any other entity.

         Collateral Records. Borrower does now, and at all times hereafter
         shall, keep correct and accurate records of the Collateral, all of
         which records shall be available to Lender or Lender's representative
         upon demand for inspection and copying at any reasonable time. With
         respect to the Accounts, Borrower agrees to keep and maintain such
         records as Lender may require, Including without limitation information
         concerning Eligible Accounts and Account balances and agings. Records
         related to Accounts (Receivables) are or will be located at 16125 SW
         72nd Ave Tigard, OR 97224. With respect to the inventory, Borrower
         agrees to keep and maintain such records as Lender may require,
         Including without limitation information concerning Eligible Inventory
         and records itemizing and describing the kind, type, quality, and
         quantity of Inventory, Borrower's inventory costs and selling prices,
         and the daily withdrawals and additions to Inventory. Records related
         to Inventory are or will be located at 16125 SW 72nd Ave Tigard, OR
         97224. The above is an accurate and complete list of all locations at
         which Borrower keeps or maintains business records concerning
         Borrower's collateral.

         Collateral Schedules. Concurrently with the execution and delivery of
         this Agreement, Borrower shall execute and deliver to Lender schedules
         of Accounts and inventory and schedules of Eligible Accounts and
         Eligible Inventory in form and substance satisfactory to the Lender.
         Thereafter supplemental schedules shall be delivered according to the
         following schedule: With respect to Eligible Accounts, schedules shall
         be delivered by the 20th of the month following month end. Borrower
         agrees to submit Accounts Receivable and Accounts Payable Agings.
         Borrower's Certificate will be required to be submitted monthly by the
         30th day of each month. In addition, Borrower to provide a Compliance
         Certificate within 30 days after the end of each month. With respect to
         Eligible Inventory, schedules shall be delivered upon request.

         Representations and Warranties Concerning Accounts, With respect to the
         Accounts, Borrower represents and warrants to Lender (1) Each Account
         represented by Borrower to be an Eligible Account for purposes of this
         Agreement conforms to the requirements of the definition of an Eligible
         Account; (2) All Account information listed on schedules delivered to
         Lender will be true and correct, subject to immaterial variance: and
         (3) Lender, its assigns, or agents shall have the right at any time and
         at Borrower's expense to inspect, examine, and audit Borrowers records
         and to confirm with Account Debtors the accuracy of such Accounts.

         Representations and Warranties Concerning Inventory. With respect to
         the inventory, Borrower represents and warrants to Lender, (1) All
         inventory represented by Borrower to be Eligible Inventory for purposes
         of this Agreement conforms to the requirements of the definition of
         Eligible Inventory; (2) All Inventory values listed on schedules
         delivered to Lender will be true and correct, subject to immaterial
         variance; (3) The value of the Inventory will be determined on a
         consistent accounting basis, (4) Except as agreed to the contrary by
         Lender in writing, all Eligible Inventory is now and at all times
         hereafter will be in Borrower's physical possession and shall not be
         held by others on consignment, sale on approval, or sale or return; (5)
         Except as reflected in the Inventory schedules delivered to Lender, all
         Eligible Inventory (is now and at all times hereafter will be of good
         and merchantable quality, free from defects; (6) Eligible Inventory is
         not now and will not at any time hereafter be stored with a bailee,
         warehouseman, or similar party without Lender's prior written consent,
         and, in such event, Borrower will concurrently at the time of bailment
         cause any such bailee, warehouseman, or similar party to issue and
         deliver to Lender, in form acceptable to Lender, warehouse receipts in
         Lender name evidencing the storage of Inventory; and (7) Lender, its
         assigns, or agents shall have the right at any time and at Borrower's
         expense to inspect and examine the Inventory and to check and test the
         same as to quality, quantity, value, and condition.

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.

         Loan Documents. Borrower shall provide to Lender the following
         documents for the Loan: (1) the Note; (2) Security Agreements granting
         to Lender security interests in the Collateral; (3) financing
         statements and all other documents
<PAGE>
         perfecting Lender's Security Interests; (4) evidence of insurance as
         required below; (5) together with all such Related Documents as Lender
         may require for the Loan; all in form and substance satisfactory to
         Lender and Lender's counsel.

         Borrower's Authorization. Borrower shall have provided in form and
         substance satisfactory to Lender properly certified resolutions, duly
         authorizing the execution and delivery of this Agreement, the Note and
         the Related Documents. In addition, Borrower shall have provided such
         other resolutions, authorizations, documents and instruments as Lender
         or its counsel, may require.

         Fees and Expenses Under This Agreement. Borrower shall have paid to
         Lender all fees, costs, and expenses specified in this Agreement and
         the Related Documents as are then due and payable.

         Representations and Warranties. The representations and warranties set
         forth in this Agreement, in the Related Documents, and in any document
         or certificate delivered to Lender under this Agreement are true and
         correct.

         No Event of Default. There shall not exist at the time of any Advance a
         condition which would constitute an Event of Default under this
         Agreement or under any Related Document.

REPRESENTATIONS AND WARRANTIES, Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any indebtedness exists:

         Organization. Borrower is a corporation for profit which is, and at all
         times shall be, duly organized, validly existing, and under and by
         virtue of the laws of the State of Oregon. Borrower is duly authorized
         to transact business in all other states in which Borrower is doing
         business, having obtained all necessary filings, governmental licenses
         and approvals for each state in which Borrower is doing business,
         Specifically, Borrower is, and at all times shall be, duly qualified as
         a foreign corporation in all states in which the failure to so qualify
         would have a material adverse affect on its business or financial
         condition. Borrower has the full power and authority to own its
         properties and to transact the business in which it is presently
         engaged or presently proposes to engage. Borrower maintains an office
         at 16125 SW 72nd Ave, Tigard, OR 97224. Unless Borrower has designated
         otherwise in writing, the principal office is the office at which
         Borrower keeps its books and records Including its records concerning
         the Collateral. Borrower will notify Lender prior to any change in the
         location of Borrower's state of organization or any change in
         Borrower's name. Borrower shall do all things necessary to preserve and
         to keep in full force and effect its existence, rights and privileges,
         and shall comply with all regulations, rules, ordinances, statutes,
         orders and decrees of any governmental or quasi-governmental authority
         or court applicable to Borrower and Borrower's business activities.

         Assumed Business Names. Borrower has flied or recorded all documents or
         filings required by law relating to all assumed business names used by
         Borrower. Excluding the name of Borrower, the following is a complete
         list of all assumed business names under which Borrower does business:
         None.

         Authorization. Borrower's execution, delivery, and performance of this
         Agreement and all the Related Documents have been duly authorized by
         all necessary action by borrower and do not conflict with, result in a
         violation of, or constitute a default under (1) any provision of
         Borrower's articles of Incorporation or organization, or bylaws, or any
         agreement or other instrument binding upon Borrower or (2) any law,
         governmental regulation, court decree, or order applicable to Borrower
         or to Borrower's properties.

         Financial Information. Each of Borrower's financial statements supplied
         to Lender truly and completely disclosed Borrower's financial condition
         as of the date of the statement, and there has been no material adverse
         change in Borrower's financial condition subsequent to the date of the
         most recent financial statement supplied to Lender. Borrower has no
         material contingent obligations except as disclosed in such financial
         statements.

         Legal Effect. This Agreement constitutes, and any instrument or
         agreement Borrower is required to give under this Agreement when
         delivered will constitute legal, valid, and binding obligations of
         Borrower enforceable against Borrower in accordance with their
         respective terms.

         Properties. Except as contemplated by this Agreement or as previously
         disclosed in Borrower's financial statements or in writing to Lender
         and as accepted by Lender, and except for property tax liens for taxes
         not presently due and payable, Borrower owns and has good title to all
         of Borrower's properties free and clear of all Security Interests, and
         has not executed any security documents or financing statements
         relating to such properties. All of Borrower's properties are titled in
         Borrower's legal name, and Borrower has not used or filed a financing
         statement under any other name for at least the last five (5) years.

         Hazardous Substances. Except as disclosed to and acknowledged by Lender
         in writing, Borrower represents and warrants that; (1) During the
         period of Borrower's ownership of Borrower's Collateral, there has been
         no use, generation, manufacture, storage, treatment, disposal, release
         or threatened release of any Hazardous Substance by any person on,
         under, about or from any of the Collateral. (2) Borrower has no
         knowledge of, or reason to believe that there has been (a) any breach
         or violation of any Environmental Laws; (b) any use, generation,
         manufacture, storage, treatment, disposal, release or threatened
         release of any Hazardous Substance on, under, about or from the
         Collateral by any prior owners or occupants of any of the Collateral;
         or (c) any actual or threatened litigation or claims of any kind by any
         person relating to such matters. (3) Neither Borrower nor any tenant,
         contractor, agent or other authorized user of any of the Collateral
         shall use, generate, manufacture, store, treat, dispose of or release
         any Hazardous Substance on, under, about or from any of the Collateral;
         and any such activity shall be conducted in compliance with all
         applicable federal, state, and local laws, regulations, and ordinances,
         Including without limitation all Environmental Laws. Borrower
         authorizes Lender and its agents to enter upon the Collateral to make
         such inspections and tests as tender may deem appropriate to determine
         compliance of the Collateral with this section of the Agreement. Any
         inspections or tests made by Lender shall be at Borrower's expense and
         for Lender's purposes only and shall not be construed to create any
         responsibility or liability on
<PAGE>
         the part of Lender to Borrower or to any other person. The
         representations and warranties contained herein are based on Borrower's
         due diligence in investigating the Collateral for hazardous waste and
         Hazardous Substances, Borrower hereby (1) releases and waives any
         future claims against Lender for indemnity or contribution in the event
         Borrower becomes liable for cleanup or other costs under any such laws,
         and (2) agrees to indemnify and hold harmless Lender against any and
         all claims, losses, liabilities, damages, penalties, and expenses which
         Lender may directly or indirectly sustain or suffer resulting from a
         breach of this section of the Agreement or as a consequence of any use,
         generation, manufacture, storage, disposal, release or threatened
         release of a hazardous waste or substance on the Collateral, or as a
         result of a violation of any Environmental Laws. The provisions of this
         section of the Agreement, Including the obligation to indemnify, shall
         survive the payment of the indebtedness and the termination, expiration
         or satisfaction of this Agreement and shall not be affected by Lenders
         acquisition of any interest in any of the Collateral, whether by
         foreclosure or otherwise.

         Litigation and Claims. No litigation, claim, investigation,
         administrative proceeding or similar action (Including those for unpaid
         taxes) against Borrower is pending or threatened, and no other event
         has occurred which may materially adversely affect Borrower's financial
         condition or properties, other than litigation, claims, or other
         events, if any, that have been disclosed to and acknowledged by Lender
         in writing.

         Taxes. To the best of Borrower's knowledge, all of Borrower's tax
         returns and reports that are or were required to be filed, have been
         filed, and all taxes, assessments and other governmental charges have
         been paid in full, except those presently being or to be contested by
         Borrower in good faith in the ordinary course of business and for which
         adequate reserves have been provided.

         Lien Priority. Unless otherwise previously disclosed to Lender in
         writing, Borrower has not entered into or granted any Security
         Agreements, or permitted the filing or attachment of any Security
         Interests on or affecting any of the Collateral directly or indirectly
         securing repayment of Borrower's Loan and Note, that would be prior or
         that may in any way be superior to Lender's Security Interests and
         rights in and to such Collateral.

         Binding Effect. This Agreement, the Note, all Security Agreements (if
         any), and all Related Documents are binding upon the signers thereof,
         as well as upon their successors, representatives and assigns, and are
         legally enforceable in accordance with their respective terms.

         Notices of Claims and Litigation. Promptly inform Lender in writing of
         (1) all material adverse changes in Borrower's financial condition, and
         (2) all existing and all threatened litigation, claims, investigations,
         administrative proceedings or similar actions affecting Borrower or any
         Guarantor which could materially affect the financial condition of
         Borrower or the financial condition of any Guarantor.

         Financial Records. Maintain its books and records in accordance with
         GAAP, applied on a consistent basis, and permit Lender to examine and
         audit Borrower's books and records at all reasonable times.

         Financial Statements.  Furnish Lender with the following:

                  Additional Requirements.

                  1) Borrower to provide CPA audited financial statements within
                  120 days after each fiscal year end.

                  2) Borrower to provide Company prepared consolidated, monthly
                  financial statements within 30 days after the end of each
                  month.

                  3) Borrower to provide tax returns within 15 days of filing
                  date.

         All financial reports required to be provided under this Agreement
         shall be prepared in accordance with GAAP, applied on a consistent
         basis, and certified by Borrower as being true and correct.

         Additional information. Furnish such additional information and
         statements, as Lender may request from time to time.

         Financial Covenants and Ratios. Comply with the following covenants and
         ratios:

                  Other Requirements.

                  1) Borrower must maintain a minimum Tangible Net Worth of
                  $7,000,000. "Tangible Net Worth" shall be defined as the
                  financial statement Net Worth of the Borrower prepared
                  according to generally accepted accounting principles less
                  intangible assets, plus indebtedness fully subordinated to the
                  debt due to the Bank.

                  2) Borrower must maintain a Minimum Quick Ratio of 1.25 to
                  1.00. "Quick Ratio" shall be defined as the financial
                  statement Cash and Cash Equivalents plus accounts receivable
                  divided by Current Liabilities.

                  3) Borrower must maintain a minimum Liquidity Ratio of 2.00 to
                  1.00. "Liquidity" shall be defined as the financial statement
                  Cash and Cash Equivalents plus 75% of eligible accounts
                  receivable less any outstandings under the Line, divided by
                  total outstandings under the Loan.

                  4) The Liquidity covenant may be replaced with a Debt Service
                  covenant of 1.50 to 1.00 upon Borrower's ability to meet the
                  Debt Service covenant for six consecutive months. "Debt
                  Service" shall be defined as Earnings Before Interest, Taxes,
                  Depreciation, and Amortization, (EBITDA), divided by total
                  interest expense plus Current Portion of Long Term Debt.

                  Except as provided above, all computations made to determine
         compliance with the requirements contained in this paragraph shall be
         made in accordance with generally accepted accounting principles,
         applied on a consistent basis, and certified by Borrower as being true
         and correct.

         Insurance. Maintain fire and other risk insurance, public liability
         insurance, and such other insurance as Lender may require with respect
         to Borrower's properties and operations, in form, amounts, coverages
         and with insurance companies acceptable to Lender. Borrower, upon
         request of Lender, will deliver to Lender from time to time the
         policies or
<PAGE>
         certificates of insurance in form satisfactory to Lender, Including
         stipulations that Coverages will not be cancelled or diminished without
         at least ten (10) days prior written notice to Lender. Each insurance
         policy also shall Include an endorsement providing that coverage in
         favor of Lender will not be impaired in any way by any act, omission or
         default of Borrower or any other person. In connection with all
         policies covering assets in which Lender holds or is offered a Security
         Interest for the Loans, Borrower will provide Lender with such lender's
         loss payable or other endorsements as Lender may require.

         Insurance Reports. Furnish to Lender, upon request of Lender, reports
         on each existing insurance policy showing such information as Lender
         may reasonably request, Including without limitation the following: (1)
         the name of the insurer; (2) the risks insured; (3) the amount of the
         policy; (4) the properties insured; (5) the then current property
         values on the basis of which insurance has been obtained, and the
         manner of determining those values; and (6) the expiration date of the
         policy. In addition, upon request of Lender (however not more often
         than annually), Borrower will have an independent appraiser
         satisfactory to Lender determine, as applicable, the actual cash value
         or replacement cost of any Collateral. The cost of such appraisal shall
         be paid by Borrower.

         Other Agreements. Comply with all terms and conditions of all other
         agreements, whether now or hereafter existing, between Borrower and any
         other party and notify Lender immediately in writing of any default in
         connection with any other such agreements.

         Loan Proceeds. Use all Loan proceeds solely for Borrower's business
         operations, unless specifically consented to the contrary by Lender in
         writing.

         Taxes, Charges and Liens. Pay and discharge when due all of its
         indebtedness and obligations, Including without limitation all
         assessments, taxes, governmental charges, levies and liens, of every
         kind and nature, imposed upon Borrower or its properties, Income, or
         profits, prior to the date on which penalties would attach, and all
         lawful claims that, if unpaid, might become a lien or charge upon any
         of Borrower's properties, Income, or profits.

         Performance. Perform and comply, in a timely manner, with all terms,
         conditions, and provisions set forth in this Agreement, in the Related
         Documents, and in all other instruments and agreements between Borrower
         and Lender. Borrower shall notify Lender immediately in writing of any
         default in connection with any agreement.

         Operations. Maintain executive and management personnel with
         substantially the same qualifications and experience as the present
         executive and management personnel; provide written notice to Lender of
         any change in executive and management personnel; conduct its business
         affairs in a reasonable and prudent manner.

         Environmental Studies. Promptly conduct and complete, at Borrower's
         expense, all such investigations, studies, samplings and testings as
         may be requested by Lender or any governmental authority relative to
         any substance, or any waste or by-product of any substance defined as
         toxic or a hazardous substance under applicable federal, state, or
         local law, rule, regulation, order or directive, at or affecting any
         property or any facility owned, leased or used by Borrower.

         Compliance with Governmental Requirements. Comply with all laws,
         ordinances, and regulations, now or hereafter in effect, of all
         governmental authorities applicable to the conduct of Borrower's
         properties, businesses and operations, and to the use or occupancy of
         the Collateral, Including without limitation, the Americans With
         Disabilities Act. Borrower may contest in good faith any such law,
         ordinance, or regulation and withhold compliance during any proceeding,
         Including appropriate appeals, so long as Borrower has notified Lender
         in writing prior to doing so and so long as, in Lender's sole opinion,
         Lender's interests in the Collateral are not jeopardized. Lender may
         require Borrower to post adequate security or a surety bond, reasonably
         satisfactory to Lender, to protect Lender's interest.

         Inspection. Permit employees or agents of Lender at any reasonable time
         to inspect any and all Collateral for the Loan or Loans and Borrower's
         other properties and to examine or audit Borrower's books, accounts,
         and records and to make copies and memoranda of Borrower's books,
         accounts, and records. If Borrower now or at any time hereafter
         maintains any records (Including without limitation computer generated
         records and computer software programs for the generation of such
         records) in the possession of a third party, Borrower, upon request of
         Lender, shall notify such party to permit Lender free access to such
         records at all reasonable times and to provide Lender with copies of
         any records it may request, all at Borrower's expense.

         Compliance Certificates, Unless waived in writing by Lender, provide
         Lender at least annually, with a certificate executed by Borrower's
         chief financial officer, or other officer or person acceptable to
         Lender, certifying that the representations and warranties set forth in
         this Agreement are true and correct as of the date of the certificate
         and further certifying that, as of the date of the certificate, no
         Event of Default exists under this Agreement.

         Environmental Compliance and Reports. Borrower shall comply in all
         respects with any and all Environmental Laws; not cause or permit to
         exist, as a result of an intentional or unintentional action or
         omission on Borrower's part or on the part of any third party, on
         property owned and/or occupied by Borrower, any environmental activity
         where damage may result to the environment, unless such environmental
         activity is pursuant to and in compliance with the conditions of a
         permit issued by the appropriate federal, state or local governmental
         authorities; shall furnish to Lender promptly and in any event within
         thirty (30) days after receipt thereof a copy of any notice, summons,
         lien, citation, directive, letter or other communication from any
         governmental agency or instrumentality concerning any intentional or
         unintentional action or omission on Borrower's part in connection with
         any environmental activity whether or not there is damage to the
         environment and/or other natural resources.

         Additional Assurances. Make, execute and deliver to Lender such
         promissory notes, mortgages, deeds of trust, security agreements,
         assignments, financing statements, instruments, documents and other
         agreements as Lender or its attorneys may reasonably request to
         evidence and secure the Loans and to perfect all Security Interests.
<PAGE>
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Borrower fails to
comply with any provision of this Agreement or any Related Documents, Including
but not limited to Borrower's failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or any Related
Documents, Lender on Borrowers behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, Including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, al any time levied or placed on any Collateral and paying all
costs for insuring, maintaining and preserving any Collateral. All such
expenditures Incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date Incurred or paid by
Lender to the date of repayment by Borrower. All such expenses will become a
part of the indebtedness and, at Lender's option, will (A) be payable on demand;
(B) be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note's
maturity.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in affect, Borrower shall not, without the prior written consent of
Lender;

         Indebtedness and Liens. (1) Except for trade debt Incurred in the
         normal course of business and indebtedness to Lender contemplated by
         this Agreement, create, Incur or assume indebtedness for borrowed
         money, Including capital leases, (2) sell, transfer, mortgage, assign,
         pledge, lease, grant a security interest in, or encumber any of
         Borrower's assets (except as allowed as Permitted Liens), or (3) sell
         with recourse any of Borrower's accounts, except to Lender.

         Continuity of Operations. (1) Engage in any business activities
         substantially different than those in which Borrower is presently
         engaged, (2) cease operations, liquidate, merge, transfer, acquire or
         consolidate with any other entity, change its name, dissolve or
         transfer or sell Collateral out of the ordinary course of business, or
         (3) pay any dividends on Borrower's stock (other than dividends payable
         in its stock); provided, however that notwithstanding the foregoing,
         but only so long as no Event of Default has occurred and is continuing
         or would result from the payment of dividends, if Borrower is a
         "Subchapter S Corporation" (as deemed in the Internal Revenue Code of
         1986, as amended), Borrower may pay cash dividends on its stock to its
         shareholders from time to time in amounts necessary to enable the
         shareholders to pay Income taxes and make estimated Income tax payments
         to satisfy their liabilities under federal and state law which arise
         solely from their status as Shareholders of a Subchapter S Corporation
         because of their ownership of shares of Borrowers stock, or purchase or
         retire any of Borrower's outstanding shares or alter or amend
         Borrower's capital structure.

         Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance
         money or assets, (2) purchase, create or acquire any interest in any
         other enterprise or entity, or (3) Incur any obligation as surety or
         guarantor other than in the ordinary course of business.

CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(A) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes
Incompetent or becomes insolvent, files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse
change in Borrower's financial condition, in the financial condition of any
Guarantor, or in the value of any Collateral securing any Loan; or (D) any
Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
Guarantor's guaranty of the Loan or any other loan with Lender; or (E) tender in
good faith deems itself insecure, even though no Event of Default shall have
occurred.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This Includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not Include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law., Borrower authorizes lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts.

DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:

         Payment Default. Borrower fails to make any payment when due under the
         Loan.

         Other Defaults. Borrower fails to comply with or to perform any other
         term, obligation, covenant or condition contained in this Agreement or
         in any of the Related Documents or to comply with or to perform any
         term, obligation, covenant or condition contained in any other
         agreement between Lender and Borrower.

         False Statements. Any warranty, representation or statement made or
         furnished to Lender by Borrower or on Borrower's behalf under this
         Agreement or the Related Documents is false or misleading in any
         material respect, either now or at the time made or furnished or
         becomes false or misleading at any time thereafter.

         Insolvency. The dissolution or termination of Borrower's existence as a
         going business, the insolvency of Borrower, the appointment of a
         receiver for any part of Borrower's property, any assignment for the
         benefit of creditors, any type of creditor workout, or the commencement
         of any proceeding under any bankruptcy or insolvency laws by or against
         Borrower.

         Defective Collateralization. This Agreement or any of the Related
         Documents ceases to be in full force and effect (Including failure of
         any collateral document to create a valid and perfected security
         interest or lien) at any time and for any reason.

         Creditor or Forfeiture Proceedings. Commencement of foreclosure or
         forfeiture proceedings, whether by judicial proceeding, self-help,
         repossession or any other method, by any creditor of Borrower or by any
         governmental agency against any collateral securing the Loan. This
         Includes a garnishment of any of Borrower's accounts, Including deposit
<PAGE>
         accounts, with Lender. However, this Event of Default shall not apply
         if there is a good faith dispute by Borrower as to the validity or
         reasonableness of the claim which is the basis of the creditor of
         forfeiture proceeding and if Borrower gives Lender written notice of
         the creditor or forfeiture proceeding and deposits with Lender monies
         or a surety bond for the creditor or forfeiture proceeding, in an
         amount determined by Lender, in its sole discretion, as being an
         adequate reserve or bond for the dispute.

         Events Affecting Guarantor. Any of the preceding events occurs with
         respect to any Guarantor of any of the indebtedness or any Guarantor
         dies or becomes Incompetent, or revokes or disputes the validity of, or
         liability under, any Guaranty of the Indebtedness, in the event of a
         death, Lender, at its option, may, but shall not be required to, permit
         the Guarantors estate to assume unconditionally the obligations arising
         under the guaranty in a manner satisfactory to tender, and, in doing
         so, cure any Event of Default.

         Change in Ownership. Any change in ownership of twenty five percent
         (25%) or more of the common stock of Borrower.

         Adverse Change. A material adverse change occurs in Borrower's
         financial condition, or Lender believes the prospect performance of the
         Loan is impaired.

         Insecurity. Lender in good faith believes itself insecure.

         Right to Cure. If any default, other than a default on indebtedness, is
         curable and if Borrower or Grantor, as the case may be, has not been
         given a notice of a similar default within the preceding twelve (12)
         months, it may be cured (and no Event of Default will have occurred) if
         Borrower or Grantor, as the case may be, after receiving written notice
         from lender demanding cure of such default. (1) cure the default within
         fifteen (15) days, or (2) if the cure requires more than fifteen (15)
         days, immediately initiate steps which Lender deems in Lender's sole
         discretion to be sufficient to cure the default and thereafter continue
         and complete all reasonable and necessary steps sufficient to produce
         compliance as soon as reasonably practical.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (Including any obligation to make
further Loan Advances or disbursements), and, at Lender's option, all
indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available by law, in equity, or
otherwise. Except as may be prohibited by applicable law, all of Lender's rights
and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect Lender's
right to declare a default and to exercise its rights and remedies.

ADDITIONAL COVENANTS.

1) Bank shall conduct semi-annual collateral audits by Bank's designated agent
at the Borrower's expense with results satisfactory to Bank.
2) Borrower's primary banking accounts to be maintained at Bank.
3) Without Bank's prior approval, which shall not be unreasonably withhold,
Borrower shall not,

         a) Enter into any mergers or acquisitions or major debt agreements.

         b) Repurchase stock or pay cash dividends except as required to cover
         personal tax liabilities of shareholders.

         c) Hypothecate assets.

         d) Loan money or guarantee loans of others.

4) Borrower shall notify Bank in writing of any legal action commenced against
it that may result in damages over $50,000. Borrower shall provide Bank with
such notice immediately upon Borrower's receipt of notion of such legal action.

5) Borrower shall provide Bank proof of insurance on all tangible corporate
assets and a Lender's Loss Payable Clause with Bank listed as loss payee. 6) All
reasonable expenses of Bank for legal fees, documentation fees, UCC searches and
filing fees, and all other costs involved with documenting shall be borne by the
Borrower whether or not the Credit Facilities close.

SUBORDINATED DEBT. Richard G. Sass to formally subordinate to Bank shareholder
loans between the Borrower and Richard G Sass in the original amounts of
$383,855, $160,000 and $675,000 dated December 15, 1999. February 1, 2000 and
August 1, 2000 respectively. Current balance of $1,090,830 to be subordinated.
Multnomah County, and that venue is proper in such courts.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

         Amendments. This Agreement, together with any Related Documents,
         constitutes the entire understanding and agreement of the parties as to
         the matters set forth in this Agreement. No alteration of or amendment
         to this Agreement shall be effective unless given in writing and signed
         by the party or parties sought to be charged or bound by the alteration
         or amendment.

         Arbitration. Borrower and Lender agree that all disputes, claims and
         controversies between them whether individual, joint, or class in
         nature, arising from this Agreement or otherwise, Including without
         limitation contract and tort disputes, shall be arbitrated pursuant to
         the Rules of the American Arbitration Association in effect at the time
         the claim is filed, upon request of either party. No act to take or
         dispose of any Collateral shall constitute a waiver of this arbitration
         agreement or be prohibited by this arbitration agreement. This
         Includes, without limitation, obtaining injunctive relief or a
         temporary restraining order; foreclosing by notice and sale under any
         deed of trust or mortgage; obtaining a writ of attachment or imposition
         of a receiver; or exercising any rights relating to personal property,
         Including taking or disposing of such property with or without judicial
         process pursuant to Article 9 of the Uniform Commercial Code. Any
         disputes, claims, or controversies concerning the lawfulness or
         reasonableness of any act, or exercise of any right, concerning any
         Collateral, Including any claim to rescind, reform, or otherwise modify
         any agreement relating to the Collateral, shall also be arbitrated,
         provided however that no arbitrator shall have the right or the power
         to enjoin or restrain any act of any party.
<PAGE>
         Judgment upon any award rendered by any arbitrator may be entered in
         any court having jurisdiction. Nothing in this Agreement shall preclude
         any party from seeking equitable relief from a court of competent
         jurisdiction. The Statute of Limitations, estoppel, waiver, laches, and
         similar doctrines which would otherwise be applicable in an action
         brought by a party shall be applicable in any arbitration proceeding,
         and the commencement of an arbitration proceeding shall be deemed the
         commencement of an action for these purposes. The Federal Arbitration
         Act shall apply to the construction, interpretation, and enforcement of
         this arbitration provision.

         Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of
         Lender's costs and expenses, Including Lender's attorneys' fees and
         Lender's legal expenses. Incurred in connection with the enforcement of
         this Agreement. Lender may hire or pay someone else to help enforce
         this Agreement, and Borrower shall pay the costs and expenses of such
         enforcement. Costs and expenses Include Lender's attorneys' fees and
         legal expenses whether or not there is a lawsuit, Including attorneys'
         fees and legal expenses for bankruptcy proceedings (Including efforts
         to modify or vacate any automatic stay or injunction), appeals, and any
         anticipated post -judgment collection services. Borrower also shall pay
         all court costs and such additional fees as may be directed by the
         court.

         Caption Headings. Caption headings in this Agreement are for
         convenience purposes only and are not to be used to interpret or define
         provisions of this Agreement.

         Consent to Loan Participation. Borrower agrees and consents to Lender's
         sale or transfer, whether now or later, of one or more participation
         interests in the Loan to one or more purchasers, whether related or
         unrelated to Lender. Lender may provide, without any limitation
         whatsoever, to any one or more purchasers, or potential purchasers, any
         information or knowledge Lender may have about Borrower or about any
         other matter relating to the Loan, and Borrower hereby waives any
         rights to privacy Borrower may have with respect to such matters.
         Borrower additionally waives any and all notices of sale of
         participation interests, as well as all notices of any repurchase of
         such participation interests. Borrower also agrees that the purchasers
         of any such participation interests will be considered as the absolute
         owners of such interests in the Loan and will have all the rights
         granted under the participation agreement or agreements governing the
         sale of such participation interests. Borrower further waives all
         rights of offset or counterclaim that it may have now or later against
         Lender or against any purchaser of such a participation interest and
         unconditionally agrees that either Lender or such purchaser may enforce
         Borrower's obligation under the Loan irrespective of the failure or
         insolvency of any holder of any interest in the Loan. Borrower further
         agrees that the purchaser of any such participation interests may
         enforce its interests irrespective of any personal claims or defenses
         that Borrower may have against Lender.

         Governing Law, This Agreement will be governed by, construed and
         enforced in accordance with federal law and the laws of the State of
         Oregon. This Agreement has been accepted by Lender in the State of
         Oregon.

         No Waiver by Lender. Lender shall not be deemed to have waived any
         rights under this Agreement unless such waiver is given in writing and
         signed by Lender. No delay or omission on the part of Lender in
         exercising any right shall operate as a waiver of such right or any
         other right. A waiver by Lender of a provision of this Agreement shall
         not prejudice or constitute a waiver of Lender's right otherwise to
         demand strict compliance with that provision or any other provision of
         this Agreement. No prior waiver by Lender, nor any course of dealing
         between Lender and Borrower, or between Lender and any Grantor, shall
         constitute a waiver of any of Lender's rights or of any of Borrower's
         or any Grantor's obligations as to any future transactions. Whenever
         the consent of Lender is required under this Agreement, the granting of
         such consent by Lender in any instance shall not constitute continuing
         consent to subsequent instances where such consent is required and in
         all cases such consent may be granted or withheld in the sole
         discretion of Lender.

         Notices. Any notice required to be given under this Agreement shall be
         given in writing, and shall be effective when actually delivered, when
         actually received by telefacsimile (unless otherwise required by law),
         when deposited with a nationally recognized overnight courier, or, if
         mailed, when deposited in the United States mail, as first class,
         certified or registered mail postage prepaid, directed to the addresses
         shown near the beginning of this Agreement. Any party may change its
         address for notices under this Agreement by giving formal written
         notice to the other parties, specifying that the purpose of the notice
         is to change the party's address. For notice purposes, Borrower agrees
         to keep Lender informed at all times of Borrower's current address.
         Unless otherwise provided or required by law, if there is more than one
         Borrower, any notice given by Lender to any Borrower is deemed to be
         notice given to all Borrowers.

         Severability. If a court of competent jurisdiction finds any provision
         of this Agreement to be illegal, invalid, or unenforceable as to any
         circumstance, that finding shall not make the offending provision
         illegal, invalid, or unenforceable as to any other circumstance. If
         feasible, the offending provision shall be considered modified so that
         it becomes legal, valid and enforceable. If the offending provision
         cannot be so modified, it shall be considered deleted from this
         Agreement. Unless otherwise required by law, the illegality,
         invalidity, or unenforceability of any provision of this Agreement
         shall not affect the legality, validity or enforceability of any other
         provision of this Agreement.

         Subsidiaries and Affiliates of Borrower. To the extent the context of
         any provisions of this Agreement makes it appropriate, Including
         without limitation any representation, warranty or covenant, the word
         "Borrower" as used in this Agreement shall Include all of Borrower's
         subsidiaries and affiliates. Notwithstanding the foregoing however,
         under no circumstances shall this Agreement be construed to require
         Lender to make any Loan or other financial accommodation to any of
         Borrower's subsidiaries or affiliates.

         Successors and Assigns. All covenants and agreements contained by or on
         behalf of Borrower shall bind Borrower's successors and assigns and
         shall inure to the benefit of Lender and its successors and assigns.
         Borrower shall not, however, have the right to assign Borrower's rights
         under this Agreement or any interest therein, without the prior written
         consent of Lender.

         Survival of Representations and Warranties. Borrower understands and
         agrees that in extending Loan Advances, Lender is relying on all
         representations, warranties, and covenants made by Borrower in this
         Agreement or in any certificate or other instrument delivered by
         Borrower to Lender under this Agreement or the Related Documents.
         Borrower further
<PAGE>
         agrees that regardless of any investigation made by Lender, all such
         representations, warranties and covenants will survive the extension of
         Loan Advances and delivery to Lender of the Related Documents, shall be
         continuing in nature, shall be doomed made and related by Borrower at
         the time each Loan Advance is made, and shall remain in full force and
         effect until such time as Borrower's indebtedness shall be paid in
         full, or until this Agreement shall be terminated in the manner
         provided above, whichever is the last to occur.

         Time is of the Essence. Time is of the essence in the performance of
         this Agreement.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement, unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall Include
the plural, and the plural shall Include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. Accounting
words and terms not otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date of this Agreement:

         Account. The word "Account" means a trade account, account receivable,
         other receivable, or other right to payment for goods sold or services
         rendered owing to Borrower (or to a third party grantor acceptable to
         Lender).

         Advance. The word "Advance" means a disbursement of Loan funds made, or
         to be made, to Borrower or on Borrower's behalf under the terms and
         conditions of this Agreement.

         Agreement. The word "Agreement" means this Business Loan Agreement
         (Asset Based), as this Business Loan Agreement (Asset Based) may be
         amended or modified from time to time, together with all exhibits and
         schedules attached to this Business Loan Agreement (Asset Based) from
         time to time,

         Borrower. The word 'Borrower" means microHelix, Inc., and all other
         persons and entities signing the Note in whatever capacity.

         Borrowing Base. The words "Borrowing Base" mean, as determined by
         Lender from time to time, the lesser of (1) $2,000,000.00 or (2) the
         sum of (a) 75. 000% of the aggregate amount of Eligible Accounts, plus
         (b) 50.000% of the aggregate amount of Eligible Inventory.

         Business Day. The words "Business Day" mean a day on which commercial
         banks are open in the State of Oregon.

         Collateral. The word "Collateral" means all property and assets granted
         as collateral security for a Loan, whether real or personal property,
         whether granted directly or indirectly, whether granted now or in the
         future, and whether granted in the form of a security interest,
         mortgage, collateral mortgage, dead of trust, assignment, pledge, crop
         pledge, chattel mortgage, collateral chattel mortgage, chattel trust,
         factor's lien, equipment trust, conditional sale, trust receipt, lien,
         charge, lien or title retention contract, lease or consignment intended
         as a security device, or any other security or lien interest
         whatsoever, whether created by law, contract, or otherwise. The word
         Collateral also Includes without limitation all collateral described in
         the Collateral section of this Agreement.

         Eligible Accounts. The words 'Eligible Accounts" mean at any time, all
         of Borrower's Accounts which contain selling terms and conditions
         acceptable to Lender. The net amount of any Eligible Account against
         which Borrower may borrow shall exclude all returns, discounts,
         credits, and offsets of any nature. Unless otherwise agreed to by
         Lender in writing, Eligible Accounts do not Include:

                  (1) Accounts with respect to which the Account Debtor is
                  employee or agent of Borrower.

                  (2) Accounts with respect to which the Account Debtor is a
                  subsidiary of, or affiliated with Borrower or its
                  shareholders, officers, or directors.

                  (3) Accounts with respect to which goods are placed on
                  consignment, guaranteed sale, or other terms by reason of
                  which the payment by the Account Debtor may be conditional.

                  (4) Accounts with respect to which the Account Debtor is not a
                  resident of the United States, except to the extent such
                  Accounts are supported by insurance, bonds or other assurances
                  satisfactory to Lender.

                  (5) Accounts with respect to which Borrower is or may become
                  liable to the Account Debtor for goods sold or services
                  rendered by the Account Debtor to Borrower.

                  (6) Accounts which are subject to dispute, counterclaim, or
                  setoff.

                  (7) Accounts with respect to which the goods have not been
                  shipped or delivered, or the services have not been rendered,
                  to the Account Debtor.

                  (8) Accounts with respect to which Lender, in its sole
                  discretion, deems the creditworthiness or financial condition
                  of the Account Debtor to be unsatisfactory.

                  (9) Accounts of any Account Debtor who has filed or has had
                  filed against it a petition in bankruptcy or an application
                  for relief under any provision of any state or federal
                  bankruptcy, insolvency, or debtor-in-relief acts; or who has
                  had appointed a trustee, custodian, or receiver for the assets
                  of such Account Debtor; or who has made an assignment for the
                  benefit of creditors or has become insolvent or fails
                  generally to pay its debts (including its payrolls) as such
                  debts become due.
<PAGE>
                  (10) Accounts with respect to which the Account Debtor is the
                  United States government or any department or agency of the
                  United States.

                  (11) Accounts which have not been paid in full within 90 days
                  from the invoice date. The entire balance of any Account of
                  any single Account Debtor will be ineligible whenever the
                  portion of the Account which has not been paid within 90 days
                  from the invoice date is in excess of 15.000% of the total
                  amount outstanding on the Account.

                  (12) That portion of the Accounts of any single Account Debtor
                  which exceeds 10.000% of all of Borrower's Accounts.

                  (13) Accounts which alone exceed 25% of total accounts, will
                  have the amount in excess of 25% excluded, unless approved in
                  writing by Bank.

                  (14) Accounts 25% or more of which is outstanding over 90 days
                  from invoice date will be excluded in its entirety, unless
                  approved by Bank in writing. '

         Eligible Inventory. The words "Eligible Inventory" mean at any time,
         all of Borrower's inventory as defined below except:

                  (1) Inventory which is not owned by Borrower free and clear of
                  all security interests, liens, encumbrances, and claims of
                  third parties.

                  (2) Inventory which Lender, in its sole discretion, deems to
                  be obsolete, unsalable, damaged, detective, or unfit for
                  further processing.

                  (3) Work in progress.

                  (4) Raw Materials Inventory less all Trade Payables associated
                  with the acquisition of related materials.

                  (5) Inventory which is not owned by Borrower free and clear of
                  security interests, liens, encumbrances, and claims of third
                  parties.

                  (6) Inventory which Lender, in its sole discretion, deems to
                  be obsolete, unsalable, damaged, defective, or unfit for
                  further processing.

         Environmental Laws. The words "Environmental Laws" mean any and all
         state, federal and local statues, regulations and ordinances relating
         to the protection of human health or the environment, Including without
         limitation the Comprehensive Environmental Response, Compensation, and
         Liability Act of 1980, as amended, 42 U.S.C. Section 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. Section 1801, et seq., the Resource Conservation and
         Recovery Act, 42 U-S.C. Section 6901, et seq., or other applicable
         state or federal laws, rules, or regulations adopted pursuant thereto
         or intended to protect human health or the environment.

         Event of Default. The words "Event of Default" mean any of the events
         of default set forth in this Agreement in the default section of this
         Agreement.

         Expiration Date. The words "Expiration Date" mean the date of
         termination of Lender's commitment to lend under this Agreement.

         GAAP.  The word "GAAP" means generally accepted accounting principles.

         Grantor. The word "Grantor" means each and all of the persons or
         entities granting a Security Interest in any Collateral for the Loan,
         Including without limitation all Borrowers granting such a Security
         Interest.

         Guarantor. The word "Guarantor" means any guarantor, surety, or
         accommodation party of any or all of the Loan.

         Guaranty. The word "Guaranty" means the guaranty from Guarantor to
         Lender, Including without limitation a guaranty of all or part of the
         Note.

         Hazardous Substances. The words "Hazardous Substances" mean materials
         that, because of their quantity, concentration or physical, chemical or
         infectious characteristics, may cause or pose a present or potential
         hazard to human health or the environment when improperly used,
         treated, stored, disposed of, generated, manufactured, transported or
         otherwise handled. The words "Hazardous Substances" are used in their
         very broadest sense and Include without limitation any and all
         hazardous or toxic substances, materials or waste as defined by or
         listed under the Environmental Laws. The term "Hazardous Substances"
         Also Includes, without limitation, petroleum and petroleum by-products
         or any fraction thereof and asbestos.

         Indebtedness. The word "Indebtedness" means the indebtedness evidenced
         by the Note or Related Documents, Including all principal and interest
         together with all other indebtedness and costs and expenses for which
         Borrower is responsible under this Agreement or under any of the
         Related Documents.

         Inventory. The word 'Inventory' means all of Borrower's raw materials,
         work in process, finished goods, merchandise, parts and supplies, of
         every kind and description, and goods held for sale or lease or
         furnished under contracts of service to which Borrower now has or
         hereafter acquires any right, whether held by Borrower or others, and
         all documents of title,
<PAGE>
         warehouse receipts, bills of lading, and all other documents of every
         type covering all or any part of the foregoing. Inventory Includes
         inventory temporarily out of Borrower's custody or possession and all
         returns on Accounts.

         Lender. The word "Lender" means WEST COAST BANK, its successors and
         assigns.

         Loan. The word "Loan" means any and all loans and financial
         accommodations from Lender to Borrower whether now or hereafter
         existing, and however evidenced, Including without limitation those
         loans and financial accommodations described herein or described on any
         exhibit or schedule attached to this Agreement from time to time.

         Note. The word "Note" means the Note executed by microHelix, Inc. in
         the principal amount of $2,000,000.00 dated December 21, 2001, together
         with all renewals of, extensions of, modifications of, refinancings of,
         consolidations of, and substitutions for the note or credit agreement.

         Permitted Liens. The words "Permitted Liens" mean (1) liens and
         security interests securing indebtedness owed by Borrower to Lender;
         (2) liens for taxes, assessments, or similar charges either not yet due
         or being contested in good faith; (3) liens of materialmen, mechanics,
         warehousemen, or carriers, or other like liens arising in the ordinary
         course of business and securing obligations which are not yet
         delinquent; (4) purchase money liens or purchase money security
         interests upon or in any properly acquired or hold by Borrower in the
         ordinary course of business to secure indebtedness outstanding on the
         date of this Agreement or permitted to be Incurred under the paragraph
         of this Agreement with respect to the net value of Borrowers assets.

         Primary Credit Facility. The words "Primary Credit Facility" mean the
         credit facility described in the Line of Credit section of this
         Agreement.

         Related Documents. The words "Related Documents" mean all promissory
         notes, credit agreements, loan agreements, environmental agreements,
         guaranties, security agreements, mortgages, deeds of trust, security
         deeds, collateral mortgages, and all other instruments, agreements and
         documents, whether now or hereafter existing, executed in connection
         with the Loan.

         Security Agreement. The words "Security Agreement" mean and Include
         without limitation any agreements, promises, covenants, arrangements,
         understandings or other agreements, whether created by law, contract,
         or otherwise, evidencing, governing, representing, or creating a
         Security Interest.

         Security Interest. The words "Security Interest" mean, without
         limitation, any and all types of collateral security, present and
         future, whether in the form of a lien, charge, encumbrance, mortgage,
         deed of trust, security deed, assignment, pledge, crop pledge, chattel
         mortgage, collateral chattel mortgage, chattel trust, factor's lien,
         equipment trust, conditional sale, trust receipt, lien or title
         retention contract, lease or consignment intended as a security device,
         or any other security or lien interest whatsoever whether created by
         taw, contract, or otherwise.

UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY US (LENDER)
AFTER OCTOBER 3, 1989 CONCERNING 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 US TO BE
ENFORCEABLE.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) IS DATED DECEMBER 21, 2001.

<TABLE>
<S>                                                                    <C>
BORROWER.

MICROHELIX, INC.


By:                 /s/                                                By:                 /s/
    ---------------------------------------------                         --------------------------------------------
    Richard G. Sass, President of microHelix, Inc.                        Jane K. Conner, Treasurer of microHelix, Inc.


LENDER:

WEST COAST BANK

By:                 /s/
   ----------------------------------------------
            Authorized Signer
</TABLE>