<PAGE>
                                                                Exhibit 10.35


                          COMMERCIAL SECURITY AGREEMENT


<TABLE>
<CAPTION>
     Principal          Loan Date        Maturity          Loan No         Call/Coll       Account          Officer         Initials
------------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>             <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.


Grantor:  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 COMMERCIAL SECURITY AGREEMENT dated December 21, 2001, is made and executed
between microHelix, Inc. ("Grantor") and WEST COAST BANK ("Lender").

GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender
a Security Interest in the Collateral to secure the indebtedness and agrees that
Lender shall have the rights stated in this Agreement with respect to the
Collateral, in addition to all other rights which Lender may have by law.

COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means
the following described property, whether now owned or hereafter acquired,
whether now existing or hereafter arising, and wherever located, in which
Grantor is giving to Lender a Security Interest for the payment of the
indebtedness and performance of all other obligations under the Note and this
Agreement:

           All Inventory, Chattel Paper, Accounts, Equipment, Instruments, and
           General Intangibles

           In addition, the word "Collateral" also includes all the following,
           whether now owned or hereafter acquired, whether now existing or
           hereafter arising, and wherever located:

           (A) All accessions, attachments, accessories, tools, parts, supplies,
           replacements and additions to any of the collateral described herein,
           whether added now or later.

           (B) All products and produce of any of the property described in this
           Collateral section.

           (C) All accounts, general intangibles, instruments, rents, monies,
           payments, and all other rights, arising out of a sale, lease, or
           other disposition of any of the property described in this Collateral
           section.

           (D) All proceeds (including insurance proceeds) from the sale,
           destruction, loss, or other disposition of any of the property
           described in this Collateral section, and sums due from a third party
           who has damaged or destroyed the Collateral or from that party's
           insurer, whether due to judgment, settlement or other process.

           (E) All records and data relating to any of the property described in
           this Collateral section, whether in the form of a writing,
           photograph, microfilm, microfiche, or electronic media, together with
           all of Grantor's right, title, and interest in and to all computer
           software required to utilize, create, maintain, and process any such
           records or data on electronic media.

Despite any other provision of this Agreement, Lender is not granted, and will
not have, a nonpurchase money Security Interest in household goods, to the
extent such a Security Interest would be prohibited by applicable law. In
addition, if because of the type of any Property, Lender is required to give a
notice of the right to cancel under Truth in Lending for the indebtedness, then
Lender will not have a Security Interest in such Collateral unless and until
such a notice is given.

CROSS-COLLATERALIZATION. In addition to the Note, this Agreement secures the
following described additional indebtedness: This note is cross-collateralized
with note #89000102.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Grantor's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Grantor holds
jointly with someone else and all accounts Grantor 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. Grantor 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.

GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With
respect to the Collateral, Grantor represents and promises to Lender that:

           Perfection of Security Interest. Grantor agrees to execute financing
           statements and to take whatever other actions are requested by Lender
           to perfect and continue Lenders Security Interest in the Collateral.
           Upon request of Lender, Grantor will deliver to Lender any and all of
           the documents evidencing or constituting the Collateral, and Grantor
           will note Lender's interest upon any and all chattel paper it not
           delivered to Lender for possession by Lender. This is a continuing
           Security Agreement and will continue in effect even though all or any
           part of the indebtedness is paid in full and even though for a period
           of time Grantor may not be indebted to Lender.

           Notices to Lender. Grantor will promptly notify Lender in writing at
           Lender's address shown above (or such other addresses as Lender may
           designate from time to time) prior to any (1) change in Grantor's
           name; (2) change in Grantor's
<PAGE>
           assumed business name(s); (3) change in the management of the
           Corporation Grantor; (4) change in the authorized signer(s); (5)
           change in Grantor's principal office address; (6) change in Grantor's
           state of organization; (7) conversion of Grantor to a new or
           different type of business entity; or (8) change in any other aspect
           of Grantor that directly or indirectly relates to any agreements
           between Grantor and Lender. No change in Grantor's name or state of
           organization will take effect until after Lender has received notice

           No Violation. The execution and delivery of this Agreement will not
           violate any law or agreement governing Grantor or to which Grantor is
           a party, and its certificate or articles of incorporation and bylaws
           do not prohibit any form or condition of this Agreement.

           Enforceability of Collateral. To the extent the Collateral consists
           of accounts, chattel paper, or general intangibles, as defined by the
           Uniform Commercial Code, the Collateral is enforceable in accordance
           with its terms, is genuine, and fully complies with all applicable
           laws and regulations concerning form, content and manner of
           preparation and execution, and all persons appearing to be obligated
           on the Collateral have authority and capacity to contract and are in
           fact obligated as they appear to be on the Collateral. At the time
           any Account becomes subject to a Security Interest in favor of
           Lender, the Account shall be a good and valid account representing an
           undisputed, bona fide indebtedness incurred by the account debtor,
           for merchandise held subject to delivery instructions or previously
           shipped or delivered pursuant to a contract of sale, or for services
           previously performed by Grantor with or for the account debtor. So
           long as this Agreement remains in effect, Grantor shall not, without
           Lender's prior written consent, compromise, settle, adjust, or extend
           payment under or with regard to any such Accounts. There shall be no
           setoffs or counterclaims against any of the Collateral, and no
           agreement shall have been made under which any deductions or
           discounts may be claimed concerning the Collateral except those
           disclosed to Lender in writing.

           Location of the Collateral. Except in the ordinary course of
           Grantor's business, Grantor agrees to keep the Collateral (or to the
           extent the Collateral consists of intangible property such as
           accounts or general intangibles, the records concerning the
           Collateral) at Grantor's address shown above or at such other
           locations as are acceptable to Lender. Upon Lender's request, Grantor
           will deliver to Lender in form satisfactory to Lender a schedule of
           real properties and Collateral locations relating to Grantor's
           operations, including without limitation the following: (1) all real
           property Grantor owns or is purchasing; (2) all real property Grantor
           is renting or leasing; (3) all storage facilities Grantor owns,
           rents, leases, or uses; and (4) all other properties where Collateral
           is or may be located.

           Removal of the Collateral. Except in the ordinary course of Grantor's
           business, including the sales of Inventory, Grantor shall not remove
           the Collateral from its existing location without Lender's prior
           written consent. To the extent that the Collateral consists of
           vehicles, or other titled property, Grantor shall not take or permit
           any action which would require application for certificates of title
           for the vehicles outside the State of Oregon, without Lender's prior
           written consent. Grantor shall, whenever requested, advise Lender of
           the exact location of the Collateral.

           Transactions involving Collateral. Except for inventory sold or
           accounts collected in the ordinary course of Grantor's business, or
           as otherwise provided for in this Agreement, Grantor shall not sell,
           offer to sell, or otherwise transfer or dispose of the Collateral.
           While Grantor is not in default under this Agreement, Grantor may
           sell inventory, but only in the ordinary course of its business and
           only to buyers who qualify as a buyer in the ordinary course of
           business, A sale in the ordinary course of Grantor's business does
           not include a transfer in partial or total satisfaction of a debt or
           any bulk sale. Grantor shall not pledge, mortgage, encumber or
           otherwise permit the Collateral to be subject to any lien, Security
           Interest, encumbrance, or charge, other than the Security Interest
           provided for in this Agreement, without the prior written consent of
           Lender. This includes Security Interests even if junior in right to
           the Security Interests granted under this Agreement. Unless waived by
           Lender, all proceeds from any disposition of the Collateral (for
           whatever reason) shall be held in trust for Lender and shall not be
           commingled with any other funds; provided however, this requirement
           shall not constitute consent by Lender to any sale or other
           disposition. Upon receipt, Grantor shall immediately deliver any such
           proceeds to Lender.

           Title. Grantor represents and warrants to Lender that Grantor holds
           good and marketable title to the Collateral, free and clear of all
           liens and encumbrances except for the lien of this Agreement. No
           financing statement covering any of the Collateral is on file in any
           public office other than those which reflect the Security Interest
           created by this Agreement or to which Lender has specifically
           consented. Grantor shall defend Lender's rights in the Collateral
           against the claims and demands of all other persons.

           Repairs and Maintenance. Grantor agrees to keep and maintain, and to
           cause others to keep and maintain, the Collateral in good order,
           repair and condition at all times while this Agreement remains in
           effect. Grantor further agrees to pay when due all claims for work
           done on, or services rendered or material furnished in connection
           with the Collateral so that no lien or encumbrance may ever attach to
           or be filed against the Collateral.

           Inspection of Collateral. Lender and Lender's designated
           representatives and agents shall have the right at all reasonable
           times to examine and inspect the Collateral wherever located.

           Taxes, Assessments and Liens. Grantor will pay when due all taxes,
           assessments and liens upon the Collateral, its use or operation, upon
           this Agreement, upon any promissory note or notes evidencing the
           indebtedness, or upon any of the other Related Documents. Grantor may
           withhold any such payment or may elect to contest any lien if Grantor
           is in good faith conducting an appropriate proceeding to contest the
           obligation to pay and so long as Lender's interest in the Collateral
           is not jeopardized in Lender's sole opinion. If the Collateral is
           subjected to a lien which is not discharged within fifteen (15) days,
           Grantor shall deposit with Lender cash, a sufficient corporate surety
           bond or other security satisfactory to Lender in an amount adequate
           to provide for the discharge of the lien plus any interest, costs,
           attorneys' fees or other charges that could accrue as a result of
           foreclosure or sale of the Collateral. In any contest Grantor shall
           defend itself and Lender and shall satisfy any final adverse judgment
           before enforcement against the Collateral. Grantor shall name Lender
           as an additional obligee under any surety bond furnished in the
           contest proceedings. Grantor further agrees to furnish Lender with
           evidence that such taxes, assessments, and governmental and other
           charges have been paid in full
<PAGE>
           and in a timely manner. Grantor may withhold any such payment or may
           elect to contest any lien if Grantor is in good faith conducting an
           appropriate proceeding to contest the obligation to pay and so long
           as Lender's interest in the Collateral is not jeopardized.

           Compliance with Governmental Requirements. Grantor shall comply
           promptly with all laws, ordinances, rules and regulations of all
           governmental authorities, now or hereafter in effect, applicable to
           the ownership, production, disposition, or use of the Collateral.
           Grantor may contest in good faith any such law, ordinance or
           regulation and withhold compliance during any proceeding, including
           appropriate appeals, so long as Lender's interest in the Collateral,
           in Lenders opinion, is not jeopardized.

           Hazardous Substances. Grantor represents and warrants that the
           Collateral never has been, and never will be so long as this
           Agreement remains a lien on the Collateral, used in violation of any
           Environmental Laws or for the generation, manufacture, storage,
           transportation, treatment, disposal, release or threatened release of
           any Hazardous Substance. The representations and warranties contained
           herein are based on Grantor's due diligence in investigating the
           Collateral for Hazardous Substances, Grantor hereby (1) releases and
           waives any future claims against Lender for indemnity or contribution
           in the event Grantor becomes liable for cleanup or other costs under
           any Environmental Laws, and (2) agrees to indemnify and hold harmless
           Lender against any and all claims and losses resulting from a breach
           of this provision of this Agreement. This obligation to indemnify
           shall survive the payment of the indebtedness and the satisfaction of
           this Agreement.

           Maintenance of Casualty Insurance. Grantor shall procure and maintain
           all risks insurance, including without limitation fire, theft and
           liability coverage together with such other insurance as Lender may
           require with respect to the Collateral, in form, amounts, coverages
           and basis reasonably acceptable to Lender and issued by a company or
           companies reasonably acceptable to Lender. Grantor, upon request of
           Lender, will deliver to Lender from time to time the policies or
           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 and
           not including any disclaimer of the insurer's liability for failure
           to give such a notice. 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 Grantor or any
           other person. In connection with all policies covering assets in
           which Lender holds or is offered a Security Interest, Grantor will
           provide Lender with such loss payable or other endorsements as Lender
           may require. If Grantor at any time fails to obtain or maintain any
           insurance as required under this Agreement, Lender may (but shall not
           be obligated to) obtain such insurance as Lender deems appropriate,
           including if Lender so chooses "single interest insurance;' which
           will cover only Lender's interest in the Collateral.

           Application of Insurance Proceeds. Grantor shall promptly notify
           Lender of any loss or damage to the Collateral. Lender may make proof
           of loss if Grantor fails to do so within fifteen (15) days of the
           casualty. All proceeds of any insurance on the Collateral, including
           accrued proceeds thereon, shall be held by Lender as part of the
           Collateral. If Lender consents to repair or replacement of the
           damaged or destroyed Collateral, Lender shall, upon satisfactory
           proof of expenditure, pay or reimburse Grantor from the proceeds for
           the reasonable cost of repair or restoration. If Lender does not
           consent to repair or replacement of the Collateral, Lender shall
           retain a sufficient amount of the proceeds to pay all of the
           indebtedness, and shall pay the balance to Grantor. Any proceeds
           which have not been disbursed within six (6) months after their
           receipt and which Grantor has not committed to the repair or
           restoration of the Collateral shall be used to prepay the
           indebtedness.

           Insurance Reserves. Lender may require Grantor to maintain with
           Lender reserves for payment of insurance premiums, which reserves
           shall be created by monthly payments from Grantor of a sum estimated
           by Lender to be sufficient to produce, at least fifteen (15) days
           before the premium due date, amounts at least equal to the insurance
           premiums to be paid. If fifteen (15) days before payment is due, the
           reserve funds are insufficient, Grantor shall upon demand pay any
           deficiency to Lender. The reserve funds shall be held by Lender as a
           general deposit and shall constitute a non-interest-bearing account
           which Lender may satisfy by payment of the insurance premiums
           required to be paid by Grantor as they become due. Lender does not
           hold the reserve funds in trust for Grantor, and Lender is not the
           agent of Grantor for payment of the insurance premiums required to be
           paid by Grantor. The responsibility for the payment of premiums shall
           remain Grantor's sole responsibility.

           Insurance Reports. Grantor, upon request of Lender, shall furnish to
           Lender reports on each existing policy of insurance showing such
           information as Lender may reasonably request including the following:
           (1) the name of the insurer; (2) the risks insured; (3) the amount of
           the policy; (4) the property insured (5) the then current value on
           the basis of which insurance has been obtained and the manner of
           determining that value; and (6) the expiration date of the policy. In
           addition, Grantor shall upon request by Lender (however not more
           often than annually) have an independent appraiser satisfactory to
           Lender determine, as applicable, the cash value or replacement cost
           of the Collateral.

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts and above in the paragraph
titled "Transactions Involving Collateral", Grantor may have possession of the
tangible personal property and beneficial use of all the Collateral and may use
it in any lawful manner not inconsistent with this Agreement or the Related
Documents, provided that Grantor's right to possession and beneficial use shall
not apply to any Collateral where possession of the Collateral by Lender is
required by law to perfect Lender's Security Interest in such Collateral. Until
otherwise notified by Lender, Grantor may collect any of the Collateral
consisting of accounts. At any time and even though no Event of Default exists,
Lender may exercise its rights to collect the accounts and to notify account
debtors to make payments directly to Lender for application to the indebtedness.
If Lender at any time has possession of any Collateral, whether before or after
an Event of Default, Lender shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral if Lender takes such action for
that purpose as Grantor shall request or as Lender, in Lender's sole discretion,
shall deem appropriate under the circumstances, but failure to honor any request
by Grantor shall not of itself be deemed to be a failure to exercise reasonable
care. Lender shall not be required to take any steps necessary to preserve any
rights in the Collateral against prior parties, nor to protect, preserve or
maintain any Security Interest given to secure the indebtedness.
<PAGE>
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Grantor fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Grantor's failure to discharge or pay when due any amounts
Grantor is required to discharge or pay under this Agreement or any Related
Documents, Lender on Grantor's 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, at any time levied or placed on the Collateral and paying all
costs for insuring, maintaining and preserving the 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 Grantor. 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. The Agreement also will secure payment of these amounts. Such right
shall be in addition to all other rights and remedies to which Lender may be
entitled upon Default.

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

           Payment Default. Grantor falls to make any payment when due under the
           indebtedness.

           Other Defaults. Grantor falls 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 Grantor.

           False Statements. Any warranty, representation or statement made or
           furnished to Lender by Grantor or on Grantor'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.

           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 under any bankruptcy
           or insolvency laws by or against Grantor.

           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 Grantor or by
           any governmental agency against any collateral securing the
           indebtedness. This includes a garnishment of any of Grantor's
           accounts, including deposit accounts, with Lender. However, this
           Event of Default shall not apply if there is a good faith dispute by
           Grantor as to the validity or reasonableness of the claim which is
           the basis of the creditor or forfeiture proceeding and if Grantor
           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 guarantor, endorser, surety, or accommodation party of any
           of the indebtedness or guarantor, endorser, surety, or accommodation
           party dies or becomes incompetent or revokes or disputes the validity
           of, or liability under, any Guaranty of the indebtedness.

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

           Insecurity.  Lender in good faith believes itself insecure.

           Cure Provisions. If any default, other than a default in payment is
           curable and if Grantor has not been given a notice of a breach of the
           same provision of this Agreement within the preceding twelve (12)
           months, it may be cured (and no event of default will have occurred)
           if Grantor, after receiving written notice from Lender demanding cure
           of such default: (1) cures the default within fifteen (15) days; or
           (2) if the cure requires more than fifteen (15) days, immediately
           initiates steps which Lender deems in Lender's sole discretion to be
           sufficient to cure the default and thereafter continues and completes
           all reasonable and necessary steps sufficient to produce compliance
           as soon as reasonably practical.

RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Oregon Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:

           Accelerate Indebtedness. Lender may declare the entire indebtedness,
           including any prepayment penalty which Grantor would be required to
           pay, immediately due and payable, without notice of any kind to
           Grantor.

           Assemble Collateral. Lender may require Grantor to deliver to Lender
           all or any portion of the Collateral and any and all certificates of
           title and other documents relating to the Collateral. Lender may
           require Grantor to assemble the Collateral and make it available to
           Lender at a place to be designated by Lender. Lender also shall have
           full power to enter upon the property of Grantor to take possession
           of and remove the Collateral: if the Collateral contains other goods
           not covered by this Agreement at the time of repossession, Grantor
           agrees Lender may take such other goods, provided that Lender makes
           reasonable efforts to return them to Grantor after repossession.

           Sell the Collateral. Lender shall have full power to sell, lease,
           transfer, or otherwise deal with the Collateral or proceeds thereof
           in Lender's own name or that of Grantor. Lender may sell the
           Collateral at public auction or private sale. Unless the Collateral
           threatens to decline speedily in value or is of a type customarily
           sold on a recognized market, Lender will give Grantor, and other
           persons as required by law, reasonable notice of the time and place
           of any public sale, or the time after which any private sale or any
           other disposition of the Collateral is to be made. However, no notice
           need be provided to any person who, after Default occurs, enters into
           and authenticates an agreement waiving that person's right to
<PAGE>
           notification of sale. The requirements of reasonable notice shall be
           met if such notice is given at least ten (10) days before the time of
           the sale or disposition. All expenses relating to the disposition of
           the Collateral, including without limitation the expenses of
           retaking, holding, insuring, preparing for sale and selling the
           Collateral, shall become a part of the indebtedness secured by this
           Agreement and shall be payable on demand, with interest at the Note
           rate from date of expenditure until repaid.

           Appoint Receiver. Lender shall have the right to have a receiver
           appointed to take possession of all or any part of the Collateral,
           with the power to protect and preserve the Collateral, to operate the
           Collateral preceding foreclosure or sale, and to collect the Rents
           from the Collateral and apply the proceeds, over and above the cost
           of the receivership, against the indebtedness. The receiver may serve
           without bond if permitted by law. Lender's right to the appointment
           of a receiver shall exist whether or not the apparent value of the
           Collateral exceeds the indebtedness by a substantial amount.
           Employment by tender shall not disqualify a person from serving as a
           receiver.

           Collect Revenues, Apply Accounts. Lender, either itself or through a
           receiver, may collect the payments, rents, income, and revenues from
           the Collateral. Lender may at any time in Lender's discretion
           transfer any Collateral into Lender's own name or that of Lender's
           nominee and receive the payments, rents, income, and revenues
           therefrom and hold the same as security for the indebtedness or apply
           it to payment of the indebtedness in such order of preference as
           Lender may determine. Insofar as the Collateral consists of accounts,
           general intangibles, insurance policies, instruments, chattel paper,
           chosen in action, or similar property, Lender may demand, collect,
           receipt for, settle, compromise, adjust, sue for, foreclose, or
           realize on the Collateral as Lender may determine, whether or not
           indebtedness or Collateral is then due. For these purposes. Lender
           may, on behalf of and in the name of Grantor, receive, open and
           dispose of mail addressed to Grantor; change any address to which
           mail and payments are to be sent; and endorse notes, checks, drafts,
           money orders, documents of title, instruments and items pertaining to
           payment, shipment, or storage of any Collateral. To facilitate
           collection, Lender may notify account debtors and obligors on any
           Collateral to make payments directly to Lender.

           Obtain Deficiency. If Lender chooses to sell any or all of the
           Collateral. Lender may obtain a judgment against Grantor for any
           deficiency remaining on the indebtedness due to Lender after
           application of all amounts received from the exercise of the rights
           provided in this Agreement. Grantor shall be liable for a deficiency
           even if the transaction described in this subsection is a sale of
           accounts or chattel paper.

           Other Rights and Remedies. Lender shall have all the rights and
           remedies of a secured creditor under the provisions of the Uniform
           Commercial Code, as may be amended from time to time. In addition,
           Lender shall have and may exercise any or all other rights and
           remedies it may have available of law, in equity, or otherwise.

           Election of Remedies. Except as may be prohibited by applicable law,
           all of Lender's rights and remedies, whether evidenced by this
           Agreement, the Related Documents, or by any other writing, 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 Grantor under this Agreement, after
           Grantor's failure to perform, shall not affect Lender's right to
           declare a default and exercise its remedies.

CHOICE OF VENUE. If there is a lawsuit, you (borrower) agree upon our request to
submit to the jurisdiction of the courts of the State of Oregon in 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. Grantor 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. 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. Grantor 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 Grantor 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
<PAGE>
           automatic stay or injunction), appeals, and any anticipated
           post-judgment collection services. Grantor 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 the provisions of this Agreement.

           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.

           Preference Payments. Any monies Lender pays because of an asserted
           preference claim in Grantor's bankruptcy will become a part of the
           indebtedness and, at Lender's option, shall be payable by Grantor as
           provided in this Agreement.

           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 Grantor, shall constitute a
           waiver of any of Lender's rights or of any of 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,
           Grantor agrees to keep Lender informed at all times of Grantor's
           current address. Unless otherwise provided or required by law, if
           there is more than one Grantor, any notice given by Lender to any
           Grantor is deemed to be notice given to all Grantors.

           Power of Attorney. Grantor hereby appoints Lender as Grantor's
           irrevocable attorney-in-fact for the purpose of executing any
           documents necessary to perfect, amend, or to continue the Security
           Interest granted in this Agreement or to demand termination of
           filings of other secured parties. Lender may at any time, and without
           further authorization from Grantor, file a carbon, photographic or
           other reproduction of any financing statement or of this Agreement
           for use as a financing statement. Grantor will reimburse Lender for
           all expenses for the perfection and the continuation of the
           perfection of Lender's Security Interest in the Collateral.

           Waiver of Co-Obligor's Rights. If more than one person is obligated
           for the indebtedness, Grantor irrevocably waives, disclaims and
           relinquishes all claims against such other person which Grantor has
           or would otherwise have by virtue of payment of the indebtedness or
           any part thereof, specifically including but not limited to all
           rights of indemnity, contribution or exoneration.

           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.

           Successors and Assigns. Subject to any limitations stated in this
           Agreement on transfer of Grantor's interest, this Agreement shall be
           binding upon and inure to the benefit of the parties, their
           successors and assigns. If ownership of the Collateral becomes vested
           in a person other than Grantor, Lender, without notice to Grantor,
           may deal with Grantor's successors with reference to this Agreement
           and the indebtedness by way of forbearance or extension without
           releasing Grantor from the obligations of this Agreement or liability
           under the indebtedness.

           Survival of Representations and Warranties. All representations,
           warranties, and agreements made by Grantor in this Agreement shall
           survive the execution and delivery of this Agreement, shall be
           continuing in nature, and shall remain in full force and effect until
           such time as Grantor's indebtedness shall be paid in full.

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

           Waive Jury. All parties to this Agreement hereby waive the right to
           any jury trial in any action, proceeding, or counterclaim brought by
           any party against any other party.

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 forms in the Uniform Commercial Code:

           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 Grantor (or to a third party
           grantor acceptable to Lender).
<PAGE>
           Agreement. The word "Agreement" means this Commercial Security
           Agreement, as this Commercial Security Agreement may be amended or
           modified from time to time, together with all exhibits and schedules
           attached to this Commercial Security Agreement from time to time.

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

           Collateral. The word "Collateral" means all of Grantor's right, title
           and interest in and to all the Collateral as described in the
           Collateral Description ' section of this Agreement.

           Default. The word "Default" means the Default set forth in this
           Agreement in the section Oiled "Default".

           Environmental Laws. The words "Environmental Laws" mean any and all
           state, federal and local statutes, 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

           Grantor.  The word "Grantor" means microHelix, Inc..

           Guaranty, The word "Guaranty" means the guaranty from guarantor,
           endorser, surety, or accommodation party to Lender, including without
           limitation a guaranty or 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,
           including crude oil and 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 Grantor is responsible under this Agreement or
           under any of the Related Documents.

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

           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.

           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 indebtedness.

GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED DECEMBER 21, 2001.

GRANTOR:


MICROHELIX, INC.


<TABLE>
<S>                                                           <C>
By:               /s/                                         By:               /s/
    ----------------------------------------------                ---------------------------------------------
    Richard G. Sass, President of microHelix, Inc.                Jane K. Conner, Treasurer of microHelix, Inc.
</TABLE>