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                                                                   EXHIBIT 10.17

                     PROMISSORY NOTE AND SECURITY AGREEMENT


$675,000.00                                                     Portland, Oregon
                                                                  August 1, 2000

        FOR VALUE RECEIVED, mHL Development Co. ("mHL") promises to pay to the
order of Richard G. Sass ("RGS") in lawful money of the United States of
America, the principal amount of Six Hundred Seventy-Five Thousand Dollars
($675,000.00) together with interest on such amount from the date of principal
advances under the note at the interest rate of twelve percent (12%) per annum
(the "Interest Rate"). Interest shall be computed on the outstanding principal
amount on the basis of a 365-day year and actual days elapsed. mHL shall pay in
full the aggregate unpaid principal amount of this Note, together with all
accrued and unpaid interest thereon, on or before December 31, 2001.

        This Note may be prepaid, at any time and from time to time, in whole or
in part, without penalty or premium. Any prepayment shall include accrued and
unpaid interest to the date of prepayment on the amount prepaid. All payments
shall be made directly to the RGS in immediately available funds.

        As security for the amounts due under this Note, mHL pledges and grants
to RGS a security interest in the trade accounts receivable and raw materials
inventory of its subsidiaries, BioElectric Corporation, microHelix Labs, Inc.,
Grayscale, Inc. and Key Tech, Inc.

        In the event that RGS uses his own or an outside attorney to construe,
interpret, or enforce any of the provisions of this Note or take any action in
any bankruptcy, insolvency or similar proceeding affecting creditors' rights
generally (including, without limitation, prosecution of a motion for relief
from stay, proposal of a Chapter 11 plan, objection to a disclosure statement or
a Chapter 11 or 13 plan, or objection to proposed use, sale or lease of
property) or in mediation or arbitration, RGS shall be entitled to recover from
mHL its reasonable attorney fees and other costs incurred regardless of whether
any legal proceeding is commenced. If any legal action, arbitration or other
proceeding is brought, the prevailing party shall be entitled to recover its
reasonable attorney fees and other costs incurred in connection therewith, both
at trial and on any appeal therefrom or petitions for review thereof.

        All parties to this Note hereby waive presentment, dishonor, notice of
dishonor, and protest. All parties to this Note hereby consent to, and the
holder of this Note is hereby expressly authorized to make, without notice, any
and all renewals, extensions, modifications or waivers of the time for or the
terms of payment of any sum or sums due under this Note, or under any documents
or instruments relating to or securing this Note, or the performance of any
covenants, conditions or agreements hereof or thereof, or the taking or release
of collateral securing this Note. The liability of all parties on this Note
shall not be discharged by any action consented to above taken by any holder of
this Note.



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        MHL may not assign or transfer this Note without the prior written
consent of RGS. This Note is made with reference to, and is to be construed in
accordance with, the laws of the State of Oregon, exclusive of choice of law or
conflicts of law rules or principles.

        MHL executes this Note as of the date first above written and
acknowledges receipt of a copy of this Note.

                                       mHL Development Co.


                                       By:  /s/ JANE K. CONNER
                                            ------------------------------------
                                            Name:  Jane K. Conner
                                            Title:  Chief Financial Officer

        Upon payment in full under this Note, RGS will execute all UCC
Termination Statements and other documents necessary to release the security
interest in the Collateral granted hereunder.


                                       Richard G.  Sass


                                       /s/ RICHARD G. SASS
                                       -----------------------------------------
                                       Name:  Richard G.  Sass



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