Document:

Exhibit
10.2

    

    COMMERCIAL
SECURITY AGREEMENT

     

    
      	 
      	 
      	 
      	 
      
	
              BORROWER:

            	
              microHelix,
      Inc.

              5300
      Meadows Road, Suite 400

              Lake
      Oswego, OR  97035

               

              WS
      Technologies LLC

              5300
      Meadows Road, Suite 400

              Lake
      Oswego, OR  97035

            	
              LENDER:

            	
              Aequitas
      Commercial Finance,  LLC

              5300
      Meadows Road, Suite 400

              Lake
      Oswego, OR  97035

              Telephone:
      (503) 419-3500

               

            
	 
      	 
      	 
      	 
      

    

    

    THIS COMMERCIAL SECURITY AGREEMENT
dated January 15, 2010, is made and executed between microHelix, Inc. and WS Technologies LLC
(collectively referred to herein as “Borrower”), and Aequitas Commercial Finance,
LLC (“Lender”).

    

    1. GRANT OF SECURITY
INTEREST.  For valuable consideration, Borrower 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 Collateral, in addition to all other rights which Lender may have by
law.

    

    2. 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
Borrower is giving to Lender a security interest for the payment of the
Indebtedness and performance of all other obligations under the Note, this
Agreement and the Related Documents.

    

    All
cash, accounts receivable, notes receivable, contract rights, deposits,
securities, investments, chattel paper, documents, instruments, general
intangibles, inventory, raw materials, work in progress, finished goods,
furnishings, fixtures, trade fixtures, equipment, machinery, motor vehicles and
all other personal property, assets or rights of whatever nature now owned or
hereafter acquired by Borrower and products and proceeds thereof.

    

    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
      of and additions to any of the collateral described herein, whether added
      now or later.

            

    

    

    
      	
               
      

            	
              (b)

            	
              All
      products and proceeds 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 Collateral.

            

    

    

    
      	
               
      

            	
              (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 the 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 Borrower’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.

            

    

    

    3. CROSS-COLLATERALIZATION; FUTURE
ADVANCES.  In addition to the Note, this Agreement secures all
obligations, debts and liabilities, plus interest thereon, of Borrower to Lender
(or an affiliate of Lender), or any one or more of them, as well as all claims
by Lender (or an affiliate of Lender) against Borrower or any one or more of
them, whether now existing or hereafter arising, whether related or unrelated to
the purpose of the Note, whether voluntary or otherwise, whether due or not due,
direct or indirect, determined or undetermined, absolute or contingent,
liquidated or unliquidated whether Borrower may be liable individually or
jointly with others, whether obligated as guarantor, surety, accommodation party
or otherwise, and whether recovery upon such amounts may be or hereafter barred
by any statute of limitations, and whether the obligation to repay such amounts
may be or hereafter may become otherwise unenforceable.  In addition
to the Note, this Agreement secures all future advances made by Lender to
Borrower regardless of whether the advances are made (i) pursuant to a
commitment, or (ii) for the same purposes.

     

    
      
        
        

      

      
        Page 1 of
9 – COMMERCIAL SECURITY AGREEMENT

        
          

        

      

      
        
        

      

    

    

    4. BORROWER’S REPRESENTATIONS AND
WARRANTIES WITH RESPECT TO THE COLLATERAL.  With respect to the
Collateral, Borrower represents and promises to Lender that:

    

    
      	
            	
              (a)

            	
              Perfection of Security
      Interest.  Borrower authorizes Lender to file one or more
      financing statements and such other documents as Lender may require and to
      take whatever other actions are requested by Lender to perfect and
      continue Lender's security interest 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 if not delivered to
      Lender for possession by Lender.  Borrower hereby appoints
      Lender as its irrevocable attorney-in-fact for the purpose of executing
      any documents necessary to perfect or to continue the security interest
      granted in this Agreement.  Lender may at any time, and without
      further authorization from Borrower, file a carbon, photographic or other
      reproduction of any financing statement or of this Agreement for use as a
      financing statement.  Borrower will reimburse Lender for all
      expenses for the perfection and the continuation of the perfection of
      Lender's security interest in the Collateral.  Borrower promptly
      will notify Lender of any change in Borrower's name including any change
      to the assumed business names of Borrower.  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
      Borrower may not be indebted to
Lender.

            

    

    

    
      	
            	
              (b)

            	
              Landlord Lien
      Waiver.  If requested by Lender, Borrower will obtain
      from each of its landlords a waiver providing that Lender’s security
      interest in the Collateral will be senior to any lien in the Collateral
      which may be claimed by such
landlords.

            

    

    

    
      	
            	
              (c)

            	
              Notices to
      Lender.  Borrower 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 Borrower’s name;
      (2) change in Borrower’s assumed business name(s); (3) change in the
      management  of Borrower or, if Borrower is a limited liability
      company, in the members or managers of Borrower; (4) change in the
      authorized signer(s); (5) change in Borrower’s principal office address;
      (6) change in Borrower’s state of organization; (7) conversion of Borrower
      to a new or different type of business entity; or (8) change in any other
      aspect of Borrower that directly or indirectly relates to any agreements
      between Borrower and Lender.  No change in Borrower’s name or
      state of organization will take effect until after Lender has received
      notice.

            

    

    

    
      	
            	
              (d)

            	
              No
      Violation.  The execution and delivery of this Agreement
      will not violate any law or agreement governing Borrower or to which
      Borrower is a party, and its articles of incorporation, bylaws, operating
      agreement or other organizational documents do not prohibit any term or
      condition of this Agreement.

            

    

    

    
      	
            	
              (e)

            	
              Enforceability of
      Collateral.  To the extent 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 Borrower with or for the
      account debtor.  So long as this Agreement remains in effect,
      Borrower 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.

            

    

    

    
      	
               
      

            	
              (f)

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

            

    

    

    
      	
            	
              (g)

            	
              Removal of the
      Collateral.  Except in the ordinary course of Borrower’s
      business, including the sales of inventory, Borrower 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, Borrower 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.  Borrower shall, whenever requested, advise Lender of
      the exact location of the
Collateral.

            

    

     

    
      
        
        

      

      
        Page 2 of
9 – COMMERCIAL SECURITY AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              (h)

            	
              Transactions involving
      Collateral.  Except for inventory sold or accounts
      collected in the ordinary course of Borrower’s business, or as otherwise
      provided for in this Agreement, Borrower shall not sell, offer to sell, or
      otherwise transfer or dispose of the Collateral.  While Borrower
      is not in default under this Agreement, Borrower 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 of
      inventory in the ordinary course of Borrower’s business does not include a
      transfer in partial or total satisfaction of a debt or any bulk
      sale.  Borrower 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, Borrower shall
      immediately deliver any such proceeds to
Lender.

            

    

    

    
      	
               
      

            	
              (i)

            	
              Title.  Borrower
      represents and warrants to Lender that Borrower holds good and marketable
      title to the Collateral, free and clear of all liens and encumbrances
      except for the lien of this Agreement and security interests which appear
      in the public records.   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.  Borrower shall defend
      Lender’s rights in the Collateral against the claims and demands of all
      other persons.

            

    

    

    
      	
               
      

            	
              (j)

            	
              Repairs and
      Maintenance.  Borrower 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.  Borrower 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.

            

    

    

    
      	
            	
              (k)

            	
              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.

            

    

    

    
      	
               
      

            	
              (l)

            	
              Taxes, Assessments and
      Liens.  Borrower 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
      other of the Related Documents.  Borrower may withhold any such
      payment or may elect to contest any lien if Borrower 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, Borrower 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 any 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 Borrower shall defend itself and
      Lender and shall satisfy any final adverse judgment before enforcement
      against the Collateral.  Borrower shall name Lender as an
      additional obligee under any surety bond furnished in the contest
      proceedings.  Borrower further agrees to furnish Lender with
      evidence that such taxes, assessments, and governmental and other charges
      have been paid in full and in a timely manner.  Borrower may
      withhold any such payment or may elect to contest any lien if Borrower is
      in good faith conducting any appropriate proceeding to contest the
      obligation to pay and so long as Lender’s interest in the Collateral is
      not jeopardized.

            

    

    

    
      	
            	
              (m)

            	
              Compliance with Governmental
      Regulations.  Borrower 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.  Borrower 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 Lender’s sole opinion, is not
      jeopardized.

            

    

    

    
      	
            	
              (n)

            	
              Hazardous
      Substances.  Borrower 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 a Hazardous
      Substance.  The representations and warranties contained herein
      are based on Borrower’s due diligence in investigating the Collateral for
      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
      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.

            

    

     

    
      
        
        

      

      
        Page 3 of
9 – COMMERCIAL SECURITY AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              (o)

            	
              Maintenance of
      Insurance.  Borrower shall procure and maintain all risk
      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.  Borrower, 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 thirty (30)
      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 Borrower or any other person.  In connection with all
      policies covering assets in which Lender holds or is offered a security
      interest, Borrower will provide Lender with such loss payable or other
      endorsements as Lender may require.  If Borrower 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.

            

    

    

    
      	
            	
              (p)

            	
              Application of Insurance
      Proceeds.  Borrower shall promptly notify Lender of any
      loss or damage to the Collateral.  Lender may make proof of loss
      if Borrower 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 Borrower 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 Borrower.  Any proceeds which have not
      been disbursed within six (6) months after their receipt and which
      Borrower has not committed to the repair or restoration of the Collateral
      shall be used to prepay the
Indebtedness.

            

    

    

    
      	
            	
              (q)

            	
              Insurance
      Reserves.  Lender may require Borrower to maintain with
      Lender reserves for payment of insurance premiums, which reserves shall be
      created by monthly payments from Borrower 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, Borrower 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
      Borrower as they become due.  Lender does not hold the reserves
      funds in trust for Borrower, and Lender is not the agent of Borrower for
      payment of the insurance premiums required to be paid by
      Borrower.  The responsibility for the payment of premiums shall
      remain Borrower’s sole
responsibility.

            

    

    

    
      	
               
      

            	
              (r)

            	
              Insurance
      Reports.  Borrower, 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 risk insured; (3) the amount of the
      policy; (4) the property insured; (5) the then current value of 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,
      Borrower 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.

            

    

    

    WARNING

    

    Unless
Borrower provides Lender with evidence of the insurance coverage as required
herein, Lender may purchase insurance at Borrower's expense to protect Lender's
interest.  This insurance may, but need not, also protect Borrower's
interest.  If the Collateral becomes damaged, the coverage Lender
purchases may not pay any claim Borrower makes or any claim made against
Borrower.  Borrower may later cancel this coverage by providing
evidence that Borrower has obtained property coverage elsewhere.

    

    Borrower
is responsible for the cost of any insurance purchased by Lender.  The
cost of this insurance may be added to the Note balances.  If the cost
is added to the Note balances, the interest rate on the Notes will apply to this
added amount.  The effective date of coverage may be the date
Borrower's prior coverage lapsed or the date Borrower failed to provide proof of
coverage.

    

    The
coverage Lender purchases may be considerably more expensive than insurance
Borrower can obtain on Borrower's own and may not satisfy any need for property
damage coverage or any mandatory liability insurance requirements imposed by
applicable law.

    

    5. BORROWER’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”, Borrower 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 Borrower’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.  Unless otherwise notified by Lender, Borrower 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
the 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 take such action for that purpose as
Borrower shall request or as Lender, in Lender’s sole discretion, shall deem
appropriate under the circumstances, but failure to honor any request by
Borrower shall not 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 4 of
9 – COMMERCIAL SECURITY AGREEMENT

        
          

        

      

      
        
        

      

    

    

    6. 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 Borrower’s behalf may (but shall not be obligated
to) take any action that Lender deems appropriate, including but not limited to
discharging and 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 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 (3) 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.

    

    7. PREFERENCE
PAYMENTS.  Any monies Lender pays because of an asserted
preference in Borrower’s bankruptcy will become a part of the Indebtedness and,
at Lender’s option, shall be payable by Borrower as provided in this
Agreement.

    

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

    

    
      	
            	
              (a)

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

            

    

    

    
      	
            	
              (b)

            	
              Other
      Defaults.  Borrower fails to comply with or to perform
      any other term, obligations, 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.  If any failure, other
      than a failure to pay money or to comply with financial covenants and
      ratio requirements, is curable and if Borrower has not been given a notice
      of a similar breach within the preceding twelve (12) months, it may be
      cured (and no Event of Default will have occurred) if Borrower, after
      delivery of written notice from Lender demanding cure of such failure: (a)
      cures the failure within fifteen (15) days; or (b) if the cure requires
      more than fifteen (15) days, immediately initiates steps sufficient to
      cure the failure and thereafter continues and completes all reasonable and
      necessary steps sufficient to produce compliance within sixty (60) days
      after notice is sent.

            

    

    

    
      	
            	
              (c)

            	
              Default in Favor of Third
      Parties.  Failure of Borrower to comply with or to
      perform any other term, obligation, covenant, or condition contained in
      any loan, extension of credit, security agreement, purchase or sales
      agreement, or any other agreement, in favor of any other creditor or
      person that may materially affect any of Borrower’s property or Borrower’s
      ability to repay the Indebtedness or perform their respective obligations
      under this Agreement or any of the Related
  Documents.

            

    

    

    
      	
            	
              (d)

            	
              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.

            

    

    

    
      	
            	
              (e)

            	
              Dissolution, Insolvency,
      etc.  The dissolution of Borrower (regardless of whether
      election to continue is made), or any other 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.

            

    

     

    
      	
            	
              (f)

            	
              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
  Indebtedness.

            

    

     

    
      
        
        

      

      
        Page 5 of
9 – COMMERCIAL SECURITY AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              (g)

            	
              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.

            

    

    

    
      	
            	
              (h)

            	
              Adverse
      Change.  A Material Adverse Change occurs in Borrower’s
      financial condition, or Lender reasonably believes the prospect of payment
      performance of this Indebtedness has been
  impaired.

            

    

    

    
      	
               
      

            	
              (i)

            	
              Insecurity.  Lender
      in good faith believes itself
insecure.

            

    

    

    9. 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:

    

    
      	
            	
              (a)

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

            

    

    

    
      	
            	
              (b)

            	
              Assemble
      Collateral.  Lender may require Borrower 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 Borrower 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 Borrower to take possession
      of and remove the Collateral.  If the Collateral contains other
      goods not covered by this Agreement at the time of repossession, Borrower
      agrees Lender may take such other goods, provided that Lender makes
      reasonable efforts to return them to Borrower after
      repossession.

            

    

    

    
      	
            	
              (c)

            	
              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 Borrower.  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 Borrower, 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 are to be made.  However, no
      notice need be provided to any person who, after an Event of Default
      occurs, enters into and authenticates an agreement waiving that person’s
      right to 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 the date of expenditure until
repaid.

            

    

    

    
      	
            	
              (d)

            	
              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 Lender shall not disqualify a person from
      serving as a receiver.

            

    

    

    
      	
            	
              (e)

            	
              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,
      choses 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 Borrower, receive, open and dispose of
      mail addressed to Borrower; 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.

            

    

    

    
      	
               
      

            	
              (f)

            	
              Obtain
      Deficiency.  If Lender chooses to sell any or all of the
      Collateral, Lender may obtain a judgment against Borrower 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.  Borrower shall be liable for a deficiency even if
      the transaction described in this subsection is a sale of accounts or
      chattel paper.

            

    

     

    
      
        
        

      

      
        Page 6 of
9 – COMMERCIAL SECURITY AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              (g)

            	
              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 at law, in equity, or
otherwise.

            

    

    

    
      	
            	
              (h)

            	
              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 Borrower under this Agreement, after Borrower’s failure to perform,
      shall not affect Lender’s right to declare a default and exercise its
      remedies.

            

    

    

    10. 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:

    

    
      	
            	
              (a)

            	
              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 a third party Borrower acceptable to
      Lender).

            

    

    

    
      	
            	
              (b)

            	
              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 the Commercial
      Security Agreement from time to
time.

            

    

    

    
      	
            	
              (c)

            	
              Borrower.  The
      word “Borrower” means the person designated as such on the first page of
      this Agreement and all other persons and entities signing the Note in
      whatever capacity.

            

    

    

    
      	
            	
              (d)

            	
              Collateral.  The
      word “Collateral” means all of Borrower’s right, title and interest in and
      to all the Collateral as described in Section 2 of this
      Agreement.

            

    

    

    
      	
            	
              (e)

            	
              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 1808, 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.

            

    

    

    
      	
               
      

            	
              (f)

            	
              Event of
      Default.  The words “Event of Default” mean any of the
      events of default set forth in Section 7 of this
  Agreement.

            

    

    

    
      	
            	
              (g)

            	
              Guarantor.  The
      word “Guarantor” means any guarantor, surety, or accommodation party of
      any or all of the Indebtedness.

            

    

    

    
      	
            	
              (h)

            	
              Guaranty.  The
      word “Guaranty” means the guaranty from Guarantor to Lender, including
      without limitation a guaranty of all of part of the
  Note.

            

    

    

    
      	
               
      

            	
              (i)

            	
              Hazardous
      Substances.  The words “Hazardous Substances” mean
      materials that, because of their quality, 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.

            

    

    

    
      	
               
      

            	
              (j)

            	
              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.  The word "Indebtedness" also includes all other
      obligations, debts and liabilities of Borrower to Lender, as well as all
      claims by Lender against Borrower, that are now or hereafter existing,
      voluntary or involuntary, due or not due, absolute or contingent,
      liquidated or unliquidated; whether Borrower may be liable individually or
      jointly with others; whether Borrower may be obligated as a guarantor,
      surety or otherwise; whether recovery upon such Indebtedness may be or
      hereafter may become barred by any statute of limitations; and whether
      such Indebtedness may be or hereafter may become otherwise
      unenforceable.

            

    

     

    
      
        
        

      

      
        Page 7 of
9 – COMMERCIAL SECURITY AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              (k)

            	
              Material Adverse
      Change.  The words “Material Adverse Change” mean any
      condition or event that Lender determines has or is reasonably likely to
      have a material adverse effect on (a) the business, operations, property,
      condition (financial or otherwise) or prospects of Borrower and its
      subsidiaries and affiliates, if any, taken as a whole, or (b) the validity
      or enforceability of this Agreement or any of the other Related Documents
      or the rights and remedies of Lender hereunder or
    thereunder.

            

    

    

    
      	
               
      

            	
              (l)

            	
              Note.  The
      word “Note” means the Note executed by microHelix, Inc. in the principal
      amount of $500,000 of even date herewith, together with all renewals of,
      extensions of, modifications of, refinancings of, consolidations of, and
      substitutions for the note or credit
agreement.

            

    

    

    
      	
            	
              (m)

            	
              Property.  The
      word “Property” means all of Borrower’s right, title and interest in and
      to all the Property as described in the “Collateral Description” section
      of this Agreement.

            

    

    

    
      	
            	
              (n)

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

            

    

    

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

    

    
      	
            	
              (a)

            	
              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.

            

    

    

    
      	
            	
              (b)

            	
              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
      collect this Agreement, and Borrower shall pay the costs and expenses of
      such enforcement. This includes, subject to any limits under applicable
      law, Lender attorneys’ fees and Lender’s legal expenses, whether or not
      there is a lawsuit, including attorneys’ fees, expenses for arbitration or
      bankruptcy proceedings (including efforts to modify or vacate any
      automatic stay or injunction), and appeals.  If not prohibited
      by applicable law, Borrower also will pay any court costs, in addition to
      all other sums provided by law.

            

    

    

    
      	
            	
              (c)

            	
              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.

            

    

    

    
      	
            	
              (d)

            	
              Assignments. Borrower
      acknowledges that Lender may sell and assign its interest in the
      Indebtedness, the payments due thereunder and the Collateral, in whole or
      in part, or sell participations therein, to an assignee (the “Assignee”)
      which may be represented by a bank or trust company acting as a trustee of
      such Assignee.  BORROWER ACKNOWLEDGES THAT ANY ASSIGNMENT OR
      TRANSFER BY LENDER OR ANY ASSIGNEE SHALL NOT MATERIALLY CHANGE BORROWER’S
      OBLIGATIONS UNDER THIS AGREEMENT.  Any Assignee shall be
      entitled to enforce all the rights so assigned but be under no obligation
      to Borrower to perform any of Lender’s obligations under this Agreement,
      the sole remedy of Borrower being against Lender with Borrower’s right
      against Lender being unaffected except as provided
      herein.  Borrower agrees that upon notice of assignment of the
      Indebtedness, it shall pay directly to the Assignee, unconditionally, all
      amounts which become due hereunder.  Borrower specifically
      covenants and agrees that it will not assert against any Assignee any
      claims by way of abatement, defense, set-off, counterclaim, recoupment or
      otherwise which Borrower may have against Lender or any third party, and
      BORROWER SHALL NOT ASSERT AGAINST SUCH ASSIGNEE IN ANY ACTION FOR PAYMENTS
      OR OTHER MONEYS PAYABLE HEREUNDER ANY DEFENSE EXCEPT THE DEFENSE OF
      PAYMENT TO SUCH ASSIGNEE.  Upon Lender’s request, Borrower will
      acknowledge to any assignee receipt of Lender’s notice of
      assignment.

            

    

    

    
      	
            	
              (e)

            	
              Governing
      Law.  This Agreement will be governed by, construed and
      enforced in accordance with the laws of the State of
      Oregon.  This Agreement has been accepted by Lender in the State
      of Oregon.  If there is a lawsuit, Borrower agrees to submit to
      the jurisdiction of the courts located in Portland, Oregon and waives any
      objections that such venue is an inconvenient
  forum.

            

    

    

    
      	
               
      

            	
              (f)

            	
              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 any Borrower shall constitute a waiver of any of
      Lender’s rights or of any of Borrower’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.

            

    

     

    
      
        
        

      

      
        Page 8 of
9 – COMMERCIAL SECURITY AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              (g)

            	
              Notices.  Any
      notice required to be given under the Agreement shall be given in writing,
      and shall be effective when actually delivered, when deposited with a
      reputable overnight courier for next business day delivery, or, if mailed,
      when deposited in the United States mail, as first class, certified or
      registered mail with 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.  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.

            

    

    

    
      	
            	
              (h)

            	
              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.

            

    

    

    
      	
               
      

            	
              (i)

            	
              Waiver of Co-Obligor’s
      Rights.  If more than one person is obligated for the
      Indebtedness, Borrower irrevocably waives, disclaims and relinquished all
      claims against such other person which Borrower 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.

            

    

    

    
      	
               
      

            	
              (j)

            	
              Interpretation. In all
      cases where there is more than one Borrower, then all words used in this
      Agreement in the singular shall be deemed to have been used in the plural
      where the context and construction so require; and where there is more
      than one Borrower named in this Agreement or when this Agreement is
      executed by more than one, the words "Borrower" shall mean all and any one
      or more of them.  Reference to the phrase "Borrower" includes
      the heirs, successors, assigns and transferees of each of
      them.

            

    

    

    
      	
            	
              (k)

            	
              Successors and
      Assigns.  Subject to any limitations stated in this
      Agreement on transfer of Borrower’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 Borrower, Lender, without notice to Borrower, may deal
      with Borrower’s successors with reference to this Agreement and the
      Indebtedness by way of forbearance or extension without releasing Borrower
      from the obligations of this Agreement or liability under the
      Indebtedness.

            

    

    

    
      	
               
      

            	
              (l)

            	
              Survival of Representations and
      Warranties.  All representations, warranties and
      agreements made by Borrower in this Agreement and the Related Documents
      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 Borrower’s Indebtedness shall be paid in
  full.

            

    

    

    
      	
            	
              (m)

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

            

    

    

    
      	
            	
              (n)

            	
              Jury
      Waiver.  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.

            

    

    

    BORROWER
ACKNOWLEDGES HAVING READ ALL OF THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT AND BORROWER AGREES TO ITS TERMS.

    

    BORROWER:

    

    
      	
              microHelix,
      Inc.

            	 
      	
              WS
      Technologies LLC

            
	 
      	 
      	
              By:

            	
              microHelix,
      Inc., its Manager

            

    

    

    

    
      	
              By:

            	
              /s/
      Thomas A. Sidley

            	 
      	
              By:

            	
              /s/
      Thomas A. Sidley

            	 
	 
      	
              Thomas
      A. Sidley, President

            	 
      	 
      	
              Thomas
      A. Sidley, President

            	 

    

    
    

    

    
      
        
        

      

      
        Page 9 of
9 – COMMERCIAL SECURITY AGREEMENTExhibit
10.3

    

    SUBORDINATION
AGREEMENT

    

    
      	 
      	 
      	 
      	 
      
	
              BORROWER:

            	
              microHelix,
      Inc.

              5300
      Meadows Road, Suite 400

              Lake
      Oswego, OR  97035

               

               

            	
              LENDER:

            	
              Aequitas
      Commercial Finance, LLC

              5300
      Meadows Road, Suite 400

              Lake
      Oswego, OR  97035

              Telephone:
      (503) 419-3500

               

            
	
              CREDITOR:

               

               

               

            	
              Aequitas
      Capital Management, Inc.

              5300
      Meadows Road, Suite 400

              Lake
      Oswego, OR  97035

               

              MH
      Financial Associates, LLC

              5300
      Meadows Road, Suite 400

              Lake
      Oswego, OR  97035

               

            	 
      	 
      

    

     

    1. THIS SUBORDINATION AGREEMENT dated
January 15, 2010, is made and executed among microHelix, Inc. ("Borrower"),
Aequitas Commercial Finance, LLC ("Lender"), Aequitas Capital Management, Inc.
and MH Financial Associates, LLC.  Aequitas Capital Management, Inc.
and MH Financial Associates, LLC are collectively referred to herein as
“Creditor”.

    

    2. CURRENT INDEBTEDNESS OWING TO
CREDITOR. As of the date of this Agreement, Borrower is indebted to
Aequitas Capital Management, Inc. pursuant to that certain Multiple Advance
Promissory Note dated December 31, 2008 in the original principal amount of
$300,000, as amended by that certain First Amendment to Multiple Advance
Promissory Note dated December 31, 2009 (the “ACM Note”).  In
addition, Borrower is indebted to MH Financial Associates, LLC pursuant to that
certain Third Amended and Restated Promissory Note dated June 27, 2008 in the
principal amount of $977,742.96, as amended by that certain First Amendment to
Third Amended and Restated Promissory Note dated December 31, 2009 (the “MH Note”)

    

    3. REQUESTED FINANCIAL
ACCOMMODATIONS. Creditor and Borrower each want Lender to provide
financial accommodations to Borrower in the form of (A) new credit or loan
advances, (B) an extension of time to pay or other compromises regarding all or
part of Borrower's present indebtedness to Lender, or (C) other benefits to
Borrower. Borrower and Creditor each represent and acknowledge to Lender that
Creditor will benefit as a result of these financial accommodations from Lender
to Borrower, and Creditor acknowledges receipt of valuable consideration for
entering into this Agreement. Based on the representations and
acknowledgments contained in this Agreement, Borrower and Creditor agree with
Lender as follows:

    

    4. SUBORDINATED INDEBTEDNESS. The
words "Subordinated
Indebtedness" as used in this Agreement mean all present and future
indebtedness, obligations, liabilities, claims, rights and demands of any kind
which may be now or hereafter owing from Borrower to Creditor pursuant to the
ACM Note and the MH Note.  The term "Subordinated Indebtedness" is
used in its broadest sense and includes without limitation all principal, all
interest, all costs, attorneys' fees, all sums paid for the purpose of
protecting the rights of a holder of security, and all other obligations,
secured or unsecured, of any nature whatsoever pursuant to the ACM Note, the MH
Note and any related documents including, without limitation, any security
agreements executed in connection with the ACM Note and the MH
Note.

    

    5. SUPERIOR INDEBTEDNESS. The
words "Superior
Indebtedness" as used in this Agreement mean and include all present and
future indebtedness, obligations, liabilities, claims, rights and demands of any
kind which may be now or hereafter owing from Borrower to Lender pursuant to
that certain Promissory Note of even date herewith in the principal amount of
$500,000 evidencing a revolving credit facility provided to Borrower by Lender
(the “LOC Note”).  The term
"Superior Indebtedness" is used in its broadest sense and includes without
limitation all principal, all interest, all costs, attorneys' fees, all sums
paid for the purpose of protecting Lender's rights in security (such as paying
for insurance on collateral if the owner fails to do so), and all other
obligations of Borrower to Lender under the LOC Note and the Related
Documents.

    

    6. SUBORDINATION. All
Subordinated lndebtedness of Borrower to Creditor is and shall be subordinated
in all respects to all Superior lndebtedness of Borrower to Lender. If Creditor
holds one or more Security Interests, whether now existing or hereafter
acquired, in any of Borrower's real property or personal property, Creditor also
subordinates all Creditor's Security Interests to all Security Interests held by
Lender, whether now existing or hereafter acquired.

    

    7. PAYMENTS TO CREDITOR. Except
with the prior written consent of Lender, Borrower will not make and Creditor
will not accept, at any time while any Superior lndebtedness is owing to Lender,
(A) any payment upon any Subordinated Indebtedness, (B) any advance, transfer or
assignment of assets to Creditor in any form whatsoever that would reduce at any
time or in any way the amount of Subordinated Indebtedness, or (C) any transfer
of any assets as security for the Subordinated Indebtedness. Creditor may not
accelerate any amounts owed to Creditor without Lender's prior written
consent.

     

    
      
         

      

      
        Page 1 of
5 – SUBORDINATION AGREEMENT

        
          

        

      

      
         

      

    

    

    In the
event of any distribution, division or application, whether partial or complete,
voluntary or involuntary, by operation of law or otherwise, of all or any part
of Borrower's assets, or the proceeds of Borrower's assets, in whatever form, to
creditors of Borrower or upon any indebtedness of Borrower, whether by reason of
the liquidation, dissolution or other winding-up of Borrower, or by reason of
any execution sale, receivership, insolvency or bankruptcy proceeding,
assignment for the benefit of creditors, proceedings for reorganization, or
readjustment of Borrower or Borrower's properties, then and in such event, (A)
the Superior lndebtedness shall be paid in full before any payment is made upon
the Subordinated Indebtedness, and (B) all payments and distributions, of any
kind or character and whether in cash, property or securities, which shall be
payable or deliverable upon or in respect of the Subordinated lndebtedness shall
be paid or delivered directly to Lender for application in payment of the
amounts then due on the Superior lndebtedness until the Superior lndebtedness
shall have been paid in full.

    

    In order
that Lender may establish its right to prove claims and recover for its own
account dividends based on the Subordinated Indebtedness, Creditor does hereby
assign all its right, title and interest in such claims to Lender. Creditor
further agrees to supply such information and evidence, provide access to and
copies of such of Creditor's records as may pertain to the Subordinated
Indebtedness, and execute such instruments as may be required by Lender to
enable Lender to enforce all such claims and collect all dividends, payments or
other disbursements which may be made on account of the Subordinated
Indebtedness. For such purposes, Creditor hereby irrevocably authorizes Lender
in its discretion to make and present for or on behalf of Creditor such proofs
of claims on account of the Subordinated lndebtedness as Lender may deem
expedient and proper and to vote such claims in any such proceeding and to
receive and collect any and all dividends, payments or other disbursements made
thereon in whatever form the same may be paid or issued and to apply the same on
account of the Superior Indebtedness.

    

    Should
any payment, distribution, security or proceeds thereof be received by Creditor
at any time on the Subordinated lndebtedness contrary to the terms of this
Agreement, Creditor immediately will deliver the same to Lender in precisely the
form received (except for the endorsement or assignment of Creditor if
necessary) for application on or to secure the Superior Indebtedness, whether it
is due or not due, and until so delivered the same shall be held in trust by
Creditor as property of Lender. In the event Creditor fails to make any such
endorsement or assignment, Lender, or any of its officers on behalf of Lender,
is hereby irrevocably authorized by Creditor to make the same.

    

    8. STANDSTILL
PROVISIONS.  Unless all of the Superior Indebtedness has been
paid in full and Lender has no further obligation to extend credit to Borrower,
Creditor shall not take any of the following actions without Lender’s consent
(which consent may be withheld by Lender in its sole and absolute discretion)
for a period of 6 months after Creditor provides Lender with written notice of a
default by Borrower under the agreement governing the Subordinated Indebtedness
(provided that such default is not cured during that 6-month period): (A)
accelerate the Subordinated Indebtedness, commence, prosecute, or participate in
any action, whether private, judicial, equitable, administrative, or otherwise
(including, without limitation, any bankruptcy case) against Borrower or any
assets of Borrower; provided that Creditor may file a proof of claim in a
bankruptcy or insolvency case or proceeding involving Borrower, which proof of
claim shall indicate Creditor's subordination hereunder; (B) possess any of
Borrower's assets, or enforce any security interests in, foreclose, levy, or
execute upon or collect or attach any such assets, whether by private or
judicial action or otherwise; (C) commence, or join with any creditors in
commencing (unless Lender also has joined therein), any bankruptcy case or
proceeding against Borrower; and (D) contest, protest or object to any
foreclosure proceeding, postpetition financing, use of cash collateral, or other
action brought by Lender or any other exercise by Lender of any rights and
remedies under any of the Related Documents.  Creditor shall notify
Lender in writing of any default by Borrower in respect of the Subordinated
Indebtedness.  Creditor acknowledges and agrees that the fact that
Creditor can take the above-described actions under the circumstances specified
in this paragraph does not entitle Creditor to receive or obtain any payments in
respect of the Subordinated Indebtedness, or to accept or obtain any assets (or
any interest therein) of Borrower, except as expressly permitted in this
Agreement.

    

    9. CREDITOR'S NOTES. Creditor
agrees to deliver to Lender, at Lender's request, all notes of Borrower to
Creditor, or other evidence of the Subordinated Indebtedness, now held or
hereafter acquired by Creditor, while this Agreement remains in effect. At
Lender's request, Borrower also will execute and deliver to Creditor a
promissory note evidencing any book account or claim now or hereafter owed by
Borrower to Creditor, which note also shall be delivered by Creditor to Lender.
Creditor agrees not to sell, assign, pledge or otherwise transfer any of such
notes except subject to all the terms and conditions of this
Agreement.

    

    10. CREDITOR'S REPRESENTATIONS AND
WARRANTIES. Creditor represents and warrants to Lender that: (A) no
representations or agreements of any kind have been made to Creditor which would
limit or qualify in any way the terms of this Agreement; (B) this Agreement is
executed at Borrower's request and not at the request of Lender; (C) Lender has
made no representation to Creditor as to the creditworthiness of Borrower; and
(D) Creditor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition. Creditor
agrees to keep adequately informed from such means of any facts, events or
circumstances which might in any way affect Creditor's risks under this
Agreement, and Creditor further agrees that Lender shall have no obligation to
disclose to Creditor information or material acquired by Lender in the course of
its relationship with Borrower.

    

    11. CREDITOR'S WAIVERS. Creditor
waives any right to require Lender: (A) to make, extend, renew or modify any
loan to Borrower or to grant any other financial accommodations to Borrower
whatsoever; (B) to make any presentment, protest, demand or notice of any kind,
including notice of any nonpayment of the Superior lndebtedness or of any
nonpayment related to any Security Interests, or notice of any action or
nonaction on the part of Borrower, Lender, any surety, endorser or other
guarantor in connection with the Superior Indebtedness, or in connection with
the creation of new or additional Superior Indebtedness; (C) to resort for payment or
to proceed directly or at once against any person, including Borrower; (D) to
proceed directly against or exhaust any Security lnterests held by Lender from
Borrower, any other guarantor or any other person; (E) to give notice of the
terms, time and place of any public or private sale of personal property
security held by Lender from Borrower or to comply with any other applicable
provisions of the Uniform Commercial Code; (F) to pursue any other remedy within
Lender's power; or (G) to commit any act or
omission of any kind, at any time, with respect to any matter
whatsoever.

     

    
      
         

      

      
        Page 2 of
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    12. LENDER'S RIGHTS. Lender may
take or omit any and all actions with respect to the Superior lndebtedness or
any Security lnterests for the Superior lndebtedness without affecting
whatsoever any of Lender's rights under this Agreement. In particular, without
limitation, Lender may, without notice of any kind to Creditor, (A) make one or
more additional secured or unsecured loans to Borrower; (B) repeatedly alter,
compromise, renew, extend, accelerate, or otherwise change the time for payment
or other terms of the Superior lndebtedness or any part thereof, including
increases and decreases of the rate of interest on the Superior lndebtedness;
extensions may be repeated and may be for longer than the original loan term;
(C) take and hold Security Interests for the payment of the Superior
Indebtedness, and exchange, enforce, waive and release any such Security
Interests, with or without the substitution of new collateral; (D) release,
substitute, agree not to sue, or deal with any one or more of Borrower's
sureties, endorsers or guarantors on any terms or manner Lender chooses;
(E) determine how,
when and what application of payments and credits shall be made on the Superior
Indebtedness; (F) apply such security and direct the order or manner of sale
thereof as Lender in its discretion may determine; and (G) assign this Agreement in
whole or in part.

    

    13. DEFAULT BY BORROWER. If
Borrower becomes insolvent or bankrupt, this Agreement shall remain in full
force and effect. Any default by Borrower under the terms of the Subordinated
lndebtedness also shall constitute an event of default under the terms of the
Superior lndebtedness in favor of Lender.

    

    14. DURATION AND TERMINATION. This
Agreement will take effect when received by Lender, without the necessity of any
acceptance by Lender, in writing or otherwise, and will remain in full force and
effect until Creditor shall notify Lender in writing at the address shown above
to the contrary. Any such notice shall not affect the Superior lndebtedness owed
Lender by Borrower at the time of such notice, nor shall such notice affect
Superior lndebtedness thereafter granted in compliance with a commitment made by
Lender to Borrower prior to receipt of such notice, nor shall such notice affect
any renewals of or substitutions for any of the foregoing. Such notice shall
affect only indebtedness of Borrower to Lender arising after receipt of such
notice and not arising from financial assistance granted by Lender to Borrower
in compliance with Lender's obligations under a commitment. Any notes lodged
with Lender pursuant to the section titled "Creditor's Notes" above need not be
returned until this Agreement has no further force or effect.

    

    15. OTHER TERMS AND CONDITIONS.
The following provisions are a part of this Agreement: (A) Any payments on the
Subordinated lndebtedness received by Creditor (including without limitation
prepayments on the Subordinated Indebtedness), other than as expressly permitted
in this Agreement, shall be held in trust for Lender and Creditor will forthwith
turn over any such payments in the form received, properly endorsed, to Lender
to be applied to the Superior lndebtedness as determined by Lender. (B) Creditor
agrees that Creditor will not make any assertion or claim in any action or
proceeding of any nature in any way challenging the priority, validity or
effectiveness of the liens and security interests granted to Lender under and in
connection with the Superior Indebtedness, or any amendment, extension or
replacement thereof, or any related instrument, document or agreement among
Lender and Borrower. (C) Creditor will not commence any action or proceeding
against Borrower to recover all or any part of the Subordinated lndebtedness not
paid when due, and shall at no time join with any creditor in bringing any
proceeding against Borrower under any liquidation, conservatorship, bankruptcy,
reorganization, rearrangement or other insolvency law now or hereafter existing,
unless and until the Superior lndebtedness shall have been paid in full.
Notwithstanding the foregoing, Creditor may accelerate the amount of the
Subordinated Indebtedness upon the occurrence of: (a) the acceleration of all
the Superior Indebtedness; and (b) the filing of a petition under the federal
Bankruptcy Code by Borrower. (D) In the event of any liquidation,
conservatorship, bankruptcy, reorganization, rearrangement or other insolvency
proceeding of Borrower, Creditor will at Lender's request file any claims,
proofs of claim or other instruments of similar character necessary to enforce
the obligations of Borrower in respect of the Subordinated Indebtedness, and
will hold in trust for Lender and pay over to Lender in the same form received,
to be applied on the Superior lndebtedness as determined by Lender, any and all
money, dividends or other assets received in any such proceedings on account of
the Subordinated Indebtedness, unless and until the Superior lndebtedness shall
be paid in full, including without limitation interest owing to Lender after the
commencement of a bankruptcy proceeding at the rate specified in Lender's loan
documents, whether or not such interest is an allowable claim in any such
proceeding. Lender may, as attorney-in-fact for Creditor, take such action on
behalf of Creditor and Creditor hereby appoints Lender as attorney-in-fact for
Creditor, coupled with an interest, to demand, sue for, collect and receive any
and all such money, dividends or other assets and give acquittance therefor and
to file any claim, proof of claim or other instrument of similar character and
to take such other proceedings in Lender's name or in the name of Creditor, as
Lender may deem necessary or advisable for the enforcement of this Agreement.
Creditor will execute and deliver to Lender such other and further powers of
attorney or other instruments as either reasonably may request in order to
accomplish the foregoing.

    

    16. 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:

     

    
      
         

      

      
        Page 3 of
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    (a) Agreement. The word
"Agreement" means this Subordination Agreement, as this Subordination Agreement
may be amended or modified from time to time, together with all exhibits and
schedules attached to this Subordination Agreement from time to
time.

    

    (b) Borrower. The word "Borrower"
means the person(s) shown as Borrower on the first page of this Agreement and
includes all co-signers and co-makers signing the LOC Note.

    

    (c) Indebtedness. The word
"lndebtedness" means the indebtedness evidenced by the LOC 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.

    

    (d) LOC Note.  The words
“LOC Note” means each promissory note executed and delivered by Borrower to
Lender to evidence the Superior Indebtedness, together with all renewals of,
extensions of, modifications of, refinancings of, consolidations of, and
substitutions for each note.

    

    (e) 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 Superior Indebtedness.

    

    (f) 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 law, contract or
otherwise.

    

    (g) Subordinated Indebtedness. The
words "Subordinated Indebtedness" mean the indebtedness described in the section
of this Agreement titled "Subordinated Indebtedness".

    

    (h) Superior Indebtedness. The
words "Superior Indebtedness" mean the indebtedness described in the section of
this Agreement titled "Superior Indebtedness".

    

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

    

    (a) 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.

    

    (b) Attorneys' Fees; Expenses.
Creditor 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 Creditor 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. Creditor also shall pay all court costs and such additional
fees as may be directed by the court.

    

    (c) Authority. The person who
signs this Agreement as or on behalf of Creditor represents and warrants that he
or she has authority to execute this Agreement and to subordinate the
Subordinated lndebtedness and Creditor's Security Interests in Creditor's
property, if any.

    

    (d) 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.

    

    (e) Governing Law; Choice of Venue.
This Agreement will be governed by, construed and enforced in accordance
with the laws of the State of Oregon. This Agreement has been accepted by Lender
in the State of Oregon.  If there is a lawsuit in connection with any
dispute arising out of or related to this Agreement, Creditor agrees to submit
to the jurisdiction of the courts located in Portland, Oregon and waives any
objections that such venue is an inconvenient forum.

    

    (f) Interpretation. In all cases
where there is more than one Creditor, then all words used in this Agreement in
the singular shall be deemed to have been used in the plural where the context
and construction so require; and where there is more than one Creditor named in
this Agreement or when this Agreement is executed by more than one, the words
"Creditor" shall mean all and any one or more of them.  Reference to
the phrase "Creditor" includes the heirs, successors, assigns and transferees of
each of them.

     

    
      
         

      

      
        Page 4 of
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    (g) Successors and Assigns. This
Agreement shall be understood to be for the benefit of Lender and for such other
person or persons as may from time to time become or be the holder or owner of
any of the lndebtedness or any interest therein, and this Agreement shall be
transferable to the same extent and with the same force and effect as any such
lndebtedness may be transferable.

    

    (h) 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
Creditor, shall constitute a waiver of any of Lender's rights or of any of
Creditor'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.

     

    BORROWER
AND CREDITOR EACH ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS
SUBORDINATION AGREEMENT, AND BORROWER AND CREDITOR EACH AGREE TO ITS
TERMS.

    

    
      	
              BORROWER:

            
	 
      	 
      	 
      
	
              microHELIX,
      INC.

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              By:

            	
              /s/ Thomas A. Sidley

            	 
      
	 
      	
              Thomas
      A. Sidley, President

            	 
      
	 
      	 
      	 
      
	
              CREDITOR:

            
	 
      	 
      	 
      
	
              AEQUITAS
      CAPITAL MANAGEMENT, INC.

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              By:

            	
              /s/Andrew N. MacRitchie

            	 
      
	 
      	
              Andrew
      N. MacRitchie

            	 
      
	 
      	
              Executive
      Vice President

            	 
      
	 
      	 
      	 
      
	
              MH
      FINANCIAL ASSOCIATES, LLC

            
	
              By:
      

            	Aequitas
      Capital Management, Inc., its Manager
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              By:

            	
              /s/Andrew N. MacRitchie

            	 
      
	 
      	
              Andrew
      N. MacRitchie

            	 
      
	 
      	
              Executive
      Vice President

            	 
      

    

    
    

     

    
      
         

      

      
        Page 5 of
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