Document:

<PAGE>
                                                                   EXHIBIT 10.34

                      BUSINESS LOAN AGREEMENT (ASSET BASED)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         Financial Statements.  Furnish Lender with the following:

                  Additional Requirements.

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

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

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

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

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

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

                  Other Requirements.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         Insecurity. Lender in good faith believes itself insecure.

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

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

ADDITIONAL COVENANTS.

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

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

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

         c) Hypothecate assets.

         d) Loan money or guarantee loans of others.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                  (3) Work in progress.

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

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

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

         Environmental Laws. The words "Environmental Laws" mean any and all
         state, federal and local statues, regulations and ordinances relating
         to the protection of human health or the environment, Including without
         limitation the Comprehensive Environmental Response, Compensation, and
         Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
         ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986,
         Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation
         Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and
         Recovery Act, 42 U-S.C. Section 6901, et seq., or other applicable
         state or federal laws, rules, or regulations adopted pursuant thereto
         or intended to protect human health or the environment.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY US (LENDER)
AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT
FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY US TO BE
ENFORCEABLE.

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

<TABLE>
<S>                                                                    <C>
BORROWER.

MICROHELIX, INC.

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

LENDER:

WEST COAST BANK

By:                 /s/
   ----------------------------------------------
            Authorized Signer
</TABLE><PAGE>
                                                                Exhibit 10.35

                          COMMERCIAL SECURITY AGREEMENT

<TABLE>
<CAPTION>
     Principal          Loan Date        Maturity          Loan No         Call/Coll       Account          Officer         Initials
------------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>             <C>               <C>              <C>             <C>              <C>             <C>
   $2,000,000.00        12-21-2001      05-30-2003        89000103           3025          307877             076
</TABLE>

References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

           Maintenance of Casualty Insurance. Grantor shall procure and maintain
           all risks insurance, including without limitation fire, theft and
           liability coverage together with such other insurance as Lender may
           require with respect to the Collateral, in form, amounts, coverages
           and basis reasonably acceptable to Lender and issued by a company or
           companies reasonably acceptable to Lender. Grantor, upon request of
           Lender, will deliver to Lender from time to time the policies or
           certificates of insurance in form satisfactory to Lender, including
           stipulations that coverages will not be cancelled or diminished
           without at least ten (10) days' prior written notice to Lender and
           not including any disclaimer of the insurer's liability for failure
           to give such a notice. Each insurance policy also shall include an
           endorsement providing that coverage in favor of Lender will not be
           impaired in any way by any act, omission or default of Grantor or any
           other person. In connection with all policies covering assets in
           which Lender holds or is offered a Security Interest, Grantor will
           provide Lender with such loss payable or other endorsements as Lender
           may require. If Grantor at any time fails to obtain or maintain any
           insurance as required under this Agreement, Lender may (but shall not
           be obligated to) obtain such insurance as Lender deems appropriate,
           including if Lender so chooses "single interest insurance;' which
           will cover only Lender's interest in the Collateral.

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

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

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

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts and above in the paragraph
titled "Transactions Involving Collateral", Grantor may have possession of the
tangible personal property and beneficial use of all the Collateral and may use
it in any lawful manner not inconsistent with this Agreement or the Related
Documents, provided that Grantor's right to possession and beneficial use shall
not apply to any Collateral where possession of the Collateral by Lender is
required by law to perfect Lender's Security Interest in such Collateral. Until
otherwise notified by Lender, Grantor may collect any of the Collateral
consisting of accounts. At any time and even though no Event of Default exists,
Lender may exercise its rights to collect the accounts and to notify account
debtors to make payments directly to Lender for application to the indebtedness.
If Lender at any time has possession of any Collateral, whether before or after
an Event of Default, Lender shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral if Lender takes such action for
that purpose as Grantor shall request or as Lender, in Lender's sole discretion,
shall deem appropriate under the circumstances, but failure to honor any request
by Grantor shall not of itself be deemed to be a failure to exercise reasonable
care. Lender shall not be required to take any steps necessary to preserve any
rights in the Collateral against prior parties, nor to protect, preserve or
maintain any Security Interest given to secure the indebtedness.
<PAGE>
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Grantor fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Grantor's failure to discharge or pay when due any amounts
Grantor is required to discharge or pay under this Agreement or any Related
Documents, Lender on Grantor's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, Security Interests, encumbrances and
other claims, at any time levied or placed on the Collateral and paying all
costs for insuring, maintaining and preserving the Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Grantor. All such expenses will become a part
of the indebtedness and, at Lender's option, will (A) be payable on demand; (B)
be added to the balance of the Note and be apportioned among and be payable with
any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be,
treated as a balloon payment which will be due and payable at the Note's
maturity. The Agreement also will secure payment of these amounts. Such right
shall be in addition to all other rights and remedies to which Lender may be
entitled upon Default.

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

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

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

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

           Defective Collateralization, This Agreement or any of the Related
           Documents ceases to be in full force and effect (including failure of
           any collateral document to create a valid and perfected Security
           Interest or lien) at any time and for any reason under any bankruptcy
           or insolvency laws by or against Grantor.

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

           Events Affecting Guarantor. Any of the preceding events occurs with
           respect to guarantor, endorser, surety, or accommodation party of any
           of the indebtedness or guarantor, endorser, surety, or accommodation
           party dies or becomes incompetent or revokes or disputes the validity
           of, or liability under, any Guaranty of the indebtedness.

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

           Insecurity.  Lender in good faith believes itself insecure.

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

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

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

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

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

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

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

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

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

           Election of Remedies. Except as may be prohibited by applicable law,
           all of Lender's rights and remedies, whether evidenced by this
           Agreement, the Related Documents, or by any other writing, shall be
           cumulative and may be exercised singularly or concurrently. Election
           by Lender to pursue any remedy shall not exclude pursuit of any other
           remedy, and an election to make expenditures or to take action to
           perform an obligation of Grantor under this Agreement, after
           Grantor's failure to perform, shall not affect Lender's right to
           declare a default and exercise its remedies.

CHOICE OF VENUE. If there is a lawsuit, you (borrower) agree upon our request to
submit to the jurisdiction of the courts of the State of Oregon in Multnomah
County, and that venue is proper in such courts.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such forms in the Uniform Commercial Code:

           Account. The word "Account" means a trade account, account
           receivable, other receivable, or other right to payment for goods
           sold or services rendered owing to Grantor (or to a third party
           grantor acceptable to Lender).
<PAGE>
           Agreement. The word "Agreement" means this Commercial Security
           Agreement, as this Commercial Security Agreement may be amended or
           modified from time to time, together with all exhibits and schedules
           attached to this Commercial Security Agreement from time to time.

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

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

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

           Environmental Laws. The words "Environmental Laws" mean any and all
           state, federal and local statutes, regulations and ordinances
           relating to the protection of human health or the environment,
           including without limitation the Comprehensive Environmental
           Response, Compensation, and Liability Act of 1980, as amended, 42
           U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and
           Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the
           Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
           seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section
           6901, et seq., or other applicable state or federal laws, rules, or
           regulations adopted pursuant thereto or intended to protect human
           health or the environment.

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

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

           Guaranty, The word "Guaranty" means the guaranty from guarantor,
           endorser, surety, or accommodation party to Lender, including without
           limitation a guaranty or all or part of the Note.

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

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

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

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

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

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

GRANTOR:

MICROHELIX, INC.

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00036-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00036-of-00352.parquet"}]]