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<SEC-DOCUMENT>0001079974-06-000389.txt : 20061024
<SEC-HEADER>0001079974-06-000389.hdr.sgml : 20061024
<ACCEPTANCE-DATETIME>20061024164500
ACCESSION NUMBER:		0001079974-06-000389
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20061018
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
ITEM INFORMATION:		Unregistered Sales of Equity Securities
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20061024
DATE AS OF CHANGE:		20061024

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ZYNEX MEDICAL HOLDINGS INC
		CENTRAL INDEX KEY:			0000846475
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845]
		IRS NUMBER:				870403828
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	033-26787-D
		FILM NUMBER:		061160666

	BUSINESS ADDRESS:	
		STREET 1:		8100 SOUTH PARK WAY
		STREET 2:		SUITE A-9
		CITY:			LITTLETON
		STATE:			CO
		ZIP:			80120
		BUSINESS PHONE:		(303) 703-4906

	MAIL ADDRESS:	
		STREET 1:		8100 SOUTH PARK WAY
		STREET 2:		SUITE A-9
		CITY:			LITTLETON
		STATE:			CO
		ZIP:			80120

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ZYNEX MEDICAL HOLDINGS   INC
		DATE OF NAME CHANGE:	20040120

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FOX RIVER HOLDINGS  INC
		DATE OF NAME CHANGE:	20031126

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ARIZONA VENTURES INC
		DATE OF NAME CHANGE:	20030115
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>zynex8k2_10242006.htm
<DESCRIPTION>REPORT 8-K
<TEXT>
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    <title>
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    <div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>UNITED
        STATES</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECURITIES
        AND EXCHANGE COMMISSION</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Washington,
        D.C. 20549</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>FORM
        8-K</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>CURRENT
        REPORT</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Pursuant
        to Section 13 or 15(d) of the Securities Exchange Act of 1934</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
        of
        Report (Date of earliest event reported):</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>October
        18, 2006</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Zynex
        Medical Holdings, Inc.</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</u></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
        name of Registrant as specified in its charter)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td valign="top" width="20%" style="border-bottom: medium none;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Nevada</u></strong></font></div>
              </td>
              <td valign="top" width="20%" style="border-bottom: medium none;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>33-26787-D</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font></div>
              </td>
              <td valign="top" width="20%" style="border-bottom: medium none;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>90-0275169</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>&#160;&#160;&#160;</strong></font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="20%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
                  or other jurisdiction of incorporation)</font></div>
              </td>
              <td valign="top" width="20%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Commission
                  File Number)</font></div>
              </td>
              <td valign="top" width="20%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(IRS
                  Employer Identification No.)</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><strong><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>8100
        South Park Way, Suite A-9</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>,
        Littleton</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>,
        CO
        80120</u></font></strong></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
        of principal executive offices) (Zip Code)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Registrant&#8217;s
        telephone number:&#160;&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>(303)
        703-4906</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Check
        the
        appropriate box below if the form 8-K filing is intended to simultaneously
        satisfy the filing obligation of the registrant under any of the following
        provisions (see General Instruction A.2. below):</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">[
        ]
</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Written
        communications pursuant to Rule 425 under the Securities Act (17 CFR
        230.425)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">[
        ]
</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Soliciting
        material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
        240.14a-12)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">[
        ]
</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Pre-commencement
        communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">240.14d-2(b))</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">[
        ]
</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Pre-commencement
        communications pursuant to Rule 13e-4(c) under the Exchange Act (17
        CFR</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">240.13e-4(c))</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Total
        pages:</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>
        5&#160;&#160;&#160;</u></font></div>
      <div>&#160;</div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
          </div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Item
        1.01 Entry into a Material Definitive Agreement</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Item
        2.03 Creation of a Direct Financial Obligation or an Obligation under an
        Off-Balance Sheet Arrangement of a Registrant</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Item
        3.02 Unregistered Sales of Equity Securities</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">On
          October 18, 2006, Zynex Medical Holdings, Inc. entered into a loan transaction
          with Ascendiant Capital Group, LLC (an affiliate of Ascendiant Securities,
          LLC)
          and issued to Ascendiant Capital (a) a secured Note in the total principal
          amount of $275,000 (the "Note") and (b) a five-year warrant to purchase
          a total
          of 429,867 shares of our common stock at&#160;a fixed&#160;exercise price of
          $0.39 per share. The&#160;Note is convertible into common stock at a fixed
          conversion price of $0.32 per share. Net proceeds of approximately $200,000
          from
          the transaction will be used for general working capital.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
          principal and interest on the Note are due in one lump sum on April 18,
          2006.
          However, we may extend the maturity date so that the outstanding principal
          balance and accrued and unpaid interest become due and payable in six equal
          monthly installments beginning on the original maturity date and ending
          on
          October 18, 2007. Interest on amounts outstanding under the Note are at
          the rate
          of 15% per annum through January 17, 2007, 18% per annum from January 18,
          2007
          to the original maturity date, and, if the maturity date is extended, 21%
          from
          the original maturity date to the extended maturity date. Events of default
          include, among other things, a failure to make payment of principal or
          interest
          due under the note and the occurrence of any event of default under an
          obligation for borrowed money in excess of $50,000. The note is secured
          by a
          second priority security interest in all of our assets. We issued the Note
          with
          an original issue discount of 5%, and we made a non-refundable prepayment
          of
          interest through April 18, 2007. In accordance with the Note, we paid to
          Ascendiant Capital $10,000 as a reimbursement of expenses in connection
          with the
          transaction and a fee of 65,000 shares of common stock. We also paid Ascendiant
          Securities a placement fee of $22,000 in cash and issued to Ascendiant
          Securities a&#160;five-year warrant for 103,139 shares of common stock at an
          exercise price of $0.39 per share.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">We
          may
          prepay the convertible note in whole or part at any time provided all accrued
          but unpaid interest is included in any prepayment. We must redeem the Note
          within two business days after (1) closing an equity or debt financing
          or series
          of such financings resulting in an aggregate gross cash proceeds of $1,000,000
          or more within 12 months of the date of the Note or (2) the &#8220;Sale of
          Maker.&#8221;</font></div><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-
            2-</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Both
          the
          Note and warrant contain anti-dilution provisions. These provisions are
          not
          triggered by a decline in the stock price and include, with certain exclusions:
          In the case of the Note, the issuance of common stock, securities convertible
          into common stock or rights to acquire common stock at a price below $0.32
          per
          share; and in the case of the warrant, the issuance of options or other
          rights
          to acquire common stock at below $0.39 per share. We have provided to Ascendiant
          Capital piggyback registration rights for the common stock underlying the
          Note
          and warrants and for the shares issued as the placement fee.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Ascendiant
          Capital, Silicon Valley Bank and we have entered into a subordination agreement
          dated October 17, 2006 in which the security interest and payment rights
          of the
          Note are made subordinate to our indebtedness to Silicon Valley Bank. The
          holder
          of the Note is not to demand payment or exercise any remedy relating to
          the Note
          until our indebtedness to Silicon Valley Bank is fully paid, except that
          we may
          pay Ascendiant Capital regularly scheduled payments of interest or principal
          pursuant to the terms of the Note so long as there is not an event of default
          under our loan and security agreement with the Bank.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">We
          have
          also agreed to modify an engagement agreement which we have with Ascendiant
          Securities for private offerings so that Ascendiant Securities will serve
          as a
          Zynex financial advisor to any and all financing transactions that involve
          investors other than those introduced by Ascendiant Securities, except
          for
          certain parties exempt from the provision, during the 12-month period following
          the closing date. For these services, Ascendiant Securities will earn a
          fee
          equal to 3% of gross proceeds associated with the transactions. </font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
          issuances of the above-referenced securities were exempt from registration
          requirements of the Securities Act of 1933 based upon our belief that Ascendiant
          Capital is an accredited investor as defined under Regulation D and that
          it
          purchased the securities for their own investment without a view toward
          distribution of such securities. In addition, there was not any general
          advertisement or solicitation in connection with the sale of the
          above-referenced securities.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
          descriptions in this report of the Note, the warrant and related matters
          are
          qualified entirely by the reference to the transaction documents attached
          as
          exhibits, which are incorporated herein by reference.</font></div><br></div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Item
        9.01. Financial Statements and Exhibits.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(c)
        Exhibits.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><strong><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></strong></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr bgcolor="#cceeff">
              <td align="left" valign="top" width="12%"><u><strong>&#160;
                Exhibit&#160;&#160; </strong></u></td>
              <td align="left" valign="top" width="67%"><u><strong>&#160;Description</strong>&#160;&#160;
</u></td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">10.1</font></div>
              </td>
              <td align="left" valign="top" width="67%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Convertible
                  Secured Promissory Note dated October 18, 2006 by Zynex Medical
                  Holdings,
                  Inc.</font></div>
              </td>
            </tr>
            <tr bgcolor="#cceeff">
              <td align="left" valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">10.2</font></div>
              </td>
              <td align="left" valign="top" width="67%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Warrant
                  dated October 18, 2006 by Zynex Medical Holdings, Inc. to Ascendiant
                  Capital Group, LLC</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">10.3</font></div>
              </td>
              <td align="left" valign="top" width="67%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Security
                  Agreement between Ascendiant Capital Group, LLC and Zynex Medical
                  Holdings, Inc.</font></div>
              </td>
            </tr>
            <tr bgcolor="#cceeff">
              <td align="left" valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">10.4</font></div>
              </td>
              <td align="left" valign="top" width="67%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Subordination
                  Agreement dated October 17, 2006 among Ascendiant Capital Group,
                  LLC,
                  Silicon Valley Bank and Zynex Medical Holdings,
                  Inc.</font></div>
              </td>
            </tr>

        </table>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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        <div id="FTR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
          </div>
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-
            3-</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
          <div style="WIDTH: 100%" align="left">
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SIGNATURES</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Pursuant
        to the requirements of the Securities Exchange Act of 1934, the registrant
        has
        duly caused this report to be signed on as its behalf by the undersigned
        hereunto duly authorized.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
        <table bgcolor="#ffffff" border="0" cellpadding="0" cellspacing="0" width="100%">

            <tr valign="top" bgcolor="#ffffff">
              <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              <td width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
            </tr>
            <tr valign="top" bgcolor="#ffffff">
              <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              <td colspan="2" width="41%">&#160;</td>
            </tr>
            <tr valign="top" bgcolor="#ffffff">
              <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;<br>&#160;</font></td>
              <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;<br>&#160;</font></td>
              <td width="40%">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;<u><font size="3">Zynex
                  Medical Holdings, Inc</font></u><br>&#160;<font size="3">(Registrant)</font></font></div>
                <div>&#160;</div>
              </td>
            </tr>
            <tr valign="top" bgcolor="#ffffff">
              <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date:&#160;<font size="3">October
                24, 2006</font></font></td>
              <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:&#160;&#160;</font></td>
              <td width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/&#160;<font size="3">Thomas
                Sandgaard</font></font></td>
            </tr>
            <tr valign="top" bgcolor="#ffffff">
              <td colspan="2" width="51%"><font size="1">&#160;</font></td>
              <td align="left" width="40%">
                <hr style="COLOR: black" align="left" noshade size="2" width="80%">
                Thomas Sandgaard</td>
            </tr>
            <tr valign="top" bgcolor="#ffffff">
              <td colspan="2" width="51%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              <td width="40%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">President
                and Chief Executive Officer</font></td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
          </div>
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-
            4-</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
          <div style="WIDTH: 100%" align="left">
          </div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">Exhibit
        Index<br>&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">

              <tr bgcolor="#cceeff">
                <td align="left" valign="top" width="12%"><u><strong>&#160; Exhibit&#160;
                  &#160; </strong></u></td>
                <td align="left" valign="top" width="67%"><u><strong>&#160;
                  Description</strong>&#160;&#160;&#160; </u></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="12%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">10.1</font></div>
                </td>
                <td align="left" valign="top" width="67%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Convertible
                    Secured Promissory Note dated October 18, 2006 by Zynex Medical
                    Holdings,
                    Inc.</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="top" width="12%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">10.2</font></div>
                </td>
                <td align="left" valign="top" width="67%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Warrant
                    dated October 18, 2006 by Zynex Medical Holdings, Inc. to Ascendiant
                    Capital Group, LLC</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="12%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">10.3</font></div>
                </td>
                <td align="left" valign="top" width="67%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Security
                    Agreement between Ascendiant Capital Group, LLC and Zynex Medical
                    Holdings, Inc.</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="top" width="12%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">10.4</font></div>
                </td>
                <td align="left" valign="top" width="67%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Subordination
                    Agreement dated October 17, 2006 among Ascendiant Capital Group,
                    LLC,
                    Silicon Valley Bank and Zynex Medical Holdings,
                    Inc.</font></div>
                </td>
              </tr>

          </table>
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<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>zynex8k2ex101_10242006.htm
<DESCRIPTION>EXHIBIT 10.1
<TEXT>
<html>
  <head>
    <title>
      Exhibit 10.1
</title>
<!-- Licensed to: EdgarTech Filing Services-->
<!-- Document Created using EDGARizer HTML 3.0.4.0 -->
<!-- Copyright 2006 EDGARfilings, Ltd., an IEC company.-->
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</head>
  <body bgcolor="#ffffff"><br>
    <div>
      <hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="4">
      <hr style="MARGIN-TOP: -10px; COLOR: #000000" noshade size="1">
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Exhibit
      10.1</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>THIS
      PROMISSORY NOTE (THE &#8220;NOTE&#8221;) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
      1933, AS AMENDED (THE &#8220;SECURITIES ACT&#8221;), OR UNDER THE SECURITIES LAWS OF ANY
      STATE. THIS NOTE IS SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
      MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT AND
      APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
      AND SCOPE REASONABLY SATISFACTORY TO THE MAKER, THAT REGISTRATION IS NOT
      REQUIRED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS
      SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>THIS
      PROMISSORY NOTE IS SUBJECT TO THE SUBORDINATION AGREEMENT BETWEEN THE HOLDER
      HEREOF AND SILICON VALLEY BANK.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>ZYNEX
      MEDICAL HOLDINGS, INC.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>CONVERTIBLE
      SECURED PROMISSORY NOTE</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="justify" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>$275,000</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
            <td valign="top" width="27%">&#160;</td>
            <td align="right" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>October
                18, 2006</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>FOR
      VALUE RECEIVED</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">,
      ZYNEX
      MEDICAL HOLDINGS, INC., a Nevada corporation (&#8220;Maker&#8221;), promises to pay to the
      order of Ascendiant Capital Group, LLC</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(&#8220;Holder&#8221;)
      at 18881 Von Karman, 16</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>th</sup></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      Floor,
      Irvine, CA 92612, the principal sum of Two Hundred Seventy Five Thousand Dollars
      ($275,000), together with all accrued interest thereon and fees, upon the terms
      and conditions specified below. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>1.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Use
      of Loan Proceeds</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
      proceeds of this Note shall be used for general working capital for the Maker.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>2.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Due
      Date</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      Unless
      earlier accelerated or converted pursuant to the terms hereof, this Note shall
      mature and the outstanding principal balance of this Note together with all
      accrued and unpaid interest hereunder shall become due and payable in one lump
      sum on April 18, 2007 (the &#8220;Maturity Date&#8221;); provided, however, if Maker
      delivers written notice to Holder at any time not less than 15 days prior to
      the
      Maturity Date stating that Maker has elected to extend the term of this Note,
      this Note shall instead mature and the outstanding principal balance of this
      Note together with all accrued and unpaid interest hereunder shall become due
      and payable in six equal monthly installments beginning on the Maturity Date
      and
      ending on October 18, 2007 (the &#8220;Extended Maturity Date&#8221;).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">1</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
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        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>3.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Original
      Issue Discount</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      This
      Note shall have an original issue discount equal to five percent (5%) of the
      aggregate principal amount of this Note, and Maker acknowledges that the
      proceeds of this Note shall be net of this five percent (5%) original issue
      discount. The amount by which the issue price of this Note is less than the
      amount to be paid at the Maturity Date (excluding amounts stated to be
      interest), constitutes &#8220;original issue discount,&#8221; the accrual of which is
      treated as interest on the Note for purposes of federal and state
      taxation.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>4.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Interest</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      Interest shall accrue on the unpaid balance outstanding from time to time under
      this Note at the rate of (a) fifteen percent (15%) per annum from the date
      hereof to and including January 17, 2007 and (b) eighteen percent (18%) per
      annum from January 18, 2007 to and including the Maturity Date (with (a) and
      (b)
      referred to herein as the &#8220;Initial Term&#8221;); provided, however, (i) if the term of
      this Note is extended by Maker pursuant to Section 2 hereof, then from and
      after
      the original Maturity Date to and including the Extended Maturity Date, interest
      shall accrue on the unpaid balance outstanding from time to time under this
      Note
      at the rate of twenty-one percent (21%) per annum, and (ii) any principal amount
      not paid when due and, to the extent permitted by applicable law, any interest
      not paid when due, in each case whether at stated maturity, by required
      prepayment, declaration, acceleration, demand or otherwise (both before as
      well
      as after judgment), shall bear interest payable upon demand at a rate that
      is
      five percent (5%) per annum in excess of the rate of interest otherwise then
      payable under this Note. All computations of interest shall be made on the
      basis
      of a year of 360 days for the actual number of days (including the first day
      and
      excluding the last day) occurring in the period for which such interest is
      payable. In no event shall the interest rate payable on this Note exceed the
      maximum rate of interest permitted to be charged under applicable law. If the
      rate of interest payable under this Note is ever reduced as a result of the
      preceding sentence and at any time thereafter the maximum rate permitted by
      applicable law shall exceed such reduced rate of interest then provided for
      hereunder, then the rate provided for hereunder shall be increased to a rate
      not
      to exceed the maximum rate permitted by applicable law at such time, such that
      the total amount of interest received by the Holder is equal to or as nearly
      equal to the amount provided for in the first sentence of this paragraph as
      applicable law permits. All Interest payable under this Note during the Initial
      Term shall be prepaid on the date hereof from the proceeds of this Note
      irrespective of any prepayment of amounts under this Note. In the case of any
      Extended Maturity Date, all interest shall be according to the amortization
      schedule set forth in Section 2 hereof.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>5.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Conversion</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">At
      any
      time or from time to time prior to the Maturity Date or the Extended Maturity
      Date, as the case may be, Holder may elect to convert all or any portion of
      the
      outstanding principal balance of this Note and accrued but unpaid interest
      thereon into the common stock of Maker at an initial conversion price of $0.32
      per share of common stock (the &#8220;Conversion Price&#8221;).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">No
      fractional shares of Maker&#8217;s capital stock will be issued upon conversion of
      this Note. In lieu of any fractional share to which Holder would otherwise
      be
      entitled, Maker will pay to Holder in cash the amount of the unconverted
      principal and interest balance of this Note that would otherwise be converted
      into such fractional share. Upon conversion of this Note pursuant to Section
      5,
      Holder shall surrender this Note, duly endorsed, at</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">2</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">the
      principal offices of Maker. At its expense, Maker will, as soon as practicable
      thereafter, issue and deliver to Holder, at such address as requested by Holder,
      a certificate or certificates for the number of shares to which Holder is
      entitled upon such conversion, together with any other securities and property
      to which Holder is entitled upon such conversion under the terms of this Note,
      including a check payable to Holder for any cash amounts payable as a result
      of
      any fractional shares as described herein.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>6.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Adjustments
      to Conversion Price for Certain Diluting Issuances</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Special
      Definitions</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      For
      purposes of this Section 6, the following definitions apply:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(i)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><em>Options</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;
shall
      mean rights, options, or warrants to subscribe for, purchase or otherwise
      acquire either Common Stock or Convertible Securities (defined
      below).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(ii)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><em>Original
      Issue Date</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;
shall
      mean the date hereof.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(iii)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><em>Convertible
      Securities</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;
shall
      mean any evidences of indebtedness, shares or other securities convertible
      into
      or exchangeable for common stock of Maker.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(iv)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><em>Additional
      Shares of Common Stock</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;
shall
      mean all shares of common stock issued (or, pursuant to Section 6(c) below
      deemed to be issued) by Maker after the Original Issue Date, other than shares
      of common stock issuable or issued:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">A.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">upon
      the
      exercise or conversion of exercisable securities or Convertible Securities
      outstanding as of the Original Issue Date;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">B.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">upon
      exercise of stock options to officers, directors, employees or consultants
      of
      Maker pursuant to stock option or stock purchase plans or agreements on terms
      approved by the Board of Directors of Maker;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">C.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">as
      stock
      splits or subdivisions or stock dividends in respect of which the Conversion
      Price is adjusted pursuant to Section 6(e);</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">D.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">in
      connection with any joint venture approved by the Board of Directors of
      Maker;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">E.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">to
      vendors in payment of normal and customary fees or in settlement of outstanding
      accounts payable in an aggregate amounts not to exceed 1% of the Maker&#8217;s
      outstanding Common Stock (measured as of the Original Issue Date and each
      anniversary date thereof) in each 12 month period following the Original Issue
      Date, provided that any such Additional Shares of Common Stock must be valued,
      as of the day such Additional Shares of Common Stock are issued or deemed to
      be
      issued, at or above the market price of the Maker&#8217;s Common Stock on the day of
      issuance, or</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">3</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">F.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">in
      connection with an acquisition by Maker of the securities, assets or business
      of
      another company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>No
      Adjustment of Conversion Price</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      Any
      provision herein to the contrary notwithstanding, no adjustment in the
      Conversion Price shall be made in respect of the issuance of Additional Shares
      of Common Stock unless the consideration per share is less than the applicable
      Conversion Price in effect on the date of, and immediately prior to such
      issue.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(c)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Deemed
      Issue of Additional Shares of Common Stock</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      In the
      event that Maker at any time or from time to time after the Original Issue
      Date
      shall issue any Options or Convertible Securities or shall fix a record date
      for
      the determination of holders of any class of securities then entitled to receive
      any such Options or Convertible Securities, then the maximum number of shares
      (as set forth in the instrument relating thereto without regard to any
      provisions contained therein designed to protect against dilution) of common
      stock issuable upon the exercise of such Options or, in the case of Convertible
      Securities and Options therefor, upon the exercise of such Options for
      Convertible Securities and the conversion or exchange of such Convertible
      Securities, shall be deemed to be Additional Shares of Common Stock issued
      as of
      the time of such issue or, in case such a record date shall have been fixed,
      as
      of the close of business on such record date, provided further that in any
      such
      case in which Additional Shares of Common Stock are deemed to be
      issued:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(i)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">no
      further adjustments in the Conversion Price shall be made upon the subsequent
      issue of Convertible Securities or shares of Common Stock upon the exercise
      of
      such Options or conversion or exchange of such Convertible
      Securities;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(ii)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">if
      such
      Options or Convertible Securities by their terms provide, with the passage
      of
      time or otherwise, for any increase or decrease in the consideration payable
      to
      the Maker, or increase or decrease in the number of shares of Common Stock
      issuable, upon the exercise, conversion or exchange thereof, the Conversion
      Price computed upon the original issue thereof (or upon the occurrence of a
      record date with respect thereto), and any subsequent adjustments based thereon,
      shall, upon any such increase or decrease becoming effective, be recomputed
      to
      reflect such increase or decrease insofar as it affects such Options or the
      rights of conversion or exchange under such Convertible Securities;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(iii)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">upon
      the
      expiration of any such Options or rights, the termination of any such rights
      to
      convert or exchange or the expiration of any Options or rights related to such
      Convertible Securities or exchangeable securities, the Conversion Price, to
      the
      extent in any way affected by or computed using such Options, rights or
      Convertible Securities or Options or rights related to such Convertible
      Securities, shall be recomputed to reflect the issuance of only the number
      of
      shares of Common Stock (and convertible or exchangeable securities that remain
      in effect) actually issued upon the exercise of such Options or rights, upon
      the
      conversion or exchange of such Convertible Securities or upon the exercise
      of
      the Options or rights related to such Convertible Securities;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">4</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(d)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Adjustment
      of Conversion Price Upon Issuance of Additional Shares of Common
      Stock</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      In the
      event that Maker, at any time after the Original Issue Date, shall issue
      Additional Shares of Common Stock without consideration or for a consideration
      per share less than the Conversion Price in effect on the date of and
      immediately prior to such issue (a &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><em>Dilutive
      Transaction</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;),
      then
      and in such event, the Conversion Price shall, automatically and without further
      action, be reduced to an amount determined by multiplying the Conversion Price
      then in effect by a fraction:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(i)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">the
      numerator of which shall be (X) the number of shares of Common Stock outstanding
      immediately prior to the Dilutive Transaction (excluding treasury shares but
      including all shares of Common Stock issuable upon conversion, exchange or
      exercise of any outstanding shares of Convertible Securities or Options) plus
      (Y) the number of shares of Common Stock which the net aggregate consideration
      received by the Maker for the total number of such additional shares of Common
      Stock so issued in the Dilutive Transaction would purchase at such Conversion
      Price then in effect (prior to such adjustment); and</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(ii)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">the
      denominator of which shall be (X) the number of shares of Common Stock
      outstanding immediately prior to the Dilutive Transaction (excluding treasury
      shares but including all shares of Common Stock issuable upon conversion,
      exchange or exercise of any outstanding shares of Options or Convertible
      Securities), plus (Z) the number of such additional shares of Common Stock
      so
      issued in the Dilutive Transaction.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(e)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Adjustments
      to Conversion Price for Stock Dividends and for Combinations or Subdivisions
      of
      Common Stock</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      In the
      event that Maker at any time or from time to time after the Original Issue
      Date
      shall declare or pay, without consideration, any dividend on the Common Stock
      payable in Common Stock or in any right to acquire Common Stock for no
      consideration, or shall effect a subdivision of the outstanding shares of Common
      Stock into a greater number of shares of Common Stock (by stock split,
      reclassification or otherwise than by payment of a dividend in Common Stock
      or
      in any right to acquire Common Stock), or in the event the outstanding shares
      of
      Common Stock shall be combined or consolidated, by reclassification or
      otherwise, into a lesser number of shares of Common Stock, then the Conversion
      Price in effect immediately prior to such event shall, concurrently with the
      effectiveness of such event, be proportionately decreased or increased, as
      appropriate. In the event that Maker shall declare or pay, without
      consideration, any dividend on the Common Stock payable in any right to acquire
      Common Stock for no consideration then Maker shall be deemed to have made a
      dividend payable in Common Stock in an amount of shares equal to the maximum
      number of shares issuable upon exercise of such rights to acquire Common
      Stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>7.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Payment</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      Payment
      shall be made in lawful tender of the United States and shall be applied first
      to the payment of all accrued and unpaid interest and then to the payment of
      principal. Subject to Section 4 (Interest), Section 8 (Warrants), Section 10
      (Optional Redemption) and Section 11 (Mandatory Redemption) of this Note,
      prepayment of the principal balance of this Note, together with all accrued
      and
      unpaid interest on the portion of principal so prepaid, may be made in whole
      or
      in part at any time without penalty.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">5</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>8.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Warrants;
      Restricted Stock</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      Upon
      the issuance of this Note, Maker shall issue to Holder a warrant, the form
      of
      which is attached hereto as </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Exhibit
      A</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      (the
&#8220;Warrant&#8221;), to purchase 429,687 shares of common stock of Maker at a per share
      exercise price of $0.39 per share. If the term of this Note is extended by
      Maker
      pursuant to Section 2 hereof, then within five business days following Maker&#8217;s
      delivery of written notice of such extension, Maker shall issue and deliver
      to
      Holder shares of common stock of Maker in an amount equal to 75,000 shares
      for
      each $50,000 or part thereof of outstanding principal amount extended under
      this
      Note until the Extended Maturity Date. By way of example, $30,000 in principal
      amount extended shall equal 75,000 shares, $80,000 in principal amount extended
      shall equal 150,000 shares and $250,000 extended, shall equal 375,000
      shares.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>9.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Events
      of Acceleration</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      The
      entire unpaid principal balance of this Note, together with all accrued and
      unpaid interest, and all other fees due hereunder shall become immediately
      due
      and payable prior to the specified due date of this Note upon the occurrence
      of
      one or more of the following events (each an &#8220;Event of Acceleration&#8221;):
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">A.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Maker
      shall fail to make any payment of principal or interest due under this Note
      which shall be deemed an &#8220;Event of Acceleration&#8221; immediately upon such failure;
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">B.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Maker
      shall fail to observe or perform any term or provision of this Note or the
      Warrant; </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><em>provided
      </em></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">that
      </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">such
      occurrence&#160;shall not be deemed an &#8220;Event of Acceleration&#8221; unless such
      condition remains uncured at the end of the&#160;tenth day after&#160;the
      receipt of written notice from Holder of the occurrence of such
      default;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">C.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Any
      representations or warranties of Maker in the Note or Warrant shall be found
      to
      be untrue or incorrect in any material respect;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">D.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
      occurrence of any event of default or acceleration under any promissory note
      or
      obligation for borrowed money with a principal amount in excess of $50,000
      owed
      by Maker; </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">E.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Any
      order, judgment or decree shall be entered against Maker decreeing the
      dissolution or split-up of Maker or any money judgment in excess of $100,000;
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">F.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Pursuant
      to or within the meaning of the United States Bankruptcy Code or any other
      federal or state law relating to insolvency or relief of debtors (a &#8220;Bankruptcy
      Law&#8221;), Maker shall (i) commence a voluntary case or proceeding; (ii) consent to
      the entry of an order for relief against it in an involuntary case; (iii)
      consent to the appointment of a trustee, receiver, assignee, liquidator or
      similar official; (iv) make an assignment for the benefit of its creditors;
      or
      (v) admit in writing its inability to pay its debts as they become due;
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">G.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">A
      court
      of competent jurisdiction enters an order or decree under any Bankruptcy Law
      that (i) is for relief against Maker in an involuntary case; (ii) appoints
      a
      trustee, receiver, assignee, liquidator or similar official for</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">6</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Maker
      or
      substantially all of Maker&#8217;s properties; or (iii) orders the liquidation of
      Maker, and in each case the order or decree is not dismissed or stayed within
      30
      days; or</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">H.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Maker
      shall fail to provide written notice to Holders of the occurrence of any event
      set forth in this Section 9 within 10 days of an officer of Maker having
      knowledge of the occurrence of such event.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>10.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Optional
      Redemption</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Subject
      to Section 4 hereof, this Note may be redeemed by Maker at any time, in whole
      or
      in part, prior to the Maturity Date or, if Maker has elected to extend the
      term
      of this Note pursuant to Section 2 hereof, prior to the Extended Maturity Date,
      at a redemption price equal to one hundred percent (100%) of the principal
      amount of this Note being redeemed, plus all accrued but unpaid interest thereon
      (the &#8220;Redemption Price&#8221;) until and including the Maturity Date or, if Maker has
      elected to extend the term of this Note pursuant to Section 2 hereof, the
      Extended Maturity Date.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>11.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Mandatory
      Redemption</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      Maker
      shall be obligated to redeem this Note at the Redemption Price within two
      business days after Maker&#8217;s receipt of funds from the consummation of a
      Qualified Financing or a Sale of Maker. For purposes hereof, (i) &#8220;Qualified
      Financing&#8221; shall mean the closing of an equity or debt financing or series of
      equity or debt financings by Maker resulting in aggregate gross cash proceeds
      (before commissions, fees or other expenses) to Maker of $1,000,000 or more
      within 12 months of the date of this Note, and (ii)&#160;&#8221;Sale of Maker&#8221; shall
      mean a transaction (or series of related transactions) between Maker and one
      or
      more persons or entities, pursuant to which such persons or entities acquire
      (A)
      capital stock of Maker possessing the voting power to elect a majority of the
      board of directors of Maker (whether by merger, consolidation, sale or transfer
      of Maker&#8217;s capital stock or otherwise); or (B) all or substantially all of
      Maker&#8217;s assets</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>12.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Registration
      Rights</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      In the
      event that Holder elects to convert all or part of this Note into shares of
      Common Stock or is issued additional shares of Common Stock upon extension
      of
      the Note, if any, under Section 8 hereof, Maker hereby grants to Holder the
      following registration rights with respect to all shares of Common Stock issued
      upon the conversion or extension of this Note (for purposes of this Section
      12,
&#8220;Registrable Shares&#8221;):</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">If
      Maker
      proposes to register for its own account or for any stockholders any of its
      capital stock or other securities under the Securities Act of 1933, as amended
      (the &#8220;Act&#8221;) in connection with the public offering of such securities solely for
      cash (other than a registration relating solely to the sale of securities to
      participants in a company stock plan, or an SEC Rule 145 transaction), Maker
      shall, at such time, promptly give Holder written notice of such registration.
      Upon the written request of Holder given within 20 days after Holder&#8217;s receipt
      of such notice from Maker, the Maker shall use its commercially reasonable
      best
      efforts to cause to be registered under the Act all of the Registrable Shares
      that Holder has requested to be registered. Notwithstanding the foregoing,
      if
      the managing underwriter, or the Chief Executive Officer of Maker in the event
      of an offering with no underwriters, determines in good faith that marketing
      factors require a limitation of the number of shares to be sold in such
      registration, then the managing underwriter or the Chief Executive Officer
      of
      the Maker, as the case may be, may exclude Registrable Shares of Holder from
      the
      registration, and the number of</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">7</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Registrable
      Shares that may be included in the registration and the underwriting shall
      be
      allocated to the Maker; provided, however, that (i) no exclusion of the Holder&#8217;s
      Registrable Shares shall be made unless all other stockholders&#8217; securities are
      first excluded and (ii) in no event shall the amount of Registrable Shares
      of
      the Holder included in an offering by the Maker of its securities be reduced
      below 25% of the total amount of securities included in such offering. For
      the
      avoidance of doubt, the Maker may terminate a proposed registration in its
      entirety at any time.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">If
      at any
      time the Registrable Shares held by Holder have been registered under Section
      5(a), and if the Maker thereafter hereafter lists its Common Stock (and only
      so
      long as the class of common stock is so listed) on any national securities
      exchange, the Nasdaq Global Market or the Nasdaq Smallcap Market, the Maker
      shall use its commercially reasonable efforts to keep the Registrable Shares
      authorized for listing on such exchange upon notice of issuance.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>13.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Representations
      And Warranties Of Maker</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      Maker
      has all requisite legal and corporate power to enter into, execute and deliver
      the Note and the Warrant. Each of the Note and the Warrant is the valid and
      binding obligation of Maker, enforceable in accordance with their respective
      terms, except as the same may be limited by bankruptcy, insolvency,
      reorganization, fraudulent conveyance, moratorium, usury or other laws of
      general application relating to or affecting enforcement of creditors&#8217; rights
      and the rules or laws governing specific performance, injunctive relief or
      other
      equitable remedies. All corporate and legal action on the part of Maker, its
      officers, directors and stockholders necessary for the sale and issuance of
      the
      Note and the Warrant, and the performance of Payor&#8217;s obligations under the Note
      and the Warrant have been taken. The offer, issue, and sale of the Note and
      Warrant is exempt from the registration requirements under applicable federal
      and state securities laws.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>14.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Security</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      As
      security for its payment obligations under this Note, Maker hereby grants Holder
      a security interest in all of the assets of Maker (including after acquired
      property) and the proceeds therefrom as further described in that certain
      Security Agreement, dated as of the date hereof, by and between Maker and
      Holder, the terms of which are incorporated herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>15.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Collection</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Maker
      promises to pay all costs and expenses (including reasonable attorney fees)
      incurred in connection with the enforcement of the terms of this
      Note.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>16.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Cumulative
      Remedies</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      Holder&#8217;s rights and remedies under this Note shall be cumulative. Holder shall
      have all other rights and remedies not inconsistent herewith as provided under
      the UCC, by law or in equity. No exercise by Holder of one right or remedy
      shall
      be deemed an election, and no waiver by Holder of any Event of Acceleration
      shall be deemed a continuing waiver of such Event of Acceleration or the waiver
      of any other Event of Acceleration.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>17.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Covenant
      of Holder</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      Holder
      represents to Maker that it is a US person and that is not subject to backup
      withholding because (a)&#160;it is exempt from backup withholding or (b)&#160;it
      has not been notified by the Internal Revneue Service that it is subject to
      backup withholding as a result of failure to report all interests or dividends,
      or (c)&#160;the Internal Revenue</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      </div>
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      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Service
      has notified Holder that it is no longer subject to backup withholding. Holder&#8217;s
      true and correct taxpayer identification number is 48-1280361. Holder hereby
      agrees that for the two year period following the date hereof, Holder will
      not
      enter into or effect any &#8220;short sales&#8221; (as such term is defined in paragraphs
      (a) through (c) of Rule 200 of Regulation SHE under the Securities Exchange
      Act
      of 1934, as amended) or hedging transaction which establishes a net short
      position respect to the common stock of Maker.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>18.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Amendment;
      Waiver</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      Any
      modification, amendment or waiver of any term of this Note must be made in
      writing and signed by Holder. No delay by Holder in acting with respect to
      the
      terms of this Note shall constitute a waiver of any breach, default, or failure
      of a condition under this Note. Maker waives presentment, demand, notice of
      dishonor, notice of default or delinquency, notice of acceleration, notice
      of
      protest and nonpayment, notice of costs, expenses or losses and interest
      thereon, notice of interest on interest and diligence in taking any action
      to
      collect any sums owing under this Note or in proceeding against any of the
      rights or interests in or to properties securing payment of this Note.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>19.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Construction;
      Section Headings</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      This
      Note is the result of negotiations among, and has been reviewed by Holder,
      Maker
      and their respective counsel. Accordingly, this Note shall be deemed to be
      the
      product of all parties hereto and no ambiguity shall be construed in favor
      of or
      against Holder or Maker. </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
      headings of Sections in this Note are provided for convenience only and will
      not
      affect its construction or interpretation. All references to &#8220;Section&#8221; or
&#8220;Sections&#8221; refer to the corresponding Section or Sections of this Note unless
      otherwise specified. All words used in this Note will be construed to be of
      such
      gender or number as the circumstances require. Unless otherwise expressly
      provided, the words &#8220;hereof and &#8220;hereunder&#8221; and similar references refer to this
      Note in its entirety and not to any specific section or subsection hereof,
      the
      words &#8220;including&#8221; or &#8220;includes&#8221; do limit the preceding words or terms and the
      word &#8220;or&#8221; is used in the inclusive sense</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>20.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Fees
      and Expenses</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Maker
      shall pay the reasonable fees of one special counsel to Holder and other
      expenses incurred by Holder in connection with the preparation of this Note
      in
      an amount not to exceed $10,000, which amount shall be deducted from the
      proceeds of this Note and paid by Holder on behalf of Maker. As a placement
      fee
      for this Note, Maker shall issue and deliver 65,000 shares of common stock
      (with
      registration rights as set forth in the Warrant) to Holder within business
      five
      days from the date hereof. Maker shall also pay to Ascendiant Securities, LLC
      as
      placement agent on the transaction, a fee (without duplication of the fee
      payable under that certain engagement letter beween Maker and Ascendiant
      Securities) equal to $22,000 (8% of the Note amount) which shall be deducted
      from the proceeds of the Note and a warrant for 103,139 shares (8% of the common
      stock issuable in the transaction) of common stock of Maker at a per share
      exercise price of $0.39 per share. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>21.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Notices</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      All
      notices and other communications provided for hereunder shall be in writing
      (including telefacsimile communication) and mailed, telecopied, or delivered
      as
      follows: if to Maker, at its address specified opposite its signature below;
      and
      if to Holder, at the address set forth in the first paragraph of this Note;
      or
      in each case at such other address as shall be designated by Holder or Maker.
      All such notices and communications shall, when mailed, telecopied or sent
      by
      overnight courier, be effective when deposited in the mails, delivered to the
      overnight courier, as the case may be, or sent by telecopier. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>22.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Governing
      Law; Jurisdiction</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      This
      Note shall be construed in accordance with the laws of the State of California,
      without resort to that State&#8217;s conflict-of-laws rules. Maker hereby irrevocably
      consents to personal jurisdiction in the state and federal courts of the State
      of California and agrees that venue shall be proper is such courts.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>23.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Severability</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">If
      any
      provision in this Note is held invalid or unenforceable by any court of
      competent jurisdiction, the other provisions of this Note will remain in full
      force and effect. Any provision of this Note held invalid or unenforceable
      only
      in part or degree will remain in full force and effect to the extent not held
      invalid or unenforceable.</font></div>
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      Page Follows]</font></div>
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        Thomas Sandgaard</u></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></u></font></div>
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        </font>Name: Thomas Sandgaard<font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></font></div>
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              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">8100
                Southpark Way, Suite A-9 </font>
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Littleton,
                  Colorado 80120</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      AND ACKNOWLEDGED:</font></div>
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      CAPITAL GROUP, LLC</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">By:</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>_/s/
      Bradley J. Wilhite_________________</u></font></div>
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        Managing Director</font></div>
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      A</u></strong></font></div>
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<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>zynex8k2ex102_10242006.htm
<DESCRIPTION>EXHIBIT 10.2
<TEXT>
<html>
  <head>
    <title>
      Exhibit 10.2
</title>
<!-- Licensed to: EdgarTech Filing Services-->
<!-- Document Created using EDGARizer HTML 3.0.4.0 -->
<!-- Copyright 2006 EDGARfilings, Ltd., an IEC company.-->
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    <div>&#160;</div>
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    <div><br>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Exhibit
      10.2</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">THIS
      WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN ACQUIRED
      FOR
      INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
      AMENDED (THE &#8220;ACT&#8221;), OR ANY STATE SECURITIES LAW. THIS WARRANT AND SUCH
      SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE PLEDGED, TRANSFERRED OR
      HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR DELIVERY OF AN OPINION
      OF
      COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
      OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH THE
      ACT
      OR UNLESS SOLD IN FULL COMPLIANCE WITH RULE 144 UNDER THE ACT.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman"><strong><u>ZYNEX
      MEDICAL HOLDINGS, INC.</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman"><strong><em>Warrant
      for the Purchase of Shares of </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman"><strong><em>Common
      Stock</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman">Date:
      October 18, 2006</font></div>
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      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="justify" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>No.
                [Insert #]</strong></font></div>
            </td>
            <td valign="top" width="27%">&#160;</td>
            <td align="right" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>429,867
                Shares</strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">FOR
      VALUE
      RECEIVED, ZYNEX MEDICAL HOLDING, INC., a Nevada corporation (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Company</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;),
      hereby grants to </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Ascendiant
      capital group, llc. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">its
      designee or its permitted assigns, subject to the terms and conditions set
      forth
      herein, the right to purchase from the Company, </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Four
      Hundred Twenty Nine Thousand Eight Hundred Sixty Seven (429,867)
</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">fully
      paid and non-assessable shares of common stock of the Company.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">For
      purposes of this Warrant, (i) said common stock of the Company, is referred
      to
      as the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Common
      Stock,</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;
(ii)
      the shares of the Common Stock purchasable hereunder or under any other Warrant
      (as defined below) are referred to as the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Warrant
      Shares</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">;&#8221;
(iii)
      the aggregate purchase price payable for the Warrant Shares purchasable
      hereunder is referred to as the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Aggregate
      Warrant Price</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;
      (initially $167,648.13, subject to adjustment as provided herein); (iv) the
      price payable (initially $0.39 per share subject to adjustment as provided
      below) for each of the Warrant Shares issuable hereunder is referred to as
      the
&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Per
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(v)
      this Warrant issued as of the date hereof and all warrants hereafter issued
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and
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      </font></div>
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      time to time, for a period of five years from the date hereof by the surrender
      of this Warrant (with the subscription form at the end hereof duly executed)
      at
      the address set forth in Section 10(a) hereof, together with proper payment
      of
      the Aggregate Warrant Price, or the proportionate part thereof if this Warrant
      is exer-cised in part, with payment for the Warrant Shares made by certified
      or
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      whole shares of the Common Stock and the Holder is entitled to receive a new
      Warrant covering the Warrant Shares that have not been exercised and setting
      forth the proportionate part of the Aggregate Warrant Price applicable to such
      Warrant Shares. Upon surrender of this Warrant, the Company will (i) issue
      a
      certificate or certificates in the name of the Holder for the largest number
      of
      whole shares of the Common Stock to which the Holder shall be entitled and,
      if
      this Warrant is exercised in whole, in lieu of any fractional share of the
      Common Stock to which the Holder shall be entitled, pay to the Holder cash
      in an
      amount equal to the fair value of such fractional share (determined in such
      reasonable manner as the Board of Directors of the Company shall determine),
      and
      (ii) deliver the other securities and properties receivable upon the exercise
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      shall keep available, solely for issuance and delivery upon the exercise of
      this
      Warrant, the shares of the Common Stock and other securities and properties
      as
      from time to time shall be receivable upon the exercise of this Warrant, free
      and clear of all restrictions on sale or transfer, other than under Federal
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      state securities laws, and free and clear of all preemptive rights and rights
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      apply:</font></div>
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      shall mean rights, options, or warrants to subscribe for, purchase or otherwise
      acquire either Common Stock or Convertible Securities (defined
      below).</font></div>
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      convertible into or exchangeable for common stock of Company.</font></div>
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      Shares of Common Stock&#8221; shall mean all shares of common stock issued (or,
      pursuant to Section 3(c) below deemed to be issued) by the Company after the
      Original Issue Date, other than shares of common stock issuable or
      issued:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">A.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">upon
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      exercise or conversion of exercisable securities or Convertible Securities
      outstanding as of the Original Issue Date;</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">B.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">upon
      exercise of stock options to officers, directors, employees or consultants
      of
      The Company pursuant to stock option or stock purchase plans or agreements
      on
      terms approved by the Board of Directors of the Company;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">C.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">as
      stock
      splits or subdivisions or stock dividends in respect of which the Per Share
      Warrant Price is adjusted pursuant to Section 3(e) or Section 3(f);</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">D.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">in
      connection with any joint venture approved by the Board of Directors of the
      Company;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">E.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">to
      vendors in payment of normal and customary fees or in settlement of outstanding
      accounts payable in an aggregate amounts not to exceed 1% of the Company&#8217;s
      outstanding Common Stock (measured as of the Original Issue Date and each
      anniversary date thereof) in each 12 month period following the Original Issue
      Date, provided that any such Additional Shares of Common Stock must be valued,
      as of the day such Additional Shares of Common Stock are issued or deemed to
      be
      issued, at or above the market price of the Company&#8217;s Common Stock on the day of
      issuance, </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">F.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">in
      connection with an acquisition by the Company of the securities, assets or
      business of another company; or</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">G.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">in
      connection with sales of shares of Common Stock or Convertible Securities by
      the
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>No
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      provision herein to the contrary notwithstanding, no adjustment in the Per
      Share
      Warrant Price shall be made in respect of the issuance of Additional Shares
      of
      Common Stock unless the consideration per share is less than the applicable
      Per
      Share Warrant Price in effect on the date of, and immediately prior to such
      issue.</font></div>
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      In the
      event that the Company at any time or from time to time after the Original
      Issue
      Date shall issue any Options or Convertible Securities or shall fix a record
      date for the determination of holders of any class of securities then entitled
      to receive any such Options or Convertible Securities, then the maximum number
      of shares (as set forth in the instrument relating thereto without regard to
      any
      provisions contained therein designed to protect against dilution) of common
      stock issuable upon the exercise of such Options or, in the case of Convertible
      Securities and Options therefor, the exercise of such Options for Convertible
      Securities and the conversion or exchange of such Convertible Securities, shall
      be deemed to be Additional Shares of Common Stock issued as of the time of
      such
      issue or, in case such a record date shall have been fixed, as of the close
      of</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">business
      on such record date, provided further that in any such case in which Additional
      Shares of Common Stock are deemed to be issued:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(i)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">no
      further adjustments in the Per Share Warrant Price shall be made upon the
      subsequent issue of Convertible Securities or shares of Common Stock upon the
      exercise of such Options or conversion or exchange of such Convertible
      Securities;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(ii)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">if
      such
      Options or Convertible Securities by their terms provide, with the passage
      of
      time or otherwise, for any increase or decrease in the consideration payable
      to
      the Company, or increase or decrease in the number of shares of Common Stock
      issuable, upon the exercise, conversion or exchange thereof, the Per Share
      Warrant Price computed upon the original issue thereof (or upon the occurrence
      of a record date with respect thereto), and any subsequent adjustments based
      thereon, shall, upon any such increase or decrease becoming effective, be
      recomputed to reflect such increase or decrease insofar as it affects such
      Options or the rights of conversion or exchange under such Convertible
      Securities;</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(iii)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">upon
      the
      expiration of any such Options or rights, the termination of any such rights
      to
      convert or exchange or the expiration of any Options or rights related to such
      Convertible Securities or exchangeable securities, the Per Share Warrant Price,
      to the extent in any way affected by or computed using such Options, rights
      or
      Convertible Securities or Options or rights related to such Convertible
      Securities, shall be recomputed to reflect the issuance of only the number
      of
      shares of Common Stock (and convertible or exchangeable securities that remain
      in effect) actually issued upon the exercise of such Options or rights, upon
      the
      conversion or exchange of such Convertible Securities or upon the exercise
      of
      the Options or rights related to such Convertible Securities;</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(d)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Adjustment
      of Per Share Warrant Price Upon Issuance of Additional Shares of Common
      Stock</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      In the
      event that the Company, at any time after the Original Issue Date, shall issue
      Additional Shares of Common Stock without consideration or for a consideration
      per share less than the Per Share Warrant Price in effect on the date of and
      immediately prior to such issue (a &#8220;Dilutive Transaction&#8221;), then and in such
      event, the Per Share Warrant Price shall, automatically and without further
      action, be reduced to an amount determined by multiplying the Per Share Warrant
      Price then in effect by a fraction:</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(i)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">the
      numerator of which shall be (X) the number of shares of Common Stock outstanding
      immediately prior to the Dilutive Transaction (excluding treasury shares but
      including all shares of Common Stock issuable upon conversion, exchange or
      exercise of any outstanding shares of Convertible Securities or Options) plus
      (Y) the number of shares of Common Stock which the net aggregate consideration
      received by the Company for the total number of such additional shares of Common
      Stock so issued in the Dilutive Transaction would purchase at such Per Share
      Warrant Price then in effect (prior to such adjustment); and</font></div>
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      denominator of which shall be (X) the number of shares of Common Stock
      outstanding immediately prior to the Dilutive Transaction (excluding treasury
      shares but including all shares of Common Stock issuable upon conversion,
      exchange or exercise of any outstanding shares of Options or Convertible
      Securities), plus (Z) the number of such additional shares of Common Stock
      so
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      Dividends, Subdivisions and Combinations</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      In case
      the Company shall hereafter (i) pay a dividend or make a distribution on its
      capital stock in shares of Common Stock (ii) subdivide its outstanding shares
      of
      Common Stock into a greater number of shares, (iii) combine its outstanding
      shares of Common Stock into a smaller number of shares or (iv) issue by
      reclassification of its Common Stock any shares of capital stock of the Company,
      the securities purchasable upon the exercise of this Warrant shall be
      proportionately adjusted and the Per Share Warrant Price shall be adjusted
      to be
      equal to a fraction, the numerator of which shall be the Aggregate Warrant
      Price
      and the denominator of which shall be the number of shares of Common Stock
      or
      other capital stock of the Company that the Holder would have owned immediately
      following such action had such Warrant been exercised immediately prior thereto.
      An adjustment made pursuant to this Subsection 3(b) shall become effective
      immediately after the record date in the case of a dividend or distribution,
      and
      shall become effective immediately after the effective date in the case of
      a
      subdivision, combination or reclassification.</font></div>
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      of any capital reclassification or reorganization, or any consolidation or
      merger to which the Company is a party other than a merger or consolidation
      in
      which the Company is the continuing corporation, or in case of any sale or
      conveyance to another entity of all or substantially all of the assets of the
      Company, or in the case of any statutory exchange of securities with another
      corporation (including any exchange effected in connection with a merger of
      a
      third entity into the Company, the Holder of this Warrant shall have the right
      thereafter to receive on the exercise of this Warrant the kind and amount of
      securities, cash or other property which the Holder would have owned or have
      been entitled to receive immediately after such reorganization,
      reclassification, consolidation, merger, statutory exchange, sale or conveyance
      had this Warrant been exercised immediately prior to the effective date of
      such
      reorganization, reclassification, consolidation, merger, statutory exchange,
      sale or conveyance and in any such case, if necessary, appropriate adjustment
      shall be made in the application of the provisions set forth in this Section
      3
      with respect to the rights and interests thereafter of the Holder of this
      Warrant to the end that the provisions set forth in this Section 3 shall
      thereafter correspondingly be made applicable, as nearly as may reasonably
      be,
      in relation to any shares of stock or other securities or property thereafter
      deliverable on the exercise of this Warrant. The above provisions of this
      Section 3(f) shall similarly apply to successive reorganizations,
      reclassifications, consolidations, mergers, statutory exchanges, sales or
      conveyances. The Company shall require the issuer of any shares of stock or
      other securities or property thereafter deliverable on the exercise of this
      Warrant to be responsible for all of the agreements and obligations of the
      Company hereunder. Notice of any such reorganization, reclassification,
      consolidation, merger, statutory exchange, sale or conveyance and of said
      provisions so proposed to be made, shall be mailed to the Holders of the
      Warrants not less than 20 days prior to the anticipated closing of such event.
      A
      sale of all or substantially all of the assets of the Company for a
      consideration consisting primarily of securities shall be deemed a consolidation
      or merger for the foregoing purposes.</font></div>
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      adjustment would require an increase or decrease of at least $0.01 per share
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      made shall be carried forward and taken into account in any subsequent
      adjustment; </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>provided</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">,
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      however, that adjustments shall be required and made in accordance with the
      provisions of this Section 3 (other than this Subsection 3(d)) not later
      than</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">such
      time
      as may be required in order to preserve the tax-free nature of a distribution
      (if any) to the Holder of this Warrant or Common Stock issuable upon the
      exercise hereof. All calculations under this Section 3 shall be made to the
      nearest cent or to the nearest 1/100th of a share, as the case may be. Anything
      in this Section 3 to the contrary notwithstanding, the Company shall be entitled
      to make such reductions in the Per Share Warrant Price, in addition to those
      required by this Section 3, as it in its discretion shall deem to be advisable
      in order that any stock dividend, subdivision of shares or distribution of
      rights to purchase stock or securities convertible or exchangeable for stock
      hereafter made by the Company to its stockholders shall not be
      taxable.</font></div>
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      the Per Share Warrant Price is adjusted as provided in this Section 3 and upon
      any modifi-cation of the rights of a Holder of Warrants in accordance with
      this
      Section 3, the Company shall promptly prepare a brief statement of the facts
      requiring such adjustment or modification and the manner of computing the same
      and cause copies of such certificate to be mailed to the Holder. In addition,
      the Company shall issue a certificate signed by the chief financial officer
      of
      the Company setting forth the Per Share Warrant Price and the number of Warrant
      Shares in effect after such adjustment or the effect of such modification,
      a
      brief statement of the facts requiring such adjustment or modification and
      the
      manner of computing the same and cause copies of such certificate to be mailed
      to the Holder.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(i)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">If
      the
      Board of Directors of the Company shall declare any dividend or other
      distribution with respect to the Common Stock the Company shall mail notice
      thereof to the Holder not less than 20 days prior to the record date fixed
      for
      determining stock-holders entitled to participate in such dividend or other
      distribution.</font></div>
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      as a
      result of an adjustment made pursuant to this Section 3, the Holder of any
      Warrant thereafter surrendered for exercise shall become entitled to receive
      shares of two or more classes of capital stock or shares of Common Stock and
      other capital stock of the Company, the Board of Directors shall in good faith
      determine the allocation of the adjusted Per Share Warrant Price between or
      among shares or such classes of capital stock or shares of Common Stock and
      other capital stock.</font></div>
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      the
      expiration of any rights, options, warrants or conversion privileges with
      respect to the issuance of which an adjustment to the Per Share Warrant Price
      had been made, if such option, right warrant or conversion shall not have been
      exercised, the number of Warrant Shares purchasable upon exercise of this
      Warrant, to the extent this Warrant has not then been exercised, shall, upon
      such expiration, be readjusted and shall thereafter be such as they would have
      been had they been originally adjusted (or had the original adjustment not
      been
      required, as the case may be) on the basis of (A) the fact that Common Stock,
      if
      any, actually issued or sold upon the exercise of such rights, options, warrants
      or conversion privileges, and (B) the fact that such shares of Common Stock,
      if
      any, were issued or sold for the consideration actually received by the Company
      upon such exercise plus the consideration, if any, actually received by the
      Company for the issuance, sale or grant of all such rights, options, warrants
      or
      conversion privileges whether or not exercised; </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>provided</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">,
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      that no
      such readjustment shall have the effect of decreasing the number of Warrant
      Shares purchasable upon exercise of this Warrant by an amount in excess of
      the
      amount of the adjustment initially made in respect of the issuance, sale or
      grant of such rights, options, warrants or conversion privileges.</font></div>
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      case
      any event shall occur as to which the other provisions of this Section 3 are
      not
      strictly applicable but as to which the failure to make any adjustment would
      not
      fairly protect the purchase rights represented by this Warrant in accordance
      with the essential intent and principles of the adjustments set forth in this
      Section 3, then, in each such case, the Board of Directors of the Company shall
      in good faith determine the adjustment, if any, on a basis consistent with
      the
      essential intent and principles established herein, necessary to preserve the
      purchase rights represented by the Warrants. Upon such determination, the
      Company will promptly mail a copy thereof to the Holder of this Warrant and
      shall make the adjustments described therein.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>4.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Fully
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      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
      shares of the Common Stock represented by each and every certificate for Warrant
      Shares delivered on the exercise of this Warrant shall, subject to the Holder&#8217;s
      compliance with the terms hereof, at the time of such delivery, be duly
      authorized, validly issued and outstanding, fully paid and nonassessable, and
      not subject to preemptive rights or rights of first refusal on the part of
      the
      Company, and the Company will take all such actions as may be necessary to
      assure that the par value, if any, per share of the Common Stock is at all
      times
      equal to or less than the then Per Share Warrant Price. The Company shall pay,
      when due and payable, any and all Federal and state stamp, original issue or
      similar taxes which may be payable in respect of the issue of any Warrant Share
      or any certificate thereof to the extent required because of the issuance by
      the
      Company of such security.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>5.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Registration</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font></div>
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      the
      Company proposes to register for its own account or for any stockholders any
      of
      its capital stock or other securities under the Securities Act of 1933, as
      amended (the &#8220;Act&#8221;) in connection with the public offering of such securities
      solely for cash (other than a registration relating solely to the sale of
      securities to participants in a Company stock plan, or an SEC Rule 145
      transaction), the Company shall, at such time, promptly give Holder written
      notice of such registration. Upon the written request of Holder given within
      20
      days after Holder&#8217;s receipt of such notice from the Company, the Company shall
      use its commercially reasonable best efforts to cause to be registered under
      the
      Act all of the Common Stock that Holder has requested to be registered.
      Notwithstanding the foregoing, if the managing underwriter, or the Chief
      Executive Officer of the Company in the event of an offering with no
      underwriters, determines in good faith that marketing factors require a
      limitation of the number of shares to be sold in such registration, then the
      managing underwriter or the Chief Executive Officer of the Company, as the
      case
      may be, may exclude shares of Holder from the registration, and the number
      of
      shares that may be included in the registration and the underwriting shall
      be
      allocated to the Company; provided, however, that (i) no exclusion of the
      Holder&#8217;s shares shall be made unless all other stockholders&#8217; securities are
      first excluded, and that (ii) in no event shall the amount of shares of the
      Holder included in an offering by the Company of its securities be reduced
      below
      25% of the total amount of securities included in such offering. For the
      avoidance of doubt, the Company may terminate a proposed registration in its
      entirety at any time.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">If
      at any
      time the shares of Common Stock held by Holder have been registered under
      Section 5(a), and if the Company thereafter hereafter lists its Common
      Stock</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(and
      only
      so long as the class of common stock is so listed) on any national securities
      exchange, the Nasdaq Global Market or the Nasdaq Smallcap Market, the Company
      shall use its commercially reasonable efforts to keep the Warrant Shares (or
      such securities, e.g., Common Stock, into which such Warrant Shares are
      ultimately convertible into) authorized for listing on such exchange upon notice
      of issuance.</font></div>
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      Holder represents to the Company, by accepting this Warrant, that it understands
      that this Warrant and any securities obtainable upon exercise of this Warrant
      have not been registered for sale under Federal or state securities laws and
      are
      being offered and sold to the Holder pursuant to one or more exemptions from
      the
      registration requirements of such securities laws. In the absence of an
      effective registration of such securities or an exemption therefrom, any
      certificates for such securities shall bear the legend set forth on the first
      page hereof. The Holder understands that it must bear the economic risk of
      its
      investment in this Warrant and any securities obtainable upon exercise of this
      Warrant for an indefinite period of time, as this Warrant and such securities
      have not been registered under Federal or state securities laws and therefore
      cannot be sold unless subsequently registered under such laws, unless an
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      Holder, by its acceptance of this Warrant, represents to the Company that it
      is
      acquiring this Warrant and will acquire any securities obtainable upon exercise
      of this Warrant for its own account for investment and not with a view to,
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      for sale in connection with, any distribution thereof in violation of the Act.
      The Holder, by acceptance of this Warrant, agrees that this Warrant and any
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      securities will not be sold or otherwise transferred unless (i) a registration
      statement with respect to such transfer is effective under the Act and any
      applicable state securities laws or (ii) such sale or transfer is made pursuant
      to one or more exemptions from the Act and in accordance with the legend set
      forth on the first page hereof.</font></div>
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      financial experience of its professional advisors (who are unaffiliated with
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      who are not compensated by the Company or any affiliate, finder or selling
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      of the Company, directly or indirectly), such Holder has the capacity to protect
      such Holder&#8217;s interests in connection with the transactions contemplated by this
      warrant. The Holder, by its acceptance of this Warrant, represents to the
      Company that that it is able to fend for itself, can bear the economic risk
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      its investment, has such knowledge and experience in financial or business
      matters that it is capable of evaluating the merits and risks of the investment
      in this Warrant, and has had the opportunity to ask questions and receive
      answers from the Company regarding its business and financial condition. Holder
      also represents it has not been organized for the purpose of acquiring this
      Warrant.</font></div>
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      Holder has been afforded (i) the opportunity to ask such questions as it has
      deemed necessary of, and to receive answers from, representatives of the Company
      concerning the terms and conditions of the Warrants or the exercise of the
      Warrants; and (ii) the opportunity to request such additional information which
      the Company possesses or can acquire without unreasonable effort or
      expense.</font></div>
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      receipt of evidence satisfactory to the Company of the loss, theft, destruction
      or mutilation of this Warrant, if lost, stolen or destroyed, and upon surrender
      and cancellation of this Warrant, if mutilated, the Company shall execute and
      deliver to the Holder a new Warrant of like date, tenor and
      denomination.</font></div>
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      This
      Warrant does not confer upon the Holder any right to vote on or consent to
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      receive notice as a stockholder of the Company, as such, in respect of any
      matters whatsoever, nor any other rights or liabilities as a stockholder, prior
      to the exercise hereof; this Warrant does, however, require certain notices
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      Holder
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      hereof to any affiliate or wholly-owned subsidiary or parent entity or entity
      under common control of or with Holder; provided, however, that Holder shall
      provide the Company with notice promptly following any such
      transfer.</font></div>
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      been given unless, the same is in writing and is mailed by first-class mail,
      postage prepaid, or via recognized overnight courier with confirmed receipt,
      addressed to:</font></div>
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      Company at 8100 Southpark Way, Suite A-9, Littleton, CO 80210 or other such
      address as the Company has designated in writing to the Holder.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 45pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">the
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      Floor,
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      The
      terms and provisions of this Warrant shall insure to the benefit of, and be
      binding upon, the Company, its successors and assigns.</font></div>
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      This
      Warrant shall be governed by and construed in accordance with the law of the
      State of California without giving effect to the principles of conflicts of
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      thereof. The Company hereby irrevocably consents to personal jurisdiction in
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      state and federal courts of the State of California and agrees that venue shall
      be proper in such courts.</font></div>
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      Except
      as expressly provided herein, neither this Warrant nor any term hereof may
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      amended, waived, discharged or terminated other than by a written instrument
      signed by the Holder and the Company.</font></div>
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          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
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      WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
      President this 18</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>TH</sup></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      day of
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>ZYNEX
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      Warrant, hereby agrees to subscribe for and purchase ____________________ shares
      of the Common Stock of Zynex Medical Holdings, Inc. covered by said Warrant,
      and
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      Warrant.</font></div>
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      constitute and appoint _____________________, attorney, to transfer said Warrant
      on the books of Zynex Medical Holdings, Inc. By acceptance of the foregoing
      Warrant, Transferee shall become a Holder under said Warrant and subject to
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      VALUE
      RECEIVED _______________ hereby assigns and transfers unto ____________________
      the right to purchase _______ shares of Common Stock of Zynex Medical Holdings,
      Inc. covered by the foregoing Warrant, and a proportionate part of said Warrant
      and the rights evidenced thereby, and does irrevocably constitute and appoint
      ____________________, attorney, to transfer such part of said Warrant on the
      books of Zynex Medical Holdings, Inc. By acceptance of the proportionate part
      of
      foregoing Warrant, Transferee shall become a Holder under said proportionate
      part of said Warrant and subject to the rights, obligations and representations
      of Holder set forth in said Warrant.</font></div>
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<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>zynex8k2ex103_10242006.htm
<DESCRIPTION>EXHIBIT 10.3
<TEXT>
<html>
  <head>
    <title>
      Exhibit 10.3
</title>
<!-- Licensed to: EdgarTech Filing Services-->
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<!-- Copyright 2006 EDGARfilings, Ltd., an IEC company.-->
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</head>
  <body bgcolor="#ffffff"><br>
    <div>
      <hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="4">
      <hr style="MARGIN-TOP: -10px; COLOR: #000000" noshade size="1">
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    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Exhibit
      10.3</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECURITY
      AGREEMENT</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">This
      </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECURITY
      AGREEMENT</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      (this
</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>&#8220;Agreement&#8221;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">)
      is
      dated as of October 18, 2006 and entered into by and among ASCENDIANT CAPITAL
      GROUP, LLC, a Nevada limited liability company (</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>&#8220;Secured
      Party&#8221;)</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      and
      ZYNEX MEDICAL HOLDINGS, INC., a Nevada corporation (</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>&#8220;Grantor&#8221;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">).
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>PRELIMINARY
      STATEMENTS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">A.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Grantor
      has issued to Secured Party a promissory note dated as of October 18, 2006
      (said
      promissory note, as it may hereafter be amended, supplemented or otherwise
      modified from time to time, being the </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>&#8220;Note&#8221;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">)
      Capitalized terms used in this Agreement and not otherwise defined herein shall
      have the meanings given to them in the Note.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">B.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">It
      is a
      condition precedent to the making of the loan by Secured Party the repayment
      of
      which is evidenced by the Note that Grantor shall have granted the security
      interests and undertaken the obligations contemplated by this
      Agreement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>NOW,
      THEREFORE</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">,
      in
      consideration of the agreements set forth herein and in order to induce Secured
      Party to make the loan the repayment of which is evidenced by the Note, Grantor
      hereby agrees with Secured Party as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      1.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 63pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Grant
      of Security.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Grantor
      hereby assigns to Secured Party, and hereby grants to Secured Party a security
      interest in, all of Grantor&#8217;s right, title and interest in and to all of the
      personal property of Grantor including the following, in each case whether
      now
      or hereafter existing, whether tangible or intangible, whether now owned or
      hereafter acquired and wherever the same may be located (the </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>&#8220;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Collateral&#8221;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">):</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">all
      Accounts;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">all
      Chattel Paper;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(c)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">all
      Money
      and all Deposit Accounts, together with all amounts on deposit from time to
      time
      in such Deposit Accounts;</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(d)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">all
      Documents;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(f)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">all
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      category of Collateral set forth above shall have the meaning set forth in
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      UCC, it being the intention of Grantor that the description of the Collateral
      set forth above be construed to include the broadest possible range of
      assets.</font></div>
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      Agreement secures, and the Collateral is collateral security for, the prompt
      payment in full when due, whether at stated maturity, by required prepayment,
      declaration, acceleration, demand or otherwise, of all Secured Obligations
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      Grantor. </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>&#8220;Secured
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      all obligations and liabilities of every nature of Grantor now or hereafter
      existing under or arising out of or in connection with the Note, together with
      all extensions or renewals thereof, whether for principal, interest, fees,
      expenses, indemnities or otherwise, whether voluntary or involuntary, direct
      or
      indirect, absolute or contingent, liquidated or unliquidated, whether or not
      jointly owed with others, and whether or not from time to time decreased or
      extinguished and later increased, created or incurred, and all or any portion
      of
      such obligations or liabilities that are paid, to the extent all or any part
      of
      such payment is avoided or recovered directly or indirectly from Secured Party
      as a preference, fraudulent transfer or otherwise, and all obligations of every
      nature of Grantor now or hereafter existing under this Agreement (including,
      without limitation, interest and other amounts that, but for the filing of
      a
      petition in bankruptcy with respect to Grantor, would accrue on such
      obligations, whether or not a claim is allowed against Grantor for such amounts
      in the related bankruptcy proceeding).</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      represents and warrants as follows:</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Jurisdiction
      of Organization</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      Grantor&#8217;s name as it appears in official filings in the state of its
      organization is &#8220;Zynex Medical Holdings, Inc.&#8221; Grantor is a corporation
      organized under the laws of the state of Nevada.</font></div>
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      Grantor
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      five
      year period preceding the date hereof, had a different name from the name of
      Grantor listed on the signature pages hereof, except as set forth on
</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Schedule
      1</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      hereto.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(c)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Due
      Authorization, etc. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Grantor
      is duly formed, validly existing and in good standing under the law of its
      jurisdiction of organization and has full entity power and authority to execute,
      deliver and perform this Agreement. The execution, delivery and performance
      of
      this Agreement has been duly authorized by all necessary entity action. This
      Agreement constitutes a legally valid and binding obligation of Grantor,
      enforceable against Grantor in accordance with its terms, except as enforcement
      hereof may be limited by applicable bankruptcy, insolvency, reorganization
      or
      other similar laws affecting the enforcement of creditors&#8217; rights generally or
      by general equitable principles.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(d)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>No
      Conflict.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      The
      execution, delivery and performance of this Agreement by Grantor will not
      violate the organizational documents of Grantor, any provision of law applicable
      to Grantor or any order, judgment or decree of any court or other governmental
      agency binding on Grantor.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(e)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Security
      Interests.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      The
      security interests in the Collateral granted hereunder constitute valid security
      interests in the Collateral, securing payment of the Secured Obligations.
      Secured Party understands and agrees that the security interests in the
      Collateral granted herein are junior in priority to the security interests
      granted by Grantor to Silicon Valley Bank. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECTION
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      Assurances</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Grantor
      agrees that from time to time, at the expense of Grantor, Grantor will promptly
      execute and deliver all further instruments and documents, and take all further
      action, that may be necessary or desirable, or that Secured Party may request,
      in order to perfect and protect any security interest granted or purported
      to be
      granted hereby or to enable Secured Party to exercise and enforce its rights
      and
      remedies hereunder with respect to any Collateral. Without limiting the
      generality of the foregoing, Grantor will: (a) (i) execute (if necessary) and
      file such financing or continuation statements, or amendments thereto, (ii)
      execute and deliver, and cause to be executed and delivered, agreements
      establishing that Secured Party has control of Deposit Accounts and Investment
      Property of Grantor, (iii)&#160;deliver to Secured Party all certificates or
      Instruments representing or evidencing Investment Property, accompanied by
      duly
      executed endorsements or instruments of transfer or assignment in blank, all
      in
      form and substance satisfactory to Secured Party and (iv)&#160;deliver such
      other instruments or notices, in each case, as may be necessary or desirable,
      or
      as Secured Party may request, in order to perfect and preserve the security
      interests granted or purported to be granted hereby; (b)&#160;furnish to Secured
      Party from time to time statements and schedules further identifying and
      describing the Collateral and such other reports in connection with the
      Collateral as Secured Party may reasonably request, all in reasonable detail;
      (c)&#160;at any reasonable time, upon request by Secured Party, exhibit the
      Collateral to and allow inspection of the Collateral by Secured Party, or
      persons designated by Secured Party; (d)&#160;at Secured Party&#8217;s request, appear
      in and defend any action or proceeding that may affect Grantor&#8217;s title to or
      Secured Party&#8217;s security interest in all or any part of the Collateral; and
      (e)&#160;use commercially reasonable efforts to obtain any necessary consents of
      third parties to the creation and perfection of a security interest in favor
      of
      Secured Party with respect</font></div>
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      any
      Collateral. Grantor hereby authorizes Secured Party to file one or more
      financing or continuation statements, and amendments thereto, relative to all
      or
      any part of the Collateral (including any financing statement indicating that
      it
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      5.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 63pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Certain
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Grantor
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">not
      use
      or permit any Collateral to be used unlawfully or in violation of any provision
      of this Agreement or any applicable statute, regulation or ordinance or any
      policy of insurance covering the Collateral;</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">give
      Secured Party at least 30 days&#8217; prior written notice of any change in Grantor&#8217;s
      name, identity or corporate structure or any reincorporation, reorganization
      or
      other action that results in a change of the jurisdiction of organization of
      Grantor;</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(c)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">pay
      promptly when due all property and other taxes, assessments and governmental
      charges or levies imposed upon, and all claims (including claims for labor,
      services, materials and supplies) against, the Collateral except to the extent
      the validity thereof is being contested in good faith; provided that Grantor
      shall in any event pay such taxes, assessments, charges, levies or claims not
      later than five days prior to the date of any proposed sale under any judgment,
      writ or warrant of attachment entered or filed against Grantor or any of the
      Collateral as a result of the failure to make such payment; and</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(d)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">permit
      representatives of Secured Party at any time during normal business hours to
      inspect and make abstracts from Records of the Collateral, and Grantor agrees
      to
      render to Secured Party, at Grantor&#8217;s cost and expense, such clerical and other
      assistance as may be reasonably requested with regard thereto.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECTION
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      Covenants with respect to Accounts</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Except
      as
      otherwise provided in this section, Grantor shall continue to collect, at its
      own expense, all amounts due or to become due to Grantor under the Accounts.
      </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      7.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 63pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Secured
      Party Appointed Attorney-in-Fact</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Grantor
      hereby irrevocably appoints Secured Party as Grantor&#8217;s attorney-in-fact, with
      full authority in the place and stead of Grantor and in the name of Grantor,
      Secured Party or otherwise, from time to time in Secured Party&#8217;s discretion to
      take any action and to execute any instrument that Secured Party may deem
      necessary or advisable to accomplish the purposes of this Agreement, including,
      without limitation:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">upon
      the
      occurrence and during the continuance of an Event of Acceleration, to obtain
      and
      adjust insurance required to be maintained by Grantor;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">upon
      the
      occurrence and during the continuance of an Event of Acceleration, to ask for,
      demand, collect, sue for, recover, compound, receive and give</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">acquittance
      and receipts for moneys due and to become due under or in respect of any of
      the
      Collateral;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(c)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">upon
      the
      occurrence and during the continuance of an Event of Acceleration, to receive,
      endorse and collect any drafts or other Instruments, Documents, Chattel Paper
      and other documents in connection with clauses (a) and (b) above;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(d)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">upon
      the
      occurrence and during the continuance of an Event of Acceleration, to file
      any
      claims or take any action or institute any proceedings that Secured Party may
      deem necessary or desirable for the collection of any of the Collateral or
      otherwise to enforce or protect the rights of Secured Party with respect to
      any
      of the Collateral;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(e)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">to
      pay or
      discharge liens (other than liens permitted under this Agreement or the Note)
      levied or placed upon or threatened against the Collateral, the legality or
      validity thereof and the amounts necessary to discharge the same to be
      determined by Secured Party in its sole discretion, any such payments made
      by
      Secured Party to become obligations of Grantor to Secured Party, due and payable
      immediately without demand;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(f)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">upon
      the
      occurrence and during the continuance of an Event of Acceleration, to sign
      and
      endorse any invoices, freight or express bills, bills of lading, storage or
      warehouse receipts, drafts against debtors, assignments, verifications and
      notices in connection with Accounts and other documents relating to the
      Collateral; and</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(g)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">upon
      the
      occurrence and during the continuance of an Event of Acceleration, generally
      to
      sell, transfer, pledge, make any agreement with respect to or otherwise deal
      with any of the Collateral as fully and completely as though Secured Party
      were
      the absolute owner thereof for all purposes, and to do, at Secured Party&#8217;s
      option and Grantor&#8217;s expense, at any time or from time to time, all acts and
      things that Secured Party deems necessary to protect, preserve or realize upon
      the Collateral and Secured Party&#8217;s security interest therein in order to effect
      the intent of this Agreement, all as fully and effectively as Grantor might
      do.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      8.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 63pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Secured
      Party May Perform; Standard of Care</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">If
      Grantor fails to perform any agreement contained herein, Secured Party may
      itself perform, or cause performance of, such agreement, and the expenses of
      Secured Party incurred in connection therewith shall be payable by Grantor
      under
      Section&#160;11(b) hereof. The powers conferred on Secured Party hereunder are
      solely to protect its interest in the Collateral and shall not impose any duty
      upon it to exercise any such powers. Except for the exercise of reasonable
      care
      in the custody of any Collateral in its possession and the accounting for moneys
      actually received by it hereunder, Secured Party shall have no duty as to any
      Collateral or as to the taking of any necessary steps to preserve rights against
      prior parties or any other rights pertaining to any Collateral. Secured Party
      shall be deemed to have exercised reasonable care in the custody and
      preservation of Collateral in its possession if such Collateral is accorded
      treatment substantially equal to that which Secured Party accords its own
      property.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-
          5-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><strong><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">SECTION
      9.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Remedies</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.</font></strong></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">If
      any
      Event of Acceleration shall have occurred and be continuing, Secured Party
      may
      exercise in respect of the Collateral, in addition to all other rights and
      remedies provided for herein or otherwise available to it, all the rights and
      remedies of a secured party on default under the UCC (whether or not the UCC
      applies to the affected Collateral), and also may (i)&#160;require Grantor to,
      and Grantor hereby agrees that it will at its expense and upon request of
      Secured Party forthwith, assemble all or part of the Collateral as directed
      by
      Secured Party and make it available to Secured Party at a place to be designated
      by Secured Party that is reasonably convenient to both parties, (ii)&#160;enter
      onto the property where any Collateral is located and take possession thereof
      with or without judicial process, (iii)&#160;prior to the disposition of the
      Collateral, store, process, repair or recondition the Collateral or otherwise
      prepare the Collateral for disposition in any manner to the extent Secured
      Party
      deems appropriate, (iv)&#160;take possession of Grantor&#8217;s premises or place
      custodians in exclusive control thereof, remain on such premises and use the
      same and any of Grantor&#8217;s equipment for the purpose of completing any work in
      process, taking any actions described in the preceding clause (iii) and
      collecting any Secured Obligation, (v)&#160;sell the Collateral or any part
      thereof in one or more parcels at public or private sale, at any of Secured
      Party&#8217;s offices or elsewhere, for cash, on credit or for future delivery, at
      such time or times and at such price or prices and upon such other terms as
      Secured Party may deem commercially reasonable, (vi) exercise dominion and
      control over and refuse to permit further withdrawals from any Deposit Account
      and provide instructions directing the disposition of funds in Deposit Accounts
      and (vii) provide entitlement orders with respect to Security Entitlements
      and
      other Investment Property constituting a part of the Collateral and, without
      notice to Grantor, transfer to or register in the name of Secured Party or
      any
      of its nominees any or all of the Collateral constituting Investment Property.
      Secured Party may be the purchaser of any or all of the Collateral at any such
      sale and Secured Party, shall be entitled, for the purpose of bidding and making
      settlement or payment of the purchase price for all or any portion of the
      Collateral sold at any such public sale, to use and apply any of the Secured
      Obligations as a credit on account of the purchase price for any Collateral
      payable by Secured Party at such sale. Grantor hereby waives any claims against
      Secured Party arising by reason of the fact that the price at which any
      Collateral may have been sold at such a private sale was less than the price
      which might have been obtained at a public sale, even if Secured Party accepts
      the first offer received and does not offer such Collateral to more than one
      offeree. If the proceeds of any sale or other disposition of the Collateral
      are
      insufficient to pay all the Secured Obligations, Grantor shall be liable for
      the
      deficiency and the fees of any attorneys employed by Secured Party to collect
      such deficiency. Grantor further agrees that a breach of any of the covenants
      contained in this Section&#160;9 will cause irreparable injury to Secured Party,
      that Secured Party has no adequate remedy at law in respect of such breach
      and,
      as a consequence, that each and every covenant contained in this Section shall
      be specifically enforceable against Grantor, and Grantor hereby waives and
      agrees not to assert any defenses against an action for specific performance
      of
      such covenants except for a defense that no default has occurred giving rise
      to
      the Secured Obligations becoming due and payable prior to their stated
      maturities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
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        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><strong><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">SECTION
      10.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Application
      of Proceeds.</font></strong></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Except
      as
      expressly provided elsewhere in this Agreement, all proceeds received by Secured
      Party in respect of any sale of, collection from, or other realization upon
      all
      or any part of the Collateral shall be applied in the following order of
      priority:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">FIRST:
      To
      the payment of all costs and expenses of such sale, collection or other
      realization, including reasonable compensation to Secured Party and its agents
      and counsel, and all other expenses, liabilities and advances made or incurred
      by Secured Party in connection therewith, and all amounts for which Secured
      Party is entitled to indemnification hereunder and all advances made by Secured
      Party hereunder for the account of Grantor, and to the payment of all costs
      and
      expenses paid or incurred by Secured Party in connection with the exercise
      of
      any right or remedy hereunder;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">SECOND:
      To the payment of all other Secured Obligations; and</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">THIRD:
      To
      the payment to or upon the order of Grantor, or to whosoever may be lawfully
      entitled to receive the same or as a court of competent jurisdiction may direct,
      of any surplus then remaining from such proceeds.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      11.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 63pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Indemnity
      and Expenses</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Grantor
      agrees to indemnify Secured Party from and against any and all claims, losses
      and liabilities in any way relating to, growing out of or resulting from this
      Agreement and the transactions contemplated hereby (including, without
      limitation, enforcement of this Agreement), except to the extent such claims,
      losses or liabilities result solely from Secured Party&#8217;s gross negligence or
      willful misconduct as finally determined by a court of competent
      jurisdiction.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Grantor
      agrees to pay to Secured Party upon demand the amount of any and all reasonably
      incurred costs and expenses, including the reasonable fees and expenses of
      counsel and of any experts and agents, that Secured Party may incur in
      connection with the custody or preservation of the Collateral, the exercise
      of
      rights or remedies hereunder or the failure by Grantor to perform or observe
      any
      of the provisions hereof.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(c)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
      obligations of Grantor in this Section&#160;11 shall survive the termination of
      this Agreement and the discharge of Grantor&#8217;s other obligations under this
      Agreement and the Note.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      12.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 63pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Amendments;
      Etc.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">No
      amendment, modification, termination or waiver of any provision of this
      Agreement, and no consent to any departure by Grantor therefrom, shall in any
      event be effective unless the same shall be in writing and signed by Secured
      Party and, in the case of any such amendment or modification, by Grantor. Any
      such waiver or consent shall be effective only in the specific instance and
      for
      the specific purpose for which it was given.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><strong><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">SECTION
      13.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Notices</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.</font></strong></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Any
      notice or other communication herein required or permitted to be given shall
      be
      in writing (including facsimile communication) and mailed, faxed or delivered
      to
      Grantor or to Secured Party, as applicable, at the address of such party set
      forth under such party&#8217;s name on the signature pages hereof, or to such other
      address as shall be designated by such party in a written notice delivered
      to
      the other party hereto. All such notices and communications shall, when mailed,
      faxed or sent by overnight courier, be effective when deposited in the mails,
      delivered to the overnight courier, as the case may be, or sent by fax.
      Electronic mail may be used to distribute routine communications; provided
      that
      no signature with respect to any notice, request, agreement, waiver amendment,
      or other documents may be sent by electronic mail.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      14.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 63pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Failure
      or Indulgence Not Waiver; Remedies Cumulative; Severability</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">No
      failure or delay on the part of Secured Party in the exercise of any power,
      right or privilege hereunder shall impair such power, right or privilege or
      be
      construed to be a waiver of any default or acquiescence therein, nor shall
      any
      single or partial exercise of any such power, right or privilege preclude any
      other or further exercise thereof or of any other power, right or privilege.
      All
      rights and remedies existing under this Agreement are cumulative to, and not
      exclusive of, any rights or remedies otherwise available.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">In
      case
      any provision in or obligation under this Agreement shall be invalid, illegal
      or
      unenforceable in any jurisdiction, the validity, legality and enforceability
      of
      the remaining provisions or obligations, or of such provision or obligation
      in
      any other jurisdiction, shall not in any way be affected or impaired
      thereby.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      15.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 63pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Continuing
      Security Interest; Transfer of Loans; Termination and&#160;</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Release</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">This
      Agreement shall create a continuing security interest in the Collateral and
      shall (i)&#160;remain in full force and effect until the payment in full of the
      Secured Obligations, (ii)&#160;be binding upon Grantor and its successors and
      assigns, and (iii)&#160;inure, together with the rights and remedies of Secured
      Party hereunder, to the benefit of Secured Party and its successors, transferees
      and assigns. Without limiting the generality of the foregoing clause (iii),
      if
      Secured Party assigns or otherwise transfers the Note (but only to the extent
      permitted under the Note) held by it to any other Person, such other Person
      shall thereupon become vested with all the benefits in respect thereof granted
      to Secured Party herein or otherwise.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Upon
      the
      payment in full of all Secured Obligations, the security interest granted hereby
      shall terminate and all rights to the Collateral shall revert to Grantor. Upon
      any such termination Secured Party will, at Grantor&#8217;s expense, execute and
      deliver to Grantor such documents as Grantor shall reasonably request to
      evidence such termination. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      16.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 63pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Headings</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Section
      and subsection headings in this Agreement are included herein for convenience
      of
      reference only and shall not constitute a part of this Agreement for any other
      purpose or be given any substantive effect.</font></div>
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          8-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
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        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><strong><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">SECTION
      17.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Governing
      Law; Rules of Construction.</font></strong></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">THIS
      AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
      GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
      INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS
      PRINCIPLES, EXCEPT TO THE EXTENT THAT THE UCC</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">PROVIDES
      THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER,
      IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
      JURISDICTION OTHER THAN THE STATE OF CALIFORNIA, IN WHICH CASE THE LAWS OF
      SUCH
      JURISDICTION SHALL GOVERN WITH RESPECT TO THE PERFECTION OF THE SECURITY
      INTEREST IN, OR THE REMEDIES WITH RESPECT TO, SUCH PARTICULAR
      COLLATERAL.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      18.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 63pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Consent
      to Jurisdiction and Service of Process</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">ALL
      JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO
      THIS
      AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL
      COURT OF COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      19.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 63pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Waiver
      of Jury Trial</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">GRANTOR
      AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
      OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.
      THE
      SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
      THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
      TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH
      OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      20.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 63pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Counterparts</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">This
      Agreement may be executed in one or more counterparts and by different parties
      hereto in separate counterparts, each of which when so executed and delivered
      shall be deemed an original, but all such counterparts together shall constitute
      but one and the same instrument; signature pages may be detached from multiple
      separate counterparts and attached to a single counterpart so that all signature
      pages are physically attached to the same document.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      21.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 63pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Definitions</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Each
      capitalized term utilized in this Agreement that is not defined in this
      Agreement, but that is defined in the UCC, including the categories of
      Collateral listed in Section 1 hereof, shall have the meaning set forth in
      Articles 1, 8 or 9 of the UCC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">In
      addition, the following terms used in this Agreement shall have the following
      meanings:</font></div>
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        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>&#8220;Collateral&#8221;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      has the
      meaning set forth in Section 1 hereof.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>&#8220;Event
      of Acceleration&#8221;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      means
      any Event of Acceleration as defined in the Note.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Secured
      Obligations&#8221;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      has the
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>&#8220;UCC&#8221;
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">means
      the
      Uniform Commercial Code, as it exists on the date of this Agreement or as it
      may
      hereafter be amended, in the State of California.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>SECTION
      22.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong><u>Subordination
      Agreement.</u></strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Notwithstanding
      any other provision of this Agreement, the rights of the Secured party hereunder
      are subject to the provisions of that certain Subordination Agreement dated
      October 17, 2006 by and between Silicon Valley Bank and Secured
      Party.</font></div>
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<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>zynex8k2ex104_10242006.htm
<DESCRIPTION>EXHIBIT 10.4
<TEXT>
<html>
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      Exhibit 10.4
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    <div>&#160;</div>
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      AGREEMENT</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">This
      Subordination Agreement (the &#8220;Agreement&#8221;) dated </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Oct.
      17</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">,
      200</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>6</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">,
      is
      between the undersigned (&#8220;Creditor&#8221;) and the Silicon Valley Bank
      (&#8220;Bank&#8221;).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Recitals</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">A.
      Zynex
      Medical Holdings, Inc. (&#8220;Borrower&#8221;) has requested and/or obtained credit from
      Bank which may be secured by Borrower&#8217;s property.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">B.
      Creditor has extended credit to Borrower and/or may later extend other credit
      to
      Borrower.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">C.
      To
      induce Bank to consent to the receipt of Subordinated Debt, Creditor will
      subordinate: (i) all of Borrower&#8217;s indebtedness and obligations to Creditor
      existing now or later (the &#8220;Subordinated Debt&#8221;) to all of Borrower&#8217;s
      indebtedness and obligation to Bank existing now or later including, without
      limitation, collection costs thereof (including attorneys&#8217; fees), and interest
      accruing after any bankruptcy, reorganization or similar proceeding (the &#8220;Senior
      Debt"); and (ii) all of the Creditor&#8217;s security interests in Borrower&#8217;s property
      to all of Bank&#8217;s security interests in Borrower&#8217;s property.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">THE
      PARTIES AGREE AS FOLLOWS:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">1.
      Creditor subordinates to Bank any security interest or lien that it has in
      any
      property of Borrower. Despite attachment or perfection dates of Creditor&#8217;s
      security interest and Bank&#8217;s security interest, bank&#8217;s security interest in
      Borrower&#8217;s property to all of Bank&#8217;s security interests in Borrower&#8217;s property
      is prior to Creditor&#8217;s security interest therein..</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">2.
      All
      Subordinated Debt payments are subordinated to all Senior Debt
      payments.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">3.
      (i)
      Except as set forth in Section 3(ii) below, Creditor will not:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 72pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(a)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">demand
                or receive from Borrower (and Borrower will not pay) any part of
                the
                Subordinated Debt, by payment, prepayment, or
                otherwise;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 72pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">exercise
                any remedy against Borrower&#8217;s property,
                or</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 72pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(c)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">accelerate
                the Subordinated Debt, or begin to or participate in any action against
                Borrower, until all the Senior debt is
                paid.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(ii)
      Notwithstanding anything to the contrary herein, Creditor, may receive regularly
      scheduled payments of interest or principal pursuant to the terms of the note
      between Creditor and Borrower that constitute Subordinated Debt, if an Event
      of
      Default (defined in that certain Loan and Security Agreement by and among
      Borrower, Zynex Medical, Inc. and Bank dated September 29, 2005, as amended,
      restated, or otherwise modified from time to time) has not occurred, is not
      continuing and </font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">would
      not
      exist immediately after payment. This does not prohibit Creditor from converting
      any Subordinated Debt into equity securities of Borrower.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">4.
      Creditor must deliver to Bank in the form received (except for endorsement
      or
      assignment by Creditor) any payment, distribution, security or proceeds it
      received on the Subordinated Debt other than according to this
      Agreement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">5.
      These
      provisions remain in full force and effect, despite Borrower&#8217;s insolvency,
      reorganization or any case or proceeding under any bankruptcy or insolvency
      law,
      and Bank&#8217;s claims against Borrower and Borrower&#8217;s estate will be fully paid
      before any payment is made to Creditor.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">6.
      Until
      the Senior Debt is paid and Bank has no further obligation to make any loans
      or
      other extensions of credit for Borrower&#8217;s benefit, Creditor irrevocably appoints
      Bank as its attorney-in-fact, with power of attorney with power of substitution,
      in Creditor&#8217;s name or in Bank&#8217;s name for Bank&#8217;s use and benefit without notice
      to Creditor, to do the following in any bankruptcy, insolvency or similar
      proceeding involving Borrower:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(a)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">file
                any claims for the Subordinated Debt for Creditor if Creditor does
                not do
                so at least 30 days before the time to file claims expires,
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">accept
                or reject any plan of reorganization or arrangement for Creditor
                and vote
                Creditor&#8217;s claims in respect of the Subordinated Debt in any way it
                chooses.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">7.
      Creditor will immediately put a legend on the Subordinated Debt instruments
      that
      the instruments are subject to this Agreement. No amendment of the Subordinated
      Debt documents will modify this Agreement in any way that terminates or impairs
      the subordination of the Subordinated Debt or the subordination of the security
      interest or lien that Bank has in Borrower&#8217;s property. For example, instruments
      may not be amended to: (a) increase the interest rate of the Subordinated Debt,
      or (b) accelerate payment of primal or interest or any other portion of the
      Subordinated Debt.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">8.
      This
      Agreement shall remain effective until Borrower owes no amounts to Bank and
      Bank
      has no further obligation to make loans or other extensions of credit for
      Borrower&#8217;s benefit. If, after full payment of the Senior Debt, Bank must
      disgorge any payments make on the Senior Debt for any reason (including, without
      limitation, the bankruptcy of Borrower), this Agreement and the relative rights
      and priorities provided in it, will be reinstated as to all disgorged payments
      as though the payments had not been made, and Creditor will immediately pay
      Bank
      all payments received under the Subordinated Debt to the extent the payments
      would have been prohibited under this Agreement; proved, however, Creditor
      will
      not have any liability to Bank if Creditor is required to disgorge all payments
      received from Borrower. At any time, without notice to Creditor, Bank may take
      action it considers appropriate on the Senior Debt such as terminating advances,
      increasing the principal, extending the time of payment, increasing interest
      rates, revising or otherwise amending any documents affecting the Senior Debt
      and any collateral securing the Senior Debt, and enforcing or failing to enforce
      any rights against</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-
          2-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Borrower
      or any other person. No action or inaction will impair or otherwise affect
      Bank&#8217;s rights under this Agreement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">

      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>9.
        All necessary action on the past of
        the Creditor, its officers, directors, partners, members and shareholders,
        as
        applicable, necessary for the authorization of this Agreement and the
        performance of all obligations of the Creditor hereunder has been taken.
        Additionally, the execution, delivery and performance of and compliance with
        this Agreement will not result in any material violation or default of any
        term
        of any of the Creditor&#8217;s charter, formation or other reorganization documents
        (such as Articles or Certificate of Incorporation, bylaws, partnership
        agreement, operating agreement, etc).</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>10.
        This Agreement binds Creditor, its
        successors, and benefits Bank&#8217;s successors or assigns. The Agreement is for
        Creditor&#8217;s and Bank&#8217;s benefit and not for the benefit of Borrower or any other
        party. If Borrower is refinancing any of the Senior Debt with a new lender,
        upon
        Bank&#8217;s request, Creditor will enter into a new subordination agreement with the
        new lender on substantially the terms of this Agreement.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>11.
        Creditor waives the benefits, if
        any, of any statutory or common law rule that may permit a subordinating
        creditor to assert any defenses of a surety or guarantor, or that may give
        the
        subordinating creditor the right to require a senior creditor to marshal
        assets,
        and Creditor agrees that it shall not assert any such defenses or
        rights.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>12.
        This Agreement may be executed in
        two or more counterparts, each of which is an original and all of which together
        constitute one instrument.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>13.
        Colorado law governs this Agreement
        without giving effect to conflicts of laws and principles. Creditor and Bank
        submit to the exclusive jurisdiction of the State and Federal courts in the
        State of Colorado; provided, however, that if for any reason Bank can not
        avail
        itself of the courts of in the State of Colorado; Creditor submits to the
        jurisdiction of the State and Federal courts in Santa Clara County, California.
        TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, CREDITOR AND BANK EACH
        WAIVE
        THEIR RIGHTS TO A JURY TRAIL OF ANY CLAIM OR CAUSE OF ACTION IN CONNECTION
        WITH
        THIS AGREEMENT.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">14.
      This
      Agreement represents the entire agreement about this subject matter, and
      supersedes prior negotiations or agreements. Creditor is not relying on any
      representations by Bank or Borrower in entering into this Agreement. Creditor
      will keep itself informed of Borrower&#8217;s financial and other conditions. The
      Agreement may be amended only be written instrument signed by Creditor and
      Bank.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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