Document:

Exhibit 10.4

     

    
      

      

    

     

    Exhibit
      10.4

    

    SUBORDINATION
      AGREEMENT

    

    This
      Subordination Agreement (the “Agreement”) dated Oct.
      17,
      2006,
      is
      between the undersigned (“Creditor”) and the Silicon Valley Bank
      (“Bank”).

    

    Recitals

    

    A.
      Zynex
      Medical Holdings, Inc. (“Borrower”) has requested and/or obtained credit from
      Bank which may be secured by Borrower’s property.

    

    B.
      Creditor has extended credit to Borrower and/or may later extend other credit
      to
      Borrower.

    

    C.
      To
      induce Bank to consent to the receipt of Subordinated Debt, Creditor will
      subordinate: (i) all of Borrower’s indebtedness and obligations to Creditor
      existing now or later (the “Subordinated Debt”) to all of Borrower’s
      indebtedness and obligation to Bank existing now or later including, without
      limitation, collection costs thereof (including attorneys’ fees), and interest
      accruing after any bankruptcy, reorganization or similar proceeding (the “Senior
      Debt"); and (ii) all of the Creditor’s security interests in Borrower’s property
      to all of Bank’s security interests in Borrower’s property.

    

    THE
      PARTIES AGREE AS FOLLOWS:

    

    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’s
      security interest and Bank’s security interest, bank’s security interest in
      Borrower’s property to all of Bank’s security interests in Borrower’s property
      is prior to Creditor’s security interest therein..

    

    2.
      All
      Subordinated Debt payments are subordinated to all Senior Debt
      payments.

    

    3.
      (i)
      Except as set forth in Section 3(ii) below, Creditor will not:

    

    
      	 	
              (a)

            	
              demand
                or receive from Borrower (and Borrower will not pay) any part of
                the
                Subordinated Debt, by payment, prepayment, or
                otherwise;

            

    

    

    
      	 	
              (b)

            	
              exercise
                any remedy against Borrower’s property,
                or

            

    

    

    

    
      	 	
              (c)

            	
              accelerate
                the Subordinated Debt, or begin to or participate in any action against
                Borrower, until all the Senior debt is
                paid.

            

    

    

    (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 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    would
      not
      exist immediately after payment. This does not prohibit Creditor from converting
      any Subordinated Debt into equity securities of Borrower.

    

    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.

    

    5.
      These
      provisions remain in full force and effect, despite Borrower’s insolvency,
      reorganization or any case or proceeding under any bankruptcy or insolvency
      law,
      and Bank’s claims against Borrower and Borrower’s estate will be fully paid
      before any payment is made to Creditor.

    

    6.
      Until
      the Senior Debt is paid and Bank has no further obligation to make any loans
      or
      other extensions of credit for Borrower’s benefit, Creditor irrevocably appoints
      Bank as its attorney-in-fact, with power of attorney with power of substitution,
      in Creditor’s name or in Bank’s name for Bank’s use and benefit without notice
      to Creditor, to do the following in any bankruptcy, insolvency or similar
      proceeding involving Borrower:

    

    
      	 	
              (a)

            	
              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

            

    

    

    
      	 	
              (b)

            	
              accept
                or reject any plan of reorganization or arrangement for Creditor
                and vote
                Creditor’s claims in respect of the Subordinated Debt in any way it
                chooses.

            

    

    

    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’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.

    

    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’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

    
      
        
        

      

      
        -
          2-

        
          

        

      

      
        
        

      

    

    Borrower
      or any other person. No action or inaction will impair or otherwise affect
      Bank’s rights under this Agreement.

    

    

      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’s charter, formation or other reorganization documents
        (such as Articles or Certificate of Incorporation, bylaws, partnership
        agreement, operating agreement, etc).

      

      10.
        This Agreement binds Creditor, its
        successors, and benefits Bank’s successors or assigns. The Agreement is for
        Creditor’s and Bank’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’s request, Creditor will enter into a new subordination agreement with the
        new lender on substantially the terms of this Agreement.

      

      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.

      

      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.

      

      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.

       

    

    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’s financial and other conditions. The
      Agreement may be amended only be written instrument signed by Creditor and
      Bank.

    

    15.
      If
      there is an action to enforce the rights of a party under this Agreement, the
      party prevailing will be entitled, in addition to other relief, all reasonable
      cost and expenses, including reasonable attorneys’ fees, incurred in this
      action.

    

    [SIGNATURES
      ON FOLLOWING PAGE]

    

    

    

    

    
      
        
        

      

      
        -
          3-

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
      as
      of the date set forth above.

    

    
      	 	
              Creditor:

            	 	 	
              Bank

            
	 	 	 	 	 
	 	
              ASCENDIANT
                CAPITAL GROUP, LLC

            	 	 	
              SILICON
                VALLEY BANK

            
	 	 	 	 	 
	
              By:
                  

            	
              /s/
                Bradley J. Wilhite

            	 	
              By: 
                

            	
              /s/
                Chris Ennis

            
	 	
              Name:
                Bradley J. Wilhite

            	 	 	
              Name:
                Chris Ennis

            
	 	
              Title:
                Managing Director

            	 	 	
              Title:
                Vice President

            
	 	 	 	 	 

    

    

    

    

    
      	
              The
                Borrower approves the terms of this Agreement:

            	 	 	 
	 	 	 	 	 
	 	
              Borrower:

            	 	 	 
	 	 	 	 	 
	 	
              ZYNEX
                MEDICAL HOLDINGS, INC.

            	 	 	 
	 	 	 	 	 
	
              By:
                  

            	
              /s/
                Thomas Sandgaard

            	 	 	 
	 	
              Name:
                Thomas Sandgaard

            	 	 	 
	 	
              Title:
                President and CEO

            	 	 	 
	 	 	 	 	 

    

     

    -
      4-EXHIBIT 4.1

DEAN HELLER
Secretary of State
204 North Carson Street, Suite I
Carson City, Nevada 89701-4299
(775) 684-5708
Website: secretaryofstate.biz

Articles of Merger
(PURSUANT TO NRS 92A.200)
Page 1

                                                              ABOVE SPACE IS FOR
                                                                 OFFICE USE ONLY

                (Pursuant to Nevada Revised Statutes Chapter 92A)
                             (excluding 92A.200(4b))

1)     Name and jurisdiction of organization of each constituent entity (NRS
       92A.200). If there are more than four merging entities, check box [ ] and
       attach an 8 1/2" x 11" blank sheet containing the required information
       for each additional entity.

FITTIPALDI LOGISTICS, INC.
Name of merging entity

NEVADA                                                        CORPORATION
Jurisdiction                                                  Entity type *

Name of merging entity

Jurisdiction                                                  Entity type *

Name of merging entity

Jurisdiction                                                  Entity type *

Name of merging entity

Jurisdiction                                                  Entity type *

and,

POWER2SHIP, INC.

Name of surviving entity

NEVADA                                                        CORPORATION
Jurisdiction                                                  Entity type *

*Corporation, non-profit corporation, limited partnership, limited-liability
company or business trust.

Filing Fee: $350.00

This form must be accompanied
by appropriate fees.                    Nevada Secretary of State AM Merger 2003

<PAGE>
DEAN HELLER
Secretary of State
204 North Carson Street, Suite I
Carson City, Nevada 89701-4299
(775) 684-5708
Website: secretaryofstate.biz

Articles of Merger
(PURSUANT TO NRS 92A.200)
Page 2

                                              ABOVE SPACE IS FOR OFFICE USE ONLY

2)     Forwarding address where copies of process may be sent by the Secretary
       of State of Nevada (if a foreign entity is the survivor in the merger -
       NRS 92A.1 90):

                           Attn:

                           c/o:

3)     (Choose one)

       [X]  The undersigned declares that a plan of merger has been adopted by
            each constituent entity (NRS 92A.200).

       [X]  The undersigned declares that a plan of merger has been adopted by
            the parent domestic entity (NRS 92A.180)

4)     Owner's approval (NRS 92A.200)(options a, b, or c must be used, as
       applicable, for each entity) (if there are more than four merging
       entities, check box [ ] and attach an 8 1/2" x 11" blank sheet containing
       the required information for each additional entity):

       (a) Owner's approval was not required from

           FITTIPALDI LOGISTICS, INC.

           Name of merging entity, if applicable

           Name of merging entity, if applicable

           Name of merging entity, if applicable

           Name of merging entity, if applicable

           and, or;

           POWER2SHIP, INC.

           Name of surviving entity, if applicable

This form must be accompanied
by appropriate fees.                    Nevada Secretary of State AM Merger 2003

<PAGE>
DEAN HELLER
Secretary of State
204 North Carson Street, Suite I
Carson City, Nevada 89701-4299
(775) 684-5708
Website: secretaryofstate.biz

Articles of Merger
(PURSUANT TO NRS 92A.200)
Page 3

                                              ABOVE SPACE IS FOR OFFICE USE ONLY

       (b) The plan was approved by the required consent of the owners of *:

            Name of merging entity, if applicable

            Name of merging entity, if applicable

            Name of merging entity, if applicable

            Name of merging entity, if applicable

            and, or;

            Name of surviving entity, if applicable

* Unless otherwise provided in the certificate of trust or governing instrument
of a business trust, a merger must be approved by all the trustees and
beneficial owners of each business trust that is a constituent entity in the
merger.

This form must be accompanied
by appropriate fees.                    Nevada Secretary of State AM Merger 2003

<PAGE>
DEAN HELLER
Secretary of State
204 North Carson Street, Suite I
Carson City, Nevada 89701-4299
(775) 684-5708
Website: secretaryofstate.biz

Articles of Merger
(PURSUANT TO NRS 92A.200)
Page 4

                                              ABOVE SPACE IS FOR OFFICE USE ONLY

        (c) Approval of plan of merger for Nevada non-profit corporation (NRS
            92A.160):

           The plan of merger has been approved by the directors of the
           corporation and by each public officer or other person whose approval
           of the plan of merger is required by the articles of incorporation of
           the domestic corporation.

           Name of merging entity, if applicable

           Name of merging entity, if applicable

           Name of merging entity, if applicable

           Name of merging entity, if applicable

           and, or;

           Name of surviving entity, if applicable

This form must be accompanied
by appropriate fees.                    Nevada Secretary of State AM Merger 2003

<PAGE>
DEAN HELLER
Secretary of State
204 North Carson Street, Suite I
Carson City, Nevada 89701-4299
(775) 684-5708
Website: secretaryofstate.biz

Articles of Merger
(PURSUANT TO NRS 92A.200)
Page 5

                                              ABOVE SPACE IS FOR OFFICE USE ONLY

5)     Amendments, if any, to the articles or certificate of the surviving
       entity. Provide article numbers, if available. (NRS 92A.200)*:

       ARTICLE 1:  THE NAME OF THE CORPORATION IS FITTIPALDI LOGISTICS, INC.

6)     Location of Plan of Merger (check a or b):

       [ ] (a)  The entire plan of merger is attached;

       or,

       [X] (b)  The entire plan of merger is on file at the registered
                office of the surviving corporation, limited-liability company
                or business trust, or at the records office address if a limited
                partnership, or other place of business of the surviving entity
                (NRS 92A.200).

7)     Effective date (optional)": 10/21/06

* Amended and restated articles may be attached as an exhibit or integrated into
the articles of merger. P lease entitle them "Restated" or "Amended and
Restated," accordingly. The form to accompany restated articles prescribed by
the secretary of state must accompany the amended and/or restated articles.
Pursuant to NRS 92A.180 (merger of subsidiary into parent - Nevada parent owning
90% or more of subsidiary), the articles of merger may not contain amendments to
the constituent documents of the surviving entity except that the name of the
surviving entity may be changed.

** A merger takes effect upon filing the articles of merger or upon a later date
as specified in the articles, which must not be more than 90 days after the
articles are fled (NRS 92A.240).

This form must be accompanied
by appropriate fees.                    Nevada Secretary of State AM Merger 2003

<PAGE>
DEAN HELLER
Secretary of State
204 North Carson Street, Suite I
Carson City, Nevada 89701-4299
(775) 684-5708
Website: secretaryofstate.biz

Articles of Merger
(PURSUANT TO NRS 92A.200)
Page 6

                                              ABOVE SPACE IS FOR OFFICE USE ONLY

8)      Signatures - Must be signed by:: An officer of each Nevada corporation;
        All general partners of each Nevada limited partnership; A manager of
        each Nevada limited-liability company with managers or all the members
        if there are no managers; A trustee of each Nevada business trust (NRS
        92A.230)*

        (If there are more than four merging entities, check box [_] and attach
        an 8 1/2" x 11" blank sheet containing the required information for each
        additional entity.):

        FITTIPALDI LOGISTICS, INC.
        Name of merging entity

        /s/ David Brooks                  CHIEF EXECUTIE OFFICER     10/10/06
        ----------------                  ----------------------     --------
        Signature                         Title                        Date

        Name of merging entity

        Signature                         Title                        Date

        Name of merging entity

        Signature                         Title                        Date

        Name of merging entity

        Signature                         Title                        Date

        POWER2SHIP, INC.
        Name of merging entity

        /s/ David Brooks                  CHIEF EXECUTIVE OFFICER    10/10/06
        ----------------                  -----------------------    --------
        Signature                         Title                        Date

*The articles of merger must be signed by each foreign constituent entity in the
manner provided by the law governing it (NRS 92A.230). Additional signature
blocks may be added to this page or as an attachment, as needed.

IMPORTANT: Failure to include any of the above information and submit the proper
fees may cause this filing to be rejected.

This form must be accompanied
by appropriate fees.                    Nevada Secretary of State AM Merger 2003

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