Document:

zynex8kex101_11162007.htm

     

    
      

      

    

     

     

    Exhibit
      10.1

     

     

    
      SUBLEASE

      

                 THIS
        SUBLEASE (hereinafter “Sublease”), made this 31st day
        of October, by and between ZYNEX MEDICAL, INC., a Colorado corporation
        (hereinafter “Subtenant”) and JONES/NCTI, INC., a Colorado corporation f/k/a
        Versacom, Inc. (hereinafter “Sublandlord”).  Subtenant and Sublandlord
        are sometimes referred to herein individually as a “party” and collectively as
        the “parties.”

      

      WITNESSETH:

      

                 WHEREAS,
        pursuant to the terms and conditions of that certain lease dated April 24,
        2002,
        as amended, a true and complete copy of which is attached hereto as Exhibit
        A
        (the “Prime Lease”), First Industrial Development predecessor-in-interest
        to  COLORADO NI INDUSTRIAL ONE LLC, (hereinafter “Prime Landlord”),
        did lease to Sublandlord, as tenant, certain premises located at 8022 South
        Park
        Circle, Suite 100, Littleton, CO 80120, and more particularly described in
        the
        Prime Lease, on the terms and conditions contained therein; and

      

                 WHEREAS,
        Sublandlord desires to sublease those premises to Subtenant, and Subtenant
        desires to sublease from Sublandlord the premises leased by Sublandlord,
        all on
        the terms and conditions set forth below;

      

                 NOW,
        THEREFORE, in and for consideration of the demise and the mutual covenants
        set
        forth below, the parties do hereby agree as follows:

      

                 1.           Term.  Sublandlord
        subleases to Subtenant, and Subtenant hereby subleases from Sublandlord,
        for a
        term commencing the later to occur of (i) Sublandlord’s delivery of possession,
        or (ii) November 1, 2007 (the “Commencement Date”) and terminating on November
        29, 2009 (the “Expiration Date”), those certain premises described on Exhibit B
        attached hereto and made a part hereof (hereinafter the “Sublease Premises” or
“premises”).  The Sublease Premises consist of approximately 16,553
        rentable square feet, commonly known as Suite 100.

      

                 2.           Use.  The
        Sublease Premises shall be used solely for general office and warehouse
        purposes, and no other purpose without the express written consent of
        Sublandlord.

      

                 3.           Rent.

      

      a.           Base
        Rent.  Subject to adjustment as provided herein, Subtenant shall pay
        to Sublandlord, or Sublandlord’s designee, Base Rent in monthly installments,
        payable in advance (together with the pro-rata portion of the Furniture Purchase
        Price as set forth below) on the first day of each month during the term
        hereof,
        in the amount of:

      

      i.           November
        1, 2007 – April 30, 2007 – $4.42 per square foot or $6,097.02 per month (NNN)
        payable in monthly installments beginning with an initial payment of $6,097.02
        for November 2007 payable on or prior to the execution of this
        Sublease;

      

      ii.           May
        1, 2008 – November 30, 2008 - $5.14 per square foot or $7,090.20 per month (NNN)
        payable in monthly installments; and

      

      iii.           December
        1, 2008 – November 29, 2009 - $7.50 per square foot or $10,345.63 per month
        (NNN) payable in monthly installments.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
 

      at
        the
        office of Sublandlord or at such other place as Sublandlord may
        designate.  All rent shall be prorated for any partial months or years
        during the term hereof.

      

                 b.           Adjustments
        to Base Rent.  Subtenant agrees to use commercially reasonable efforts
        to sublease or terminate its lease with respect to that certain 9,857 rentable
        square feet of office space located at 8100 S. Southpark Way, Suite A-9,
        Littleton CO 80120 (the “Current Lease”).  Subtenant agrees and
        acknowledges that in the event that Subtenant successfully subleases or
        terminates the Current Lease, Subtenant shall immediately notify Sublandlord,
        and effective as of the date of such sublease or termination the aforementioned
        Base Rent shall be increased to the following amounts:

      

      i.           November
        1, 2007 – April 30, 2007 – $6.85 per square foot or $9,449.00 per month (NNN)
        payable in monthly installments;

      

      ii.           May
        1, 2008 – November 30, 2008 - $6.85 per square foot or $9,449.00 per month (NNN)
        payable in monthly installments; and

      

      iii           December
        1, 2008 – November 29, 2009 - $7.50 per square foot or $10,345.63 per month
        (NNN) payable in monthly installments.

      

                 c.           Triple
        Net Lease.  Subtenant agrees and acknowledges that the Sublease
        Premises are being subleased on a triple net basis, and, in addition to payment
        of the above sums, Subtenant shall also be responsible for payment to
        Sublandlord of Subtenant’s pro rata share of Building Operating Costs, real
        estate taxes and assessments (special or otherwise), as said terms are defined
        in the Primary Lease.  The monthly estimated Building Operating Costs
        are $3.71 per square foot.  Subtenant shall also procure and pay
        directly all insurance and maintenance expenses arising out of its use of
        the
        Sublease Premises during the term of this Sublease, including but not limited
        to
        utilities, janitorial services, maintenance (including procurement of any
        HVAC
        maintenance contract required under the Prime Lease and payment of all costs
        relating to its use of the HVAC system), and any repair or upkeep of the
        Sublease Premises.  Subtenant shall have no obligation to replace any
        item except in case where damage has been caused by Subtenant’s negligence or
        willful misconduct.

      

                 d.           Furniture
        and Fixture Purchase.  Sublandlord and Subtenant acknowledge and agree
        that the Sublease Premises are partially furnished and have an NEC telephone
        system, office furniture, systems furniture, security system, storage shelving,
        uninterruptible power supply (UPS) system, lunchroom television, computer
        room
        racking and conference room furniture (collectively, the “Purchased
        Furniture”).  Sublandlord, in consideration of a purchase price of
        Seven Thousand Dollars ($7,000.00) (the “Furniture Purchase Price”), does hereby
        sell, assign and transfer unto Subtenant good title to the Purchased Furniture,
        free and clear of any and all security interests, claims, liens, pledges,
        restrictions, encumbrances, claims and charges of any kind.  Subtenant
        agrees to pay the Furniture Purchase Price in twenty-five (25) equal monthly
        payments of Two Hundred Eighty Dollars ($280.00) which shall be due and payable
        on the first day of each month during the term hereof in addition to the
        Base Rent set forth above (as adjusted herein).  Until all twenty-five
        (25) installment payments, and any other amounts due under this Sublease,
        have
        been fully paid, Sublandlord shall retain title and a security interest in
        the
        Purchased Furniture (and any and all equipment,
        parts, accessories, attachments, additions and other goods, and all replacements
        of them, installed in, affixed to or used in connection with the Purchased
        Furniture and,
        if
        Subtenant sells or otherwise disposes of the Purchased Furniture in violation
        of
        the terms of this agreement, in the proceeds of such sale or
        disposition.  During the term hereof, Subtenant agrees to maintain the
        Purchased Furniture in good working condition and that all repairs

       

      
        
          
          

        

        
          2.

          
            

          

        

        
          
          

        

      

       

       

       to
        Purchased Furniture shall be effected in such manner (both as regards
        workmanship and quality of materials) as not to materially diminish the value
        of
        the Purchased Furniture, reasonable wear and tear
        excepted.  SUBLANDLORD MAKES NO REPRESENTATIONS OR WARRANTIES
        REGARDING THE PURCHASED FURNITURE, AND THE PURCHASED FURNITURE IS SOLD, ASSIGNED
        AND TRANSFERRED TO SUBTENANT IN ITS PRESENT CONDITION, AS IS, WHERE
        IS.

      

                 4.           Security
        Deposit.  Upon mutual execution of this Sublease by Sublandlord
        and Subtenant and during the term hereof, Subtenant shall be required to
        deposit
        with Sublandlord the amount of $10,345.63 as security for Subtenant's faithful
        performance of its obligations hereunder (the “Security Deposit”), it being
        expressly understood that Security Deposit shall not be considered an advance
        payment of rental or a measure of Sublandlord’s damage in case of default by
        Subtenant.  If Subtenant defaults in any of its obligations, including
        but not limited to the payment of rent, Sublandlord may use, apply, or retain
        the whole or any part of the Security Deposit to satisfy any sum due to
        Sublandlord or to defray any expense or damage reasonably incurred by reason
        of
        the default.  In the event that all or part of the Security Deposit is
        so used or applied, Subtenant shall, on demand, pay to Sublandlord a like
        sum to
        replenish the Security Deposit and Subtenant’s failure to so replenish the
        Security Deposit shall be an default hereunder.  Sublandlord shall not
        be obliged to keep the Security Deposit as a  separate
        account  and may mix said Security Deposit with its own
        funds.  No interest shall accrue on the Security
        Deposit.  Provided that Subtenant is not in default of any of its
        obligations hereunder and Sublandlord does not, as a direct result of
        Subtenant’s occupancy, need to repair any damage or injury, or pay any expense
        or liability, Sublandlord shall return the amount of such security deposit
        to
        Subtenant within sixty (60) days following the expiration or other termination
        of this Sublease.  The making by Subtenant of such deposit, or the
        application thereof by Sublandlord in the manner hereinabove provided, shall
        not
        constitute nor be construed as a limitation upon the exercise by Sublandlord
        of
        any other rights or remedies provided to Sublandlord under the terms of this
        Lease in the event of Subtenant’s default.

      

                 5.           Pre-occupancy.  Upon
        mutual execution hereof, Subtenant shall be given reasonable access to the
        premises during business hours in order to allow Subtenant to setup the phone
        system and internet access.  Such preoccupancy access
        shall be free of any Rent or Additional Rent or Building Operating
        Costs.

      

                 6.           Assumption
        of Prime Lease Obligations.  Except as modified by this Sublease,
        all of the terms and provisions of the Prime Lease are incorporated into
        and
        made a part of this Sublease and the rights and obligations of the parties
        under
        the Prime Lease are hereby imposed upon the parties hereto with respect to
        the
        Sublease Premises, Sublandlord being substituted for the “Landlord” in the Prime
        Lease, and Subtenant being substituted for the “Tenant” in the Prime Lease,
        except as required in Section 8.4 of the Prime Lease.  Subtenant shall
        not be required to remove or restore Tenant-Owned Alterations or Utility
        installations (other than the Purchased Furniture which
        shall become the obligations of Subtenant upon full payment in accordance
        with
        Section 3.d. above), such obligations called for in Section 8.4
        shall remain with Sublandlord, “Tenant”, in the Prime Lease.  It is
        further understood that where reference is made in the Prime Lease to the
        “Premises,” the same shall mean the Sublease Premises as defined herein; where
        reference is made to the “Commencement Date,” the same shall mean the
        Commencement Date as defined herein; and where reference is made to the “Lease,”
the same shall mean this Sublease.  Subtenant shall not do or cause to
        be done or suffer or permit any act to be done which would or might cause
        the
        Prime Lease, or the rights of Sublandlord, as lessee or tenant, under the
        Prime
        Lease, to be endangered, canceled, terminated, forfeited or surrendered,
        or
        which would or might cause Sublandlord to be in default thereunder or liable
        for
        any damage, claim or penalty and 

       

      
        
          
          

        

        
          3.

          
            

          

        

        
          
          

        

      

       

       

      Subtenant
        indemnifies and holds harmless Sublandlord from any such acts.  In the
        event of any inconsistency between the terms of this Sublease and the terms
        of
        the Prime Lease, the terms of this Sublease shall prevail, provided, however,
        that Subtenant agrees, as an express inducement for Sublandlord’s executing this
        Sublease, that if there is any conflict between the provisions of this Sublease
        and the provisions of the Prime Lease which would permit Subtenant to do
        or
        cause to be done or suffer or permit any act or things to be done which is
        prohibited by the Prime Lease, then the provisions of the Prime Lease shall
        prevail. Sublandlord shall have all those rights and privileges against
        Subtenant, including, without limitation, all those remedies in the event
        of
        Subtenant’s default, which Prime Landlord has against Sublandlord, as tenant
        under the Prime Lease.  Sublandlord shall also have such other rights
        and privileges against Subtenant to which Sublandlord may be entitled either
        at
        law or in equity.  Any rights reserved by the Prime Landlord under the
        Prime Lease may be exercised by either Prime Landlord or Sublandlord with
        respect to this Sublease.  Sublandlord represents to Subtenant that
        the Prime Lease is in full force and effect, and that no default or event
        that,
        with the passing of time or the giving of notice of both, would constitute
        a
        default, exists on the part of Sublandlord, or, to Sublandlord’s knowledge, the
        Prime Landlord.  Sublandlord agrees to maintain the Prime Lease in
        full force and effect, except to the extent that any failure to maintain
        the
        Prime Lease is due to the failure of Subtenant to comply with any of its
        obligations under this Sublease.  Additionally, Sublandlord shall not
        amend or modify the Prime Lease in such a manner as to materially or adversely
        affect Subtenant’s use of the Subleased Premises or increase the obligations or
        decrease the rights of Subtenant hereunder, without the prior written consent
        of
        Subtenant, which may be granted or withheld at Subtenant’s sole
        discretion.   Subtenant shall have all those rights and
        privileges against Prime Landlord, including, without limitation, all those
        remedies in the event of Prime Landlord’s default, which Sublandlord has against
        Prime Landlord, as tenant under the Prime Lease.  Subtenant shall also
        have such other rights and privileges against Sublandlord and Prime Landlord
        to
        which Subtenant may be entitled either at law or in equity.  Any
        rights reserved by the Sublandlord as “Tenant” under the Prime Lease may be
        exercised by Subtenant with respect to this Sublease.

      

                 7.           Indemnification.  Subtenant
        shall indemnify and hold Sublandlord and Prime Landlord harmless from and
        against all losses, costs, damages, expenses and liabilities, including but
        not
        limited to internal administrative costs, attorneys’ fees, court costs and
        penalty, that Sublandlord or Prime Landlord may incur or pay out by reason
        of
        any injuries to person or damage caused, in whole or in part, by any wrongful,
        negligent or willful act or omission of Subtenant, its agents, employees
        or
        invitees, or by reason of any breach or default under the Prime Lease or
        hereunder on Subtenant’s part.  Sublandlord agrees to indemnify
        Subtenant, and hold it harmless, from and against any and all claims, damages,
        losses, expenses and liabilities (including reasonable attorneys’ fees) incurred
        as a result of any default by Sublandlord, beyond any applicable cure periods,
        under this Sublease or the Prime Lease, arising from the non-performance,
        non-observance or non-payment of any of Sublandlord’s obligations under this
        Sublease or the Master Lease, provided Subtenant has fully performed all
        of its
        obligations hereunder.  Sublandlord shall not do, nor permit to be
        done, any act or thing which is, or with notice or the passage of time would
        be,
        a default under this Sublease or the Prime Lease.

      

                 8.           Insurance.

      

                 a.           Coverage.  Subtenant
        shall, at all times during the term of this Lease, and at its own cost and
        expense procure and continue in force the following insurance
        coverage:

      

                            i.           Bodily
        Injury and Property Damage, Liability Insurance with a combined single limit
        for
        bodily injury and property damage of not less than $2,000,000.

       

      
        
          
          

        

        
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                            ii.           Fire
        and Extended Coverage Insurance, including vandalism and malicious mischief
        coverage, in an amount equal to the full replacement value of all fixtures,
        furniture and improvements installed by or at the expense of
        Subtenant.

      

                 b.           Insurance
        Policies.  The aforementioned minimum limits of policies shall in
        no event limit the liability of Subtenant hereunder.  The aforesaid
        insurance shall name both Prime Landlord and Sublandlord as an additional
        insured.  Said insurance shall be with companies having a rating of
        not less than A-VII in “Best’s Key Rating Guide.”  Subtenant shall
        furnish from the insurance companies or cause the insurance companies to
        furnish
        certificates of coverage.  No such policy shall be cancelable or
        subject to reduction of coverage or other material modifications or
        cancellation except after thirty (30) days’ prior notice in writing to
        Sublandlord by the insurer.  All such policies shall be written as
        primary policies, not contributing with and not in excess of the coverage
        which
        Sublandlord may carry.  Subtenant shall, not more than twenty (20)
        days after the expiration of such policies, furnish Sublandlord with
        renewals or binders.  Subtenant agrees that if Subtenant does not take
        out and maintain such insurance, then, upon at least five (5) days’ written
        notice, Sublandlord may (but shall not be required to) procure said insurance
        on
        Subtenant’s behalf and charge Subtenant the premium together with a ten percent
        (10%) handling charge, payable upon demand.  Subtenant shall have the
        right to provide such insurance coverage pursuant to blanket policies obtained
        by Subtenant provided such blanket policies expressly afford coverage to
        the
        Sublease Premises and to Subtenant as required by this Lease.

      

                 9.           Services.  Sublandlord
        shall provide Subtenant with any and all maintenance or other services made
        available to Sublandlord by Prime Landlord under the Prime Lease, insofar
        as the
        same are applicable to the Sublease Premises.  Sublandlord agrees to
        use commercially reasonable efforts to cause Prime Landlord to perform all
        the
        duties, covenants, agreements and obligations of Prime Landlord under the
        Prime
        Lease except as stated herein to the contrary.  Upon Subtenant’s
        request, Sublandlord agrees to immediately notify Prime Landlord of its
        non-performance under the Prime Lease and requesting that Prime Landlord
        perform
        its obligations under the Prime Lease; provided, however, that if Subtenant
        commences a lawsuit or other action, Subtenant shall pay all costs and expenses
        incurred in connection therewith, and Subtenant shall indemnify Sublandlord
        against, and hold Sublandlord harmless from, all costs and expenses incurred
        by
        Sublandlord in connection therewith to obtain all maintenance or other services
        which Prime Landlord is required to provide under the Prime Lease, but
        Sublandlord shall not be liable for the failure of Prime Landlord to provide
        such services, unless such failure is due to the willful act or neglect of
        Sublandlord under the Prime Lease.  In addition, Sublandlord shall
        have no obligation to render any services to Subtenant or to spend any money
        for
        the repair or preservation of the Sublease Premises.  If services to
        the Sublease Premises are stopped or interrupted in such a manner as to
        substantially interfere with the normal operation of Subtenant’s business on the
        Sublease Premises, Sublandlord, upon the written request and at the reasonable
        expense of Subtenant, will exert reasonable efforts to enforce and pursue
        the
        rights, which Sublandlord may have pursuant to the Prime Lease to rectify
        such
        service stoppage or failure; however, Sublandlord is not liable for any damages
        which may result.  Sublandlord covenants to reasonably comply with its
        duties and obligations under the Prime Lease so as to keep the same free
        from
        default and in full force and effect, but this Sublease is subject and
        subordinate to the terms and conditions of the Prime Lease and any mortgages
        as
        provided therein.

      

                 10.           Consent
        of Prime Landlord.  This Sublease is subject to the written
        consent of the Prime Landlord, which consent shall be evidenced by the Prime
        Landlord’s execution of the Consent to Sublease attached hereto as Attachment
        A.

       

      
        
          
          

        

        
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                 11.           Binding
        Effect.  This Sublease shall apply to and bind the respective
        successors and assigns of the parties hereto, but this paragraph shall not
        be
        construed as a consent to any additional assignment or subletting by the
        Sublandlord or the Prime Landlord, or a waiver of any rights whatsoever by
        the
        Prime Landlord.

      

                 12.           Assignment
        or Subletting.  This Sublease may not be assigned or sublet by
        Subtenant without Sublandlord’s prior written
        consent.  Notwithstanding anything to the contrary contained in this
        Sublease, and provided that Subtenant complies with any restrictions on
        assignment or subletting set forth in the Prime Lease, none of (i) an assignment
        of this Sublease to a transferee of all or substantially all of the assets
        of
        Subtenant, (ii) an assignment of this Sublease or sublease of the Sublease
        Premises to a transferee which is either (A) the resulting entity of a merger
        or
        consolidation of Subtenant with another entity or (B) acquiring all or
        substantially all of the assets of Subtenant, or (iii) an assignment or
        subletting of all or a portion of the Sublease Premises to an affiliate of
        Subtenant (an entity which is controlled by, controls, or is under common
        control with, Subtenant), shall be deemed an assignment or sublease under
        this
        Sublease (and thus shall not be subject to Sublandlord's prior consent pursuant
        to this section).

      

                 13.           Consents
        and Approvals.  In any instance when Sublandlord’s consent or
        approval is required under this Sublease, Sublandlord’s refusal to consent to or
        approve any matter or thing shall be deemed reasonable and in good faith
        if such
        consent or approval has not been obtained from Prime Landlord; provided however,
        Sublandlord covenants to use reasonable efforts, at the sole cost and expense
        of
        Subtenant (including, without limitation, internal administrative costs,
        attorneys’ fees and expenses), to obtain the consent or approval of Prime
        Landlord and will indicate to Prime Landlord in those cases where its approval
        is conditioned upon Prime Landlord’s approval that it has no objection
        thereto.  If such consent of Prime Landlord shall not be required,
        Sublandlord shall not unreasonably withhold, condition or delay its consent
        to
        such matter.

      

                 14.           Right
        to Cure Subtenant’s Defaults and Damages.  If Subtenant shall at
        any time fail to make any payment or perform any other obligation of Subtenant
        hereunder within the applicable cure period, if any, then Sublandlord shall
        have
        the right, but not the obligation, after five days’ written notice to Subtenant,
        or without notice to Subtenant in the case of any emergency, and without
        waiving
        or releasing Subtenant from any obligations of Subtenant hereunder, to make
        such
        payment or perform such other obligation of Subtenant in such manner and
        to
        extent as Sublandlord shall deem necessary, and in exercising any such right,
        to
        pay any incidental reasonable costs and expenses, employ attorneys, and incur
        and pay reasonable attorneys’ fees.  Subtenant shall pay to
        Sublandlord upon demand all reasonable sums so paid by Sublandlord and all
        reasonable incidental costs and expenses of Sublandlord in connection therewith
        together with interest thereon at a rate of ten percent (10%) per year or
        any
        part thereof or the then-maximum rate of interest which may lawfully be
        collected from Subtenant, whichever shall be less, from the date of the making
        of such expenditures.

      

                 15.           Brokerage
        Fees.  Justin Rayburn of CB Richard Ellis (“CBRE”) represents
        Sublandlord, and Sublandlord recognizes that Melanie Baxter of Cresa Partners
        (“CP”) represents Subtenant pursuant to a separate agreement.  In
        consideration of the foregoing, Sublandlord hereby agrees to pay CBRE and
        CP the
        following amounts, respectively:

      

      a.           $6,983.30
        to CBRE and $13,966.60 to CP, payable upon the parties’ execution of this
        Sublease; and

       

      
        
          
          

        

        
          6.

          
            

          

        

        
          
          

        

      

      
 

      b.           an
        additional $6,983.30 to CBRE and $13,966.60 to CP, payable on June 1, 2008;
        provided that Subtenant has not failed to make any payment or perform any
        other
        obligation of Subtenant hereunder within the applicable cure
        period.

      

                 16.           Options,
        Rights of First Refusal, Etc.  If the Prime Lease provides for any
        options to lease additional space, rights of first refusal, rights of
        contradiction, rights of cancellation, roof rights, or staging rights, such
        rights shall not be transferred to Subtenant hereby.

      

                 17.           No
        Recording.  Subtenant shall not record this Sublease or a
        memorandum hereof.  Violation of this provision shall cause an
        automatic termination of this Sublease.

      

                 18.           Notices.  Notices
        shall be given as provided in the Prime Lease.  Sublandlord’s and
        Subtenant’s addresses for notices shall be as follows:

      

                 Subtenant:                      
        Zynex Medical, Inc.

                                                      
        Attn: Chief Executive Officer

                                                      
        Attn: Chief Financial Officer

                                                      
        8022 South Park Circle, Suite 100

                                                      
        Littleton, CO 80120

      

                 Sublandlord:                    Jones/NCTI,
        Inc.

      Attn:
        Mary Bliss

      9697
        E.
        Mineral Ave.

      Centennial,
        CO 80112

       

      with
        a
        copy to:               Jones
        International, Ltd.

      Attn:
        General Counsel

      9697
        E.
        Mineral Ave.

      Centennial,
        CO 80112

      

                 19.           Default
        Under Prime Lease.  If Sublandlord is in default with respect to
        the terms and conditions of the Prime Lease, Prime Landlord may give notice
        of
        Sublandlord's default to Subtenant and, if Prime Landlord elects, in its
        sole
        discretion, may require Subtenant to attorn to Prime Landlord and thereafter
        all
        payments hereunder shall be paid directly to Prime Landlord.  In no
        event shall Subtenant be liable to Sublandlord as a result of Subtenant’s
        compliance with any notice provided by Prime Landlord hereunder.

      

      20.           Acceptance
        of Sublease Premises.  Sublandlord warrants that, to its knowledge
        (i) the plumbing, electrical, gas, HVAC and other mechanical systems servicing
        the Sublease Premises are in good working condition and order on the
        Commencement Date, (ii) the Sublease Premises are free of Hazardous Substances,
        and (iii) the Sublease Premises are in material compliance with all existing
        laws, codes, regulations and ordinances of any governmental
        authorities.  Sublandlord makes no other warranties, express or
        implied, as to the fitness (including fitness for any particular purpose)
        or
        condition of the Sublease Premises or the Purchased Furniture, including
        but not
        limited to the integrity of the existing cabling and other equipment located
        within the Sublease Premises.  Subtenant, at its sole cost and
        expense, shall be responsible for all costs and expenses incurred in connection
        with procuring for the Sublet Premises telephone and data connectivity services,
        programming of the security system, and electrical, gas and other
        utilities.

       

      
        
          
          

        

        
          7.

          
            

          

        

        
          
          

        

      

       

                 21.           Governing
        Law.  This Sublease shall be governed by and construed in
        accordance with the laws of the State of Colorado.

      

                 22.           Entire
        Agreement.  This Sublease, including all attachments and exhibits
        hereto, contains the entire agreement between the parties and no agreement
        shall
        be effective to change, modify or terminate this Sublease in whole or in
        part
        unless such agreement is in writing and duly signed by the parties
        hereto.

      

                 23.           Definitions.  Any
        term that is capitalized but not defined in this Sublease that is capitalized
        and defined in the Prime Lease shall have the same meaning for purposes of
        this
        Sublease as it has for purposes of the Prime Lease.

      

                 24.           Waiver.  One
        or more waivers of any covenant or condition by Sublandlord shall not be
        construed as a waiver of a subsequent breach of the same or any other covenant
        or condition, and the consent or approval by Sublandlord to or of any act
        by
        Subtenant requiring Sublandlord’s consent or approval shall not be construed to
        waive or render unnecessary Sublandlord’s consent or approval to or of any
        subsequent similar act by Subtenant.

      

                 25.           Severability.  If
        any term or provision of this Sublease or any application thereof shall be
        invalid or unenforceable, the remainder of this Sublease and any other
        application of such term or provision shall not be affected
        thereby.

      

                 26.           Access.  Subtenant
        shall permit Sublandlord to have access to the Sublease Premises during
        Subtenant’s business hours during the term hereof, after reasonable advance
        notice, for the purpose of inspection the same and, to the extent Subtenant
        fails to perform such obligations after expiration of any applicable notice
        and
        cure period, for the purpose of performing Sublandlord’s obligations under the
        Prime Lease.

      

                 27.           Interpretation.  If
        any provision of this Sublease or the application thereof to any person or
        circumstance shall, for any reason and to any extent, be invalid or
        unenforceable, the remainder of this Sublease and the application of that
        provision to other persons or circumstances shall not be affected but rather
        shall be enforced to the extent permitted by law.  The table of
        contents, captions, headings and titles, if any, in this Sublease are solely
        for
        convenience of reference and shall not affect its
        interpretation.  This Sublease shall be construed without regard to
        any presumption or other rule requiring construction against the party causing
        this Sublease to be drafted.  Each covenant, agreement, obligation or
        other provision of this Sublease shall be deemed and construed as a separate
        and
        independent covenant of the party bound by, undertaking or making same, not
        dependent on any other provision of this Sublease unless otherwise expressly
        provided.  All pronouns and any variations thereof shall be deemed to
        refer to the masculine, feminine or neuter, singular or plural, as the identity
        of the parties may require.  The word “person” as used in this
        Sublease shall mean a natural person or persons, a partnership, a corporation
        or
        any other form of business or legal association or entity.  This
        Sublease may be executed in counterparts or with counterpart signature
        pages.

      

                 28.           No
        Offer.  The submission of this Sublease shall not be deemed to be
        an offer, an acceptance, or a reservation of the Sublease Premises; and
        Sublandlord shall not be bound hereby until Sublandlord has delivered to
        Subtenant a fully executed copy of this Sublease, signed by both of the parties
        on the last page of this Sublease in the spaces herein
        provided.  Until such delivery, Sublandlord reserves the right to
        exhibit and lease the Sublease Premises to other prospective
        tenants.

       

      
        
          
          

        

        
          8.

          
            

          

        

        
          
          

        

      

       

                 29.           Notice
        of Default.  Sublandlord hereby represents that at the execution
        of this Sublease no noncured notice of default has been issued by Prime Landlord
        and that Sublandlord has no knowledge of any current condition which would
        constitute such a default of the Prime Lease.

      

      30.           Consents.  In
        the event that Subtenant desires to take any action that will require the
        consent of Prime Landlord, Sublandlord shall use commercially reasonable
        efforts
        to obtain such consent, provided that Sublandlord shall not be liable in
        any way
        for the failure of Prime Landlord to so consent.

      

      31.           Attorneys’
        Fees.  In the event that either Sublandlord or Subtenant should
        bring suit because of the breach of any provision of this Sublease or for
        any
        other relief against the other, then all costs and expenses, including
        reasonable attorneys' fees, incurred by the prevailing party therein shall
        be
        paid by the other party.

      

      32.           Parking.  Subtenant
        shall be entitled to use, at no additional cost to Subtenant, the fifty-one
        (51)
        vehicle parking spaces granted to Sublandlord under the Prime
        Lease.

      

      33.           Signage.  Subtenant,
        at its sole cost and expense, shall be entitled to install standard suite
        entry
        and monument signage; provided, that all such signage complies with all terms
        and conditions (including any notice and approval requirements) set forth
        in any
        of the Prime Lease, the covenants, conditions and restrictions applicable
        to the
        High Pointe Business Center (if any), and local and state zoning
        codes.

      

      34.           Access.  Sublandlord,
        at Sublandlord’s cost, shall provide Subtenant with a minimum of three (3)
        security access cards at the time of the pre-occupancy period specified in
        Section 5, supra; thereafter, upon delivery of the Sublease Premises,
        Sublandlord shall provide no fewer than an additional thirty-two (32) security
        access cards.  Sublandlord shall be entitled to keep two (2) security
        access cards, and Subtenant shall ensure that such security access cards
        remain
        operable at all times throughout the term hereof.

      

      35.           Subordination.  The
        sublease shall be subject and subordinate at all times to the Prime Lease
        and to
        all of the covenants, agreements, terms, provisions and conditions of the
        Prime
        Lease.

      

      [SIGNATURES
        ON THE FOLLOWING PAGE]

      
        
          
          

        

        
          9.

          
            

          

        

        
          
          

        

      

                 IN
        WITNESS WHEREOF, The parties hereto have executed this instrument on the
        date
        first above written.

      

      SUBLANDLORD:                                                                SUBTENANT:

      

      Jones/NCTI,
        Inc.                                                                   Zynex
        Medical, Inc.

      

      

                               
        /s/ Thomas Sandgaard

      

      By:
I
        cannot make out the
        signature                                        By:    
        Thomas Sandgaard

      

      Title:
        Vice
        President                                                              
Title: President

      

      Date:
        11/2/2007                                                                    
Date: 10-31-2007

      

      
        
                    

          
          

        

        
          10.

          
            

          

        

        
          
          

        

      

      ATTACHMENT
        A

      

      FORM
        OF
        CONSENT TO SUBLEASE

      

      Colorado
        NI Industrial One LLC., a Delaware corporation, Landlord under the Prime
        Lease,
        hereby consents to the foregoing Sublease, dated ______, 2007 by and between
        Jones/NCTI, Inc. (f/k/a Versacom, Inc.), as Sublandlord, and Zynex Medical,
        Inc., as Subtenant, relating to consist of approximately 16,553 square feet
        of
        net rentable space, commonly known as Suite 100 located at 8022 South Park
        Circle, Littleton, CO 80120.  Landlord’s consent hereunder is
        expressly conditioned upon Sublandlord’s continuing responsibility for the full
        performance of all terms and conditions of the Prime Lease.  Neither
        the giving of this Consent nor anything contained in the Sublease shall serve
        to
        modify the Prime Lease in any way.

      

      LANDLORD

      

      Colorado
        NI Industrial One LLC

      

      By:                                                                

      

      Its:                                                                

      

      Date:sfgfinancial8k110707ex4-1.htm

    
      

      

    

     

    NEITHER
      THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
      EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
      AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR
      OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH
      SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
      EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A
      WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT
      REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES
      LAWS
      IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER.

     

    SFG
      FINANCIAL CORPORATION

     

    COMMON
      STOCK PURCHASE WARRANT

     

    Warrant
      No.: W-2007-01

     

    Original
      Issue Date: November ____, 2007

     

    THIS
      CERTIFIES THAT, FOR VALUE RECEIVED, ___________ or his
      registered assigns (“Holder”) is entitled to purchase, on the
      terms and conditions hereinafter set forth, at any time or from time to time
      from the date hereof until 5:00 p.m., Eastern Time, on the tenth anniversary
      of
      the Original Issue Date set forth above, or if such date is not a day on which
      the Company (as hereinafter defined) is open for business, then the next
      succeeding day on which the Company is open for business (such date is the
      “Expiration Date”), but not thereafter, to purchase up to
      2,000,000 shares of the Common Stock, par value $.0001 per share (the
“Common Stock”), of SFG Financial Corporation, a Delaware
      corporation (the “Company”), at a purchase price of $0.0001 per
      share (the “Exercise Price”), such number of shares and
      Exercise Price being subject to adjustment upon the occurrence of the
      contingencies set forth in this Warrant.  Each share of Common Stock
      as to which this Warrant is exercisable is a “Warrant Share”
and all such shares are collectively referred to as the “Warrant
      Shares.” 

     

    
      	
               

            	
              Section
                1.

            	
              Exercise
                of Warrant; Conversion of
                Warrant. 

            

    

     

    (a)       This
      Warrant may, at the option of Holder, be exercised in whole or in part from
      time
      to time by delivery to the Company at its principal office, Attention:
      President, on or before 5:00 p.m., Eastern Time, on the Expiration Date,
      (i) a written notice of such Holder's election to exercise this Warrant
      (the “Exercise Notice”), which notice may be in the form of the
      Notice of Exercise attached hereto, properly executed and completed by Holder
      or
      an authorized officer thereof, (ii) payment for the Warrant Shares
      (“Payment”), as further described in Section 1(b), below,
and (iii) this Warrant (the items specified in
      (i), (ii), and (iii) are collectively the “Exercise
      Materials”). 

     

    (b)       Payment
      may be made by check payable to the order of the Company, in an amount equal
      to
      the product of the Exercise Price multiplied by the
      number of Warrant Shares specified in the Exercise Notice.

    

    (c)       Notwithstanding
      any provisions herein to the contrary, if the Fair Market Value (as defined
      below) of one share of Common Stock is greater than the Exercise Price (at
      the
      date of calculation as set forth below), to the extent the Holder does not
      elect
      to pay cash or by promissory note upon the deemed exercise of this Warrant,
      the
      Holder shall be deemed to have elected to receive shares equal to the value
      (as
      determined below) of this Warrant (or the portion thereof being cancelled)
      in
      which event the Company shall issue to the holder a number of shares of Common
      Stock computed using the following formula:

     

    X=Y
      (A-B)

    A

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Where  X=      
      the number of shares of Common Stock to be issued to the holder

    

    
      	
               

            	
              Y=

            	
              the
                number of shares of Common Stock deemed purchased under the Warrant
                for
                which the Holder is not paying cash

            

    

     

    
      	
               

            	
              A=

            	
              the
                Fair Market Value of one share of the Company’s Common Stock (at the date
                of such calculation)

            

    

     

    
      	
               

            	
              B=

            	
              Purchase
                Price (as adjusted to the date of such
                calculation)

            

    

     

     

    For
      purposes of Rule 144 promulgated under the 1933 Act, it is intended, subject
      to
      applicable interpretations of the Securities and Exchange Commission, that
      the
      Warrant Shares issued in a cashless exercise transaction shall be deemed to
      have
      been acquired by the Holder, and the holding period for the Warrant Shares
      shall
      be deemed to have commenced, on the date this Warrant was originally
      issued.

    

     

    Fair
      Market Value of a share of Common Stock as of a particular date (the
      "Determination Date") shall mean:

     

    (i)    
          If the Company's Common Stock is traded on an exchange
      or is quoted on the National Association of Securities Dealers, Inc. Automated
      Quotation ("Nasdaq") National Market System, the Nasdaq SmallCap Market or
      the
      American Stock Exchange, Inc., then the closing or last sale price,
      respectively, reported for the last business day immediately preceding the
      Determination Date;

     

    (ii)        If
      the Company's Common Stock is not traded on an exchange or on the Nasdaq
      National Market System, the Nasdaq SmallCap Market or the American Stock
      Exchange, Inc., but is traded in the over-the-counter market, then the average
      of the closing bid and ask prices reported for the last business day immediately
      preceding the Determination Date;

     

    (iii)       Except
      as provided in clause (iv) below, if the Company's Common Stock is not
      publicly traded, then as the Holder and the Company agree, or in the absence
      of
      such an agreement, by arbitration in accordance with the rules then standing
      of
      the American Arbitration Association, before a single arbitrator to be chosen
      from a panel of persons qualified by education and training to pass on the
      matter to be decided; or

     

    (iv)       If
      the Determination Date is the date of a liquidation, dissolution or winding
      up,
      or any event deemed to be a liquidation, dissolution or winding up pursuant
      to
      the Company's articles of incorporation , then all amounts to be payable per
      share to holders of the Common Stock pursuant to the articles of incorporation
      in the event of such liquidation, dissolution or winding up, plus all other
      amounts to be payable per share in respect of the Common Stock in liquidation
      under the articles of incorporation , assuming for the purposes of this clause
      (iv) that all of the shares of Common Stock then issuable upon exercise of
      all of the Warrants are outstanding at the Determination Date.

     

    

    

    

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    

    (d)       As
      promptly as practicable after its receipt of the Exercise Materials, Company
      shall execute or cause to be executed and delivered to Holder a certificate
      or
      certificates representing the number of Warrant Shares specified in the Exercise
      Notice, together with cash in lieu of any fraction of a share, and if this
      Warrant is partially exercised, a new warrant on the same terms for the
      unexercised balance of the Warrant Shares.  The stock certificate or
      certificates shall be registered in the name of Holder or such other name or
      names as shall be designated in the Exercise Notice.  The date on
      which the Warrant shall be deemed to have been exercised (the “Effective
      Date”), and the date the person in whose name any certificate
      evidencing the Common Stock issued upon the exercise hereof is issued shall
      be
      deemed to have become the holder of record of such shares, shall be the date
      the
      Company receives the Exercise Materials, irrespective of the date of delivery
      of
      a certificate or certificates evidencing the Common Stock issued upon the
      exercise or conversion hereof, provided, however, that if the
      Exercise Materials are received by the Company on a date on which the stock
      transfer books of the Company are closed, the Effective Date shall be the next
      succeeding date on which the stock transfer books are open.  All shares of
      Common Stock issued upon the exercise or conversion of this Warrant will, upon
      issuance, be fully paid and nonassessable and free from all taxes, liens, and
      charges with respect thereto.

     

    
      	
               

            	
              Section
                2.

            	
              Adjustments
                to Warrant Shares.

            

    

     

    The
      number of Warrant Shares issuable upon the exercise hereof shall be subject
      to
      adjustment as follows:

     

    (a)    
         In the event the Company is a party to a consolidation, share
      exchange, or merger, or the sale of all or substantially all of the assets
      of
      the Company to, any person, or in the case of any consolidation or merger of
      another corporation into the Company in which the Company is the surviving
      corporation, and in which there is a reclassification or change of the shares
      of
      Common Stock of the Company, this Warrant shall after such consolidation, share
      exchange, merger, or sale be exercisable for the kind and number of securities
      or amount and kind of property of the Company or the corporation or other entity
      resulting from such share exchange, merger, or consolidation, or to which such
      sale shall be made, as the case may be (the “Successor
      Company”), to which a holder of the number of shares of Common Stock
      deliverable upon the exercise (immediately prior to the time of such
      consolidation, share exchange, merger, or sale) of this Warrant would have
      been
      entitled upon such consolidation, share exchange, merger, or sale; and in any
      such case appropriate adjustments shall be made in the application of the
      provisions set forth herein with respect to the rights and interests of Holder,
      such that the provisions set forth herein shall thereafter correspondingly
      be
      made applicable, as nearly as may reasonably be, in relation to the number
      and
      kind of securities or the type and amount of property thereafter deliverable
      upon the exercise of this Warrant.  The above provisions shall similarly
      apply to successive consolidations, share exchanges, mergers, and sales. 
Any adjustment required by this Section 2 (a) because of a consolidation, share
      exchange, merger, or sale shall be set forth in an undertaking delivered to
      Holder and executed by the Successor Company which provides that Holder shall
      have the right to exercise this Warrant for the kind and number of securities
      or
      amount and kind of property of the Successor Company or to which the holder
      of a
      number of shares of Common Stock deliverable upon exercise (immediately prior
      to
      the time of such consolidation, share exchange, merger, or sale) of this Warrant
      would have been entitled upon such consolidation, share exchange, merger, or
      sale.  Such undertaking shall also provide for future adjustments to the
      number of Warrant Shares and the Exercise Price in accordance with the
      provisions set forth in Section 2 hereof.

     

    (b)    
         In the event the Company should at any time, or from time to
      time after the Original Issue Date, fix a record date for the effectuation
      of a
      stock split or subdivision of the outstanding shares of Common Stock or the
      determination of holders of Common Stock entitled to receive a dividend or
      other
      distribution payable in additional shares of Common Stock, or securities or
      rights convertible into, or entitling the holder thereof to receive directly
      or
      indirectly, additional shares of Common Stock (hereinafter referred to as
“Common Stock Equivalents”) without payment of any
      consideration by such holder for the additional shares of Common Stock or the
      Common Stock Equivalents (including the additional shares of Common Stock
      issuable upon exercise or exercise thereof), then, as of such record date (or
      the date of such dividend, distribution, split, or subdivision if no record
      date
      is fixed), the number of Warrant Shares issuable upon the exercise hereof shall
      be proportionately increased and the Exercise Price shall be appropriately
      decreased by the same proportion as the increase in the number of outstanding
      Common Stock Equivalents of the Company resulting from the dividend,
      distribution, split, or subdivision.  Notwithstanding the preceding
      sentence, no adjustment shall be made to decrease the Exercise Price below
      $.001
      per Share.

    

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    

     

    (c)        In
      the event the Company should at any time or from time to time after the Original
      Issue Date, fix a record date for the effectuation of a reverse stock split,
      or
      a transaction having a similar effect on the number of outstanding shares of
      Common Stock of the Company, then, as of such record date (or the date of such
      reverse stock split or similar transaction if no record date is fixed), the
      number of Warrant Shares issuable upon the exercise hereof shall be
      proportionately decreased and the Exercise Price shall be appropriately
      increased by the same proportion as the decrease of the number of outstanding
      Common Stock Equivalents resulting from the reverse stock split or similar
      transaction.

     

    (d)        In
      the event the Company should at any time or from time to time after the Original
      Issue Date, fix a record date for a reclassification of its Common Stock, then,
      as of such record date (or the date of the reclassification if no record date
      is
      set), this Warrant shall thereafter be convertible into such number and kind
      of
      securities as would have been issuable as the result of such reclassification
      to
      a holder of a number of shares of Common Stock equal to the number of Warrant
      Shares issuable upon exercise of this Warrant immediately prior to such
      reclassification, and the Exercise Price shall be unchanged.

     

    (e)       The
      Company will not, by amendment of its Certificate of Incorporation or through
      reorganization, consolidation, merger, dissolution, issue, or sale of
      securities, sale of assets or any other voluntary action, void or seek to avoid
      the observance or performance of any of the terms of the Warrant, but will
      at
      all times in good faith assist in the carrying out of all such terms and in
      the
      taking of all such actions as may be necessary or appropriate in order to
      protect the rights of Holder against dilution or other impairment.  Without
      limiting the generality of the foregoing, the Company (x) will not create a
      par
      value of any share of stock receivable upon the exercise of the Warrant above
      the amount payable therefor upon such exercise, and (y) will take all such
      action as may be necessary or appropriate in order that the Company may validly
      and legally issue fully paid and non-assessable shares upon the exercise of
      the
      Warrant.

     

    (f)       When
      any adjustment is required to be made in the number or kind of shares
      purchasable upon exercise of the Warrant, or in the Exercise Price, the Company
      shall promptly notify Holder of such event and of the number of shares of Common
      Stock or other securities or property thereafter purchasable upon exercise
      of
      the Warrants and of the Exercise Price, together with the computation resulting
      in such adjustment.

     

    (g)       The
      Company covenants and agrees that all Warrant Shares which may be issued will,
      upon issuance, be validly issued, fully paid, and non-assessable.  The
      Company further covenants and agrees that the Company will at all times have
      authorized and reserved, free from preemptive rights, a sufficient number of
      shares of its Common Stock to provide for the exercise of the Warrant in
      full.

    

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

     

    
      	
               

            	
              Section
                3.

            	
              No
                Stockholder Rights.

            

    

     

    This
      Warrant shall not entitle Holder hereof to any voting rights or other rights
      as
      a stockholder of the Company.

     

    
      	
               

            	
              Section
                4.

            	
              Transfer
                of Securities.

            

    

     

    (a)       This
      Warrant and the Warrant Shares and any shares of capital stock received in
      respect thereof, whether by reason of a stock split or share reclassification
      thereof, a stock dividend thereon, or otherwise, shall not be transferable
      except upon compliance with the provisions of the Securities Act of 1933, as
      amended (the “Securities Act”) and applicable state securities
      laws with respect to the transfer of such securities.  The Holder, by
      acceptance of this Warrant, agrees to be bound by the provisions of
      Section 4 hereof and to indemnify and hold harmless the Company against any
      loss or liability arising from the disposition of this Warrant or the Warrant
      Shares issuable upon exercise hereof or any interest in either thereof in
      violation of the provisions of this Warrant.

     

    (b)       Each
      certificate for the Warrant Shares and any shares of capital stock received
      in
      respect thereof, whether by reason of a stock split or share reclassification
      thereof, a stock dividend thereon or otherwise, and each certificate for any
      such securities issued to subsequent transferees of any such certificate shall
      (unless otherwise permitted by the provisions hereof) be stamped or otherwise
      imprinted with a legend in substantially the following form:

     

    “NEITHER
      THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
      STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL
      (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE
      STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR
      (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL
      ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES
      ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION
      WITH
      SUCH PROPOSED TRANSFER.”

     

    
      	
               

            	
              Section
                5.

            	
              Miscellaneous. 

            

    

     

    (a)       The
      terms of this Warrant shall be binding upon and shall inure to the benefit
      of
      any successors or permitted assigns of the Company and Holder.

     

    (b)       Except
      as otherwise provided herein, this Warrant and all rights hereunder are
      transferable by the registered holder hereof in person or by duly authorized
      attorney on the books of the Company upon surrender of this Warrant, properly
      endorsed, to the Company.  The Company may deem and treat the registered
      holder of this Warrant at any time as the absolute owner hereof for all purposes
      and shall not be affected by any notice to the contrary.

     

    (c)       Notwithstanding
      any provision herein to the contrary, Holder may not exercise, sell, transfer,
      or otherwise assign this Warrant unless the Company is provided with an opinion
      of counsel satisfactory in form and substance to the Company, to the effect
      that
      such exercise, sale, transfer, or assignment would not violate the Securities
      Act or applicable state securities laws.

     

    (d)       This
      Warrant may be divided into separate warrants covering one share of Common
      Stock
      or any whole multiple thereof, for the total number of shares of Common Stock
      then subject to this Warrant at any time, or from time to time, upon the request
      of the registered holder of this Warrant and the surrender of the same to the
      Company for such purpose.  Such subdivided Warrants shall be issued
      promptly by the Company following any such request and shall be of the same
      form
      and tenor as this Warrant, except for any requested change in the name of the
      registered holder stated herein.

    

    
      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

     

    (e)       Any
      notices, consents, waivers, or other communications required or permitted to
      be
      given under the terms of this Warrant must be in writing and will be deemed
      to
      have been delivered (a) upon receipt, when delivered personally, (b) upon
      receipt, when sent by facsimile, provided a copy is
      mailed by U.S. certified mail, return receipt requested, (c) three (3) days
      after being sent by U.S. certified mail, return receipt requested, or (d) one
      (1) day after deposit with a nationally recognized overnight delivery service,
      in each case properly addressed to the party to receive the same.

     

    If
      to
      Holder, to the registered address of Holder appearing on the books of the
      Company.  Each party shall provide five (5) days prior written notice
      to the other party of any change in address, which change shall not be effective
      until actual receipt thereof

     

    (f)        The
      corporate laws of the State of Delaware shall govern all issues concerning
      the
      relative rights of the Company and its stockholders.  All other
      questions concerning the construction, validity, enforcement and interpretation
      of this Warrant shall be governed by the internal laws of the State of Delaware,
      without giving effect to any choice of law or conflict of law provision or
      rule
      (whether of the State of Delaware or any other jurisdictions) that would cause
      the application of the laws of any jurisdictions other than the State of
      Delaware.   If any provision of this Warrant shall be invalid or
      unenforceable in any jurisdiction, such invalidity or unenforceability shall
      not
      affect the validity or enforceability of the remainder of this Warrant in that
      jurisdiction or the validity or enforceability of any provision of this Warrant
      in any other jurisdiction.

     

    

     

    [Signatures
      on the following page]

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

    
      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

    

    SIGNATURE
      PAGE

    TO

    COMPANY

    COMMON
      STOCK PURCHASE WARRANT

     

     

    IN
      WITNESS WHEREOF, the Company, has caused this Warrant to be executed in its
      name
      by its duly authorized officers under seal, and to be dated as of the date
      first
      above written.

     

    

    
      	 	SFG
              Financial Corporation
	 	 	 
	 	 	 
	 	
              By:

            	                                                                   
                
	 	 	
              Name:

            	 
	 	 	
              Title:

            	 

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    

    
      
        
           

        

        
          7

          
            

          

        

        
           

        

      

    

     

    ASSIGNMENT

     

    (To
      be
      Executed by the Registered Holder to effect a Transfer of the foregoing
      Warrant)

     

    FOR
      VALUE
      RECEIVED, the undersigned hereby sells, and assigns and transfers unto
      ___________________________________________________________________________
      the
      foregoing Warrant and the rights represented thereto to purchase shares of
      Common Stock of SFG Financial Corporation in accordance with terms and
      conditions thereof, and does hereby irrevocably constitute and appoint
      ________________ Attorney to transfer the said Warrant on the books of the
      Company, with full power of substitution.

     

    Holder:

    _______________________________

     

    _______________________________

     

    Address

     

    Dated:
      __________________, 20__

     

    In
      the
      presence of:

     

    _______________________________

     

    

     

    

     

    

     

    

     

    

    

    
      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    

    

    EXERCISE
      OR CONVERSION NOTICE

     

     

    [To
      be
      signed only upon exercise of Warrant]

     

    To:       SFG
      Financial Corporation

     

    The
      undersigned Holder of the attached Warrant hereby irrevocably elects to exercise
      the Warrant for, and to purchase thereunder, _____ shares of Common Stock of
      SFG
      Financial Corporation, issuable upon exercise of said Warrant and hereby
      surrenders said Warrant.

     

    The
      undersigned herewith requests that the certificates for such shares be issued
      in
      the name of, and delivered to the undersigned, whose address is
      ________________________________.

     

    

    If
      electronic book entry transfer, complete the following:

     

    Account
      Number:
                                                                             

     

    Transaction
      Code
      Number:                                                                           

     

    Dated:
      ___________________

     

    Holder:

     

    ____________________________________

     

    ____________________________________

     

    By:                                                               

      Name:

      Title:

     

     

    NOTICE

     

    The
      signature above must correspond to the name as written upon the face of the
      within Warrant in every particular, without alteration or enlargement or any
      change whatsoever.

     

    
 

     

    9

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