Document:

Exhibit 10.2

     

    
      

      

    

    
 

    Exhibit
      10.2

    

    THIS
      WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN ACQUIRED
      FOR
      INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
      AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAW. THIS WARRANT AND SUCH
      SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE PLEDGED, TRANSFERRED OR
      HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR DELIVERY OF AN OPINION
      OF
      COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
      OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH THE
      ACT
      OR UNLESS SOLD IN FULL COMPLIANCE WITH RULE 144 UNDER THE ACT.

    

    

    

    ZYNEX
      MEDICAL HOLDINGS, INC.

    

    

    Warrant
      for the Purchase of Shares of 

    Common
      Stock

    

    Date:
      October 18, 2006

    

    
      	
              No.
                [Insert #]

            	 	
              429,867
                Shares

            

    

    

    

    FOR
      VALUE
      RECEIVED, ZYNEX MEDICAL HOLDING, INC., a Nevada corporation (the “Company”),
      hereby grants to Ascendiant
      capital group, llc. its
      designee or its permitted assigns, subject to the terms and conditions set
      forth
      herein, the right to purchase from the Company, Four
      Hundred Twenty Nine Thousand Eight Hundred Sixty Seven (429,867)
fully
      paid and non-assessable shares of common stock of the Company.

     

    For
      purposes of this Warrant, (i) said common stock of the Company, is referred
      to
      as the “Common
      Stock,”
(ii)
      the shares of the Common Stock purchasable hereunder or under any other Warrant
      (as defined below) are referred to as the “Warrant
      Shares;”
(iii)
      the aggregate purchase price payable for the Warrant Shares purchasable
      hereunder is referred to as the “Aggregate
      Warrant Price”
      (initially $167,648.13, subject to adjustment as provided herein); (iv) the
      price payable (initially $0.39 per share subject to adjustment as provided
      below) for each of the Warrant Shares issuable hereunder is referred to as
      the
“Per
      Share Warrant Price;”
(v)
      this Warrant issued as of the date hereof and all warrants hereafter issued
      in
      exchange or substitution for this Warrant is referred to as the “Warrant”
and
      (vi) the holder of this Warrant is referred to as the “Holder.”
      

     

    
      
         

         

         

      

      
         

        
          

        

      

      
         

      

    

    1. Exercise
      of Warrant.

     

    (a) This
      Warrant may be exercised by Holder, in whole or in part, at any time, or from
      time to time, for a period of five years from the date hereof by the surrender
      of this Warrant (with the subscription form at the end hereof duly executed)
      at
      the address set forth in Section 10(a) hereof, together with proper payment
      of
      the Aggregate Warrant Price, or the proportionate part thereof if this Warrant
      is exer-cised in part, with payment for the Warrant Shares made by certified
      or
      official bank check payable to the order of the Company.

     

    

    (b) If
      this
      Warrant is exercised in part, this Warrant must be exercised for a number of
      whole shares of the Common Stock and the Holder is entitled to receive a new
      Warrant covering the Warrant Shares that have not been exercised and setting
      forth the proportionate part of the Aggregate Warrant Price applicable to such
      Warrant Shares. Upon surrender of this Warrant, the Company will (i) issue
      a
      certificate or certificates in the name of the Holder for the largest number
      of
      whole shares of the Common Stock to which the Holder shall be entitled and,
      if
      this Warrant is exercised in whole, in lieu of any fractional share of the
      Common Stock to which the Holder shall be entitled, pay to the Holder cash
      in an
      amount equal to the fair value of such fractional share (determined in such
      reasonable manner as the Board of Directors of the Company shall determine),
      and
      (ii) deliver the other securities and properties receivable upon the exercise
      of
      this Warrant, or the proportionate part thereof, if this Warrant is exercised
      in
      part, pursuant to the provisions of this Warrant. 

     

    2. Reservation
      of Warrant Shares.
      The
      Company agrees that it shall at all times have authorized and in reserve, and
      shall keep available, solely for issuance and delivery upon the exercise of
      this
      Warrant, the shares of the Common Stock and other securities and properties
      as
      from time to time shall be receivable upon the exercise of this Warrant, free
      and clear of all restrictions on sale or transfer, other than under Federal
      or
      state securities laws, and free and clear of all preemptive rights and rights
      of
      first refusal.

     

    3. Certain
      Adjustments.
      The
      number of and kind of securities purchasable upon exercise of this Warrant
      and
      the Per Share Warrant Price shall be subject to adjustment from time to time
      as
      follows:

     

    (a) Certain
      Dilutive Issuances.
      

     

    Special
      Definitions. For purposes of this Section 3, the following definitions
      apply:

     

    (i) “Options”
      shall mean rights, options, or warrants to subscribe for, purchase or otherwise
      acquire either Common Stock or Convertible Securities (defined
      below).

     

    (ii) “Original
      Issue Date” shall mean the date hereof.

     

    (iii) “Convertible
      Securities” shall mean any evidences of indebtedness, shares or other securities
      convertible into or exchangeable for common stock of Company.

     

    
      
         

         

         

      

      
         

        
          

        

      

      
         

      

    

    (iv) “Additional
      Shares of Common Stock” shall mean all shares of common stock issued (or,
      pursuant to Section 3(c) below deemed to be issued) by the Company after the
      Original Issue Date, other than shares of common stock issuable or
      issued:

     

    A. upon
      the
      exercise or conversion of exercisable securities or Convertible Securities
      outstanding as of the Original Issue Date;

     

    B. upon
      exercise of stock options to officers, directors, employees or consultants
      of
      The Company pursuant to stock option or stock purchase plans or agreements
      on
      terms approved by the Board of Directors of the Company;

     

    C. as
      stock
      splits or subdivisions or stock dividends in respect of which the Per Share
      Warrant Price is adjusted pursuant to Section 3(e) or Section 3(f);

     

    D. in
      connection with any joint venture approved by the Board of Directors of the
      Company;

     

    E. to
      vendors in payment of normal and customary fees or in settlement of outstanding
      accounts payable in an aggregate amounts not to exceed 1% of the Company’s
      outstanding Common Stock (measured as of the Original Issue Date and each
      anniversary date thereof) in each 12 month period following the Original Issue
      Date, provided that any such Additional Shares of Common Stock must be valued,
      as of the day such Additional Shares of Common Stock are issued or deemed to
      be
      issued, at or above the market price of the Company’s Common Stock on the day of
      issuance, 

     

    F. in
      connection with an acquisition by the Company of the securities, assets or
      business of another company; or

     

    G. in
      connection with sales of shares of Common Stock or Convertible Securities by
      the
      Company.

     

    (b) No
      Adjustment of Per Share Warrant Price.
      Any
      provision herein to the contrary notwithstanding, no adjustment in the Per
      Share
      Warrant Price shall be made in respect of the issuance of Additional Shares
      of
      Common Stock unless the consideration per share is less than the applicable
      Per
      Share Warrant Price in effect on the date of, and immediately prior to such
      issue.

     

    (c) Deemed
      Issue of Additional Shares of Common Stock.
      In the
      event that the Company at any time or from time to time after the Original
      Issue
      Date shall issue any Options or Convertible Securities or shall fix a record
      date for the determination of holders of any class of securities then entitled
      to receive any such Options or Convertible Securities, then the maximum number
      of shares (as set forth in the instrument relating thereto without regard to
      any
      provisions contained therein designed to protect against dilution) of common
      stock issuable upon the exercise of such Options or, in the case of Convertible
      Securities and Options therefor, the exercise of such Options for Convertible
      Securities and the conversion or exchange of such Convertible Securities, shall
      be deemed to be Additional Shares of Common Stock issued as of the time of
      such
      issue or, in case such a record date shall have been fixed, as of the close
      of

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    business
      on such record date, provided further that in any such case in which Additional
      Shares of Common Stock are deemed to be issued:

     

    (i) no
      further adjustments in the Per Share Warrant Price shall be made upon the
      subsequent issue of Convertible Securities or shares of Common Stock upon the
      exercise of such Options or conversion or exchange of such Convertible
      Securities;

     

    (ii) if
      such
      Options or Convertible Securities by their terms provide, with the passage
      of
      time or otherwise, for any increase or decrease in the consideration payable
      to
      the Company, or increase or decrease in the number of shares of Common Stock
      issuable, upon the exercise, conversion or exchange thereof, the Per Share
      Warrant Price computed upon the original issue thereof (or upon the occurrence
      of a record date with respect thereto), and any subsequent adjustments based
      thereon, shall, upon any such increase or decrease becoming effective, be
      recomputed to reflect such increase or decrease insofar as it affects such
      Options or the rights of conversion or exchange under such Convertible
      Securities;

     

    (iii) upon
      the
      expiration of any such Options or rights, the termination of any such rights
      to
      convert or exchange or the expiration of any Options or rights related to such
      Convertible Securities or exchangeable securities, the Per Share Warrant Price,
      to the extent in any way affected by or computed using such Options, rights
      or
      Convertible Securities or Options or rights related to such Convertible
      Securities, shall be recomputed to reflect the issuance of only the number
      of
      shares of Common Stock (and convertible or exchangeable securities that remain
      in effect) actually issued upon the exercise of such Options or rights, upon
      the
      conversion or exchange of such Convertible Securities or upon the exercise
      of
      the Options or rights related to such Convertible Securities;

     

    (d) Adjustment
      of Per Share Warrant Price Upon Issuance of Additional Shares of Common
      Stock.
      In the
      event that the Company, at any time after the Original Issue Date, shall issue
      Additional Shares of Common Stock without consideration or for a consideration
      per share less than the Per Share Warrant Price in effect on the date of and
      immediately prior to such issue (a “Dilutive Transaction”), then and in such
      event, the Per Share Warrant Price shall, automatically and without further
      action, be reduced to an amount determined by multiplying the Per Share Warrant
      Price then in effect by a fraction:

     

    (i) the
      numerator of which shall be (X) the number of shares of Common Stock outstanding
      immediately prior to the Dilutive Transaction (excluding treasury shares but
      including all shares of Common Stock issuable upon conversion, exchange or
      exercise of any outstanding shares of Convertible Securities or Options) plus
      (Y) the number of shares of Common Stock which the net aggregate consideration
      received by the Company for the total number of such additional shares of Common
      Stock so issued in the Dilutive Transaction would purchase at such Per Share
      Warrant Price then in effect (prior to such adjustment); and

     

    (ii) the
      denominator of which shall be (X) the number of shares of Common Stock
      outstanding immediately prior to the Dilutive Transaction (excluding treasury
      shares but including all shares of Common Stock issuable upon conversion,
      exchange or exercise of any outstanding shares of Options or Convertible
      Securities), plus (Z) the number of such additional shares of Common Stock
      so
      issued in the Dilutive Transaction.

     

    
      
         

         

      

      
         

        
          

        

      

      
         

      

    

              (e) Stock
      Dividends, Subdivisions and Combinations.
      In case
      the Company shall hereafter (i) pay a dividend or make a distribution on its
      capital stock in shares of Common Stock (ii) subdivide its outstanding shares
      of
      Common Stock into a greater number of shares, (iii) combine its outstanding
      shares of Common Stock into a smaller number of shares or (iv) issue by
      reclassification of its Common Stock any shares of capital stock of the Company,
      the securities purchasable upon the exercise of this Warrant shall be
      proportionately adjusted and the Per Share Warrant Price shall be adjusted
      to be
      equal to a fraction, the numerator of which shall be the Aggregate Warrant
      Price
      and the denominator of which shall be the number of shares of Common Stock
      or
      other capital stock of the Company that the Holder would have owned immediately
      following such action had such Warrant been exercised immediately prior thereto.
      An adjustment made pursuant to this Subsection 3(b) shall become effective
      immediately after the record date in the case of a dividend or distribution,
      and
      shall become effective immediately after the effective date in the case of
      a
      subdivision, combination or reclassification.

     

    (f) Reclassification,
      Reorganization and Consolidation.
      In case
      of any capital reclassification or reorganization, or any consolidation or
      merger to which the Company is a party other than a merger or consolidation
      in
      which the Company is the continuing corporation, or in case of any sale or
      conveyance to another entity of all or substantially all of the assets of the
      Company, or in the case of any statutory exchange of securities with another
      corporation (including any exchange effected in connection with a merger of
      a
      third entity into the Company, the Holder of this Warrant shall have the right
      thereafter to receive on the exercise of this Warrant the kind and amount of
      securities, cash or other property which the Holder would have owned or have
      been entitled to receive immediately after such reorganization,
      reclassification, consolidation, merger, statutory exchange, sale or conveyance
      had this Warrant been exercised immediately prior to the effective date of
      such
      reorganization, reclassification, consolidation, merger, statutory exchange,
      sale or conveyance and in any such case, if necessary, appropriate adjustment
      shall be made in the application of the provisions set forth in this Section
      3
      with respect to the rights and interests thereafter of the Holder of this
      Warrant to the end that the provisions set forth in this Section 3 shall
      thereafter correspondingly be made applicable, as nearly as may reasonably
      be,
      in relation to any shares of stock or other securities or property thereafter
      deliverable on the exercise of this Warrant. The above provisions of this
      Section 3(f) shall similarly apply to successive reorganizations,
      reclassifications, consolidations, mergers, statutory exchanges, sales or
      conveyances. The Company shall require the issuer of any shares of stock or
      other securities or property thereafter deliverable on the exercise of this
      Warrant to be responsible for all of the agreements and obligations of the
      Company hereunder. Notice of any such reorganization, reclassification,
      consolidation, merger, statutory exchange, sale or conveyance and of said
      provisions so proposed to be made, shall be mailed to the Holders of the
      Warrants not less than 20 days prior to the anticipated closing of such event.
      A
      sale of all or substantially all of the assets of the Company for a
      consideration consisting primarily of securities shall be deemed a consolidation
      or merger for the foregoing purposes.

     

    (g) No
      adjustment in the Per Share Warrant Price shall be required unless such
      adjustment would require an increase or decrease of at least $0.01 per share
      of
      Common Stock, provided,
      however,
      that
      any adjustments which by reason of this Subsection 3(g) are not required to
      be
      made shall be carried forward and taken into account in any subsequent
      adjustment; provided,
      further,
      however, that adjustments shall be required and made in accordance with the
      provisions of this Section 3 (other than this Subsection 3(d)) not later
      than

     

    
      
         

         

      

      
         

        
          

        

      

      
         

      

    

    such
      time
      as may be required in order to preserve the tax-free nature of a distribution
      (if any) to the Holder of this Warrant or Common Stock issuable upon the
      exercise hereof. All calculations under this Section 3 shall be made to the
      nearest cent or to the nearest 1/100th of a share, as the case may be. Anything
      in this Section 3 to the contrary notwithstanding, the Company shall be entitled
      to make such reductions in the Per Share Warrant Price, in addition to those
      required by this Section 3, as it in its discretion shall deem to be advisable
      in order that any stock dividend, subdivision of shares or distribution of
      rights to purchase stock or securities convertible or exchangeable for stock
      hereafter made by the Company to its stockholders shall not be
      taxable.

     

    (h) Whenever
      the Per Share Warrant Price is adjusted as provided in this Section 3 and upon
      any modifi-cation of the rights of a Holder of Warrants in accordance with
      this
      Section 3, the Company shall promptly prepare a brief statement of the facts
      requiring such adjustment or modification and the manner of computing the same
      and cause copies of such certificate to be mailed to the Holder. In addition,
      the Company shall issue a certificate signed by the chief financial officer
      of
      the Company setting forth the Per Share Warrant Price and the number of Warrant
      Shares in effect after such adjustment or the effect of such modification,
      a
      brief statement of the facts requiring such adjustment or modification and
      the
      manner of computing the same and cause copies of such certificate to be mailed
      to the Holder.

     

    (i) If
      the
      Board of Directors of the Company shall declare any dividend or other
      distribution with respect to the Common Stock the Company shall mail notice
      thereof to the Holder not less than 20 days prior to the record date fixed
      for
      determining stock-holders entitled to participate in such dividend or other
      distribution.

     

    (j) If,
      as a
      result of an adjustment made pursuant to this Section 3, the Holder of any
      Warrant thereafter surrendered for exercise shall become entitled to receive
      shares of two or more classes of capital stock or shares of Common Stock and
      other capital stock of the Company, the Board of Directors shall in good faith
      determine the allocation of the adjusted Per Share Warrant Price between or
      among shares or such classes of capital stock or shares of Common Stock and
      other capital stock.

     

    (k) Upon
      the
      expiration of any rights, options, warrants or conversion privileges with
      respect to the issuance of which an adjustment to the Per Share Warrant Price
      had been made, if such option, right warrant or conversion shall not have been
      exercised, the number of Warrant Shares purchasable upon exercise of this
      Warrant, to the extent this Warrant has not then been exercised, shall, upon
      such expiration, be readjusted and shall thereafter be such as they would have
      been had they been originally adjusted (or had the original adjustment not
      been
      required, as the case may be) on the basis of (A) the fact that Common Stock,
      if
      any, actually issued or sold upon the exercise of such rights, options, warrants
      or conversion privileges, and (B) the fact that such shares of Common Stock,
      if
      any, were issued or sold for the consideration actually received by the Company
      upon such exercise plus the consideration, if any, actually received by the
      Company for the issuance, sale or grant of all such rights, options, warrants
      or
      conversion privileges whether or not exercised; provided,
      however,
      that no
      such readjustment shall have the effect of decreasing the number of Warrant
      Shares purchasable upon exercise of this Warrant by an amount in excess of
      the
      amount of the adjustment initially made in respect of the issuance, sale or
      grant of such rights, options, warrants or conversion privileges.

     

    
      
         

         

         

      

      
         

        
          

        

      

      
         

      

    

    (l) In
      case
      any event shall occur as to which the other provisions of this Section 3 are
      not
      strictly applicable but as to which the failure to make any adjustment would
      not
      fairly protect the purchase rights represented by this Warrant in accordance
      with the essential intent and principles of the adjustments set forth in this
      Section 3, then, in each such case, the Board of Directors of the Company shall
      in good faith determine the adjustment, if any, on a basis consistent with
      the
      essential intent and principles established herein, necessary to preserve the
      purchase rights represented by the Warrants. Upon such determination, the
      Company will promptly mail a copy thereof to the Holder of this Warrant and
      shall make the adjustments described therein.

     

    4. Fully
      Paid Stock; Taxes.
      The
      shares of the Common Stock represented by each and every certificate for Warrant
      Shares delivered on the exercise of this Warrant shall, subject to the Holder’s
      compliance with the terms hereof, at the time of such delivery, be duly
      authorized, validly issued and outstanding, fully paid and nonassessable, and
      not subject to preemptive rights or rights of first refusal on the part of
      the
      Company, and the Company will take all such actions as may be necessary to
      assure that the par value, if any, per share of the Common Stock is at all
      times
      equal to or less than the then Per Share Warrant Price. The Company shall pay,
      when due and payable, any and all Federal and state stamp, original issue or
      similar taxes which may be payable in respect of the issue of any Warrant Share
      or any certificate thereof to the extent required because of the issuance by
      the
      Company of such security.

     

    5. Registration.

     

    (a) If
      the
      Company proposes to register for its own account or for any stockholders any
      of
      its capital stock or other securities under the Securities Act of 1933, as
      amended (the “Act”) in connection with the public offering of such securities
      solely for cash (other than a registration relating solely to the sale of
      securities to participants in a Company stock plan, or an SEC Rule 145
      transaction), the Company shall, at such time, promptly give Holder written
      notice of such registration. Upon the written request of Holder given within
      20
      days after Holder’s receipt of such notice from the Company, the Company shall
      use its commercially reasonable best efforts to cause to be registered under
      the
      Act all of the Common Stock that Holder has requested to be registered.
      Notwithstanding the foregoing, if the managing underwriter, or the Chief
      Executive Officer of the Company in the event of an offering with no
      underwriters, determines in good faith that marketing factors require a
      limitation of the number of shares to be sold in such registration, then the
      managing underwriter or the Chief Executive Officer of the Company, as the
      case
      may be, may exclude shares of Holder from the registration, and the number
      of
      shares that may be included in the registration and the underwriting shall
      be
      allocated to the Company; provided, however, that (i) no exclusion of the
      Holder’s shares shall be made unless all other stockholders’ securities are
      first excluded, and that (ii) in no event shall the amount of shares of the
      Holder included in an offering by the Company of its securities be reduced
      below
      25% of the total amount of securities included in such offering. For the
      avoidance of doubt, the Company may terminate a proposed registration in its
      entirety at any time.

     

    (b) If
      at any
      time the shares of Common Stock held by Holder have been registered under
      Section 5(a), and if the Company thereafter hereafter lists its Common
      Stock

     

    
      
         

         

      

      
         

        
          

        

      

      
         

      

    

    (and
      only
      so long as the class of common stock is so listed) on any national securities
      exchange, the Nasdaq Global Market or the Nasdaq Smallcap Market, the Company
      shall use its commercially reasonable efforts to keep the Warrant Shares (or
      such securities, e.g., Common Stock, into which such Warrant Shares are
      ultimately convertible into) authorized for listing on such exchange upon notice
      of issuance.

     

    6. Investment
      Intent; Limited Transferability.

     

    (a) The
      Holder represents to the Company, by accepting this Warrant, that it understands
      that this Warrant and any securities obtainable upon exercise of this Warrant
      have not been registered for sale under Federal or state securities laws and
      are
      being offered and sold to the Holder pursuant to one or more exemptions from
      the
      registration requirements of such securities laws. In the absence of an
      effective registration of such securities or an exemption therefrom, any
      certificates for such securities shall bear the legend set forth on the first
      page hereof. The Holder understands that it must bear the economic risk of
      its
      investment in this Warrant and any securities obtainable upon exercise of this
      Warrant for an indefinite period of time, as this Warrant and such securities
      have not been registered under Federal or state securities laws and therefore
      cannot be sold unless subsequently registered under such laws, unless an
      exemption from such registration is available. 

     

    (b) The
      Holder, by its acceptance of this Warrant, represents to the Company that it
      is
      acquiring this Warrant and will acquire any securities obtainable upon exercise
      of this Warrant for its own account for investment and not with a view to,
      or
      for sale in connection with, any distribution thereof in violation of the Act.
      The Holder, by acceptance of this Warrant, agrees that this Warrant and any
      such
      securities will not be sold or otherwise transferred unless (i) a registration
      statement with respect to such transfer is effective under the Act and any
      applicable state securities laws or (ii) such sale or transfer is made pursuant
      to one or more exemptions from the Act and in accordance with the legend set
      forth on the first page hereof.

     

    (c) Either
      by
      reason of such Holder’s business or financial experience or the business or
      financial experience of its professional advisors (who are unaffiliated with
      and
      who are not compensated by the Company or any affiliate, finder or selling
      agent
      of the Company, directly or indirectly), such Holder has the capacity to protect
      such Holder’s interests in connection with the transactions contemplated by this
      warrant. The Holder, by its acceptance of this Warrant, represents to the
      Company that that it is able to fend for itself, can bear the economic risk
      of
      its investment, has such knowledge and experience in financial or business
      matters that it is capable of evaluating the merits and risks of the investment
      in this Warrant, and has had the opportunity to ask questions and receive
      answers from the Company regarding its business and financial condition. Holder
      also represents it has not been organized for the purpose of acquiring this
      Warrant.

     

    (d) The
      Holder has been afforded (i) the opportunity to ask such questions as it has
      deemed necessary of, and to receive answers from, representatives of the Company
      concerning the terms and conditions of the Warrants or the exercise of the
      Warrants; and (ii) the opportunity to request such additional information which
      the Company possesses or can acquire without unreasonable effort or
      expense.

     

    (e) The
      Holder is an “accredited investor” within the meaning of Regulation D under the
      Act. 

     

    7. Loss,
      etc., of Warrant.
      Upon
      receipt of evidence satisfactory to the Company of the loss, theft, destruction
      or mutilation of this Warrant, if lost, stolen or destroyed, and upon surrender
      and cancellation of this Warrant, if mutilated, the Company shall execute and
      deliver to the Holder a new Warrant of like date, tenor and
      denomination.

     

    8. Warrant
      Holder Not Stockholder.
      This
      Warrant does not confer upon the Holder any right to vote on or consent to
      or
      receive notice as a stockholder of the Company, as such, in respect of any
      matters whatsoever, nor any other rights or liabilities as a stockholder, prior
      to the exercise hereof; this Warrant does, however, require certain notices
      to
      the Holder as set forth herein.

     

    9. Transfer.
      Holder
      may transfer this Warrant and any Warrant Shares issuable upon the exercise
      hereof to any affiliate or wholly-owned subsidiary or parent entity or entity
      under common control of or with Holder; provided, however, that Holder shall
      provide the Company with notice promptly following any such
      transfer.

     

    10. Communication.
      No
      notice
      or other communi-cation under this Warrant shall be effective or deemed to
      have
      been given unless, the same is in writing and is mailed by first-class mail,
      postage prepaid, or via recognized overnight courier with confirmed receipt,
      addressed to:

     

    (a) the
      Company at 8100 Southpark Way, Suite A-9, Littleton, CO 80210 or other such
      address as the Company has designated in writing to the Holder.

     

    (b) the
      Holder at 18881 Von Karman Ave, 16th
      Floor,
      Irvine, CA 92612.

     

    11. Successors
      and Assigns.
      The
      terms and provisions of this Warrant shall insure to the benefit of, and be
      binding upon, the Company, its successors and assigns.

     

    12. Governing
      Law; Jurisdiction.
      This
      Warrant shall be governed by and construed in accordance with the law of the
      State of California without giving effect to the principles of conflicts of
      law
      thereof. The Company hereby irrevocably consents to personal jurisdiction in
      the
      state and federal courts of the State of California and agrees that venue shall
      be proper in such courts.

     

    13. Amendment,
      Waiver, etc.
      Except
      as expressly provided herein, neither this Warrant nor any term hereof may
      be
      amended, waived, discharged or terminated other than by a written instrument
      signed by the Holder and the Company.

     

    

    
      
        
          
             

          

        

         

      

      
         

        
          

        

      

      
         

        
          

        

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
      President this 18TH
      day of
      October, 2006.

     

    

    

    ZYNEX
      MEDICAL HOLDINGS, INC.

    

    

     By:  /s/
      Thomas Sandgaard  

                      
      Name: Thomas Sandgaard  

     Title:   President
      and Chief Executive Officer

    
      
         

         

         

      

      
         

        
          

        

      

      
         

      

    

    SUBSCRIPTION (cash)

    

    The
      undersigned, ___________________, pursuant to the provisions of the foregoing
      Warrant, hereby agrees to subscribe for and purchase ____________________ shares
      of the Common Stock of Zynex Medical Holdings, Inc. covered by said Warrant,
      and
      makes payment therefor in full at the price per share provided by said
      Warrant.

     

    

    

    Dated:_______________       Signature:____________________

    

    Address:______________________

    

    

    

    

    

    
      
         

         

         

      

      
         

        
          

        

      

      
         

      

    

    ASSIGNMENT

    

    FOR
      VALUE
      RECEIVED _______________ hereby sells, assigns and transfers unto
      ____________________ (“Transferee”)
      the
      foregoing Warrant and all rights evidenced thereby, and does irrevocably
      constitute and appoint _____________________, attorney, to transfer said Warrant
      on the books of Zynex Medical Holdings, Inc. By acceptance of the foregoing
      Warrant, Transferee shall become a Holder under said Warrant and subject to
      the
      rights, obligations and representations of Holder set forth in said
      Warrant.

     

     

    
 

    Dated:_______________       Signature:____________________

    

    Address:______________________

    

    

    

    

    

    

    PARTIAL
      ASSIGNMENT

    

    FOR
      VALUE
      RECEIVED _______________ hereby assigns and transfers unto ____________________
      the right to purchase _______ shares of Common Stock of Zynex Medical Holdings,
      Inc. covered by the foregoing Warrant, and a proportionate part of said Warrant
      and the rights evidenced thereby, and does irrevocably constitute and appoint
      ____________________, attorney, to transfer such part of said Warrant on the
      books of Zynex Medical Holdings, Inc. By acceptance of the proportionate part
      of
      foregoing Warrant, Transferee shall become a Holder under said proportionate
      part of said Warrant and subject to the rights, obligations and representations
      of Holder set forth in said Warrant.

     

    

    Dated:_______________       Signature:____________________

    

    Address:______________________Exhibit 10.3

    
      

      

    

     

    Exhibit
      10.3

     

    

     

    SECURITY
      AGREEMENT

     

    This
      SECURITY
      AGREEMENT
      (this
“Agreement”)
      is
      dated as of October 18, 2006 and entered into by and among ASCENDIANT CAPITAL
      GROUP, LLC, a Nevada limited liability company (“Secured
      Party”)
      and
      ZYNEX MEDICAL HOLDINGS, INC., a Nevada corporation (“Grantor”).
      

     

    PRELIMINARY
      STATEMENTS

     

    A. Grantor
      has issued to Secured Party a promissory note dated as of October 18, 2006
      (said
      promissory note, as it may hereafter be amended, supplemented or otherwise
      modified from time to time, being the “Note”)
      Capitalized terms used in this Agreement and not otherwise defined herein shall
      have the meanings given to them in the Note.

     

    B. It
      is a
      condition precedent to the making of the loan by Secured Party the repayment
      of
      which is evidenced by the Note that Grantor shall have granted the security
      interests and undertaken the obligations contemplated by this
      Agreement.

     

    NOW,
      THEREFORE,
      in
      consideration of the agreements set forth herein and in order to induce Secured
      Party to make the loan the repayment of which is evidenced by the Note, Grantor
      hereby agrees with Secured Party as follows:

     

    SECTION
      1. Grant
      of Security.

     

    Grantor
      hereby assigns to Secured Party, and hereby grants to Secured Party a security
      interest in, all of Grantor’s right, title and interest in and to all of the
      personal property of Grantor including the following, in each case whether
      now
      or hereafter existing, whether tangible or intangible, whether now owned or
      hereafter acquired and wherever the same may be located (the “Collateral”):

     

    (a) all
      Accounts;

     

    (b) all
      Chattel Paper;

     

    (c) all
      Money
      and all Deposit Accounts, together with all amounts on deposit from time to
      time
      in such Deposit Accounts;

     

    (d) all
      Documents;

     

    
      
        
        

      

      
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          1-

        
          

        

      

      
        
        

      

    

    (e) all
      General Intangibles (including patents, trademarks, service marks, copyrights,
      and other intellectual property), Payment Intangibles and Software;

     

    (f) all
      Goods, including Inventory, Equipment and Fixtures;

     

    (g) all
      Instruments;

     

    (h) all
      Investment Property;

     

    (i) all
      Letter-of-Credit Rights and other Supporting Obligations; 

     

    (j) all
      Records;

     

    (k) all
      Commercial Tort Claims; and

     

    (l) all
      Proceeds and Accessions with respect to any of the foregoing
      Collateral.

     

    Each
      category of Collateral set forth above shall have the meaning set forth in
      the
      UCC, it being the intention of Grantor that the description of the Collateral
      set forth above be construed to include the broadest possible range of
      assets.

     

    SECTION
      2. Security
      for Obligations.

     

    This
      Agreement secures, and the Collateral is collateral security for, the prompt
      payment in full when due, whether at stated maturity, by required prepayment,
      declaration, acceleration, demand or otherwise, of all Secured Obligations
      of
      Grantor. “Secured
      Obligations”
      means
      all obligations and liabilities of every nature of Grantor now or hereafter
      existing under or arising out of or in connection with the Note, together with
      all extensions or renewals thereof, whether for principal, interest, fees,
      expenses, indemnities or otherwise, whether voluntary or involuntary, direct
      or
      indirect, absolute or contingent, liquidated or unliquidated, whether or not
      jointly owed with others, and whether or not from time to time decreased or
      extinguished and later increased, created or incurred, and all or any portion
      of
      such obligations or liabilities that are paid, to the extent all or any part
      of
      such payment is avoided or recovered directly or indirectly from Secured Party
      as a preference, fraudulent transfer or otherwise, and all obligations of every
      nature of Grantor now or hereafter existing under this Agreement (including,
      without limitation, interest and other amounts that, but for the filing of
      a
      petition in bankruptcy with respect to Grantor, would accrue on such
      obligations, whether or not a claim is allowed against Grantor for such amounts
      in the related bankruptcy proceeding).

     

    SECTION
      3. Representations
      and Warranties.

     

    Grantor
      represents and warrants as follows:

     

    (a) Jurisdiction
      of Organization.
      Grantor’s name as it appears in official filings in the state of its
      organization is “Zynex Medical Holdings, Inc.” Grantor is a corporation
      organized under the laws of the state of Nevada.

     

    
      
        
        

      

      
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          2-

        
          

        

      

      
        
        

      

    

    (b) Names.
      Grantor
      (and any predecessor by merger or otherwise of Grantor) has not, within the
      five
      year period preceding the date hereof, had a different name from the name of
      Grantor listed on the signature pages hereof, except as set forth on
Schedule
      1
      hereto.

     

    (c) Due
      Authorization, etc. Grantor
      is duly formed, validly existing and in good standing under the law of its
      jurisdiction of organization and has full entity power and authority to execute,
      deliver and perform this Agreement. The execution, delivery and performance
      of
      this Agreement has been duly authorized by all necessary entity action. This
      Agreement constitutes a legally valid and binding obligation of Grantor,
      enforceable against Grantor in accordance with its terms, except as enforcement
      hereof may be limited by applicable bankruptcy, insolvency, reorganization
      or
      other similar laws affecting the enforcement of creditors’ rights generally or
      by general equitable principles.

     

    (d) No
      Conflict.
      The
      execution, delivery and performance of this Agreement by Grantor will not
      violate the organizational documents of Grantor, any provision of law applicable
      to Grantor or any order, judgment or decree of any court or other governmental
      agency binding on Grantor.

     

    (e) Security
      Interests.
      The
      security interests in the Collateral granted hereunder constitute valid security
      interests in the Collateral, securing payment of the Secured Obligations.
      Secured Party understands and agrees that the security interests in the
      Collateral granted herein are junior in priority to the security interests
      granted by Grantor to Silicon Valley Bank. 

     

    SECTION
      4. Further
      Assurances.

     

    Grantor
      agrees that from time to time, at the expense of Grantor, Grantor will promptly
      execute and deliver all further instruments and documents, and take all further
      action, that may be necessary or desirable, or that Secured Party may request,
      in order to perfect and protect any security interest granted or purported
      to be
      granted hereby or to enable Secured Party to exercise and enforce its rights
      and
      remedies hereunder with respect to any Collateral. Without limiting the
      generality of the foregoing, Grantor will: (a) (i) execute (if necessary) and
      file such financing or continuation statements, or amendments thereto, (ii)
      execute and deliver, and cause to be executed and delivered, agreements
      establishing that Secured Party has control of Deposit Accounts and Investment
      Property of Grantor, (iii) deliver to Secured Party all certificates or
      Instruments representing or evidencing Investment Property, accompanied by
      duly
      executed endorsements or instruments of transfer or assignment in blank, all
      in
      form and substance satisfactory to Secured Party and (iv) deliver such
      other instruments or notices, in each case, as may be necessary or desirable,
      or
      as Secured Party may request, in order to perfect and preserve the security
      interests granted or purported to be granted hereby; (b) furnish to Secured
      Party from time to time statements and schedules further identifying and
      describing the Collateral and such other reports in connection with the
      Collateral as Secured Party may reasonably request, all in reasonable detail;
      (c) at any reasonable time, upon request by Secured Party, exhibit the
      Collateral to and allow inspection of the Collateral by Secured Party, or
      persons designated by Secured Party; (d) at Secured Party’s request, appear
      in and defend any action or proceeding that may affect Grantor’s title to or
      Secured Party’s security interest in all or any part of the Collateral; and
      (e) use commercially reasonable efforts to obtain any necessary consents of
      third parties to the creation and perfection of a security interest in favor
      of
      Secured Party with respect

     

    
      
        
        

      

      
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          3-

        
          

        

      

      
        
        

      

    

    to
      any
      Collateral. Grantor hereby authorizes Secured Party to file one or more
      financing or continuation statements, and amendments thereto, relative to all
      or
      any part of the Collateral (including any financing statement indicating that
      it
      covers “all assets” or “all personal property” of Grantor).

     

    SECTION
      5. Certain
      Covenants of Grantor.

     

    Grantor
      shall:

     

    (a) not
      use
      or permit any Collateral to be used unlawfully or in violation of any provision
      of this Agreement or any applicable statute, regulation or ordinance or any
      policy of insurance covering the Collateral;

     

    (b) give
      Secured Party at least 30 days’ prior written notice of any change in Grantor’s
      name, identity or corporate structure or any reincorporation, reorganization
      or
      other action that results in a change of the jurisdiction of organization of
      Grantor;

     

    (c) pay
      promptly when due all property and other taxes, assessments and governmental
      charges or levies imposed upon, and all claims (including claims for labor,
      services, materials and supplies) against, the Collateral except to the extent
      the validity thereof is being contested in good faith; provided that Grantor
      shall in any event pay such taxes, assessments, charges, levies or claims not
      later than five days prior to the date of any proposed sale under any judgment,
      writ or warrant of attachment entered or filed against Grantor or any of the
      Collateral as a result of the failure to make such payment; and

     

    (d) permit
      representatives of Secured Party at any time during normal business hours to
      inspect and make abstracts from Records of the Collateral, and Grantor agrees
      to
      render to Secured Party, at Grantor’s cost and expense, such clerical and other
      assistance as may be reasonably requested with regard thereto.

     

    SECTION
      6. Special
      Covenants with respect to Accounts.

     

    Except
      as
      otherwise provided in this section, Grantor shall continue to collect, at its
      own expense, all amounts due or to become due to Grantor under the Accounts.
      

     

    SECTION
      7. Secured
      Party Appointed Attorney-in-Fact.

     

    Grantor
      hereby irrevocably appoints Secured Party as Grantor’s attorney-in-fact, with
      full authority in the place and stead of Grantor and in the name of Grantor,
      Secured Party or otherwise, from time to time in Secured Party’s discretion to
      take any action and to execute any instrument that Secured Party may deem
      necessary or advisable to accomplish the purposes of this Agreement, including,
      without limitation:

     

    (a) upon
      the
      occurrence and during the continuance of an Event of Acceleration, to obtain
      and
      adjust insurance required to be maintained by Grantor;

     

    (b) upon
      the
      occurrence and during the continuance of an Event of Acceleration, to ask for,
      demand, collect, sue for, recover, compound, receive and give

     

    
      
        
        

      

      
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          4-

        
          

        

      

      
        
        

      

    

    acquittance
      and receipts for moneys due and to become due under or in respect of any of
      the
      Collateral;

     

    (c) upon
      the
      occurrence and during the continuance of an Event of Acceleration, to receive,
      endorse and collect any drafts or other Instruments, Documents, Chattel Paper
      and other documents in connection with clauses (a) and (b) above;

     

    (d) upon
      the
      occurrence and during the continuance of an Event of Acceleration, to file
      any
      claims or take any action or institute any proceedings that Secured Party may
      deem necessary or desirable for the collection of any of the Collateral or
      otherwise to enforce or protect the rights of Secured Party with respect to
      any
      of the Collateral;

     

    (e) to
      pay or
      discharge liens (other than liens permitted under this Agreement or the Note)
      levied or placed upon or threatened against the Collateral, the legality or
      validity thereof and the amounts necessary to discharge the same to be
      determined by Secured Party in its sole discretion, any such payments made
      by
      Secured Party to become obligations of Grantor to Secured Party, due and payable
      immediately without demand;

     

    (f) upon
      the
      occurrence and during the continuance of an Event of Acceleration, to sign
      and
      endorse any invoices, freight or express bills, bills of lading, storage or
      warehouse receipts, drafts against debtors, assignments, verifications and
      notices in connection with Accounts and other documents relating to the
      Collateral; and

     

    (g) upon
      the
      occurrence and during the continuance of an Event of Acceleration, generally
      to
      sell, transfer, pledge, make any agreement with respect to or otherwise deal
      with any of the Collateral as fully and completely as though Secured Party
      were
      the absolute owner thereof for all purposes, and to do, at Secured Party’s
      option and Grantor’s expense, at any time or from time to time, all acts and
      things that Secured Party deems necessary to protect, preserve or realize upon
      the Collateral and Secured Party’s security interest therein in order to effect
      the intent of this Agreement, all as fully and effectively as Grantor might
      do.

     

    SECTION
      8. Secured
      Party May Perform; Standard of Care.

     

    If
      Grantor fails to perform any agreement contained herein, Secured Party may
      itself perform, or cause performance of, such agreement, and the expenses of
      Secured Party incurred in connection therewith shall be payable by Grantor
      under
      Section 11(b) hereof. The powers conferred on Secured Party hereunder are
      solely to protect its interest in the Collateral and shall not impose any duty
      upon it to exercise any such powers. Except for the exercise of reasonable
      care
      in the custody of any Collateral in its possession and the accounting for moneys
      actually received by it hereunder, Secured Party shall have no duty as to any
      Collateral or as to the taking of any necessary steps to preserve rights against
      prior parties or any other rights pertaining to any Collateral. Secured Party
      shall be deemed to have exercised reasonable care in the custody and
      preservation of Collateral in its possession if such Collateral is accorded
      treatment substantially equal to that which Secured Party accords its own
      property.

     

    
      
        
        

      

      
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          5-

        
          

        

      

      
        
        

      

    

    SECTION
      9. Remedies.

     

    If
      any
      Event of Acceleration shall have occurred and be continuing, Secured Party
      may
      exercise in respect of the Collateral, in addition to all other rights and
      remedies provided for herein or otherwise available to it, all the rights and
      remedies of a secured party on default under the UCC (whether or not the UCC
      applies to the affected Collateral), and also may (i) require Grantor to,
      and Grantor hereby agrees that it will at its expense and upon request of
      Secured Party forthwith, assemble all or part of the Collateral as directed
      by
      Secured Party and make it available to Secured Party at a place to be designated
      by Secured Party that is reasonably convenient to both parties, (ii) enter
      onto the property where any Collateral is located and take possession thereof
      with or without judicial process, (iii) prior to the disposition of the
      Collateral, store, process, repair or recondition the Collateral or otherwise
      prepare the Collateral for disposition in any manner to the extent Secured
      Party
      deems appropriate, (iv) take possession of Grantor’s premises or place
      custodians in exclusive control thereof, remain on such premises and use the
      same and any of Grantor’s equipment for the purpose of completing any work in
      process, taking any actions described in the preceding clause (iii) and
      collecting any Secured Obligation, (v) sell the Collateral or any part
      thereof in one or more parcels at public or private sale, at any of Secured
      Party’s offices or elsewhere, for cash, on credit or for future delivery, at
      such time or times and at such price or prices and upon such other terms as
      Secured Party may deem commercially reasonable, (vi) exercise dominion and
      control over and refuse to permit further withdrawals from any Deposit Account
      and provide instructions directing the disposition of funds in Deposit Accounts
      and (vii) provide entitlement orders with respect to Security Entitlements
      and
      other Investment Property constituting a part of the Collateral and, without
      notice to Grantor, transfer to or register in the name of Secured Party or
      any
      of its nominees any or all of the Collateral constituting Investment Property.
      Secured Party may be the purchaser of any or all of the Collateral at any such
      sale and Secured Party, shall be entitled, for the purpose of bidding and making
      settlement or payment of the purchase price for all or any portion of the
      Collateral sold at any such public sale, to use and apply any of the Secured
      Obligations as a credit on account of the purchase price for any Collateral
      payable by Secured Party at such sale. Grantor hereby waives any claims against
      Secured Party arising by reason of the fact that the price at which any
      Collateral may have been sold at such a private sale was less than the price
      which might have been obtained at a public sale, even if Secured Party accepts
      the first offer received and does not offer such Collateral to more than one
      offeree. If the proceeds of any sale or other disposition of the Collateral
      are
      insufficient to pay all the Secured Obligations, Grantor shall be liable for
      the
      deficiency and the fees of any attorneys employed by Secured Party to collect
      such deficiency. Grantor further agrees that a breach of any of the covenants
      contained in this Section 9 will cause irreparable injury to Secured Party,
      that Secured Party has no adequate remedy at law in respect of such breach
      and,
      as a consequence, that each and every covenant contained in this Section shall
      be specifically enforceable against Grantor, and Grantor hereby waives and
      agrees not to assert any defenses against an action for specific performance
      of
      such covenants except for a defense that no default has occurred giving rise
      to
      the Secured Obligations becoming due and payable prior to their stated
      maturities.

     

    
      
        
        

      

      
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          6-

        
          

        

      

      
        
        

      

    

    SECTION
      10. Application
      of Proceeds.

     

    Except
      as
      expressly provided elsewhere in this Agreement, all proceeds received by Secured
      Party in respect of any sale of, collection from, or other realization upon
      all
      or any part of the Collateral shall be applied in the following order of
      priority:

     

    FIRST:
      To
      the payment of all costs and expenses of such sale, collection or other
      realization, including reasonable compensation to Secured Party and its agents
      and counsel, and all other expenses, liabilities and advances made or incurred
      by Secured Party in connection therewith, and all amounts for which Secured
      Party is entitled to indemnification hereunder and all advances made by Secured
      Party hereunder for the account of Grantor, and to the payment of all costs
      and
      expenses paid or incurred by Secured Party in connection with the exercise
      of
      any right or remedy hereunder;

     

    SECOND:
      To the payment of all other Secured Obligations; and

     

    THIRD:
      To
      the payment to or upon the order of Grantor, or to whosoever may be lawfully
      entitled to receive the same or as a court of competent jurisdiction may direct,
      of any surplus then remaining from such proceeds.

     

    SECTION
      11. Indemnity
      and Expenses.

     

    (a) Grantor
      agrees to indemnify Secured Party from and against any and all claims, losses
      and liabilities in any way relating to, growing out of or resulting from this
      Agreement and the transactions contemplated hereby (including, without
      limitation, enforcement of this Agreement), except to the extent such claims,
      losses or liabilities result solely from Secured Party’s gross negligence or
      willful misconduct as finally determined by a court of competent
      jurisdiction.

     

    (b) Grantor
      agrees to pay to Secured Party upon demand the amount of any and all reasonably
      incurred costs and expenses, including the reasonable fees and expenses of
      counsel and of any experts and agents, that Secured Party may incur in
      connection with the custody or preservation of the Collateral, the exercise
      of
      rights or remedies hereunder or the failure by Grantor to perform or observe
      any
      of the provisions hereof.

     

    (c) The
      obligations of Grantor in this Section 11 shall survive the termination of
      this Agreement and the discharge of Grantor’s other obligations under this
      Agreement and the Note.

     

    SECTION
      12. Amendments;
      Etc.

     

    No
      amendment, modification, termination or waiver of any provision of this
      Agreement, and no consent to any departure by Grantor therefrom, shall in any
      event be effective unless the same shall be in writing and signed by Secured
      Party and, in the case of any such amendment or modification, by Grantor. Any
      such waiver or consent shall be effective only in the specific instance and
      for
      the specific purpose for which it was given.

     

    
      
        
        

      

      
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          7-

        
          

        

      

      
        
        

      

    

    SECTION
      13. Notices.

     

    Any
      notice or other communication herein required or permitted to be given shall
      be
      in writing (including facsimile communication) and mailed, faxed or delivered
      to
      Grantor or to Secured Party, as applicable, at the address of such party set
      forth under such party’s name on the signature pages hereof, or to such other
      address as shall be designated by such party in a written notice delivered
      to
      the other party hereto. All such notices and communications shall, when mailed,
      faxed or sent by overnight courier, be effective when deposited in the mails,
      delivered to the overnight courier, as the case may be, or sent by fax.
      Electronic mail may be used to distribute routine communications; provided
      that
      no signature with respect to any notice, request, agreement, waiver amendment,
      or other documents may be sent by electronic mail.

     

    SECTION
      14. Failure
      or Indulgence Not Waiver; Remedies Cumulative; Severability.

     

    (a) No
      failure or delay on the part of Secured Party in the exercise of any power,
      right or privilege hereunder shall impair such power, right or privilege or
      be
      construed to be a waiver of any default or acquiescence therein, nor shall
      any
      single or partial exercise of any such power, right or privilege preclude any
      other or further exercise thereof or of any other power, right or privilege.
      All
      rights and remedies existing under this Agreement are cumulative to, and not
      exclusive of, any rights or remedies otherwise available.

     

    (b) In
      case
      any provision in or obligation under this Agreement shall be invalid, illegal
      or
      unenforceable in any jurisdiction, the validity, legality and enforceability
      of
      the remaining provisions or obligations, or of such provision or obligation
      in
      any other jurisdiction, shall not in any way be affected or impaired
      thereby.

     

    SECTION
      15. Continuing
      Security Interest; Transfer of Loans; Termination and  Release.

     

    (a) This
      Agreement shall create a continuing security interest in the Collateral and
      shall (i) remain in full force and effect until the payment in full of the
      Secured Obligations, (ii) be binding upon Grantor and its successors and
      assigns, and (iii) inure, together with the rights and remedies of Secured
      Party hereunder, to the benefit of Secured Party and its successors, transferees
      and assigns. Without limiting the generality of the foregoing clause (iii),
      if
      Secured Party assigns or otherwise transfers the Note (but only to the extent
      permitted under the Note) held by it to any other Person, such other Person
      shall thereupon become vested with all the benefits in respect thereof granted
      to Secured Party herein or otherwise.

     

    (b) Upon
      the
      payment in full of all Secured Obligations, the security interest granted hereby
      shall terminate and all rights to the Collateral shall revert to Grantor. Upon
      any such termination Secured Party will, at Grantor’s expense, execute and
      deliver to Grantor such documents as Grantor shall reasonably request to
      evidence such termination. 

     

    SECTION
      16. Headings.

     

    Section
      and subsection headings in this Agreement are included herein for convenience
      of
      reference only and shall not constitute a part of this Agreement for any other
      purpose or be given any substantive effect.

     

    
      
        
        

      

      
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          8-

        
          

        

      

      
        
        

      

    

    SECTION
      17. Governing
      Law; Rules of Construction.

     

    THIS
      AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
      GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
      INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS
      PRINCIPLES, EXCEPT TO THE EXTENT THAT THE UCC PROVIDES
      THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER,
      IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
      JURISDICTION OTHER THAN THE STATE OF CALIFORNIA, IN WHICH CASE THE LAWS OF
      SUCH
      JURISDICTION SHALL GOVERN WITH RESPECT TO THE PERFECTION OF THE SECURITY
      INTEREST IN, OR THE REMEDIES WITH RESPECT TO, SUCH PARTICULAR
      COLLATERAL.

     

    SECTION
      18. Consent
      to Jurisdiction and Service of Process.

     

    ALL
      JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO
      THIS
      AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL
      COURT OF COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA.

     

    SECTION
      19. Waiver
      of Jury Trial.

     

    GRANTOR
      AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
      OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.
      THE
      SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
      THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
      TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH
      OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.

     

    SECTION
      20. Counterparts.

     

    This
      Agreement may be executed in one or more counterparts and by different parties
      hereto in separate counterparts, each of which when so executed and delivered
      shall be deemed an original, but all such counterparts together shall constitute
      but one and the same instrument; signature pages may be detached from multiple
      separate counterparts and attached to a single counterpart so that all signature
      pages are physically attached to the same document.

     

    SECTION
      21. Definitions.

     

    (a) Each
      capitalized term utilized in this Agreement that is not defined in this
      Agreement, but that is defined in the UCC, including the categories of
      Collateral listed in Section 1 hereof, shall have the meaning set forth in
      Articles 1, 8 or 9 of the UCC.

     

    (b) In
      addition, the following terms used in this Agreement shall have the following
      meanings:

     

    
      
        
        

      

      
        -
          9-

        
          

        

      

      
        
        

      

    

    “Collateral”
      has the
      meaning set forth in Section 1 hereof.

     

    “Event
      of Acceleration”
      means
      any Event of Acceleration as defined in the Note.

     

    “Secured
      Obligations”
      has the
      meaning set forth in Section 2 hereof.

     

    “UCC”
      means
      the
      Uniform Commercial Code, as it exists on the date of this Agreement or as it
      may
      hereafter be amended, in the State of California.

     

    SECTION
      22. Subordination
      Agreement.

     

    Notwithstanding
      any other provision of this Agreement, the rights of the Secured party hereunder
      are subject to the provisions of that certain Subordination Agreement dated
      October 17, 2006 by and between Silicon Valley Bank and Secured
      Party.

     

    [Remainder
      of page intentionally left blank]

     

    

     

    
      
        
        

      

      
        -
          10-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      Grantor
      and Secured Party have caused this Agreement to be duly executed and delivered
      by their respective officers thereunto duly authorized as of the date first
      written above.

     

    
      
        	
                 

              	 	 	 
	 	 	 	 	 
	 	
                ZYNEX
                  MEDICAL HOLDINGS, INC.,
                  

              	 	 	 
	
                 

              	 as Grantor	 	 	 
	 	
              	 	 	 
	 	 	 	 	 
	
                By: 
                  

              	
                /s/
                  Thomas Sandgaard

              	 	 	 
	 	
                Name:
                  Thomas Sandgaard

              	 	 	 
	 	
                Title:
                  President and CEO

              	 	 	 
	 	 	 	 	 
	 	 Notice Address:	 	 	 
	 	 	 	 	 
	 	 
                _________________________________________	 	 	 
	 	  _________________________________________	 	 	 
	 	  _________________________________________	 	 	 

      

       

       

      
        

        
          	
                   

                	 	 	 
	 	 ASCENDIANT CAPITAL
                  GROUP, LLC,	 	 	 
	 	
                   

                	 	 	 
	 	 as Secured Party	 	 	 
	 	
                	 	 	 
	 	 	 	 	 
	
                  By: 
                    

                	
                  
                    /s/
                      Bradley J. Wilhite

                  

                	 	 	 
	 	
                  Name:
                    Bradley J. Wilhite

                	 	 	 
	 	
                  Title:
                    Managing Director

                	 	 	 
	 	 	 	 	 
	 	 Notice Address:	 	 	 
	 	 	 	 	 
	 	 
                  _________________________________________	 	 	 
	 	  _________________________________________	 	 	 
	 	  _________________________________________	 	 	 

        

         

        
 

      

    

    
      
        
        

      

      
        -
          11-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1

    

    LIST
      OF OTHER NAMES

    

    Zynex
      Medical Holdings, Inc. (for purposes of this Schedule, “Holdings”)

    

    Zynex
      Medical, Inc. (for purposes of this Schedule, “Sub”), is a wholly owned
      subsidiary of Holdings. Sub was incorporated in 1998 as Stroke Recovery Systems,
      Inc. ("SRSI"). On October 1, 2003, SRSI acquired by merger the assets and
      liabilities of Dan Med, Inc. ("DMI").

    

    Holdings
      was initially organized on December 26, 1991 as a Delaware

    corporation
      under the name of Life Medical Technologies, Inc., and, between 1995 and 2003,
      changed its corporate name (and business) to iBonzai.com, Inc,, to China Global
      Development, Inc., to Arizona Ventures, Inc., and to Fox River Holdings,
      Inc.

    

    On
      February 11, 2004, Holdings acquired 100% of the common stock of
      Sub.

    

    -
      12-

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