SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 
FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported):    October 3, 2008

 
 Zynex, Inc.  
(Exact name of Registrant as specified in its charter)
 
Nevada
33-26787-D
90-0275169
(State or other
(Commission
(I.R.S. Employer
Jurisdiction
File Number)
Identification No.)
of incorporation)
   


8022 Southpark Circle, Suite 100, Littleton, CO
80120
(Address of principal executive offices)
(Zip Code)
   
 
Registrant’s telephone number:   (303) 703-4906
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[  ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[  ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR240.14d-2(b))

[  ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR240.13e-4(c))


 

 

Item 1.01.  Entry into a Material Definitive Agreement
 
Item 3.03.  Material Modification to Rights of Security Holders
 
Item 5.02.  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
 
Item 5.03.  Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
 
On October 6, 2008, Zynex, Inc. added two directors to the Board of Directors of Zynex.  Both are independent directors as that term is defined in rules of the American Stock Exchange.  These additions are part of steps being taken to meet corporate governance requirements for the listing of Zynex common stock on AMEX.  Zynex has previously applied for the listing of its common stock on AMEX, and the application is in process.
 
In connection with the addition of the independent directors and the AMEX application, Zynex also revised its Articles of Incorporation and Bylaws and entered into Indemnification Agreements with its directors and executive officers.  See below for information on the Amended Articles and Bylaws.  The Board of Directors of Zynex now consists of Thomas Sandgaard, Taylor Simonton and Mary Beth Vitale.  The executive officers of Zynex continue to be Thomas Sandgaard and Fritz Allison.
 
Election of Two Directors
 
On October 6 , 2008, the size of the Board of Directors of Zynex was increased to three directors, and J. Taylor Simonton and Mary Beth Vitale were appointed by the Board of Directors as directors of Zynex to fill two vacancies resulting from the increase in the number of directors.  Mr. Simonton and Ms. Vitale were also appointed as the only members of the newly created Audit Committee of Zynex.
 
Biographical information concerning each of these new directors is as follows:
 
J. Taylor Simonton, 64, spent 35 years at PricewaterhouseCoopers LLP, including 23 years as an audit partner in the firm’s Accounting and Business Advisory Services practice before retiring in 2001.  While serving in the PricewaterhouseCoopers National office from 1998 to 2001, Mr. Simonton was a member of the Risk & Quality Group that handled all auditing and accounting standards, SEC, corporate governance, risk management and quality matters for the firm.  He was one of six partners in a specialized SEC consulting group overseeing the quality of financial statements and SEC reporting for all PricewaterhouseCoopers foreign clients that publicly report in the U.S.  Prior to that, Mr. Simonton participated in the firm’s Partner International Program for three years, during which time he assisted Colombian companies in-country with capital-raising activities in the United States, consulted to major companies and coordinated IPO assistance, advised on due diligence and SEC regulatory matters and traveled extensively internationally assisting companies with SEC registration statements and other capital-raising activities.  Until February 2007, Mr. Simonton served on the Board of Directors of Fischer Imaging Corporation, a public company that designed, manufactured and marketed specialty medical imaging systems, and served as its Audit Committee chair.  Since October 2005, Mr. Simonton has been the Chair of the Audit Committee of Red Robin Gourmet Burgers, Inc., a public company that is a casual dining restaurant chain focused on serving high quality gourmet burgers in a family-friendly atmosphere.  Mr. Simonton is also currently the president of the Colorado chapter of the National Association of Corporate Directors, Lead Director and Chair of the Audit Committee, Keating Capital, Inc. (a private closed end investment fund) and serves on the Board of Managers of Quality Rail Services, LLC (a privately-held railroad contractor that streamlines the mechanical and fueling functions).
 
 
 
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Mary Beth Vitale , 54, is a co-founder of Pellera, a strategic communications and business development firm started in 2001.  Ms. Vitale is a general management executive with 25 years experience in the telecommunications and consumer products industries.  Previously, she had served as President, CEO and Chairman of the Board of WestwindMedia.com, President and COO of RMI.NET, and President-western states for AT&T.  She was also a Commissioner on former Colorado Governor Bill Owens' Commission for Science and Technology.  Ms. Vitale previously served on the Board of Intrado, Inc., a publicly-traded technology company, from 1999 to 2004, sitting on the Audit, Compensation and Corporate Governance committees, and on the Board of RMI.Net, a publicly traded national e-business and convergent communications company from 1997 to 2000, sitting on the Audit Committee.  Since January 2005, Ms Vitale has been a director of CoBiz Financial Inc., a public company which is a diversified financial holding company headquartered in Denver, Colorado and includes among its businesses a full-service business banking institution serving Colorado and Arizona.  Ms. Vitale has been Chair of the Audit Committee of CoBiz Financial since May, 2006.  Ms. Vitale is also currently the treasurer of the Colorado chapter of the National Association of Corporate Directors (NACD), Lead Director and Finance Chair for Eye-Ris, a privately held software company, and is a member of Eye-Ris’ Compensation Committee.  She was awarded her NACD Director Certificate in 2006.
 
The Zynex Board of Directors has established compensation for the non-employee directors who have joined the Board.  The compensation arrangements are as follows:
 
·  
$1,000, plus 1,000 shares of Zynex common stock, for each Board meeting and for each Audit Committee meeting in person (with these amounts being paid for both an Audit Committee and Board meeting held on the same day as if they were one meeting).  Instead of these amounts, the Chair of the Audit Committee receives $1,500, plus 1,500 shares of Zynex common stock, for each Audit Committee meeting in person or for each Audit Committee meeting and Board meeting in person held on the same day.
 
·  
$500 for any telephonic Board meeting or telephone meeting of the Audit Committee;
 
·  
A “sign-on bonus” for each non-employee director of a fully vested option to purchase 12,000 shares of Company common stock at an exercise price equal to the fair market value on the date of grant ($5.10).  The options have a term of ten years and are being issued under the existing 2005 Stock Option Plan of the Company.  The Company has registered the shares issuable under the Plan.
 
Articles of Incorporation
 
On October 3, 2008, the Board of Directors and Thomas Sandgaard as the majority shareholder of Zynex approved Amended and Restated Articles of Incorporation for Zynex.  The Amended Articles have been filed with the Nevada Secretary of State.  Changes in the Articles of Incorporation include the following:
 

 
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·  
The authority of the Board of Directors to determine the terms and conditions of preferred stock issued in series has been simplified.  (There is no outstanding preferred stock of Zynex.)  Provisions stating required terms for the shares of preferred stock were deleted.  One such required term was that the dividends of outstanding shares of preferred stock must be paid before any dividends were paid on common stock in the same dividend period.  Another deleted requirement was that if the assets available for distribution to holders of shares of preferred stock of all series, upon voluntary or involuntary liquidation or dissolution, would be insufficient to pay the holders the full preferential amount to which they were entitled, then the assets would be distributed ratably among shares of all series of preferred stock in accordance with the respective preferential amounts.  Under the Amended Articles, all such terms relating to dividends and the dissolution and liquidation rights of any series of preferred stock may be determined by the Board of Directors and may be different among the series.  In addition, the Board of Directors is authorized in the Amended Articles to increase or decrease the number of shares of any series of preferred stock subsequent to the issuance of shares of that series (but not below the number of shares of the series then outstanding).
 
·  
Per the Amended Articles, the number of directors may be determined, increased or reduced in the manner provided in the Bylaws of the Corporation.  Previously the Board was required to have only one director.
 
·  
The indemnification provision was simplified to state that Zynex shall indemnify its officers and directors and may indemnify any other person to the fullest extent permitted by law.  In the Articles of Incorporation previously in effect, indemnification rights were subject to exclusions which were somewhat different than the Nevada corporate statutes, including an exclusion from indemnification if the person was adjudged to be liable for his own negligence or misconduct in the performance of the person’s duties.
 
·  
The Amended Articles provide that Zynex is permitted to redeem, repurchase or make distributions, such as dividends, with respect to the shares of its capital stock in all circumstances other than where doing so would cause the corporation to be unable to pay its debts as they become due in the usual course of business.  As allowed by the Nevada corporate statutes, this provision means that a second requirement for distributions is no longer applicable.  This second requirement would have been that the Corporation’s total assets must not be less than the sum of total liabilities plus the amount needed for preferential rights of stockholders.
 
·  
The provision on the elimination of personal monetary liability of directors has been simplified to refer to the elimination of such liability to the maximum extent permitted by the Nevada Revised Statutes.  The prior Articles stated those situations where personal liability could not be eliminated.
 

 
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·  
Both the Amended Articles and the prior Articles do not opt out from anti-takeover statutes of the Nevada corporate statutes.  These statutes concern requirements for combinations with interested stockholders and a vote of stockholders on the voting rights of a person who acquires a controlling interest.
 
The Amended and Restated Articles of Incorporation of Zynex are attached as an exhibit to this Report.  The above description of the Amended and Restated Articles of Incorporation is subject to, and qualified in its entirety by reference to, such exhibit.
 
Bylaws
 
On October 3, 2008, the Board of Directors of Zynex adopted Amended and Restated Bylaws for Zynex.  The Amended Bylaws are those prepared by Zynex’s current counsel.  Significant changes in the Bylaws include the following:
 
·  
The Amended Bylaws provide that actions of the stockholders on a matter, other than the election of directors, is approved if the number of votes cast in favor of the action exceeds the number of votes cast in opposition on the action, unless the question is one upon which the Nevada statutes, the Articles of Incorporation, other Bylaw provisions or express agreements require a different vote.  This provision allows broker non-votes and abstentions not to be treated as a negative vote on a matter presented to the stockholders.  Under the prior Bylaws, a majority of outstanding shares present in person or by proxy were required for an action by the stockholders.  In addition to stating a different voting standard, the provision in the prior Bylaws could have resulted in broker non-votes and abstentions being treated as a negative vote.
 
·  
The Amended Bylaws allow stockholders entitled to exercise a majority of the voting power of Zynex to request a special meeting of stockholders.  Under the prior Bylaws, a special meeting of stockholders could be called at the request of 30% of the shares entitled to vote.
 
·  
The Amended Bylaws modified a pre-notification provision for any nominations by a stockholder of a person for the election as a director or a stockholder’s proposal of business to be considered at an annual meeting of stockholders.  The Amended Bylaws state that nominations or proposals and related information must be delivered to the Secretary of Zynex at the principal executive office not earlier than 150 days and no later than 120 days prior to the first anniversary date of mailing of the notice for the preceding year’s annual meeting, with a different date in case an annual meeting is advanced or delayed by 30 days from the date of the preceding year’s annual meeting.  The prior Bylaws had a pre-notification period of not less than 50 days no more than 90 days prior to the date of the annual meeting.
 

 
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·  
The Amended Bylaws do not contain indemnification provisions.  See the above for information on Indemnification Agreements with directors and executive officers.  Prior to the Amended Bylaws, the Bylaws had a provision on indemnification similar to the Nevada corporate statutes except that some exclusions from indemnification were not the same as the statutes.
 
·  
The prior Bylaws stated that, in the event Zynex received a takeover offer, the Board “shall consider” all relevant factors in evaluating the offer, including but not limited to the terms of the offer and the potential economic and social impact on the Company’s stockholders, employees, customers, credits and community in which it operates.  The Amended Bylaws do not address this subject, which leaves in place the Nevada corporate statutes providing that directors and officers “may consider” the interests of employees, suppliers, creditors, customers, the economy of the state and nation and the interests of the community and of society.
 
The Amended and Restated Bylaws of Zynex are attached as an exhibit to this Report.  The above description of the Amended and Restated Bylaws is subject to, and qualified in its entirety by reference to, such exhibit.
 
Indemnification Agreements
 
The Indemnification Agreements with the directors and executive officers follow generally the Nevada corporate statutes in terms of when indemnification may be available and the required standards of conduct for indemnification.  Under the Indemnification Agreements, effective October 6 , 2008, each director and executive officer is indemnified against expenses, liabilities and amounts paid in settlement (if the settlement is approved in advance by Zynex, which approval shall not be unreasonably withheld) in any action or claim in which a director or executive officer is a party or threatened to be made a party by reason of the fact that the person is or was a director, officer, employee or agent of Zynex or any subsidiary of Zynex or was serving at the request of Zynex in a position at another entity.
 

 
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For such indemnification, the director or officer must meet certain standards of conduct.  The director or executive officer, in order to receive the indemnification, must not be liable under a Nevada statutory provision on fiduciary duties and the person must have acted in good faith and in a manner the director or executive officer reasonably believed to be in or not opposed to the best interests of Zynex (and with respect to any criminal action or proceeding, had no reasonable cause to believe that the director or executive officer’s conduct was unlawful).  Pursuant to the Indemnification Agreements and the Nevada corporate statutes, in the case of a derivative action by or in the right of Zynex against the director or executive officer, there is no indemnification if the director or executive officer is adjudged by a court of competent jurisdiction, after all appeals, to be liable to Zynex or for the amounts paid in settlement to Zynex, unless and only to the extent that a court determines that the director or executive officer is fairly and reasonable entitled to indemnification for expenses as the court deems proper.  In addition, the Indemnification Agreements provide that Zynex is not obligated under the Indemnification Agreements:  (a) To indemnify or advance expenses with respect to proceedings or claims initiated or brought voluntarily by the director or officer and not by way of defense unless the proceeding is brought to establish or enforce a right to indemnification or the Board of Directors has approved the initiation or the bringing of the proceeding; (b) to indemnify the director or executive officer for expenses incurred with respect to any proceeding instituted by the director or officer to enforce or interpret the Indemnification Agreement if the court determines that the material assertions were not made in good faith or frivolous; or (c) to indemnify the director or officer for the expenses or payments of profits under the short-swing liability provisions of Section 16(b) of the Securities Exchange Act of 1934.
 
Zynex is also required to advance expenses incurred by the director or executive officer in connection with the investigation, defense or settlement of an action or claim.  The burden proof of establishing whether the director or executive officer acted in accordance with a standard of conduct for indemnification or advancement of expenses rests with Zynex per the Indemnification Agreements.  If there has been a Change in Control of Zynex, then a determination of whether the person meets the applicable standards of conduct is to be made by an independent legal counsel.  The Indemnification Agreements are not exclusive of any other rights which a director or officer may have.
 
The form of Indemnification Agreements for directors and executive officers is attached as an exhibit.  The summary above of certain terms of the Indemnification Agreements is subject to, and qualified in its entirety by reference to, such exhibit.
 
Item 8.01.  Other Events

On October 6, 2008, the Board of Directors of Zynex established an Audit Committee and adopted an Audit Committee Charter.  The Audit Committee Charter is an exhibit to this Report.  In addition, at the same time, the Board of Directors adopted a Code of Business Conduct and Ethics which is also attached as an exhibit to this Report.
 
Zynex issued a press release on October 7, 2008 regarding the appointment of the two independent directors and other matters covered in this Report.  Such press release is attached as Exhibit 99.1 and is incorporated herein by reference.
 

 
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Item 9.01.  Financial Statements and Exhibits
 
Exhibits.
 
The following exhibit accompanies this Report:
 
Exhibit No.
                                     Document
10.1
Amended and Restated Articles of Incorporation of Zynex, Inc.
10.2
Amended and Restated Bylaws of Zynex, Inc.
10.3
Form of Indemnification Agreement for directors and executive officers (October 2008)
10.4
Code of Business Conduct and Ethics (October 2008)
10.5
Audit Committee Charter (October 2008)
99.1
Press Release dated October 7, 2008 regarding the election of directors and other matters
 


 
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SIGNATURES
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
Zynex, Inc.
(Registrant)
 
       
Date:  October 7, 2008
By:  
/s/ Fritz Allison  
   
Fritz Allison
Chief Financial Officer
 
       
       


 
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Exhibit Index
 
 
Exhibit No.
                                     Document
10.1
Amended and Restated Articles of Incorporation of Zynex, Inc.
10.2
Amended and Restated Bylaws of Zynex, Inc.
10.3
Form of Indemnification Agreement for directors and executive officers (October 2008)
10.4
Code of Business Conduct and Ethics (October 2008)
10.5
Audit Committee Charter (October 2008)
99.1
Press Release dated October 7, 2008 regarding the election of directors and other matters
 
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Exhibit 10.1

AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
ZYNEX, INC.

The undersigned Thomas Sandgaard hereby certifies that:

1.           He is the duly elected and acting President of Zynex, Inc., a Nevada corporation.

2.           The Articles of Incorporation of this corporation were originally filed with the Secretary of State of Nevada on December 31, 2001.

3.           The Articles of Incorporation of this corporation shall be amended and restated to read in their entirety as follows:

ARTICLE 1.    NAME .   The name of the corporation is:

ZYNEX, INC.

ARTICLE 2.     CAPITALIZATION .   The total number of shares of stock which the Corporation shall have the authority to issue is one hundred ten million (110,000,000) shares, consisting of one hundred million (100,000,000) shares of Common Stock having a par value of $.001 per share and ten million (10,000,000) shares of Preferred Stock having a par value of $.001 per share.

The Preferred Stock may be divided into such number of series as the Board of Directors may determine.  The Board of Directors is authorized to determine and alter the rights, preferences, privileges and restrictions granted to and imposed upon any wholly unissued series of Preferred Stock, and to fix the number of shares of any series of Preferred Stock and the designation of any such series of Preferred Stock.  The Board of Directors, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series, may increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series subsequent to the issue of shares of that series.


ARTICLE 3.    DIRECTORS .   The members of the governing board shall be styled directors.  The number of directors may be increased or reduced in the manner provided for in the Bylaws of the corporation.

ARTICLE 4.    INDEMNIFICATION .   The corporation shall indemnify its officers and directors and may indemnify any other person to the fullest extent permitted by law.
 
 
 
 

 
 

 
ARTICLE 5.    DISTRIBUTIONS .   Subject to the terms of these Articles of Incorporation and to the fullest extent permitted by the Nevada Revised Statutes, the corporation shall be expressly permitted to redeem, repurchase, or make distributions, as that term is defined in Section 78.191 of the Nevada Revised Statutes, with respect to the shares of its capital stock in all circumstances other than where doing so would cause the corporation to be unable to pay its debts as they become due in the usual course of business.

ARTICLE 6.    LIABILITY OF DIRECTORS AND OFFICERS .   To the maximum extent permitted under the Nevada Revised Statutes, no director or officer of the corporation shall be personally liable to the corporation or its stockholders for damages as a result of any act or failure to act in his capacity as a director or officer.

4.           The foregoing Amended and Restated Articles of Incorporation have been duly and unanimously adopted and approved by this corporation’s Board of Directors and stockholders in accordance with the applicable provisions of Chapter 78 of the Nevada Revised Statutes.

Dated this 3rd day of October, 2008.

/s/ Thomas Sandgaard
Thomas Sandgaard,  President

 


 
 
 



 
Exhibit 10.2

AMENDED & RESTATED
BYLAWS

OF

ZYNEX, INC.
a Nevada corporation
(October 3, 2008)


ARTICLE I
 
OFFICES
 
Section 1.       Registered Office .  The registered office shall be maintained at such place as the Board of Directors shall determine from time to time.
 
Section 2.       Other Offices .  The corporation may also have offices at such other places both within and without the State of Nevada as the Board of Directors may from time to time determine or the business of the corporation may require.
 
ARTICLE II
 
STOCKHOLDERS
 
Section 1.       Meetings .  All meetings of stockholders, for any purpose, may be held at such time and place, within or without the State of Nevada, as shall be stated in the notice of meeting or in a duly executed waiver of notice thereof.
 
Section 2.       Annual Meeting .  The annual meeting of stockholders shall be held on the day and at the time set by the Board of Directors, if not a legal holiday, and if a legal holiday, then on the next regular business day following, at the hour set forth in the notice thereof.  At such annual meeting, the stockholders shall elect, by a plurality vote, a Board of Directors and transact such other business as may properly be brought before the meeting.  Notwithstanding the foregoing, in the event that the Directors are elected by written consent of the stockholders in accordance with Article II, Section 11 of these Bylaws and NRS 78.320, an annual meeting of stockholders shall not be required to be called or held for such year, but the Directors may call and notice an annual meeting for any other purpose or purposes.
 
Section 3.       Notice of Annual Meeting .  Written notice of the annual meeting shall be given to each stockholder entitled to vote thereat at least ten (10) days but not more than sixty (60) days before the date of the meeting.  The notice must state the purpose or purposes for which the meeting is called and the time when, and the place where, the meeting is to be held.
 

 
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Section 4.       List of Stockholders .  The officer who has charge of the stock ledger of the corporation shall prepare and make a complete list of the stockholders entitled to vote for the election of Directors, arranged in alphabetical order, showing the address of and the number of shares registered in the name of each stockholder, and the list shall be produced and kept at the time and place of election during the whole time thereof and be subject to the inspection of any stockholder who may be present.
 
Section 5.       Special Meetings .  Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Articles of Incorporation, may be called by the President and shall be called by the President or Secretary at the request, in writing, of a majority of the Board of Directors, or at the request, in writing, of stockholders entitled to exercise a majority of the voting power of the corporation.  Such request shall state the purpose or purposes of the proposed meeting.
 
Section 6.       Notice of Special Meetings .  Written notice of a special meeting of stockholders stating the purpose or purposes for which the meeting is called, time when, and place where, the meeting will be held, shall be given to each stockholder entitled to vote thereat, at least ten (10) days but not more than sixty (60) days before the date fixed for the meeting.
 
Section 7.       Limitation on Business .  Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.
 
Section 8.       Quorum .  Stockholders of the corporation holding at least a majority of the voting power of the corporation, present in person or represented by proxy, regardless of whether the proxy has authority to vote on all matters, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Articles of Incorporation.  If, however, a quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented.  At any adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed.
 
Section 9.       Voting Required for Action .  When a quorum is present at any meeting, action by the stockholders on a matter other than the election of directors is approved if the number of votes cast in favor of the action exceeds the number of votes cast in opposition to the action, unless the question is one upon which by express provision of the statutes or of the Articles of Incorporation, the Bylaws of the corporation, or an express agreement in writing, a different vote is required, in which case such express provision shall govern and control the decision of such question.  If voting by a class or series of stockholders is permitted or required, action by the stockholders of each class or series is approved if the number of votes cast in favor of the action by the class or series votes exceeds the number of votes cast in opposition by the class or series votes, unless the question is one upon which by express provision of the statute or of the Articles of Incorporation, the Bylaws of the corporation or an express agreement in writing, a different vote is required, in which case such express provision shall govern and control the decision of such question.  Voting for Directors shall be in accordance with Article II, Section 2, of these Bylaws.
 

 
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Section 10.       Proxies .  Except as otherwise provided in the Articles of Incorporation or in a Certificate of Designation or similar document filed with the Secretary of State of Nevada in accordance with Section 78.1955 of the Nevada Revised Statutes, each stockholder shall, at every meeting of the stockholders be entitled to one (1) vote in person or by proxy for each share of stock having voting power held by such stockholder, but no proxy shall be valid after the expiration of six (6) months from the date of its execution unless (a) coupled with an interest, or (b) the person executing it specifies therein the length of time for which it is to be continued in force, which in no case shall exceed seven (7) years from the date of its execution.
 
Section 11.       Action by Consent .  Any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if, before or after the action, a written consent thereto is signed by stockholders holding at least a majority of the voting power, except that if any different proportion of voting power is required for such action at a meeting, then such different proportion of written consents shall be required.  In no instance where action is authorized by written consent, need a meeting of stockholders be called or noticed.
 
Section 12.       Telephonic Meetings .  Stockholders may participate in a meeting of stockholders by means of a telephone conference or similar method of communication by which all persons participating in the meeting can hear one another.  Participation in such meeting shall constitute presence in person at the meeting.
 
Section 13.       Closing of Transfer Books/Record Date .  The Board of Directors may close the stock transfer books of the corporation for a period not exceeding sixty (60) days preceding the date of any meeting of stockholders or the date for payment of any dividend or the date when any change or conversion or exchange of capital stock shall go into effect or for a period not exceeding sixty (60) days in connection with obtaining the consent of stockholders for any purpose.  In lieu of closing the stock transfer books, the Board of Directors may fix in advance a record date, not more than sixty (60) days or less than ten (10) days before the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining such consent, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting, and any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, or to give such consent, and in such case such stockholders and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights or to exercise such rights, or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the corporation after any such record date fixed as aforesaid.
 
Section 14.       Registered Stockholders .  The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, and the corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Nevada.
 

 
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Section 15.       Nominations and Proposals by Stockholders .
 
(a)           Annual Meetings of Stockholders.
 
(1)           Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the corporation who was a stockholder of record both at the time of giving of notice provided for in this Section 15(a) and at the time of the annual meeting, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Section 15(a).
 
(2)           For nominations for election to the Board of Directors or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this Section 15, the stockholder must have given timely notice thereof in writing to the Secretary of the corporation and such other business must otherwise be a proper matter for action by the stockholders.  To be timely, a stockholder’s notice shall set forth all information required under this Section 15 and shall be delivered to the Secretary at the principal executive office of the corporation not earlier than the 150th day nor later than 5:00 P.M., Mountain Time, on the 120th day prior to the first anniversary of the date of mailing of the notice for the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 P.M., Mountain Time, on the later of the 120th day prior to the date of such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made by the corporation.  In no event shall the public announcement of a postponement of the mailing of the notice for such annual meeting or of an adjournment or postponement of an annual meeting to a later date or time commence a new time period for the giving of a stockholder’s notice as described above.  A stockholder’s notice to be proper must set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director (A) the name, age, business address and residence address of such person, (B) the class, series and number of any shares of stock of the corporation that are beneficially owned or owned of record by such person, (C) the date or dates such shares were acquired and the investment intent of such acquisition, and (D) all other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest (even if an election contest is not involved), or is otherwise required, in each case pursuant to Regulation 14A (or any successor provision) under the Securities Exchange Act of 1934 as amended from time to time (“Exchange Act”) and the rules thereunder (including such person’s written consent to being named in a proxy statement or information statement (if any) as a nominee and to serving as a director if elected); (ii) as to any other business that the stockholder proposes to bring before the meeting, a description of such business, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom; (iii) as to the stockholder giving the notice and any Stockholder Associated Person, (A) the class, series and number of all shares of stock of the corporation which are owned by such stockholder and by such Stockholder Associated Person, if any, (B) the nominee holder for,
 

 
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and number of, shares owned beneficially but not of record by such stockholder and by any such Stockholder Associated Person, and (C) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares) has been made, the effect or intent of which is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, such stockholder or any such Stockholder Associated Person with respect to any share of stock of the corporation; (iv) as to the stockholder giving the notice and any Stockholder Associated Person covered by clauses (ii) or (iii) of this paragraph (2) of this Section 15(a), the name and address of such stockholder, as they appear on the corporation’s stock ledger, and current name and address, if different, and of such Stockholder Associated Person; and (v) to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee for election or reelection as a director or the proposal of other business on the date of such stockholder’s notice.
 
(3)           Notwithstanding anything in this subsection (a) of this Section 15 to the contrary, in the event the number of directors to be elected to the Board of Directors is increased, and there is no public announcement of such action or specifying the size of the increased Board of Directors at least 100 days prior to the first anniversary of the date of mailing of the notice for preceding year’s annual meeting, a stockholder’s notice required by this Section 15(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if the notice is delivered to the Secretary at the principal executive office of the corporation not later than 5:00 P.M., Mountain Time, on the tenth day immediately following the day on which such public announcement is first made by the corporation.
 
(4)           For purposes of this Section 15, “Stockholder Associated Person” of any stockholder shall mean (i) any person controlling, directly or indirectly, or acting in concert with, such stockholder, (ii) any beneficial owner of shares of stock of the corporation owned of record or beneficially by such stockholder and (iii) any person controlling, controlled by or under common control with such Stockholder Associated Person.
 

 
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(b)            Special Meetings of Stockholders .
 
Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the corporation’s notice of meeting.  Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected (i) pursuant to the corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) provided that the Board of Directors has determined that directors shall be elected at such special meeting, by any stockholder of the corporation who is a stockholder of record both at the time of giving of notice provided for in this Section 15(b) and at the time of the special meeting, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Section 15(b).  In the event the corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be) for election to such position as specified in the corporation’s notice of meeting, if the stockholder’s notice required by paragraph (a)(2) of this Section 15 shall be delivered to the Secretary at the principal executive office of the corporation not earlier than 5:00 P.M., Mountain Time, on the 150 th day prior to such special meeting and not later than 5:00 P.M., Mountain Time, on the later of the 120 th day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and the nominees proposed by the Board of Directors to be elected at such meeting.  In no event shall the public announcement of a postponement or adjournment of a special meeting to a later date or time commence a new time period for the giving of a stockholder’s notice as described above.
 
(c)            General .
 
(1)           If information submitted pursuant to this Section 15 by any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders shall be inaccurate to any material extent, such information may be deemed not to have been provided in accordance with this Section 15.  Upon written request by the Secretary, the Board of Directors or any committee thereof, any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders shall provide, within seven Business Days of delivery of such request (or such other period as may be specified in such request), written verification, satisfactory in the discretion of the Board of Directors, any committee thereof or any authorized officer of the corporation, to demonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 15.  If a stockholder fails to provide such written verification within such period, the information as to which written verification was requested may be deemed not to have been provided in accordance with this Section 15.
 

 
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(2)           Only such persons who are nominated in accordance with the procedures set forth in this Section 15 shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 15.  The chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 15 and, if any proposed nomination or business is not in compliance with this Section 15, to declare that such defective nomination or proposal be disregarded.
 
(3)           For purposes of this Section 15, (a) the “date of mailing of the notice” shall mean the date of the proxy statement for the solicitation of proxies for election of directors and (b) “public announcement” shall mean disclosure (i) in a press release either transmitted to the principal securities exchange on which shares of the corporation’s common stock are traded or reported by a recognized news service or (ii) in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to the Exchange Act.
 
(4)           Notwithstanding the foregoing provisions of this Section 15, a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 15.  Nothing in this Section 15 shall be deemed to affect any right of a stockholder to request inclusion of proposals or nominations in, nor the right of the corporation to omit a proposal or nomination from, the corporation’s proxy statement pursuant to any rules and regulations, if applicable, under the Exchange Act.
 
ARTICLE III
 
DIRECTORS
 
Section 1.       Number .  The number of Directors which shall constitute the whole Board shall be fixed by the Board of Directors of the corporation at any regular or special meeting thereof (or appropriate written consent thereby) subject to any limitations prescribed in the Articles of Incorporation.  The Directors shall either be elected by written consent in accordance with Article II, Section 11 of these Bylaws and NRS 78.320 or at the annual meeting of the stockholders, except as provided in Sections 2 and 3 of this Article, and each Director elected shall hold office until his successor is elected and qualified.  Directors need not be stockholders.  If, for any reason, Directors are not elected pursuant to NRS 78.320 or at the annual meeting of the stockholders, they may be elected at a special meeting of the stockholders called and held for that purpose.
 
Section 2.       Vacancies .  Vacancies and newly created directorships resulting from any increase in the authorized number of Directors may be filled by a majority of the Directors then in office, though less than a quorum, and the Directors so chosen shall hold office until their successors are duly elected and shall qualify, unless sooner displaced.
 

 
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Section 3.      Removal by Stockholders .  Any Director or one or more of the incumbent Directors of the corporation may be removed from office by a vote of stockholders representing not less than two-thirds of the voting power of the issued and outstanding stock entitled to voting power (or such higher amount as may be set forth in the Articles of Incorporation), in which event the vacancy or vacancies so created shall be filled by a majority of the remaining Directors, though less than a quorum, as provided in Section 2 of this Article.  Notwithstanding the foregoing, in the event that any class or series of stockholders is entitled to elect one or more Directors, only the approval of the holders of the applicable proportion of such class or series is required to remove such Director(s) and not the votes of the outstanding shares as a whole.
 
Section 4.       Management of Business .  The business of the corporation shall be managed by its Board of Directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders.
 
Section 5.       Meetings .  The Board of Directors of the corporation may hold meetings, both regular and special, either within or without the State of Nevada.
 
Section 6.       Annual Meeting .  The first meeting of each newly elected Board of Directors may be held following the annual meeting of stockholders.  If such annual meeting of directors is not a regular meeting of the Board of Directors, such meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors or as shall be specified in a written waiver signed by all of the Directors.
 
Section 7.       Regular Meetings .  Regular meetings of the Board of Directors may be held without notice at such time and at such place as from time to time shall be determined by the Board.
 
Section 8.       Special Meetings .  Special meetings of the Board may be called by the President on two (2) days' written notice to each Director.  Special meetings shall be called by the President or Secretary in like manner and on like notice on the written request of a majority of the Directors.
 
Section 9.       Quorum and Voting .  A majority of the Directors then in office, at a meeting duly assembled, shall constitute a quorum for the transaction of business, and the act of the Directors holding a majority of the voting power of the Directors, present at any meeting at which there is a quorum, shall be the act of the Board of Directors except as may be otherwise specifically provided by statute or by the Articles of Incorporation.  If a quorum shall not be present at any meeting of the Board of Directors, the Directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
 

 
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Section 10.       Meetings by Consent .  Unless otherwise restricted by the Articles of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if, before or after the action, a written consent thereto is signed by all members of the Board or of such committee, as the case may be.
 
Section 11.       Telephonic Meetings .  Members of the Board of Directors or any committee designated by the Board of Directors may participate in a meeting of the Board of Directors or committee by means of a telephone conference system or similar method of communication by which all persons participating in the meeting can hear one another.  Participation in such meeting constitutes presence in person at such meeting.
 
Section 12.       Committees .  The Board of Directors, by resolution, resolutions or as set forth in these Bylaws, may designate one (1) or more committees, which, to the extent provided in the resolution, resolutions or in these Bylaws, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation.  Each committee must include at least one Director.  The Board of Directors may appoint natural persons who are not Directors to serve on any committee.  Each committee must have the name or names as may be designated in these Bylaws or as may be determined from time to time by resolution adopted by the Board of Directors.  Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors as and when required.
 
Section 13.       Compensation .  The Directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as a Director.  No such payment shall preclude any Director from serving the corporation in any other capacity and receiving compensation therefore.  Members of special or standing committees may be allowed like compensation for attending committee meetings.
 
ARTICLE IV
 
NOTICES
 
Section 1.       General .  Notices to Directors and stockholders shall be in writing and delivered personally or mailed to the Directors or stockholders at their addresses appearing on the books of the corporation.  Notice by mail shall be deemed to be given at the time when the same shall be mailed.  Notice to Directors may also be given by other media, including electronic transmission, if the sending of notice by such other media may be verified or confirmed.  Notice to stockholders may also be given by other media, including electronic transmission, in the manner and to the extent permitted by statute.
 
Section 2.       Waiver of Notice .  Whenever any notice is required to be given under the provisions of the statutes or of the Articles of Incorporation or of these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.
 

 
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ARTICLE V
 
OFFICERS
 
Section 1.       General .  The officers of the corporation shall be chosen by the Board of Directors and shall at a minimum consist of a President, a Secretary and a Treasurer.  The Board of Directors may also choose a Chairman of the Board, Chief Executive Officer, Chief Financial Officer and one (1) or more Assistant Secretaries and Assistant Treasurers.  Two (2) or more offices may be held by the same person.  The officers of the corporation shall hold their offices for such terms and shall exercise such authority and perform such duties as shall be determined from time to time by these Bylaws or the Board of Directors.
 
Section 2.       Appointment .  The Board of Directors shall appoint the officers of the corporation who shall hold office at the pleasure of the Board of Directors.  No officer need be a member of the Board of Directors.
 
Section 3.       Other Officers .  The Board of Directors may appoint other officers and agents as it shall deem necessary who shall hold their positions for such terms and exercise such powers and perform such duties as shall be determined from time to time by the Board unless otherwise received in writing.  Any such officer or agent may be removed at any time, with or without cause, by the Board of Directors unless otherwise agreed in writing.
 
Section 4.       Compensation .  The salaries and other compensation of all officers of the corporation shall be fixed by the Board of Directors unless otherwise agreed in writing.
 
Section 5.      Duties of CEO .  Unless otherwise determined by the Board of Directors, the Chief Executive Officer shall be the chief executive officer of the corporation and shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect.  He shall vote or execute, in the name of the corporation, proxies for, any securities pursuant to which the corporation has voting rights, unless some other person is designated by the Board of Directors to execute such proxies.
 
Section 6.       Duties of Vice President .  The Vice President, if any, or if there shall be more than one (1), the Vice Presidents, in the order or seniority determined by the Board of Directors, shall, in the absence or disability of the Chief Executive Officer and President, perform the duties and exercise the powers of the Chief Executive Officer and President and shall perform such other duties and have such other powers as the Board of Directors may prescribe from time to time.
 
Section 7.       Duties of Secretary .  The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required.  He shall give or cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors and shall perform such other duties as may be prescribed by the Board of Directors or the President, under whose supervision he shall be.
 

 
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Section 8.       Duties of Assistant Secretaries .  The Assistant Secretary, or if there be more than one (1), the Assistant Secretaries, in the order of seniority determined by the Board of Directors, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.
 
Section 9.       Duties of Treasurer .  The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors.  He shall disburse the funds of the corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the corporation.  The Treasurer is authorized to execute and file on behalf of the corporation all federal tax returns and all elections under federal tax laws.  If required by the Board of Directors, he shall give the corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control, belonging to the corporation.  Any of the duties and functions of the Treasurer as stated above may be performed by the Chief Financial Officer, alone or together with the Treasurer.
 
Section 10.       Duties of Assistant Treasurers .  The Assistant Treasurer, or if there shall be more than one (1), the Assistant Treasurers, in the order of seniority determined by the Board of Directors, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.  The Assistant Treasurer is also authorized to execute and file on behalf of the corporation all federal tax returns and all elections under federal tax laws.
 

 
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ARTICLE VI
 
CERTIFICATES OF STOCK
 
Section 1.       Certificates .  Every holder of stock in the corporation shall be entitled to have a certificate signed in the name of the corporation by the President or Chief Executive Officer and the Treasurer, the Chief Financial Officer or the Secretary of the corporation, certifying the number of shares owned by him in the corporation.  When such certificate is signed (a) by a transfer agent or an assistant transfer agent or (b) by a transfer clerk acting on behalf of the corporation and registrar, the signature of any such officer may be facsimile.  If the corporation shall be authorized to issue more than one class of stock or more than one series of any class of stock, the voting powers, qualifications, limitations, restrictions, designations, preferences and relative rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class or series of stock; provided, however, that except as otherwise provided by applicable law, in lieu of the foregoing requirements, there may be set forth on the face or back of a certificate a statement directing the stockholder, officer or agent of the corporation who will furnish such a summary or description without charge upon written request by any stockholder.  In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates shall cease to be such officer or officers of the corporation, whether because of death, resignation or otherwise, before such certificate or certificates have been delivered by the corporation, such certificate or certificates may nevertheless be adopted by the corporation and be issued and delivered as though the person or persons who signed such certificate or certificates, or whose facsimile signature or signatures have been used thereon, had not ceased to be such officer or officers of the corporation.
 
Section 2.       Lost Certificates .  The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed.  When authorizing such issuance of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed.
 
ARTICLE VII
 
GENERAL PROVISIONS
 
Section 1.                       Dividends .  Dividends upon the capital stock of the corporation may be declared by the Board of Directors out of funds legally available therefore at any regular or special meeting.  Dividends may be paid in cash, in property, or in shares of the capital stock of the corporation.
 

 
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Section 2.       Reserves .  Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends, such sum or sums as the Board of Directors from time to time, in its absolute discretion, thinks proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the Directors shall think conducive to the interest of the corporation, and the Directors may modify or abolish any such reserve in the manner in which it was created.
 
Section 3.       Checks .  All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.
 
Section 4.       Fiscal Year .  The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.
 
Section 5.       Seal .  The corporate seal, if there be one, shall have inscribed thereon the words, “State of Nevada.”
 
Section 6.       Captions .  Captions used in these Bylaws are for convenience only and are not a part of these Bylaws and shall not be deemed to limit or alter any provisions hereof and shall not be deemed relevant in construing these Bylaws.
 
Section 7.       Interpretations .  To the extent permitted by the context in which used, words in the singular number shall include the plural, words in the masculine gender shall include the feminine and neuter, and vice versa.
 
ARTICLE VIII
 
AMENDMENTS
 
Section 1.      Amendments.  These Bylaws may be amended or repealed at any regular meeting of the stockholders or of the Board of Directors, or at any special meeting of the stockholders or of the Board of Directors, if notice of such alteration or repeal be contained in the notice of such special meeting.
 


 
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ZYNEX, INC.

SECRETARY’S CERTIFICATE


The undersigned, Thomas Sandgaard, certifies as follows:

 
1.
I am duly elected and acting Secretary of Zynex, Inc., a Nevada corporation.

 
2.
Attached hereto is a true and correct copy of the Amended and Restated Bylaws adopted by the Board of Directors on October 3, 2008.

IN WITNESS WHEREOF, the undersigned has hereto set her hand on the 3rd day of October, 2008.


/s/ Thomas Sandgaard
Thomas Sandgaard,  Secretary
 
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EXHIBIT 10.3
 
ZYNEX, INC.
 
INDEMNIFICATION AGREEMENT
 
This Indemnification Agreement (this “ Agreement ”) is made as of ____________, 2008, by and between ZYNEX, INC., a Nevada corporation (the “ Company ”), and _________________ (“ Indemnitee ”).
 
R E C I T A L S
 
WHEREAS, the Company and Indemnitee recognize the increasing difficulty in obtaining directors’ and officers’ liability insurance and the possibility of corporate litigation in general, subjecting officers and directors to expensive litigation risks; and
 
WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve as officers and directors of the Company and to indemnify its officers and directors so as to provide them with the maximum protection permitted by law.
 
NOW, THEREFORE, in consideration for Indemnitee’s services, as an officer or director of the Company, the Company and Indemnitee hereby agree as follows:
 
1.            Indemnification .
 
(a)            Third Party Proceedings .  The Company shall indemnify Indemnitee if Indemnitee is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or any alternative dispute resolution mechanism, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, or any subsidiary of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including reasonable attorneys’ fees), judgments, fines and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld, conditioned or delayed) actually and reasonably incurred by Indemnitee in connection with such action, suit or proceeding if Indemnitee is not liable pursuant to Nevada Revised Statutes (“ NRS ”) § 78.138, or if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that Indemnitee is liable pursuant to NRS § 78.138 or did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or that, with respect to any criminal action or proceeding, Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
 

 
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(b)            Proceedings By or in the Right of the Company .  The Company shall indemnify Indemnitee if Indemnitee is or was a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company or any subsidiary of the Company to procure a judgment in its favor by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, or any subsidiary of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including amounts paid in settlement and reasonable attorneys’ fees) actually and reasonably incurred by Indemnitee in connection with the defense or settlement of such action or suit if Indemnitee is not liable pursuant to NRS § 78.138 or Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, except that no indemnification shall be made for any claim, issue or matter as to which Indemnitee has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the Company or for amounts paid in settlement to the Company, unless and only to the extent that the court in which such action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.
 
(c)            Mandatory Payment of Expenses .  To the extent that Indemnitee has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1(a) and 1(b), or in defense of any claim, issue or matter therein, Indemnitee shall be indemnified against expenses (including reasonable attorneys’ fees) actually and reasonably incurred by Indemnitee in connection therewith.
 
2.            Service to the Company .  The parties recognize that Indemnitee is providing consideration to the Company for this Agreement by either accepting the position of a director or officer or by continuing to serve in such a position, without any obligation to do so, until the director or officer resigns or is removed.  This Agreement serves as part of the consideration and inducement for Indemnitee to do so.
 
3.            Expenses; Indemnification Procedure .
 
(a)            Advancement of Expenses .  The Company shall advance all expenses incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of any civil or criminal action, suit or proceeding referenced in Section 1(a) or 1(b) (but not amounts actually paid in settlement of any such action, suit or proceeding because settlement payments are the subject of Section 1 above).  Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it is ultimately determined by a court of competent jurisdiction that Indemnitee is not entitled to be indemnified by the Company as authorized hereby for the amounts.
 

 
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(b)            Notice/Cooperation by Indemnitee .  Indemnitee shall, as a condition precedent to his right to be indemnified under this Agreement, give the Company written notice as soon as practicable of any claim for which Indemnitee will or could seek indemnification under this Agreement.  In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee’s power.
 
(c)            Procedure .  Any indemnification and advances provided for in Section 1 and this Section 3 shall be made no later than 30 days after receipt of the written request of Indemnitee, provided that a determination is made within such 30-day period that, as to Indemnitee’s specific case, indemnification of Indemnitee is proper in the circumstances.  Such determination shall be made: (a) by the Company’s stockholders; (b) by the Company’s Board of Directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding; (c) if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion; or (d) if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion.  Notwithstanding the foregoing, if there has been a Change of Control (as defined below) after the date of this Agreement and if so requested by the Indemnitee, such determination shall be made by independent legal counsel in a written opinion.  For this purpose, “independent legal counsel” means a law firm or a member of a law firm that neither is at the time, nor in the past five (5) years has been, retained to represent (i) the Company or the Indemnitee in any matter; or (ii) any other party to the matter giving rise to a claim for indemnification under this Agreement.  Notwithstanding the foregoing, the term “independent legal counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing under the laws of the State of Nevada, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee’s rights under this Agreement.  The Company agrees to pay the reasonable fees of the independent legal counsel referenced above and to indemnify fully such independent legal counsel against any and all expenses (including without limitation attorneys’ fees), liabilities, losses and damages arising out of or relating to this Agreement or its engagement pursuant to this Agreement.  If a claim under this Agreement, under any statute, or under any provision of the Company’s Articles of Incorporation or Bylaws providing for indemnification, is not paid in full by the Company within 30 days after a written request for payment thereof has first been received by the Company, Indemnitee may, but need not, at any time thereafter bring an action against the Company to recover the unpaid amount of the claim and, subject to Sections 8 and 9(g) of this Agreement, Indemnitee shall also be entitled to be paid for the expenses (including reasonable attorneys’ fees) of bringing such action.  It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in connection with any action, suit or proceeding in advance of its final disposition) that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed.  However, Indemnitee shall be entitled to receive interim payments of expenses pursuant to Section 3(a) unless and until such defense may be finally adjudicated by court order or judgment from which no further right of appeal exists.  It is the parties’ intention that if the Company contests Indemnitee’s right to indemnification, the question of Indemnitee’s right to indemnification shall be for a court of competent jurisdiction to decide, and neither the failure of
 

 
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the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its stockholders) to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actual determination by the Company (including it Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption that Indemnitee has or has not met the applicable standard of conduct.
 
(d)            Notice to Insurers .  If, at the time of the receipt of a notice of a claim pursuant to Section 3(b), the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.
 
(e)            Selection of Counsel .  In the event the Company shall be obligated under Section 3(a) to advance the expenses of any proceeding against Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of such proceeding, with counsel approved by Indemnitee (which approval shall not be unreasonably withheld), upon the delivery to Indemnitee of written notice of its election to do so.  After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same proceeding, provided that (i) Indemnitee shall have the right to employ his  counsel in any such proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense, or (C) the Company shall not, in fact, have employed counsel to assume the defense of such proceeding, then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company.
 
(f)            Settlement by the Company .  The Company shall not settle any proceeding in any manner which would impose any penalty or limitation on Indemnitee without Indemnitee’s written approval, which approval shall not be unreasonably withheld, conditioned or delayed.
 
(g)            Burden of Proof .  If under applicable law, the entitlement of Indemnitee to be indemnified or advanced expenses hereunder depends upon whether a standard of conduct has been met, the burden of proof of establishing that Indemnitee did not act in accordance with such standard shall rest with the Company.  Indemnitee shall be presumed to have acted in accordance with such standard and to be entitled to indemnification or the advancement of expenses (as the case may be) unless, based upon a preponderance of the evidence, it shall be determined that Indemnitee has not met such standard.
 

 
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(h)            Change in Control .  For purposes of this Section, a “Change in Control” shall be deemed to have occurred if any of the following events occurs: (i) any “person” (as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), excluding the Sandgaard Group, becomes after the date hereof the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 30% or more of the total number of votes that may be cast for the election of directors of the Company (called in this definition "voting securities"); (ii) at least 40% of the directors of the Company constitute persons who were not, at the time of their first election to the Board of Directors of the Company, candidates proposed by a majority of the Company's Board of Directors in office prior to the time of such first election; (iii) either stockholder approval of the dissolution of the Company or the actual dissolution of the Company; (iv) a sale or other disposition, or the last sale or other disposition to occur in a series of sales and/or other dispositions within any 12-month period ("Serial Sales"), by the Company of assets which (at the time of the sale or disposition or, in the case of Serial Sales, as of the beginning of such 12-month period) account for more than 75% of the total assets or 40% of the revenues of the Company, as determined in accordance with generally accepted accounting principles; provided, however, that no sale or disposition of assets or stock shall be taken into account to the extent that the proceeds of such sale or disposition (whether in cash or in-kind) are reinvested in the Company or are, in the case of proceeds received in-kind, used in the ongoing conduct of the Company, provided further that such a reinvestment shall not be deemed to have occurred unless made within 12 months of such sale or disposition and provided further that, the term reinvestment shall include, among other things, the use of proceeds to repay debt incurred in connection with the operation of the business in which the assets sold or disposed of were used; (v) the stockholders shall approve any merger, consolidation, or like business combination or reorganization of the Company, the consummation of which would result in the voting securities of the Company outstanding immediately prior thereto representing (by remaining outstanding or being converted into securities of the surviving entity or otherwise) less than 70% of the voting securities of the Company or such surviving entity outstanding immediately after such merger, consolidation, business combination or reorganization; or (vi) any other event which the Company's Board of Directors determines, in its discretion, would materially alter the structure of the Company or its ownership.  “Sandgaard Group” means (i) Thomas Sandgaard who is at the date of this Agreement an officer or director of the Company and a beneficial owner of more than 30% of the Company’s common stock; (ii) any affiliate (as defined in Rule 12b-2 of the rules and regulations under the Exchange Act; (iii) a Related Party of Mr. Sandgaard; and (iv) any transferee of common stock owned beneficially by any person described in the foregoing clauses that is approved in advance of a transfer by a majority of the Board of Directors of the Company.  For this purpose, “Related Party” means:  (i) a spouse, children (by blood or adoption), and other descendants (by blood or adoption); (ii) any trust primarily for the benefit of Mr. Sandgaard and/or any of the persons described in clause (i); (iii) any entity owned beneficially entirely by any of Mr. Sandgaard, parties described in clause (i) and/or parties described in clause (ii); and (iv) in the case of the death of Mr. Sandgaard or any party that was a Related Party immediately prior to the person’s death, the heirs, legatees, devisees, distributees, personal representatives, or estate of the deceased person, whether by will or intestacy.
 

 
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4.            Additional Indemnification Rights; Nonexclusivity .
 
(a)            Scope .  Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify Indemnitee to the fullest extent permitted by the NRS, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’s Articles of Incorporation, the Company’s Bylaws or by statute.  In the event of any change, after the date of this Agreement, in any applicable law, statute, or rule which expands the right of a Nevada corporation to indemnify a member of its board of directors or an officer, such changes shall be, ipso facto, within the purview of Indemnitee’s rights and Company’s obligations, under this Agreement.  In the event of any change in any applicable law, statute or rule which narrows the right of a Nevada corporation to indemnify a member of its board of directors or an officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties’ rights and obligations hereunder.
 
(b)            Nonexclusivity .  The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemnitee may be entitled under the Company’s Articles of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested directors, the NRS, or otherwise, for either an action in Indemnitee’s official capacity or action in another capacity while holding such office, except that indemnification, unless ordered by a court pursuant to NRS § 78.7502 or for the advancement of expenses made pursuant to Section 3, may not be made to or on behalf of Indemnitee if a final adjudication establishes that Indemnitee’s acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action.  The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity even though he may have ceased to serve in such capacity at the time of any action, suit or other covered proceeding.
 
5.            Partial Indemnification .  If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the expenses, judgments, fines or penalties actually and reasonably incurred by him in the investigation, defense, appeal or settlement of any civil or criminal action, suit or proceeding, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such expenses, judgments, fines or penalties to which Indemnitee is entitled.
 
6.            Mutual Acknowledgement .  Both the Company and Indemnitee acknowledge that in certain instances, federal law or applicable public policy may prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise.  Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right under public policy to indemnify Indemnitee.
 

 
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7.            Officer and Director Liability Insurance .  The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain a policy greater in value than the Company’s current Director and Officer Liability Insurance Policy with National Union Fire Insurance Co. of Pittsburgh, PA, Policy #659-63-95 (the “ Current D&O Policy ”), or to maintain the Current D&O Policy providing the officers and directors of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnification obligations under this Agreement.  Among other considerations, the Company will weigh the costs of obtaining or maintaining such insurance coverage against the protection afforded by such coverage.  In all policies of director and officer liability insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s directors, if Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a director of the Company but is an officer.  Notwithstanding the foregoing, the Company shall have no obligation to maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or if Indemnitee is covered by similar insurance maintained by a subsidiary or parent of the Company.
 
8.            Exceptions .  Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:
 
(a)            Claims Initiated by Indemnitee .  To indemnify or advance expenses to Indemnitee with respect to proceedings or claims initiated or brought voluntarily by Indemnitee and not by way of defense, except with respect to proceedings brought to establish or enforce a right to indemnification under this Agreement or any other statute or law or otherwise as required under § 78.7502 of the NRS, but such indemnification or advancement of expenses may be provided by the Company in specific cases if the Board of Directors has approved the initiation or bringing of such suit; or
 
(b)            Lack of Good Faith .  To indemnify Indemnitee for any expenses incurred by Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by Indemnitee in such proceeding was not made in good faith or was frivolous; or
 
(c)            No Duplicative Payments.   To indemnify Indemnitee for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) to the extent that Indemnitee has otherwise actually received payment (under any insurance policy, provision of the Company’s articles of incorporation, bylaws or otherwise) of the amounts otherwise payable hereunder.
 
(d)            Claims Under Section 16(b) .  To indemnify Indemnitee for expenses and the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute.
 

 
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9.            Miscellaneous .
 
(a)            Choice of Law .  This Agreement shall be governed by and its provisions construed in accordance with the laws of the State of Nevada, as applied to contracts between Nevada residents entered into and to be performed entirely within Nevada without regard to the conflict of law principles thereof.
 
(b)            Consent to Jurisdiction .  The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of Nevada for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement may be brought in the state courts of the State of Nevada.
 
(c)            Amendment and Termination .  No amendment, modification, termination or cancellation of this Agreement shall be effective unless it is in writing and signed by the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver.
 
(d)            Entire Agreement .  This Agreement sets forth the entire understanding between the parties hereto and supersedes and merges all previous written and oral negotiations, commitments, understandings and agreements relating to the subject matter hereof between the parties hereto.
 
(e)            Successors and Assigns .  This Agreement shall be binding upon the Company and its successors and assigns, and shall inure to the benefit of Indemnitee and Indemnitee’s heirs, executors and administrators.
 
(f)            Severability .  If and to the extent that any provision of this Agreement is held by final judgment of a court of competent jurisdiction to be invalid, illegal or unenforceable, then to such extent the invalid, illegal or unenforceable provision shall be severed from the remainder of this Agreement, and the remainder of this Agreement shall be enforced.  In addition, the invalid, illegal or unenforceable provision shall be deemed to be automatically modified, and, as so modified, to be included in this Agreement, such modification being made to the minimum extent necessary to render the provision valid, legal and enforceable.  Notwithstanding the foregoing, however, if the severed or modified provision concerns all or a portion of the essential consideration to be delivered under this Agreement by one party to the other, the remaining provisions of this Agreement shall also be modified to the extent necessary to equitably adjust the parties’ respective rights and obligations hereunder.
 

 
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(g)            Attorneys’ Fees .  In the event that any action is instituted by Indemnitee under this Agreement to enforce or interpret any of the terms hereof, Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable attorneys’ fees, incurred by Indemnitee with respect to such action, unless as a part of such action, the court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for such action were not made in good faith or were frivolous.  In the event of an action instituted by or in the name of the Company under this Agreement or to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable attorneys’ fees, incurred by Indemnitee in defense of such action (including with respect to Indemnitee’s counterclaims and cross-claims made in such action), unless as a part of such action the court determines that each of Indemnitee’s material defenses to such action were made in bad faith or were frivolous.
 
(h)            Notice .  All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be delivered personally by hand or by courier, mailed by United States first-class mail, postage prepaid, sent by facsimile or sent by electronic mail directed to the party to be notified at the address, facsimile number or electronic mail address indicated for such person on the signature page hereof, or at such other address, facsimile number or electronic mail address as such party may designate by 10 days’ advance written notice to the other party hereto.  All such notices and other communications shall be deemed given upon personal delivery, on the date of mailing, upon confirmation of facsimile transfer or when directed to the electronic mail address set forth on the signature page hereof.
 
(i)            Construction .  Whenever used in this Agreement, the singular number will include the plural, and the plural number will include the singular, and pronouns in the masculine, feminine, or neuter gender will include each other gender.  Headings are used for convenience only, and are not to be given substantive effect.  All references to section numbers and exhibits in this Agreement are references to sections and exhibits in this Agreement, unless otherwise specifically indicated.  All exhibits and schedules are incorporated in this Agreement as if set forth herein in full.  Recitals are part of this Agreement and shall be considered in its interpretation.
 
(j)            Period of Limitations .  No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against Indemnitee, Indemnitee’s estate, spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.
 
(k)            Subrogation .  In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.
 

 
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(l)            Counterparts .  This Agreement may be executed in one or more counterparts, each of which shall constitute an original.
 
EXECUTED as of the date first above written.
 
   
 
ZYNEX, INC.
   
   
 
By:                                                                   
 
__________________, __________
   
 
Address:
   

 
AGREED TO AND ACCEPTED:
   
 
Indemnitee
   
   
 
_________________________________
   
   
 
Address:
 
_______________________________
_______________________________
 
_______________________________
 
_______________________________


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Exhibit 10.4
 

 
ZYNEX, INC. AND ITS SUBSIDIARIES
 

 
CODE OF BUSINESS CONDUCT AND ETHICS
 

 
(October 2008)
 
Introduction
 
This Code of Business Conduct and Ethics covers a wide range of business practices and procedures.  It does not cover every issue that may arise, but it sets out basic principles to guide all employees of Zynex, Inc. and its subsidiaries (called the “Company”).  All of our employees must conduct themselves accordingly and seek to avoid even the appearance of improper behavior.  The Code should also be provided to and followed by the Company’s agents and representatives, including consultants.
 
If a law conflicts with a policy in this Code, you must comply with the law; however, if a local custom or policy conflicts with this Code, you must comply with the Code.  If you have any questions about these conflicts, you should ask your supervisor how to handle the situation.
 
Those who violate the standards in this Code will be subject to disciplinary action.   If you are in a situation which you believe may violate or lead to a violation of this Code, follow the guidelines described in Section 14 of this Code.
 
1.   Compliance with Laws, Rules and Regulations
 
Obeying the law, both in letter and in spirit, is the foundation on which this Company’s ethical standards are built.  All employees must respect and obey the laws of the cities, states and countries in which we operate.  Although not all employees are expected to know the details of these laws, it is important to know enough to determine when to seek advice from supervisors, managers or other appropriate personnel.
 
2.   Conflicts of Interest
 
A “conflict of interest” exists when a person’s private interest interferes in any way with the interests of the Company.  A conflict situation can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively.  Conflicts of interest may also arise when an employee, officer or director, or members of his or her family, receives improper personal benefits as a result of his or her position in the Company.  Loans to, or guarantees of obligations of, employees and their family members may create conflicts of interest.
 

 
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It is almost always a conflict of interest for a Company employee to work simultaneously for a competitor, customer or supplier.  You are not allowed to work for a competitor as a consultant or board member.  The best policy is to avoid any direct or indirect business connection with our customers, suppliers or competitors, except on our behalf. 
 
Conflicts of interest are prohibited as a matter of Company policy, except under guidelines approved by the Board of Directors.  Conflicts of interest may not always be clear-cut, so if you have a question, you should consult with Chief Financial Officer.  Any employee, officer or director who becomes aware of a conflict or potential conflict should bring it to the attention of Chief Financial Officer or consult the procedures described in Section 14 of this Code.
 
3.   Insider Trading
 
Employees, officers and directors who are aware of confidential information (a) are not permitted to trade directly or indirectly in stock of the Company or any interest in that stock if the information may be considered material and (b) are not permitted to use or share that information for any other purpose except the conduct of our business.  All non-public information about the Company should be considered confidential information.  To use non-public information for personal financial benefit or to “tip” others who might make an investment decision on the basis of this information is not only unethical but also illegal.  If you have any questions, please consult Chief Financial Officer.
 
4.   Corporate Opportunities
 
Employees, officers and directors are prohibited from taking for themselves personally opportunities that are discovered through the use of corporate property, information or position without the consent of the Board of Directors.  No employee may use corporate property, information, or position for improper personal gain, and no employee may compete with the Company directly or indirectly.  Employees, officers and directors owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.
 
5.   Competition and Fair Dealing
 
We seek to compete fairly and honestly.  We seek competitive advantages through superior performance, never through unethical or illegal business practices.  Stealing proprietary information, possessing trade secret information that was obtained without the owner’s consent, or inducing such disclosures by past or present employees of other companies is prohibited.  Each employee should endeavor to respect the rights of and deal fairly with the Company’s customers, suppliers, competitors and employees.  No employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice.
 

 
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To maintain the Company’s valuable reputation, compliance with our quality processes and safety requirements is essential.  In the context of ethics, quality requires that our products and services be designed and manufactured to meet our obligations to customers.  All inspection and testing documents must be handled in accordance with all applicable regulations.
 
The purpose of business entertainment and gifts in a commercial setting is to create good will and sound working relationships, not to gain unfair advantage with customers.  No gift or entertainment should ever be offered, given, provided or accepted by any Company employee, family member of an employee or agent unless it:  (1) is not a cash gift, (2) is consistent with customary business practices, (3) is not excessive in value, (4) cannot be construed as a bribe or payoff and (5) does not violate any laws or regulations.  Please discuss with Chief Financial Officer any gifts or proposed gifts which you are not certain are appropriate.
 
6.   Discrimination and Harassment
 
The diversity of the Company’s employees is an asset.  We are firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment or any kind.  Examples include derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances.
 
7.   Health and Safety
 
The Company strives to provide each employee with a safe and healthful work environment.  Each employee has responsibility for maintaining a safe and healthy workplace for all employees by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions.
 
Violence and threatening behavior are not permitted.  Employees should report to work in condition to perform their duties, free from the influence of illegal drugs or alcohol.  The use of illegal drugs in the workplace will not be tolerated.
 
8.   Record-Keeping
 
The Company requires honest and accurate recording and reporting of information in order to make responsible business decisions.  For example, only the true and actual number of hours worked should be reported.
 
Some employees use business expense accounts, which must be documented and recorded accurately.  If you are not sure whether a certain expense is legitimate, ask your supervisor or Chief Financial Officer.  Rules and guidelines are available from the Accounting Department.
 

 
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All of the Company’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company’s transactions and must conform both to applicable legal requirements and to the Company’s system of internal controls.  Unrecorded or “off the books” funds or assets should not be maintained unless permitted by applicable law or regulation.
 
Business records and communications often become public, and we should avoid exaggeration, derogatory remarks, guesswork, or inappropriate characterizations of people and companies that can be misunderstood.  This applies equally to e-mail, internal memos, and formal reports.  Records should always be retained or destroyed according to the Company’s record retention policies. In accordance with those policies, in the event of litigation or governmental investigation please consult Chief Financial Officer.
 
9.   Confidentiality
 
Employees must maintain the confidentiality of confidential information entrusted to them by the Company or its customers, except when disclosure is authorized by Chief Financial Officer or required by laws or regulations.  Confidential information includes all non-public information that might be of use to competitors, or harmful to the Company or its customers, if disclosed. It also includes information that suppliers and customers have entrusted to us.  The obligation to preserve confidential information continues even after employment ends.
 
10.   Protection and Proper Use of Company Assets
 
All employees should endeavor to protect the Company’s assets and ensure their efficient use.  Theft, carelessness, and waste have a direct impact on the Company’s profitability.  Any suspected incident of fraud or theft should be immediately reported for investigation.  Company equipment should not be used for non-Company business, though incidental personal use may be permitted.
 
The obligation of employees to protect the Company’s assets includes its proprietary information.  Proprietary information includes intellectual property such as trade secrets, patents, trademarks, and copyrights, as well as business, marketing and service plans, engineering and manufacturing ideas, designs, databases, records, salary information and any unpublished financial data and reports.  Unauthorized use or distribution of this information would violate Company policy.  It could also be illegal and result in civil or even criminal penalties.
 
11.   Payments to Government Personnel
 
The U.S. Foreign Corrupt Practices Act prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business.  It is strictly prohibited to make illegal payments to government officials of any country.
 

 
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In addition, the U.S. government has a number of laws and regulations regarding business gratuities which may be accepted by U.S. government personnel.  The promise, offer or delivery to an official or employee of the U.S. government of a gift, favor or other gratuity in violation of these rules would not only violate Company policy but could also be a criminal offense. State and local governments, as well as foreign governments, may have similar rules.  The Company’s Chief Financial Officer can provide guidance to you in this area.
 
12.   Reporting any Illegal or Unethical Behavior
 
Employees are encouraged to talk to supervisors or any of the Company’s executive officers about observed illegal or unethical behavior and when in doubt about the best course of action in a particular situation.  It is the policy of the Company not to allow retaliation for reports of misconduct by others made in good faith by employees.  Employees are expected to cooperate in internal investigations of misconduct.
 
13.   Waiver
 
Any waiver of this Code for executive officers or directors may be made only by the Board or a Board committee and may be promptly disclosed as required by law or trading market regulation.
 
14.   Compliance Procedures
 
We must all work to ensure prompt and consistent action against violations of this Code.  However, in some situations it is difficult to know right from wrong.  Since we cannot anticipate every situation that will arise, it is important that we have a way to approach a new question or problem.  These are the steps to keep in mind:
 
·  
Make sure you have all the facts .  In order to reach the right solutions, we must be as fully informed as possible.
 
·  
Ask yourself:  What specifically am I being asked to do?  Does it seem unethical or improper ?  This will enable you to focus on the specific question you are faced with, and the alternatives you have.  Use your judgment and common sense; if something seems unethical or improper, it probably is.
 
·  
Clarify your responsibility and role .  In most situations, there is shared responsibility.  Are your colleagues informed?  It may help to get others involved and discuss the problem.
 
·  
Discuss the problem with your supervisor or an executive officer .  This is the basic guidance for all situations.  In many cases, your supervisor or the executive officer will be more knowledgeable about the question, and will appreciate being brought into the decision-making process.  Remember that it is your supervisor’s or an executive officer’s responsibility to help solve problems.
 

 
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·  
Seek help from Company resources .  In the rare case where it may not be appropriate to discuss an issue with your supervisor, or where you do not feel comfortable approaching your supervisor with your question, discuss it with Chief Financial Officer.  If that also is not appropriate, contact the Chairman of the audit committee of the Company’s Board of Directors.  If you prefer to write, address your concerns to: Chairman of Audit Committee, Confidential, Zynex, Inc., 8022 Southpark Circle, Suite 100, Littleton, Colorado 80120.
 
·  
You may report ethical violations in confidence and without fear of retaliation .  If your situation requires that your identity be kept secret, your anonymity will be protected.  The Company does not permit retaliation of any kind against employees for good faith reports of ethical violations.
 
If you are unsure of what to do in any situation, seek guidance before you act .
 
 
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Exhibit 10.5

 
Zynex, Inc.
 
Audit Committee Charter
 
(October 2008)
 
Organization
 
This charter governs the operation of the Audit Committee (the “Committee’“) of the Board of Directors of Zynex, Inc. (the “Company”).  The Committee shall review and reassess the adequacy of the charter at least annually and obtain the approval of the Board of Directors for any proposed changes to the charter.  The Committee shall be appointed by the Board and shall make regular reports to the Board.  The Committee shall be comprised of at least two directors, each of whom shall meet the applicable independence and experience requirements of the American Stock Exchange and the Securities and Exchange Commission.
 
Responsibilities and Processes
 
The primary responsibility of the Committee is to oversee the Company’s financial reporting processes on behalf of the Board and report the results of its activities to the Board.  Management is responsible for preparing the Company’s financial statements, and the independent auditors are responsible for auditing those financial statements.  The Committee, in carrying out its oversight responsibilities, will assess the Company’s systems of internal accounting and financial controls, any internal audit process, the independence, qualifications and performance of the Company’s independent auditor, and the overall integrity of the Company’s financial statements and information systems.  The Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Company.  In addition, the Committee will have the power to review and approve “related party transactions”, in accordance with the requirements of the American Stock Exchange and any regulatory agencies.  The Committee may also have such other duties as may, from time to time, be assigned to it by the Board.
 
The Committee shall have the authority, to the extent it deems necessary or appropriate to carry out its duties, to retain special legal, accounting or other consultants to advise the Committee.  The Company must provide appropriate funding, as determined by the Committee, for payment for the services of such advisors, as well as for the ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.  The Committee may also form and delegate authority to subcommittees to undertake its responsibilities, under its supervision.
 
The Committee shall meet as often as it determines, but not less frequently than quarterly.  The Committee shall meet with the independent auditor in separate executive sessions at least quarterly.
 
The following shall be the principal recurring processes of the Committee in carrying out its oversight responsibilities.  The processes are set forth as a guide with the understanding that the Committee may modify them, as it deems appropriate.
 

 
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Financial Statement and Disclosure Matters
 
·  
Review with management and the independent auditor the annual audited financial statements to be included in the Company’s Annual Report on Form 10-K. Based on these reviews, the Committee shall report to the Board whether the Committee recommends inclusion of the annual audited financial statements in the Company’s Form 10-K.
 
·  
Review with management and the independent auditor the interim financial statements to be included in the Company’s Quarterly Report on Form 10-Q.  The Committee shall discuss with the independent auditor the results of its review of each interim financial statement for a quarter.
 
·  
Discuss with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including the effect of alternative acceptable accounting policies on the Company’s financial statements.
 
·  
Prepare the report required by the rules of the Securities and Exchange Commission to be included in the Company’s proxy statement for any annual meeting.
 
·  
Discuss with management and the independent auditor the effect of regulatory and accounting initiatives as well as off-balance sheet structures on the Company’s financial statements.
 
·  
Discuss with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies.
 
Oversight of the Company’s Relationship with the Independent Auditor
 
·  
Be directly responsible for the appointment, compensation, retention, termination and oversight of the work of the independent auditor engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company (including the resolution of disagreements between management and the independent auditor regarding financial reporting).  The independent auditor must report directly to the Committee.
 

 
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·  
Obtain and review a report from the independent auditor at least annually regarding (a) the auditor’s internal quality-control procedures, (b) any material issues raised by the most recent quality-control review of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm, (c) any steps taken to deal with any such issues, and (d) all relationships between the independent auditor and the Company, including those consistent with Independence Standards Board Standard 1.  The Committee shall evaluate the experience, qualifications, performance and independence of the independent auditor, including considering whether the provision of non-audit services is compatible with maintaining the auditor’s independence, and taking into account the opinions of management.  The Committee shall present its conclusions to the Board and, if so determined by the Committee, recommend that the Board take additional action to satisfy itself of the qualifications, performance and independence of the auditor.  As part of these matters, the Committee shall be responsible for actively engaging in a dialogue with the auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the auditor and for taking, or recommending that the full Board take, appropriate action to oversee the independence of the independent auditor.
 
·  
Discuss with the independent auditors the overall scope and plans for its audit.  Also, discuss with management and the independent auditors the adequacy and effectiveness of the Company’s accounting and financial controls.  Meet separately with the independent auditors, with and without management present, to discuss the results of the audit and any other examinations.
 
·  
Discuss the matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards.
 
·  
Review and pre-approve all audit engagement fees and terms and all non-audit services with the independent auditor.  The Committee shall consult with management but shall not delegate these responsibilities to management.
 
·  
Review any proposed employment offer by the Company to an employee or former employee of the independent auditor and discuss with the management the actions intended to be taken by management and the independent auditor to ensure that the auditor maintains independence.
 
Compliance Oversight Responsibilities
 
·  
Obtain from the independent auditor assurance that Section 10A of the Securities Exchange Act of 1934, in regard to the occurrence of illegal acts, has not been implicated.
 

 
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·  
Discuss with management and the independent auditor any correspondence with regulators or governmental agencies and any employee complaints or published reports which raise material issues regarding the Company’s financial statements or accounting policies.
 
·  
Discuss with the Company’s general counsel legal matters that may have a material impact on the financial statements or the Company’s compliance policies.
 
·  
Approve or reject all “related party” transactions. Review reports and disclosures of related party transactions prepared by management.
 
Oversight of the Company’s Internal Audit Function
 
·  
Discuss with management and the independent auditors the quality and adequacy of the Company’s internal controls and any internal audit functions’ organization, responsibilities, plans, results, budget and staffing, as well as providing oversight to internal audit activities, including review of significant reports prepared by the employees performing internal audit functions and management’s responses.
 
Whistleblower Policy
 
·  
Establish and oversee the Company’s anonymous complaint policy contained within the Company’s Code of Business Conduct and Ethics regarding the confidential, anonymous submission by employees of reports regarding questionable accounting practices, internal accounting controls or auditing matters and the investigation, disposition and retention of such reports.
 
Limitation of Audit Committee’s Role
 
·  
While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations.  These are the responsibilities of management and the independent auditor.  It is not the duty of the Committee to conduct investigations or to assure Company’s compliance with laws and regulations.
 
 
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Exhibit 99.1
 
October 7, 2008

Zynex Announces Additional Board Members

 
Zynex, Inc. ZYXI, a provider of pain management systems and electrotherapy products for medical patients with functional disability, announces two additions to its Board of Directors. Taylor Simonton and Mary Beth Vitale have been elected to serve on Zynex’s audit committee, and Mr. Simonton as Audit Chairman.

Taylor Simonton is currently the president of the Colorado chapter of the National Association of Corporate Directors (NACD), Chair of Audit Committee, Red Robin Gourmet Burgers, Inc., Lead Director and Chair of the Audit Committee, Keating Capital, Inc., and serves on the Board of Managers, Quality Rail Services, LLC.  Mr. Simonton retired in 2001 from a 35-year career with PricewaterhouseCoopers. While serving in the PricewaterhouseCoopers National office from 1998 - 2001, Taylor was a member of the Risk & Quality Group that handles all auditing and accounting standards, SEC, corporate governance, risk management and quality matters for the firm. He was one of six partners in a specialized SEC consulting group overseeing the quality of financial statements and SEC reporting for all PricewaterhouseCoopers foreign clients that publicly report in the U.S. Prior to that, Taylor participated in the firm's Partner International Program for three years, during which time he assisted Colombian companies in-country with capital-raising activities in the United States, consulted to major companies and coordinated IPO assistance, advised on due diligence and SEC regulatory matters and traveled extensively internationally assisting companies with SEC registration statements and other capital-raising activities. Since retiring, Taylor has served or is serving on a number of corporate boards of directors. He is a C.P.A. and holds a Certificate of Director Education from the Corporate Directors Institute. He received his B.S. in Accounting from the University of Tennessee.

Mary Beth Vitale is currently the treasurer of the Colorado chapter of the National Association of Corporate Directors (NACD), and Co-Founder of Pellera, LLC. Ms. Vitale is a general management executive with 25 years experience in the telecommunications and consumer products industries.  Mary Beth was Chairman of the Board for Westwind Media, spent 5 years on the Board of Intrado, sitting on the Audit, Compensation and Corporate Governance committees, and spent 3 years with RMI, sitting on the Audit Committee.  Currently, Mary Beth is a member of the Board of Directors of CoBiz Financial Corp., and chairs the Audit Committee as a financial expert.  She is also Lead Director and Finance Chair for Eye-Ris, a privately held software company, and is a member of their Compensation committee. She is a founding member of former Governor Owens Commission on Science and Technology and has been instrumental in forming its strategic direction over the past eight years.  She was awarded her NACD Director Certificate in 2006, and has been a frequent speaker and presenter at many technology functions and seminars across the United States.


 
 

 

About Zynex, Inc.
Zynex (founded in 1996) engineers, manufactures, markets and sells its own design of electrotherapy medical devices in two distinct markets: standard digital electrotherapy products for pain relief and pain management; and the NeuroMove(TM) for stroke and spinal cord injury (SCI) rehabilitation. Zynex's product lines are fully developed, FDA-cleared, commercially sold, and have been developed to uphold the Company's mission of improving the quality of life for patients suffering from impaired mobility due to stroke, spinal cord injury, or debilitating and chronic pain.

Safe Harbor Statement
Certain statements in this release are "forward-looking" and as such are subject to numerous risks and uncertainties. Actual results may vary significantly from the results expressed or implied in such statements. Factors that could cause actual results to materially differ from forward-looking statements include, but are not limited to, the need to obtain additional capital in order to grow our business, larger competitors with greater financial resources, the need to keep pace with technological changes, our dependence on the reimbursement from insurance companies for products sold or rented to our customers, our dependence on third party manufacturers to produce our goods on time and to our specifications, the acceptance of our products by hospitals and clinicians, implementation of our sales strategy including a strong direct sales force and other risks described in our 10-KSB Report for the year ended December 31, 2007.

Contact Information: Zynex, Inc. Thomas Sandgaard, CEO, 303-703-4906 www.zynexmed.com