THIRD WAIVER OF RIGHTS AGREEMENT
Exhibit
10.8
This Third Waiver of Rights Agreement
(the “Agreement”)
is made and entered into on June ___, 2008 (the “Effective
Date”), by and between Pediatric
Prosthetics, Inc., an Idaho corporation (“Pediatric”)
and AJW
Partners, Inc., AJW Partners, LLC, AJW Offshore, Ltd., AJW Qualified Partners,
LLC and New Millennium Capital Partners, II, LLC (collectively the “Purchasers”),
each individually a “Party”
and collectively the “Parties.”
W I T N E S S E T H:
WHEREAS, pursuant to a
Securities Purchase Agreement entered into with the Purchasers on May 30, 2006
(the “Closing”
and the “Purchase
Agreement”), Pediatric agreed to sell the Purchasers an aggregate of
$1,500,000 in three tranches of Callable Secured Convertible Notes (the “Notes”),
all of which have been sold to date. Additionally, pursuant to the
Purchase Agreement and in connection with the sale of the Notes, Pediatric
granted 50,000,000 Warrants to purchase shares of Pediatric’s common stock at
$0.10 per share to the Purchasers (the “Warrants”
or “Warrant
Agreements”);
WHEREAS, the Parties have
previously entered into a Waiver of Rights Agreement dated October 25, 2006 (the
“Waiver
Agreement”) and a Second Waiver of Rights Agreement on or around April
17, 2007 (the “Second
Waiver Agreement”), to amend certain of the documents entered into by the
Parties at the Closing, including the Rights Agreement, which Waiver Agreement
and Second Waiver Agreement shall not be affected by the terms and conditions of
this Agreement;
WHEREAS, Pediatric and one of
the Purchasers, New Millennium Capital Partners, II, LLC (“New
Millennium”), desire to enter into a Securities Purchase Agreement,
pursuant to which New Millennium will purchase $150,000 in Notes (the “New
Notes”) and be granted 20,000,000 warrants by Pediatric (the “New
Warrants”) to purchase shares of common stock at an exercise price of
$0.001 per share (the “New
Funding”);
WHEREAS, pursuant to Section
1.6(d) of the Notes, in the event Pediatric issues or sells any shares of common
stock or grants any convertible securities for consideration per share less than
the Notes, such Note conversion price will reset to such lower value (the “Note
Anti-Dilution Right”);
WHEREAS, pursuant to Section
4(a) of the Warrants, in the event Pediatric issues or sells any shares of
common stock or grants any convertible securities for consideration per share
less than the Warrants, such Warrant exercise price will reset to such lower
value (the “Warrant
Anti-Dilution Right”); and
WHEREAS, the Purchasers desire
to waive any and all anti-dilution rights and other rights provided pursuant to
the Purchase Agreement or related agreements, and/or any rights associated with
the Notes or Warrants in order to encourage Pediatric to enter into the New
Funding, pursuant to and in connection with the terms of this
Agreement.
NOW, THEREFORE, in
consideration for the promises and pledges contained below and other good and
valuable consideration, which consideration Pediatric and the
Purchasers
acknowledge receipt of, and the premises and the mutual covenants, agreements,
and considerations herein contained, the Parties hereto agree as
follows:
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1.
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Waiver of the
Anti-Dilution Provisions of the Notes and
Warrants.
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The
Purchasers agree to waive the Note Anti-Dilution Right and the Warrant
Anti-Dilution right in connection with Pediatric’s entry into the New
Funding. Furthermore, the Purchasers agree to waive any
anti-dilution or reset rights they may have whatsoever in connection with
the Purchase Agreement, Notes, Warrants or any document related to the
Closing (or any additional funding contemplated by the Closing) in
connection with the sale of the New Notes and New Warrants and/or the
subsequent conversion of the New Notes and/or exercise of the New
Warrants. The Purchasers further agree that there will be no
affect on the conversion prices of the Notes or the exercise prices of the
Warrants, or any other provision of the Purchase Agreement or any other
document or agreement entered into in connection therewith (including any
additional fundings contemplated by the Closing) as a result of the New
Funding and/or any subsequent conversion of the New Notes and/or exercise
of the New Warrants.
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Each
of the Purchasers individually confirms that it will receive valid
consideration in connection with the Company’s New
Funding.
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2.
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Approval of the New
Funding.
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Each
of the Purchasers individually agrees that it approves of and consents to
the New Funding and the issuance of the New Notes and New Warrants, and
agrees to waive any notice requirement, right of first refusal, potential
event of default caused by or other funding right whatsoever provided by
the Purchase Agreement or any agreement or document entered into in
connection with and/or pursuant to the Purchase Agreement (including any
additional fundings) relating to or from the New
Funding.
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3.
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Conditions
of Effectiveness.
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This
Amendment shall become effective upon execution by each of the Parties
hereto.
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4.
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Additional
Funding.
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Each
of the Purchasers also agrees and understands that New Millennium and
Pediatric currently anticipate entering into additional Securities
Purchase Agreements for the sale of additional Notes and/or Warrants in
the future, and as such, each of the Purchasers agrees to waive any and
all rights waived and/or to give any and all approvals provided in
Sections 1 and 2 above, in connection with any future fundings by and
between New Millennium and/or any of the other Purchasers and Pediatric,
without the need for the re-approval of such funding and/or waiver of such
rights waived above.
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5.
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Miscellaneous.
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(1)
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Assignment. All
of the terms, provisions and conditions of this Agreement shall be binding
upon and shall inure to the benefit of and be enforceable by the Parties
hereto and their respective successors and permitted
assigns.
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(2)
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Applicable
Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Texas, excluding
any provision of this Agreement which would require the use of the laws of
any other jurisdiction.
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(3)
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Entire Agreement,
Amendments and Waivers. This Agreement
constitutes the entire agreement of the Parties hereto and expressly
supersedes all prior and contemporaneous understandings and commitments,
whether written or oral, with respect to the subject matter
hereof. No variations, modifications, changes or extensions of
this Agreement or any other terms hereof shall be binding upon any Party
hereto unless set forth in a document duly executed by such Party or an
authorized agent or such Party.
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(4)
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Waiver.
No failure on the part of any Party to enforce any provisions of this
Agreement will act as a waiver of the right to enforce that
provision.
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(5)
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Section
Headings. Section headings are for convenience only
and shall not define or limit the provisions of this
Agreement.
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(6)
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Construction. The
Parties acknowledge that each of them has had the benefit of legal counsel
of its own choice and has been afforded an opportunity to review this
Agreement with its legal counsel and that this Agreement shall be
construed as if jointly drafted by the parties hereto.
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(7)
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Authority. Each
Party has all requisite power and authority, corporate or otherwise, to
enter into and affect the transactions contemplated by this
Agreement.
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(8)
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Effect of Facsimile
and Photocopied Signatures. This Agreement may be executed in
several counterparts, each of which is an original. It shall
not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other
counterparts. A copy of this Agreement signed by one Party and
faxed to another Party shall be deemed to have been executed and delivered
by the signing Party as though an original. A photocopy of this
Agreement shall be effective as an original for all
purposes.
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of page left intentionally blank. Signature page
follows.]
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This
Agreement has been executed by the Parties on the date first written above, with
an Effective Date as provided above.
Pediatric Prosthetics,
Inc.
/s/
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Chief
Executive Officer
Purchasers:
AJW
Partners, LLC
By: SMS
Group, LLC
/s/
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Manager
AJW
Offshore, Ltd.
By: First
Street Manager II, LLC
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Manager
AJW
Qualified Partners, LLC
By: AJW
Manager, LLC
/s/
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Manager
New Millennium Capital
Partners, II, LLC
By: First
Street Manager II, LLC
/s/
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Manager
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