Exhibit 10.18
WAIVER OF RIGHTS AGREEMENT
This Waiver of Rights Agreement (the "AGREEMENT") is made and entered into
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this October 25, 2006, to be effective as of July 31, 2006 (the "EFFECTIVE
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DATE"), by and between PEDIATRIC PROSTHETICS, INC., an Idaho corporation
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("PEDIATRIC") and AJW PARTNERS, INC., AJW PARTNERS, LLC, AJW OFFSHORE, LTD., AJW
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QUALIFIED PARTNERS, LLC AND NEW MILLENNIUM CAPITAL PARTNERS, II, LLC
(collectively the "PURCHASERS"), each individually a "PARTY" and collectively
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the "PARTIES."
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W I T N E S S E T H:
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WHEREAS, pursuant to a Securities Purchase Agreement entered into with the
Purchasers on May 30, 2006 (the "CLOSING" and the "PURCHASE AGREEMENT"),
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Pediatric agreed to sell the Purchasers an aggregate of $1,500,000 in three
tranches of Callable Secured Convertible Notes (the "NOTES"), of which $600,000
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in Notes were sold on May 30, 2006, with the remaining $900,000 in Notes to be
sold in subsequent tranches when Pediatric meets certain filing and
effectiveness goals as set forth in the Purchase Agreement, as well as
50,000,000 Warrants to purchase shares of Pediatric's common stock (the
"WARRANTS");
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WHEREAS, Pediatric agreed to register the shares of common stock which the
Notes are convertible into and the shares of common stock which the Warrants are
exercisable for (the "UNDERLYING SECURITIES"), pursuant to a Registration Rights
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Agreement (the "RIGHTS AGREEMENT") entered into with the Purchasers at the
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Closing;
WHEREAS, pursuant to Section 4(c) of the Purchase Agreement, Pediatric
agreed to timely file all of its required reports with the Securities and
Exchange Commission (the "COMMISSION" and the "TIMELY FILING REQUIREMENTS");
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pursuant to Section 4(n) of the Purchase Agreement, Pediatric agreed to use its
best efforts to obtain shareholders consent on or before August 15, 2006, to
increase its authorized shares of common stock (the "SHAREHOLDER APPROVAL"); and
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pursuant to Section 2(a) of the Rights Agreement, Pediatric agreed to file a
registration statement with the Commission (the "REGISTRATION STATEMENT")
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covering the Underlying Securities no later than sixty (60) days from the date
of the Closing (July 31, 2006, the "FILING DATE") and to obtain effectiveness of
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such Registration Statement pursuant to Section 3(a) of the Rights Agreement no
later than one hundred and forty-five (145) days from the date of the Closing
(October 22, 2006, the "EFFECTIVENESS DATE"), which Timely Filing Requirements,
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Filing Date and Effectiveness Date were not met by Pediatric and which
Shareholder Approval has not been obtained (the "DEFAULTS");
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WHEREAS, the Parties now desire to enter into this Agreement to waive the
Defaults.
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:
1. WAIVER OF THE DEFAULTS.
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Due to the fact that Pediatric has experienced delays in filing its
periodic reports and information statement filing with the Commission in
connection with comments received from the Commission, which comments were
unforeseen at the Closing, the Purchasers agree to:
(1) Amend the Timely Filing Requirement as provided in Section
2(c) of the Purchase Agreement, to provide for Pediatric to "use
its bests efforts" to meet such Timely Filing Requirement moving
forward, provided however that Pediatric's failure to meet such
Timely Filing Requirement shall not be treated as an Event of
Default under the Purchase Agreement or any of the other
agreements or documents entered into in connection with the
Closing (the "CLOSING DOCUMENTS");
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(2) To waive Pediatric's failure to receive Shareholder Approval, and
amend such requirement as provided in Section 4(n) of the Purchase
Agreement, to provide for Pediatric to "use its best efforts" to
obtain such approval; and
(3) To increase the Filing Date as provided in Section 2(a) of the
Rights Agreement (and Section 3.3 of the Purchase Agreement) to
January 15, 2007, and amend any mention of the Filing Date in the
Rights Agreement and/or the Closing Documents to refer to such later
date; and
(4) To increase the Effectiveness Date of the Registration Statement,
which date is currently one hundred and forty five (145) days from the
Closing date as provided in Section 3(a) of the Rights Agreement (and
Section 3.3 of the Purchase Agreement), to April 16, 2007, and amend
any mention of such date in the Rights Agreement and/or the Closing
Documents to refer to such later date;
which acknowledgments and waivers shall be effective as of the
Effective Date.
2. NO EVENT OF DEFAULT.
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The Purchasers agree that after the Parties entry into this Agreement,
Pediatric will not be in default of any covenant described in the Purchase
Agreement, and that no Event of Default as defined in the Notes shall have
occurred or shall be occurring.
3. MISCELLANEOUS.
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(1) Assignment. All of the terms, provisions and conditions of this
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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.
(2) Applicable Law. This Agreement shall be construed in accordance
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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.
(3) Entire Agreement, Amendments and Waivers. This Agreement
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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.
(4) Waiver. No failure on the part of any Party to enforce any
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provisions of this Agreement will act as a waiver of the right to
enforce that provision.
(5) Section Headings. Section headings are for convenience only and
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shall not define or limit the provisions of this Agreement.
(6) Effect of Facsimile and Photocopied Signatures. This Agreement
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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.
[Remainder of page left intentionally blank. Signature page follows.]
This Agreement has been executed by the Parties on the date first written
above, with an Effective Date as provided above.
PEDIATRIC PROSTHETICS, INC.
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/s/ Xxxxx Xxxxxxx-Xxxx
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XXXXX XXXXXXX-XXXX
CHIEF EXECUTIVE OFFICER
PURCHASERS:
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AJW PARTNERS, LLC
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By: SMS Group, LLC
/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
Manager
AJW OFFSHORE, LTD.
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By: First Street Manager II, LLC
/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
Manager
AJW QUALIFIED PARTNERS, LLC
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By: AJW Manager, LLC
/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
Manager
NEW MILLENNIUM CAPITAL PARTNERS, II, LLC
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By: First Street Manager II, LLC
/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
Manager
