EXHIBIT 10.1

SECOND WAIVER OF RIGHTS AGREEMENT

This Second Waiver of Rights Agreement (the “Agreement”) is made and entered
into on April  17, 2007, to be effective as of January 15, 2007 (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”), of which $600,000
in Notes were sold on May 30, 2006 and $400,000 in Notes were sold on or around
February 16, 2007, with the remaining $500,000 in Notes to be sold in a
subsequent tranche when Pediatric receives effectiveness of its Form SB-2
Registration Statement as set forth in the Purchase Agreement. 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, 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
Agreement (the “Rights Agreement”) entered into with the Purchasers at the
Closing;

WHEREAS, the Parties have previously entered into a Waiver of Rights Agreement
dated October 25, 2006 (the “Waiver Agreement”), to amend certain of the
documents entered into by the Parties at the Closing, including the Rights
Agreement, which Waiver Agreement shall not be affected by the terms and
conditions of this Agreement;

WHEREAS, pursuant to Section 4(n) of the Purchase Agreement, as amended by the
Waiver Agreement, Pediatric agreed to use its best efforts to obtain
shareholders consent on or before December 15, 2006, to increase its authorized
shares of common stock (the “Shareholder Approval”); and pursuant to Section
2(a) of the Rights Agreement, as amended by the Waiver Agreement, Pediatric
agreed to file a registration statement with the Commission (the “Registration
Statement”) covering the Underlying Securities no later than January 15, 2007
(“Filing Date”) and pursuant to Section 3(a) of the Rights Agreement, as amended
by the Waiver Agreement, to obtain effectiveness of such Registration Statement
by April 16, 2007 (the “Effectiveness Date”);

WHEREAS, pursuant to Section 3(V) of the Securities Purchase Agreement,
Pediatric agreed to maintain effective controls and procedures (the “Controls
and Procedures”), which Controls and Procedures Pediatric has had difficultly in
maintaining to date;

WHEREAS, pursuant to Section 3(X) of the Securities Purchase Agreement,
Pediatric agreed that following the Closing, it would be “solvent,” defined as
having assets with a fair market value greater than its liabilities
(“Solvency”), which Pediatric no longer believes is correct;

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WHEREAS, pursuant to Section 7(G) of the Securities Purchase Agreement and
Section 3.9 of the Notes, Pediatric agreed to obtain authorization to have its
common stock quoted on the OTCBB, which authorization has not been obtained to
date (the “Listing Requirement”);
 
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.

 
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, and in consideration for the grant of the Additional Warrants (as
defined below) the Purchasers agree:

(1)
To reconfirm the waiver of Pediatric’s failure to file a registration statement
covering the Underlying Securities prior to January 15, 2007, which was the
required filing date as provided in the Waiver Agreement, which default has
previously been waived via email;

(2)
That Pediatric is not in default of the Registration Rights Agreement or Warrant
Agreements as a result of such Registration Statement not including the shares
issuable to the Purchasers in connection with the exercise of the Warrants;

 
(3)
To waive Pediatric’s inability to maintain effective Controls and Procedures and
to require Pediatric moving forward to use its “best efforts” to maintain
effective Controls and Procedures;

 
(4)
To waive the Solvency requirement as provided by the Securities Purchase
Agreement;

 
(5)
To waive the Listing Requirement as provided by the Securities Purchase
Agreement and Notes, and instead to require Pediatric to use its “best efforts”
to obtain listing of its securities on the OTCBB as soon hereafter as
practicable; and

which acknowledgments and waivers shall be effective as of the Effective Date.

2. Amendment to Rights Agreement.

(a) Subject to satisfaction of the conditions precedent set forth in Section 5
below, and in consideration for the issuance of the Additional Warrants, as
defined below, Section 1(a)(iii) of the Rights Agreement is hereby amended and
replaced in its entirety and the following new Section 1(a)(iii), inserted in
lieu thereof:

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““Registrable Securities” means 9,356,392 of the Conversion Shares issued or
issuable upon conversion or otherwise pursuant to the Notes and Additional Notes
(as defined in the Securities Purchase Agreement), which amount shall include,
without limitation, any and all Damages Shares (as defined in the Notes)
issuable in payment of the Standard Liquidated Damages Amount (as defined in the
Securities Purchase Agreement), shares issued or issuable in respect of interest
or in redemption of the Notes in accordance with the terms thereof); but such
term shall not include any of the Warrant Shares issuable, upon exercise or
otherwise pursuant to the Warrants and Additional Warrants (as defined in the
Securities Purchase Agreement);”

(b) Subject to satisfaction of the conditions precedent set forth in Section 5
below, and in consideration for the issuance of the Additional Warrants, as
defined below, Section 2(a) of the Rights Agreement is hereby amended and
replaced in its entirety and the following new Section 2(a), inserted in lieu
thereof:

“Mandatory Registration. The Company shall prepare, and, on or prior to February
15, 2007 (the “Filing Date”), file with the SEC a Registration Statement on Form
S-3 (or, if Form S-3 is not then available, on such form of Registration
Statement as is then available to effect a registration of the Registrable
Securities, subject to the consent of the Initial Investors, which consent will
not be unreasonably withheld) covering the resale of the Registrable
Securities;”
 
 
(c) Subject to satisfaction of the conditions precedent set forth in Section 5
below, and in consideration for the issuance of the Additional Warrants, as
defined below, Section 3(a) of the Rights Agreement is hereby amended and
replaced in its entirety and the following new Section 3(a), inserted in lieu
thereof:

“The Company shall prepare promptly, and file with the SEC not later than the
Filing Date, a Registration Statement with respect to the number of Registrable
Securities provided in Section 2(a), and thereafter use its best efforts to
cause such Registration Statement relating to Registrable Securities to become
effective as soon as possible after such filing but in no event later than
August 13, 2007, and keep the Registration Statement effective pursuant to Rule
415 at all times until such date as is the earlier of (i) the date on which all
of the Registrable Securities have been sold and (ii) the date on which the
Registrable Securities (in the opinion of counsel to the Initial Investors) may
be immediately sold to the public without registration or restriction
(including, without limitation, as to volume by each holder thereof) under the
1933 Act (the “Registration Period”), which Registration Statement (including
any amendments or supplements thereto and prospectuses contained therein) shall
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the statements therein
not misleading;”
 

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(d) The Purchasers agree that after the Parties entry into this Agreement,
Pediatric will only be responsible for registering a total of 9,356,392 of the
shares of common stock underlying the Notes pursuant to the Rights Agreement,
the Notes, Warrant and Purchase Agreement; that the Purchasers will rely on Rule
144 for the conversion and subsequent sale of any of the additional shares
issuable in connection with the conversion of the Notes (including the
conversion of any interest on the Notes or any damages on the Notes) which are
no longer required to be registered pursuant to the Rights Agreement by
Pediatric; and that the Purchasers will rely on their cashless exercise
provision and the holding requirements of Rule 144 in connection with the
exercise and subsequent sale of the Warrant Shares; and

(e)  Each party hereto agrees that all provisions of the Rights Agreement,
Notes, Warrants, and Purchase Agreement (the “Closing Documents”), describing or
referring to the “Registrable Securities” or the shares of common stock which
Pediatric is required to register with the Commission, shall refer only to the
shares of common stock issuable in connection with the conversion of 9,356,392
of the shares of common stock underlying the Notes, and Pediatric shall not be
responsible for registering any of the other shares convertible in connection
with the Notes, or issuable in connection with the exercise of the Warrants; and
that any references in the Closing Documents to the Filing Date and/or the
Effectiveness Date shall refer to those dates as amended hereby.

3.   Grant of Additional Warrants.

 
In connection with and in consideration for the Purchasers agreeing to the terms
and conditions of Sections 1 and 2, above, Pediatric agrees to grant an
additional 1,000,000 Warrants to the Purchasers, on substantially the same terms
and conditions as the previous Warrants granted in connection with the Closing,
including an exercise price of $0.10 per share and an expiration date of May 30,
2013, but with a grant date of the date of this Agreement as provided above (the
“Additional Warrants”), which Additional Warrants shall be distributed to the
Purchasers as provided on Schedule 1 attached hereto, and which Additional
Warrants shall not be required to be registered with the Commission.

4.  No Event of Default.

The Purchasers agree that after the Parties entry into this Agreement, Pediatric
will not be in default of any covenant described in the Closing Documents or
Registration Rights Agreement, and that no Event of Default as defined in those
documents shall have occurred or shall be occurring.
 
5.Conditions of Effectiveness. This Amendment shall become effective upon due
execution by each of the Parties hereto.

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6.  Miscellaneous.

 
(1)
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.

 
(2)
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.

 
(3)
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.

(4)
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.

 
(5)
Section Headings. Section headings are for convenience only and shall not define
or limit the provisions of this Agreement.

 
(6)
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.

[Remainder 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/ Kenneth W. Bean
Kenneth W. Bean
VP Operation, C.O.O.

Purchasers:

AJW Partners, LLC
 
By: SMS Group, LLC
 
/s/ Corey S. Ribotsky                                                 
Corey S. Ribotsky
Manager
 
AJW Offshore, Ltd.
 
By: First Street Manager II, LLC

/s/ Corey S. Ribotsky                                               
Corey S. Ribotsky
Manager

AJW Qualified Partners, LLC
 
By: AJW Manager, LLC
 
/s/ Corey S. Ribotsky                                               
Corey S. Ribotsky
Manager

New Millennium Capital Partners, Ii, LLC
 
By: First Street Manager II, LLC
 
/s/ Corey S. Ribotsky                                              
Corey S. Ribotsky
Manager

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SCHEDULE 1

Breakdown of the Grant of Additional Warrants

Purchasers:
Warrants
   
AJW Partners, LLC
 
102,000
AJW Offshore, Ltd.
 
606,000
AJW Qualified Partners, LLC
 
279,000
New Millennium Capital Partners, II, LLC
 
13,000
Total Warrants
 
1,000,000
 

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