Document:

ex10-7.htm

    Exhibit 10.7

     

    SUBSIDIARY
GUARANTY

     

    THIS SUBSIDIARY GUARANTY (this
“Subsidiary
Guaranty”), effective as of June 2, 2008, among Pediatric Prosthetics,
Inc., an Idaho corporation (the “Company”), Pediatric
Prosthetics, Inc., a Texas corporation (individually a “Subsidiary
Guarantor”), for the benefit of the secured parties signatory hereto and
their respective endorsees, transferees and assigns (individually a “Secured Party” and
collectively, (the “Secured
Parties”).

     

    W I T N E S S E T
H:

     

    WHEREAS,
pursuant to a Securities Purchase Agreement, dated the date hereof, between
Company and the Secured Parties (the “Purchase
Agreement”), the Company has agreed to issue to the Secured Parties and
the Secured Parties have agreed to purchase from Company certain of the
Company’s 6% Callable Secured Convertible Notes, due three years from the date
of issue (the “Notes”),
which are convertible into shares of Company’s Common Stock, par value $.001 per
share (the “Common
Stock”).  In connection therewith, Company shall issue the
Secured Parties certain Common Stock purchase warrants (the “Warrants”);
and

     

    WHEREAS,
the Company and the Subsidiary Guarantors have been, and are now, engaged as a
national provider of specialized pediatric prosthetics for both upper and lower
limbs; and

     

    WHEREAS,
in the past, as now, the Company has provided financing for the Subsidiary
Guarantor, and the Subsidiary Guarantor has relied upon the Company to provide
such financing.  In addition, it is anticipated that, if the
Subsidiary Guarantor executes and delivers this Subsidiary Guaranty, the Company
will continue to provide such financing to the Subsidiary Guarantor, and that
the proceeds of the Purchase Agreement and Notes will
be used, in part, for the general working capital purposes of the Subsidiary
Guarantor; and

     

    WHEREAS,
the Subsidiary Guarantor constitutes all of the subsidiaries of the Company and
it is in the best interest of the Subsidiary Guarantor as subsidiary of the
Company and the indirect beneficiaries of the Purchase Agreement and Notes, that
the Secured Parties enter into the Purchase Agreement and purchase the Notes
from the Company; and

     

    WHEREAS,
as a material inducement to the Secured Parties to enter into the Purchase
Agreement and Notes, the Secured Parties have required and the Subsidiary
Guarantor has agreed to unconditionally guarantee the timely and full
satisfaction of all obligations of the Company, whether matured or unmatured,
now or hereafter existing or created and becoming due and payable (the “Obligations”)
to the Secured Parties, their successors, endorsees, transferees or assigns
under the Transaction Documents (as defined in the Purchase Agreement);
and

     

    WHEREAS,
in light of the foregoing, the Subsidiary Guarantor expects to derive
substantial benefit from the Purchase Agreement and sale of the Notes and the
transactions contemplated
thereby and, in furtherance thereof, has agreed to execute and deliver this
Subsidiary Guaranty.

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

     

     

    NOW,
THEREFORE, in consideration of the foregoing recitals, and the mutual covenants
contained herein, the parties hereby agree as follows:

     

    1.      Guaranty.  The
Subsidiary Guarantor, jointly and severally, hereby absolutely, unconditionally
and irrevocably guarantee to the Secured Parties, their successors, endorsees,
transferees and assigns the due and punctual performance and payment of the
Obligations owing to the Secured Parties, their successors, endorsees,
transferees or assigns when due, all at the time and place and in the amount and
manner prescribed in, and otherwise in accordance with, the Transaction
Documents, regardless of any defense or set-off counterclaim which the Company
or any other person may have or assert, and regardless of whether or not the
Secured Parties or anyone on behalf of the Secured Parties shall have instituted
any suit, action or proceeding or exhausted its remedies or taken any steps to
enforce any rights against the Company or any other person to compel any such
performance or observance or to collect all or part of any such amount, either
pursuant to the provisions of the Transaction Documents or at law or in equity,
and regardless of any other condition or contingency.

     

    2.      Waiver of
Demand.  The Subsidiary Guarantor hereby
unconditionally:  (i) waive any requirement that the Secured Parties,
in the event of a breach in any material respect by the Company of any of its
representations or warranties in the Transaction Documents, first make demand
upon, or seek to enforce remedies against, the Company or any other person
before demanding payment of enforcement hereunder; (ii) covenant that this
Subsidiary Guaranty will not be discharged except by complete performance of all
the Obligations; (iii) agree that this Subsidiary Guaranty shall remain in full
force and effect without regard to, and shall not be affected or impaired,
without limitation, by, any invalidity, irregularity or unenforceability in
whole or in part of the Transaction Documents or any limitation on the liability
of the Company thereunder, or any limitation on the method or terms of payment
thereunder which may now or hereafter be caused or imposed in any manner
whatsoever; and (iv) waive diligence, presentment and protest with respect to,
and notice of default in the performance or payment of any Obligation by the
Company under or in connection with the Transaction Documents.

     

    3.      Absolute
Obligation.  The Subsidiary Guarantor acknowledges and agrees
that (i) no Secured Party has made any representation or warranty to such
Subsidiary Guarantor with respect to the Company, any of its subsidiaries, any
Transaction Documents or any agreement, instrument or document executed or
delivered in connection therewith, or any other matter whatsoever, and (ii) such
Subsidiary Guarantor shall be liable hereunder, and such liability shall not be
affected or impaired, irrespective of (A) the validity or enforceability of any
Transaction Documents, or any agreement, instrument or document executed or
delivered in connection therewith, or the collectability of any of the
Obligations, (B) the preference or priority ranking with respect to any of the
Obligations, (C) the existence, validity, enforceability or perfection of any
security interest or collateral security under any Transaction Documents, or the
release, exchange, substitution or loss or impairment of any such security
interest or collateral security, (D) any failure, delay, neglect or omission by
any Secured Party to realize upon or protect any direct or indirect collateral
security, indebtedness, liability or obligation, any Transaction
Documents, or any agreement, instrument or 

     

     

     

     

     

    
      
        
        

      

      
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    document
executed or delivered in connection therewith, or any of the Obligations, (E)
the existence or exercise of any right of set-off by any Secured Party, (F) the
existence, validity or enforceability of any other guaranty with respect to any
of the Obligations, the liability of any other person in respect of any of the
Obligations, or the release of any such person or any other guarantor of any of
the Obligations, (G) any act or omission of any Secured Party in connection with
the administration of any Transaction Documents or any of the Obligations, (H)
the bankruptcy, insolvency, reorganization or receivership of, or any other
proceeding for the relief of debtors commenced by or against, any person, (I)
the disaffirmance or rejection, or the purported disaffirmance or purported
rejection, of any of the Obligations, any Transaction Documents, or any
agreement, instrument or document executed or delivered in connection therewith,
in any bankruptcy, insolvency, reorganization or receivership, or any other
proceeding for the relief of debtor, relating to any person, (J) any law,
regulation or decree now or hereafter in effect which might in any manner affect
any of the terms or provisions of any Transaction Documents, or any agreement,
instrument or document executed or delivered in connection therewith or any of
the Obligations, or which might cause or permit to be invoked any alteration in
the time, amount, manner or payment or performance of any of the Company's
obligations and liabilities (including the Obligations), (K) the merger or
consolidation of the Company into or with any person, (L) the sale by the
Company of all or any part of its assets, (M) the fact that at any time and from
time to time none of the Obligations may be outstanding or owing to any Secured
Party, (N) any amendment or modification of, or supplement to, any Transaction
Documents, or (O) any other reason or circumstance which might otherwise
constitute a defense available to or a discharge of the Company in respect of
its obligations or liabilities (including the Obligations) or of such Subsidiary
Guarantor in respect of any of the Obligations (other than by the performance in
full thereof).

     

    4.      Release.  The
obligations, covenants, agreements and duties of the Subsidiary Guarantor
hereunder shall not be released, affected or impaired by any assignment or
transfer, in whole or in part, of the Transaction Documents or any Obligation,
although made without notice to or the consent of the Subsidiary Guarantor, or
any waiver by the Secured Parties, or by any other person, of the performance or
observance by the Company or the Subsidiary Guarantor of any of the agreements,
covenants, terms or conditions contained in the Transaction Documents, or any
indulgence in or the extension of the time or renewal thereof, or the
modification or amendment (whether material or otherwise), or the voluntary or
involuntary liquidation, sale or other disposition of all or any portion of the
stock or assets of the Company or the Subsidiary Guarantor, or any receivership,
insolvency, bankruptcy, reorganization, or other similar proceedings, affecting
the Company or the Subsidiary Guarantor or any assets of the Company or the
Subsidiary Guarantor, or the release of any proper from any security for any
Obligation, or the impairment of any such property or security, or the release
or discharge of the Company or the Subsidiary Guarantor from the performance or
observance of any agreement, covenant, term or condition contained in or arising
out of the Transaction Documents by operation of law, or the merger or
consolidation of the Company, or any other cause, whether similar or dissimilar
to the foregoing.

     

     

     

     

     

     

    
      
        
        

      

      
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    5.      Subrogation.

     

    (a)           Unless
and until complete performance of all the Obligations, the Subsidiary Guarantor
shall not be entitled to exercise any right of subrogation to any of the rights
of the Secured Parties against the Company or any collateral security or
guaranty held by the Secured Parties for the payment or performance of the
Obligations, nor shall the Subsidiary Guarantor seek any reimbursement from the
Company in respect of payments made by the Subsidiary Guarantor
hereunder.

     

    (b)           In
the extent that the Subsidiary Guarantor shall become obligated to perform or
pay any sums hereunder, or in the event that for any reason the Company is now
or shall hereafter become indebted to the Subsidiary Guarantor, the amount of
such sum shall at all times be subordinate as to lien, time of payment and in
all other respects, to the amounts owing to the Secured Parties under the
Transaction Documents and the Subsidiary Guarantor shall not enforce or receive
payment thereof until all Obligations due to the Secured Parties under the
Transaction have been performed or paid.  Nothing herein contained is
intended or shall be construed to give to the Subsidiary Guarantor any right of
subrogation in or under the Transaction Documents, or any right to participate
in any way therein, or in any right, title or interest in the assets of the
Secured Parties.

     

    6.      Application of Proceeds;
Release.  The proceeds of any sale or enforcement of or against
all or any part of the cash or collateral at the time held by the Secured
Parties hereunder, shall be applied by the Secured Parties first to the payment
of the reasonable costs of any such sale or enforcement, then to the payment of
the principal amount or stated valued (as applicable) of, and interest or
dividends (as applicable) and any other payments due in respect of, the
Obligations.  The remainder, if any, shall be paid to the Subsidiary
Guarantor.  As used in this Subsidiary Guaranty, “proceeds” shall mean
cash, securities and other property realized in respect of.

     

    7.      Representations and
Warranties.

     

    (a)           The
Subsidiary Guarantor hereby represents and warrants to the Secured Parties
that:

     

    (i)           this
Subsidiary Guaranty constitutes a legal, valid and binding obligation of the
Subsidiary Guarantor, enforceable in accordance with its terms.

     

    (ii)          the
execution, delivery and performance of this Subsidiary Guaranty and other
instruments contemplated herein will not violate any provision of any order or
decree of any court or governmental instrumentality or of any mortgage,
indenture, contract or other agreement to which the Subsidiary Guarantor is a
party or by which the Subsidiary Guarantor may be bound, and will not result in
the creation or imposition of any lien, charge or encumbrance on, or security
interest in, any of the Subsidiary Guarantor’s properties pursuant to the
provisions of such mortgage, indenture, contract or other
agreement.

     

     

     

     

     

    
      
        
        

      

      
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    (iii)         all
representations and warranties relating to it contained in the Purchase
Agreement are true and correct.

     

    (b)           The
Company represents and warrants to the Secured Parties that it has no knowledge
that any of the representations or warranties of the Subsidiary Guarantor herein
are incorrect or false in any material respect.

     

    8.      No Waiver; No Election of
Remedies.  No failure on the part of the Secured Parties to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise by the
Secured Parties of any right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or
remedy.  The remedies herein provided are cumulative and are not
exclusive of any remedies provided by law.  In addition, the exercise
of any right or remedy of the Secured Parties at law or equity or under this
Subsidiary Guaranty or any of the documents shall not be deemed to be an
election of Pledgee’s rights or remedies under such documents or at law or
equity.

     

    9.      Termination.  This
Subsidiary Guaranty shall terminate on the date on which all Obligations have
been performed, satisfied, paid or discharged in full.

     

    10.    Further
Assurances.  The parties hereto agree that, from time to time
upon the written request of any party hereto, they will execute and deliver such
further documents and do such other acts and things as such party may reasonably
request in order fully to effect the purposes of this Subsidiary
Guaranty.

     

    11.    Miscellaneous.

     

    (a)           Payment of
Fees.  The Subsidiary Guarantor and the Company jointly and
severally agree to pay all costs including all reasonable attorneys’ fees and
disbursements incurred by the Secured Parties in enforcing this Subsidiary
Guaranty in accordance with its terms.

     

    (b)           Modification.  This
Subsidiary Guaranty contains the entire understanding between the parties with
respect to the subject matter hereof and specifically incorporates all prior
oral and written agreements relating to the subject matter hereof.  No
portion or provision of this Subsidiary Guaranty may be changed, modified,
amended, waived, supplemented, discharged, canceled or terminated orally or by
any course of dealing, or in any manner other than by an agreement in writing,
signed by the party to be charged.

     

    (c)           Notice.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section prior to 6:30 p.m. (New York City time) on a Business
Day (as defined in the Purchase Agreement), (ii) the Business Day after the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile telephone number specified in this Subsidiary Guaranty later than
6:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York
City time) on such date, (iii) the Business Day following the date of mailing,
if sent by nationally recognized overnight
courier services, or (iv) upon actual receipt by the party to whom such notice
is required to be given.  The address for such notices and
communications shall be as follows:

     

     

     

     

     

    
      
        
        

      

      
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              If
      to the Company:

            	
              Pediatric
      Prosthetics, Inc.

            

    

    
      	
               
      

            	
              12926
      Willow Chase Drive

            

    

    
      	
               
      

            	
              Houston,
      TX 77070

            

    

    
      	
               
      

            	
              Attention:  Chief
      Executive Officer

            

    

    
      	
               
      

            	
              Telephone:  (281)
      897-1108

            

    

    
      	
               
      

            	
              Facsimile:   (281)
      897-8462

            

    

     

    
      	
              With
      copies to:

            	
              David
      M. Loev, Esq.

            

    

    6300 West
Loop South, Suite 280

    Bellaire,
TX 77401

    Attention:   David
M. Loev, Esq.

    Telephone:  (713)
524-4110

    Facsimile:   (713)
524-4122

     

    

     

    If to the
Subsidiary
Guarantors:                        Pediatric
Prosthetics, Inc.

    12926
Willow Chase Drive

    Houston,
TX 77070

    Attention:  Chief
Executive Officer

    Telephone:  (281)
897-1108

    Facsimile:   (281)
897-8462

     

    
      	
              If
      to the Secured Parties:

            	
              New
      Millennium Capital Partners II, LLC

            

    

    
      	
               
      

            	
              1044
      Northern Boulevard

            

    

    
      	
               
      

            	
              Suite
      302

            

    

    
      	
               
      

            	
              Roslyn,
      New York 11576

            

    

    
      	
               
      

            	
              Attention:  Corey
      Ribotsky

            

    

    
      	
               
      

            	
              Facsimile:  516-739-7115

            

    

     

    With
copies
to:                                                     Ballard
Spahr Andrews & Ingersoll, LLP

    1735
Market Street, 51st
Floor

    Philadelphia,
Pennsylvania  19103

    Attention:  Gerald
J. Guarcini, Esquire

    Facsimile:  215-864-8999

     

    (d)           Invalidity.  If
any part of this Subsidiary Guaranty is contrary to, prohibited by, or deemed
invalid under applicable laws or regulations, such provision shall be
inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder hereof shall not be invalidated thereby and shall be
given effect so far as possible.

     

    (e)           Benefit of
Agreement.  This Subsidiary Guaranty shall be binding upon and
inure to the parties hereto and their respective successors and
assigns.

     

     

     

     

     

    
      
        
        

      

      
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    (f)           Mutual
Agreement.  This Subsidiary Guaranty embodies the arm’s length
negotiation and mutual agreement between the parties hereto and shall not be
construed against either party as having been drafted by it.

     

    (g)           New York Law to
Govern.  This Subsidiary Guaranty shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York without regard to the principals of conflicts of law
thereof.  Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and Federal courts sitting in the city of New York,
borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court or that such suit, action or proceeding is
improper.  Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

     

     

     

     

    
      
        
        

      

      
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    IN
WITNESS WHEREOF, the parties hereto have caused this Guaranty and Pledge
Agreement to be duly executed by their respective authorized persons as of the
date first indicated above.

    

    COMPANY

    

    PEDIATRIC
PROSTHETICS, INC.

     

    /s/
Linda Putback-Bean

     

    Linda
Putback-Bean

    Chief
Executive Officer

     

    

    SUBSIDIARY
GUARANTORS:

    

    

    PEDIATRIC
PROSTHETICS, INC.

     

    /s/
Linda Putback-Bean

     

    Linda
Putback-Bean

    Chief
Executive Officer

     

    

     

     

     

     

     

    
      
        
        

      

      
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              SECURED
      PARTIES:

            

    

    

    

    
      	
               
      

            	
              NEW
      MILLENNIUM CAPITAL PARTNERS II, LLC

            

    

    
      	
               
      

            	
              By:  First
      Street Manager II, LLC

            

    

     

                            
By:  /s/ Corey S.
Ribotsky

                     Corey
S. Ribotsky

                    
Manager

     

     

     

     

     

    
 

    
      
        
        

      

      
        -9-ex10-8.htm

    Exhibit
10.8

     

    THIRD
WAIVER OF RIGHTS AGREEMENT

    

    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:

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	 	
                1.

              	
                Waiver of the
      Anti-Dilution Provisions of the Notes and
  Warrants.

              
	 	 
      	 
      
	 	 
      	
                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.

              
	 	 
      	 
      
	 	 
      	
                Each
      of the Purchasers individually confirms that it will receive valid
      consideration in connection with the Company’s New
  Funding.

              
	 	 
      	 
      
	 	
                2.

              	
                Approval of the New
      Funding.

              
	 	 
      	 
      
	 	
                 

              	
                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.

              
	 	 
      	 
      
	 	
                3.

              	
                Conditions
      of Effectiveness.

              
	 	 
      	 
      
	 	 
      	
                This
      Amendment shall become effective upon execution by each of the Parties
      hereto.

              
	 	 
      	 
      
	 	
                4.

              	
                Additional
      Funding.

              
	 	 
      	 
      
	 	 
      	
                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.

            	
              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)

              	
                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.

              
	 	 
      	 
      
	 	
                (7)

              	
                Authority.  Each
      Party has all requisite power and authority, corporate or otherwise, to
      enter into and affect the transactions contemplated by this
      Agreement.

              
	 	 
      	 
      
	 	
                (8)

              	
                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.]

     

     

     

     

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

     

     

     

               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/
Linda putback-bean

    Linda
Putback-Bean

    Chief
Executive Officer

    

    

    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

     

     

     

     

     

    
      
        
        

      

      
        -4-

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