0001144204-08-056706.txt : 20081008 0001144204-08-056706.hdr.sgml : 20081008 20081008153422 ACCESSION NUMBER: 0001144204-08-056706 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20081008 DATE AS OF CHANGE: 20081008 GROUP MEMBERS: KANDERS & COMPANY, INC. GROUP MEMBERS: LANGER PARTNERS, LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: LANGER INC CENTRAL INDEX KEY: 0000725460 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 112239561 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-36032 FILM NUMBER: 081114304 BUSINESS ADDRESS: STREET 1: 450 COMMACK ROAD CITY: DEER PARK STATE: NY ZIP: 11729 BUSINESS PHONE: 6136671200 MAIL ADDRESS: STREET 1: 450 COMMACK ROAD CITY: DEER PARK STATE: NY ZIP: 11729 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: KANDERS WARREN B CENTRAL INDEX KEY: 0000935577 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: C/O KANDERS & COMPANY, INC. STREET 2: TWO SOUNDVIEW DRIVE CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2035529600 MAIL ADDRESS: STREET 1: C/O KANDERS & COMPANY, INC. STREET 2: TWO SOUNDVIEW DRIVE CITY: GREENWICH STATE: CT ZIP: 06830 SC 13D/A 1 v128329_sc13da.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D/A

Amendment No. 8

Under the Securities Exchange Act of 1934

Langer, Inc.

(Name of Issuer)

Common Stock, $0.02 par value

(Title of Class of Securities)

515707107

(CUSIP Number)

Langer Partners, LLC

Kanders & Company, Inc.

Warren B. Kanders

One Landmark Square

Stamford, CT 06901

(203) 552-9600

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

September 29, 2008

(Date of Event which requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box o.

	SCHEDULE 13D
CUSIP No. 515707107		Page 2 of 9 Pages

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Langer Partners, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 1,506,856 (see Item 5)
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER 1,506,856 (see Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,506,856 (see Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.1%
14	TYPE OF REPORTING PERSON* OO

*Warren B. Kanders is the sole voting member and sole manager of Langer Partners, LLC

	SCHEDULE 13D
CUSIP No. 515707107		Page 3 of 9 Pages

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Kanders & Company, Inc.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 575,000 (see Item 5)
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER 575,000 (see Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 575,000 (see Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.6%
14	TYPE OF REPORTING PERSON* CO

*Warren B. Kanders is the sole stockholder and sole director of Kanders & Company, Inc.

	SCHEDULE 13D
CUSIP No. 515707107		Page 4 of 9 Pages

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Warren B. Kanders
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* PF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION United States of America
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 1,716,199 (see Item 5)
		8	SHARED VOTING POWER 2,081,856 (see Item 5)
		9	SOLE DISPOSITIVE POWER 1,716,199 (see Item 5)
		10	SHARED DISPOSITIVE POWER 2,081,856 (see Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,798,055 (see Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 30.6%
14	TYPE OF REPORTING PERSON* IN

The Schedule 13D filed February 23, 2001 (the “Schedule 13D”) by Langer Partners, LLC (“Langer LLC”), Kanders & Company, Inc. (“Kanders & Co.”), and Warren B. Kanders with respect to shares of common stock, par value $.02 per share, of Langer, Inc., a Delaware corporation (the “Issuer” or the “Company”), as amended by Amendments Nos. 1, 2, 3, 4, 5, 6 and 7 to the Schedule 13D, is hereby further amended by this Amendment No. 8 to the Schedule 13D. Information contained in this Amendment No. 8 is as of the date hereof, unless otherwise expressly provided herein. Capitalized terms used but not defined herein shall have the meanings set forth in the Schedule 13D.

Item 3. Source and Amount of Funds or Other Consideration.

Item 3 of the Schedule 13D is hereby amended by the addition of the following:

On September 29, 2008, Warren B. Kanders individually or through related entities, acquired approximately $3,250,000 principal amount of the Issuer’s 5% Convertible Subordinated Notes, due December 7, 2011 (the “5% Notes”). The source of the $1,161,875 used to acquire the 5% Notes was the personal funds of Warren B. Kanders or certain of his related entities.

Item 5. Interest in Securities of the Issuer.

Item 5 of the Schedule 13D is hereby amended and restated in its entirety to read as follows:

(a)-(c)

(1)

Kanders & Co. beneficially owns and has the power to direct the voting and disposition of (i) options to purchase an aggregate of 100,000 shares of Common Stock (the “Kanders & Co. Option Shares”), (ii) 100,000 shares of Common Stock which were issued to Kanders & Co. as a restricted stock award (the “RSA Vested Shares”) and (iii) 100,000 shares of Common Stock purchased in a private transaction and 275,000 shares of Common Stock acquired by purchase on the open market (such 375,000 shares are collectively referred to as the “Kanders & Co. Outstanding Shares”). The foregoing shares beneficially owned by Kanders & Co. collectively constitute 4.6% of the Issuer’s outstanding shares of Common Stock.

5 of 9

(2)

Langer LLC beneficially owns and has the power to direct the voting and disposition of (i) 1,491,856 shares of Common Stock which are presently issued and outstanding (the “LLC Outstanding Shares”), and (ii) warrants issued September 30, 2004 (the “Warrants”) to purchase 15,000 shares of Common Stock (the “Warrant Shares”). The foregoing shares beneficially owned by Langer LLC collectively constitute 12.1% of the Issuer’s outstanding shares of Common Stock.

(3)

Warren B. Kanders beneficially owns and has the power to direct the voting and disposition of (i) options to purchase 515,000 shares of Common Stock (the “WBKanders Option Shares”), (ii) as trustee for a member of his family, $2,000,000 principal amount of the 5% Notes, which are convertible into 429,028 shares of Common Stock and $3,250,000 principal amount of the 5% Notes, which are convertible into 697,171 shares of Common Stock (such 1,126,199 shares are collectively referred to as the “WBKanders 5% Note Conversion Shares”), (iii) 75,000 shares of Common Stock purchased in a private transaction (the “WBKanders Outstanding Shares”), and (iv) 500,000 unvested shares of Common Stock which were issued to Mr. Kanders as a restricted stock award (the “WBKanders Unvested RSA Shares”) described in paragraph 5(c) of Amendment No. 7 to this Schedule 13D. The foregoing shares beneficially owned by Warren B. Kanders, excluding the WBKanders Unvested RSA Shares, collectively constitute 13.8% of the Issuer's outstanding Common Stock. The WBKanders Unvested RSA Shares become vested after and if certain EBITDA targets are achieved or following a change in control of the Issuer as described in paragraph 5(c) of Amendment No. 7 to this Schedule 13D. As of the date of this Amendment No. 8, such conditions have not yet been met and therefore the WBKanders Unvested RSA Shares are not presently outstanding and carry no voting rights at the present time.

(4)

Warren B. Kanders, the sole stockholder and sole director of Kanders & Co., and the sole voting member and manager of Langer LLC, may be considered the beneficial owner with the shared power to vote and dispose of (i) the Kanders & Co. Option Shares, as to which Mr. Kanders disclaims beneficial ownership, (ii) the LLC Outstanding Shares, as to which Mr. Kanders disclaims beneficial ownership, (iii) the Warrant Shares, as to which Mr. Kanders disclaims beneficial ownership and (iv) the Kanders & Co. Outstanding Shares, as to which Mr. Kanders disclaims beneficial ownership. All such securities, together with the WBKanders Option Shares, the WBKanders 5% Note Conversion Shares, and the WBKanders Outstanding Shares (but excluding the WBKanders Unvested RSA Shares) would constitute 30.6% of the Issuer’s outstanding shares of Common Stock, assuming the exercise or conversion of the aforesaid options, Warrants and 5% Notes.

Each of the above percentage calculations is based upon an aggregate of 12,407,772 shares of Common Stock outstanding, which represents the sum of (i) 10,651,573 shares outstanding as reported by the Issuer on its Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 and (ii) 1,756,199 shares acquirable by the Reporting Persons under the options, Warrants and 5% Notes owned by the Reporting Persons, but not including the WBKanders Unvested RSA Shares, which are not presently outstanding and carry no voting rights at the present time.

6 of 9

The transferability of the WBKanders Option Shares is subject to restrictions between the Issuer and Kanders & Co. or Mr. Kanders, as applicable. See Item 5, paragraph (c), as set forth in Amendment No. 4 of this Schedule 13D.

The beneficial ownership reported above excludes $500,000 principal amount of the 5% Notes, which are presently convertible into 107,257 shares of Common Stock (the “Excluded 5% Note Conversion Shares”) based on a conversion price of $4.6617 per share, as to which the beneficial owners thereof have agreed to vote such shares of Common Stock in the same proportion and manner as the Reporting Persons pursuant to the terms of the Letter Agreements discussed in Item 6 below. Each of the Reporting Persons hereby disclaims beneficial ownership in and the existence of a “group” with respect to the Excluded 5% Note Conversion Shares.

Except for the purchase on September 29, 2008 of $3,250,000 principal amount of the 5% Notes, no transactions in the shares of the Issuer’s Common Stock or other securities have been effected by the Reporting Persons during the last 60 days.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

Item 6 of the Schedule 13D is hereby amended by the addition of the following:

On September 29, 2008, Kanders & Co. entered into letter agreements (the “Letter Agreements”) with each of W. Gray Hudkins, the Issuer’s President and Chief Executive Officer, and Kathleen P. Bloch, the Issuer’s Vice President and Chief Financial Officer, pursuant to which such persons agreed (i) not to sell, transfer, pledge, or otherwise dispose or convert into Common Stock, any portion of the 5% Notes respectively owned by them and (ii) to cast all votes to which they respectively may cast with respect to any shares of Common Stock underlying the 5% Notes in the same manner and proportion as shares of Common Stock voted by the Reporting Persons. The description of the Letter Agreements in this Item 6 is qualified in its entirety by reference to the full text of the Letter Agreements, the form of which is attached hereto as Exhibit 99.3.

On September 29, 2008, Mr. Hudkins executed and delivered to Kanders & Co. a promissory note in the principal amount of $40,000 (the “Note”). The Note accrues interest at the rate of 10% per annum and all payments of principal and interest due under the Note is due and payable on December 15, 2011. Mr. Hudkins applied the proceeds of the Note toward the acquisition of $250,000 principal amount of the 5% Notes for the aggregate price of $87,500. The description of the Note in this Item 6 is qualified in its entirety by reference to the full text of the Note, the form of which is attached hereto as Exhibit 99.4.

Item 7. Material to be Filed as Exhibits.

Item 7 of the Schedule 13D is hereby amended by the addition of the following:

Exhibit 99.3:

Form of Letter Agreements.

Exhibit 99.4:

Form of Promissory Note.

7 of 9

[Signature Page Follows:]

8 of 9

Signature

After reasonable inquiry and to the best of my knowledge and belief, the undersigned each certifies that the information set forth in this statement is true, complete and correct.

Date: October 7, 2008


	Langer Partners, LLC

	By:	/s/ Warren B. Kanders
		Warren B. Kanders, Sole Voting Member and Manager


	Kanders & Company, Inc.

	By:	/s/ Warren B. Kanders
		Warren B. Kanders, President


		/s/ Warren B. Kanders
		Warren B. Kanders

9 of 9

EX-99.3 2 v128329_ex99-3.htm

September 26, 2008

To:	Kanders & Company, Inc.

One Landmark Square, 22nd Floor

Stamford, Connecticut 06901

Attention: Mr. Warren B. Kanders

Re:

Langer, Inc. (the “Company”)

Dear Mr. Kanders:

The undersigned, ____________ for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, agrees that, until December 7, 2011 (the “Termination Date”), the undersigned will not offer, sell, contract to sell, hypothecate, pledge, grant any option to purchase, make any short sale or otherwise dispose of or encumber any portion of the $250,000 principal amount of the Company’s 5% Convertible Subordinated Notes due December 7, 2011 (the “Note”) owned by the undersigned. Except with your prior written consent, the undersigned further agrees not to exercise any rights to convert the Note into shares of the Company’s common stock, $0.02 par value (the “Conversion Shares” and with the Note, the “Subject Securities”) prior to the Termination Date.

The foregoing restriction is expressly agreed to preclude the undersigned from engaging in any hedging or other transaction which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the Subject Securities even if the Subject Securities would be disposed of by someone other than the undersigned. Such prohibited hedging or other transactions would include without limitation any short sale or any purchase, sale or grant of any right (including without limitation any put or call option) with respect to any of the Subject Securities or with respect to any security that includes, relates to, or derives any significant part of its value from such securities.

Notwithstanding the foregoing, subject to applicable law the undersigned may transfer the Subject Securities subject to the provisions, including those regarding voting, set forth herein (i) as a bona fide gift or gifts, provided that the donee or donees thereof agree to be bound in writing by the restrictions set forth herein, (ii) to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, or (iii) with your prior written consent. For purposes of this Letter Agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin. The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of the Subject Securities except in compliance with the foregoing restrictions.

The undersigned further agrees to cast all votes to which the undersigned is entitled in respect of the Subject Securities, whether at any annual or special meeting, by written consent or otherwise, in the same manner and proportion as shares of Common Stock are voted by you and your affiliates or as otherwise directed by you. Prior to the Termination Date, the undersigned shall not enter into any agreement or understanding with any entity or person including to vote, grant any proxy or give instructions with respect to the voting of the Subject Securities in any manner inconsistent with the preceding sentence.

The undersigned agrees to execute any additional documents reasonably necessary or related to the enforcement of this Letter Agreement. The undersigned further agrees that until the Termination Date, the Note will be under the custody of Kane Kessler, P.C. The undersigned’s obligations under this Letter Agreement shall be binding upon the undersigned’s successors and assigns or heirs, as the case may be.

This Letter Agreement, and all rights and obligations of the parties hereunder, shall be construed and enforced in accordance with and governed by the law of the State of New York. This Letter Agreement shall be subject to the exclusive jurisdiction of the courts of New York County, New York. Any breach or default of any provision hereof shall be deemed to be a breach or default occurring in the State of New York by virtue of a failure to perform an act required to be performed in the State of New York, and the parties, for themselves and their lawful successors, irrevocably and expressly agree to submit to the jurisdiction of the courts of the State of New York for the purpose of enforcing the terms of hereof and the transactions contemplated hereby. The parties irrevocably waive (for themselves and their lawful successors), to the fullest extent permitted by law, any objection which they may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Letter Agreement or any judgment entered by any court in respect hereof brought in New York County, New York, and further irrevocably waive any claim that any suit, action or proceeding brought in New York County, New York has been brought in an inconvenient forum.

Very truly yours,

__________________________________

EX-99.4 3 v128329_ex99-4.htm

PROMISSORY NOTE

September 26, 2008

U.S. $40,000.00

PROMISSORY NOTE (THE “NOTE”)

FOR VALUE RECEIVED, the undersigned, W. Gray Hudkins, an individual, residing at ___________ (“Payor”), hereby promises to pay to the order of Kanders & Company, Inc., a Delaware corporation with executive offices at One Landmark Square, 22nd Floor, Stamford, Connecticut 06901 (“Payee”), in immediately available funds, the sum of Forty Thousand and Zero Cents ($40,000.00), together with all accrued and unpaid interest thereon from the date hereof at a rate of 10.0% per annum, compounding quarterly on the first day of October, January, April and July until the principal balance has been paid in full. All amounts referred to herein are expressed and payable in United States dollars. This Note is subject to the following additional terms.

1. Payment; Prepayment.

(a) All payments of principal and interest hereunder shall be due and payable on December 15, 2011, at the address of Payee set forth above, or at such other place as Payee may from time to time designate by written notice to Payor. All payments hereunder shall be applied first to any outstanding amounts specified in paragraph 11 hereof, then to all accrued and unpaid interest hereunder, and then to the principal amount outstanding hereunder.

(b) The accrued interest and principal amount of this Note shall be subject to mandatory pre-payment upon the earlier of any conversion, redemption, prepayment or sale of the 5% Convertible Subordinated Notes Due December 7, 2011.

(c) This Note may be prepaid, in whole or in part, at any time, subject to the provisions below. Any prepayment shall first be applied to all accrued and unpaid interest on the amount prepaid, to the date of prepayment, and the balance to unpaid principal.

2. Absolute Obligation. No provision of this Note shall alter or impair the obligation of the Payor, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place and rate herein prescribed.

3. Events of Default. If one or more of the following described “Events of Default” shall occur:

(a) The Payor shall default in the payment, when due, of principal or interest on this Note; or

(b) The Payor shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; or (4) apply for or consent to the appointment of a trustee, liquidator or receiver for all of its or for a substantial part of its property or business;

(c) Bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Payor and, if instituted against the Payor, shall not be dismissed within forty (45) days after such institution, or the Payor shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit the material allegations of, or default in answering a petition filed in any such proceeding; or

(d) Payor breaches the terms of that certain letter agreement dated as of the date hereof;

then, or at any time thereafter, and as long as such Event of Default is continuing unless such Event of Default shall have been waived in writing by the Payee (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Payee and in the Payee's sole discretion, (i) all amounts of principal and accrued interest payable hereunder, together with collection costs (including all attorneys' fees and disbursements), shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, (ii) the principal sum of, and any accrued interest on, this Note shall be irrevocably and unconditionally payable by Payor, without offset, discount, defense, claim or counterclaim of any nature, and (iii) the Payee may immediately, and without expiration of any period of grace other than as contained in this Section, enforce any and all of the Payee's rights and remedies provided herein or any other rights or remedies afforded by law.

4. Applicable Law and Jurisdiction. This Note shall be governed by and interpreted under the laws of the State of New York applicable to contracts made and to be performed therein, without giving effect to the principles of conflicts of law. Payor irrevocably consents to the service of process arising out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by postage prepaid certified or registered first-class mail, return receipt requested, to Payor. The foregoing, however, shall not limit the right of Payee to service of process in any other manner permitted by law or to commence any legal action or proceeding or to obtain execution of judgment in any appropriate jurisdiction. Payor hereby expressly and irrevocably submits to the jurisdiction of any court of the State of New York or any federal court of the United States, in each case located in New York County, the State of New York for the purposes of any action arising out of this Note and expressly and irrevocably waives, to the fullest extent permitted by law, any objection which it may have or hereafter may have to the laying of venue of any such action brought in any such court and any claim that any such action has been brought in an inconvenient forum. In the event of litigation between Payee and Payor over any matter connected with this Note, the right to a trial by jury is hereby waived by Payor.

5. Further Assurances. Payor hereby agrees to execute and deliver such other documents and instruments as may be reasonably requested by Payee in order to give effect to the intent and purposes of this Note.

6. No Failure to Exercise. No failure on the part of Payee to exercise, and no delay in exercising any right hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise by Payee of any right preclude any other or further exercise thereof or the exercise of any other right.

7. Amendments. No amendment, modification or waiver of any provision of this Note, nor any consent to any departure by Payor therefrom, shall be effective unless the same shall be in writing and signed by Payee and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

8. Binding; Assignment. This Note shall be binding upon the Payor and its successors and assigns, and the terms hereof shall inure to the benefit of Payee and its heirs, legal representatives, successors and permitted assigns, including subsequent holders hereof. The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction.

9. Notice. Any notice, request, demand or other communication permitted or required to be given under this Note shall be in writing, shall be sent by one of the following means to the addressee at the address provided above (or at such other address as shall be designated hereunder by notice to the other party) and shall be deemed conclusively to have been given: (i) on the first day following the day timely deposited with Federal Express (or other equivalent national overnight courier) or United States Express Mail, with the cost of delivery prepaid or for the account of the sender; (ii) on the fifth day following the day duly sent by certified or registered United States mail, postage prepaid and return receipt requested; or (iii) on the day actually received by the addressee when personally delivered.

10. Usury Savings Clause. Anything in this Note to the contrary notwithstanding, the obligation of the Payor to make payments of interest shall be subject to the limitation that payments of interest shall not be required to be made to the extent that the Payee's receipt thereof would not be permissible under the law or laws applicable to it limiting rates of interest which may be charged or collected by it. Any such amount of interest which is not paid as a result of the limitation referred to in the preceding sentence shall be carried forward and paid by the Payor to the Payee on the earliest date or dates on which any interest is payable under this Note and on which the receipt thereof is permissible under the laws applicable to the Payee limiting rates of interest which may be charged or collected by Payee.

11. Attorneys’ Fees; Expenses. Payor agrees to pay all costs and expenses Payee incurs to collect this Note. This includes, subject to any limits under applicable law, Payee’s reasonable attorneys’ fees and expenses whether or not Payee commences a lawsuit, together with reasonable attorneys’ fees and expenses for contesting or appearing in bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, Payor also will pay any court costs, in addition to all other sums provided by law.

12. Waiver. Payor hereby waives presentment for payment, notice of dishonor, protest and notice of protest of this Note.

____________________________________

W. Gray Hudkins