Item 8.01 Other Events.
On August 30, 2007, the Company accepted the surrender of 642,611 shares of the Company's common stock by Mark Woodburn and Terry LaCore in payment of the principal and accrued interest on a non-recourse promissory note to the Company for the principal amount of $2,500,000 (the "Note"). The Note was executed and delivered to the Company on October 31, 2006, in connection with a settlement agreement between the Company and Messrs. Woodburn and LaCore (the "Settlement"). It bore interest at the rate of 6% per year and was secured by a pledge of 1,081,066 shares of the Company's common stock.
As provided in the Note, the value of the surrendered shares for purposes of determining the credit to be given against the principal and interest accrued on the Note was equal to the average of the closing prices for the 20 consecutive trading days preceding the date the shares were tendered for surrender. After the Company's acceptance of the surrendered shares, Messrs. Woodburn and LaCore continue to own a total of 438,455 of the originally pledged shares (the "Remaining Shares"). Pursuant to the Settlement, the Remaining Shares may not be sold, transferred or conveyed to a third party before October 31, 2007. Prior to October 31, 2007, the Remaining Shares will remain pledged to the Company to secure obligations of Messrs. Woodburn and LaCore under an Indemnification Agreement executed and delivered on October 31, 2006, in connection with the Settlement. While owned by Messrs. Woodburn and LaCore or their affiliates, the Remaining Shares will remain subject to an irrevocable proxy and voting agreement in favor of the Company's Board of Directors until October 31, 2009.