UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
Date of
Report (date of earliest event reported): October 1,
2008
ABC
FUNDING, INC.
(Exact
Name of Registrant as Specified in its Charter)
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Nevada
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333-121070
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56-2458730
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State
of Incorporation
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Commission
File Number
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IRS
Employer I.D. Number
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4606 FM 1960 West, Suite
400, Houston, Texas 77069
Address
of principal executive offices
Registrant’s
telephone number:
(281)
315-8890
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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Item
3.02
Unregistered Sales of
Equity Securities
Employment
Arrangement
As disclosed elsewhere in this
Current Report under Item 5.02 “Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers,” on October 1, 2008, ABC Funding, Inc. (“we”
or “the Company”) entered into the Employment Agreement (defined in Item 5.02
below) whereby we agreed to issue an aggregate of 750,000 Restricted Shares (as
defined in Item 5.02 below) and (ii) granted options, pursuant to our 2008 Stock
Incentive Plan (the “Plan”), to purchase up to an aggregate of 1,000,000 shares
of our common stock to our newly appointed executive
officer. Issuance of the Restricted Shares and vesting of the stock
options are made specifically subject to the effectiveness in the State of
Nevada of the Company’s Certificate of Amendment to it Articles of
Incorporation, increasing the number of authorized shares of the Company’s
common stock to 149,000,000 (the “Charter Amendment”) and are exempt from the
registration requirements of the Securities Act of 1933, as amended, under
Section 4(2) thereof.
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Item
5.02
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers
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Appointment
of New Officer:
On October 1, 2008, we entered into
an employment agreement, a copy of which is filed as Exhibit 99.1 (the
"Employment Agreement"), pursuant to which we engaged, effective as of October
1, 2008 (the "Effective Date"), Jim B. Davis, to serve as our Senior Vice
President of Operations.
We also entered into a restricted
stock agreement ("Restricted Stock Agreement") and option agreements (the
"Options") with Mr. Davis, pursuant to which we have agreed to issue up to an
aggregate of 1,750,000 shares of our common stock to this executive officer,
subject to the effectiveness of the Charter Amendment in the State of
Nevada.
Reference is made to the Employment
Agreement, the Restricted Stock Agreement and the Options, copies of which are
filed as Exhibits 99.1 through 99.5 hereto and incorporated herein by this
reference, and the below summary of these agreements is qualified in its
entirety by reference thereto.
Set forth below is certain
biographical information for Mr. Davis:
Jim B. Davis, age 46, has over 21
years experience with major and independent E&P companies. From
September 2007 until joining ABC Funding, Inc. on October 1, 2008, Mr. Davis
served as an independent consulting drilling engineer for Apache Australia Ltd.,
designing wells in the Gippsland and Carnorvoran Basins located offshore
Australia, and for El Paso Corp., designing and drilling high pressure/high
temperature wells in Duval, Lavaca, Starr and Hidalgo counties of South Texas,
as well as supervising two to three drilling rigs. From April 2002
until his resignation in August 2007, Mr. Davis held positions of increasing
responsibility as manager, vice president and senior vice president of
engineering and operations for Goodrich Petroleum Corp. (NYSE:
GDP). Mr. Davis was instrumental in growing Goodrich, both through
increased reserves and cash flow, during his tenure at Goodrich. From
May 2001 until March 2002, Mr. Davis consulted as the senior drilling engineer
(and acting drilling manager during the Forest Oil acquisition) for Forcenergy,
Inc. and from January 2000 to May 2001 was responsible for Forcenergy’s daily
drilling and engineering activities for its Gulf of Mexico
projects. From November 1987 until December 1999, Mr. Davis held
various production, development and drilling engineering positions with Texaco
E&P, Inc. in fields throughout Southeast Louisiana and the Gulf of
Mexico. Mr. Davis is a licensed Professional Engineer in the States
of Louisiana and Texas and received a Master of Engineering Degree and a
Bachelor of Science Degree in Petroleum Engineering in 1987 and 1985,
respectively, from Louisiana State University.
Employment
Agreement:
The Employment Agreement provides for
Mr. Davis to serve as our Senior Vice President of Operations at an initial
annual base salary of $190,000. The initial term of employment under
the Employment Agreement is two (2) years unless earlier terminated by us or
executive officer by reason of death, disability, without cause, for cause, for
"good reason," change of control or otherwise.
In addition to his base salary, Mr.
Davis is guaranteed an annual bonus of $38,000 on the First Anniversary
Date and an amount up to 75% of his then applicable base salary for calendar
year 2009, as determined by our board of directors or committee thereof, based
on such officer's performance and achievement of quantitative and qualitative
criteria set by our board, for such year. In awarding such bonus, our
board of directors may take into account the guaranteed bonus paid to Mr. Davis
on the first anniversary date. Mr. Davis is further eligible under
his employment agreement to participate, subject to any eligibility, co-payment
and waiting period requirements, in all employee health and/or benefit plans
offered or made available to our senior officers.
Upon termination of Mr. Davis without
"cause", upon his resignation for "good reason", or upon his termination
following a "change of control" (each as defined in the Employment Agreement),
Mr. Davis will be entitled to receive from us, in addition to his then current
base salary through the date of resignation or termination, as applicable, and
pro rata bonus and fringe benefits otherwise due and unpaid at time of
resignation or termination, a severance payment equal to twelve (12) months base
salary at the then current rate plus pro rata performance bonus earned and
unpaid through the date of termination or resignation, as applicable. Mr. Davis
shall also be entitled to any unpaid bonus from the preceding year of
employment, and any Restricted Shares (as defined below) granted to him shall
immediately vest. All other stock options or grants, if any, made to
him pursuant to any incentive or benefit plans then in effect shall vest and be
exercisable, as applicable, in accordance with the terms of any such plans or
agreements. We have also agreed to pay this executive officer an
additional gross-up amount equal to all Federal, state or local taxes that may
be imposed upon him by reason of the severance payments.
Mr. Davis has agreed that, during the
respective term of his employment and for a one-year period after his
termination (other than termination by him for “good reason” or by us without
cause or following a “change of control”), not to engage, directly or
indirectly, as an owner, employee, consultant or otherwise, in any business
engaged in the exploration, drilling or production of natural gas or oil within
any five (5) mile radius from any property that we then have an ownership,
leasehold or participation interest. Mr. Davis is further prohibited during the
above time period from soliciting or inducing, directly or indirectly, any of
our then-current employees or customers, or any customers of ours during the one
year preceding the termination of his employment.
Restricted
Stock Agreement:
Pursuant to the Restricted Stock
Agreement, we have agreed upon the effectiveness of the Charter Amendment to
grant restricted stock awards (the "Restricted Shares") to Mr. Davis as
follows:
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·
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750,000
shares of our common stock to Mr. Davis, which vest equally as to
one-third of the shares over a two year period, commencing on the
effective date of the Charter Amendment in the State of Nevada and each of
the first and second year anniversary of the Effective Date of the
Employment Agreement.
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The above vesting schedule is subject
to the officer being continuously employed by us at the applicable vesting
date.
Upon effectiveness of the Charter
Amendment, Mr. Davis shall have, with respect to all of the Restricted Shares
(whether then vested or not), all of the rights of a holder of our common stock,
including the right to vote such shares and to receive dividends as may be
declared. Notwithstanding the preceding sentence, the Restricted
Stock shall not be transferable until and unless they have become vested in
accordance with the vesting schedule.
Option
Agreements:
As part of the Employment Agreement
with Mr. Davis, on October 1, 2008, we granted stock options, exercisable for up
to 1,000,000 shares of our common stock pursuant to our 2008 Stock Incentive
Plan, as follows:
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·
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option
exercisable for up to 333,334 shares, at an exercise price of $0.54 per
share, which option vests with respect to these shares on the
effectiveness of the Charter Amendment in the State of
Nevada;
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·
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option
exercisable for up to 333,333 shares, at an exercise price of $0.59 per
share, which option vests with respect to these shares on October 1, 2009;
and
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·
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option
exercisable for up to 333,333 shares, at an exercise price of $0.65 per
share, which option vests with respect to these shares on October 1,
2010.
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Options vesting on October 1, 2009
and October 1, 2010 are subject to acceleration in the event we undergo a
"change of control" while such executive officer is still employed by us. All
options expire on October 1, 2015.
The holder of the options shall have
none of the rights and privileges of a stockholder of the Company with respect
to any of the underlying shares of common stock, in whole or in part, prior to
the exercise of the options with respect to such underlying shares.
Item
8.01
Other
Events
On October 6, 2008, we issued a press
release announcing our hiring of Jim B. Davis as our Senior Vice President of
Operations. A copy of this press release, dated October 6, 2008, is
attached as Exhibit 99.6 hereto and is incorporated herewith.
Item
9.01
Financial Statements
and Exhibits
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the Registrant has duly caused this Current
Report to be signed on its behalf by the undersigned hereunto duly
authorized.
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Dated: October
6, 2008
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ABC
FUNDING, INC.
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By: /s/ Robert
P. Munn
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Name: Robert
P. Munn
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Title: Chief
Executive Officer
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