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): May 21, 2008
ABC FUNDING, INC.
(Exact Name of Registrant as Specified in its Charter)
Nevada 333-121070 56-2458730
------ ---------- ----------
State of Commission IRS Employer
Incorporation File Number I.D. Number
|
c/o Thompson & Knight LLP, 919 Third Avenue, Floor 39, New York, NY 10022
Address of principal executive offices
Registrant's telephone number: (212) 561-3601
(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):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On May 22, 2008, ABC Funding, Inc., a Nevada corporation ("we" or the
"Company"), entered into a Stock Purchase and Sale Agreement (the "Voyager
Agreement") with Voyager Gas Holdings, L.P. ("Seller"), and Voyager Gas
Corporation ("Voyager"). Reference is made to the Voyager Agreement, a copy of
which is filed as Exhibit 99.1 hereto and incorporated herein by this reference,
and the summary of the Voyager Agreement in this Current Report is qualified in
its entirety by reference thereto.
Pursuant to the Voyager Agreement, at the Closing defined below, and
subject to the satisfaction of various terms and conditions, we shall purchase
from the Seller all of the issued and outstanding shares of common stock of
Voyager, a Delaware corporation (the "Shares"). Voyager owns interests in
substantial oil and gas lease blocks located within the Frio and Yegua trends in
Duval County, Texas, including working and other interests in oil and gas
leases, wells, and properties, together with rights under related operating,
marketing, and service contracts and agreements, seismic exploration licenses
and rights, and personal property, equipment, and facilities (collectively, the
"Assets"). We are not acquiring the "Voyager" name.
The closing of the purchase of the Shares (the "Closing") is expected to
occur on or before August 20, 2008 (the "Closing Date"). The transfer of
ownership of the Shares will be effective as of the Closing Date.
The purchase price we agreed to pay for the Shares at the Closing is
$42,000,000 (the "Base Consideration"), payable as follows: (a) $35,000,000 in
cash (the "Cash Portion"), subject to adjustment as discussed below, and (b)
17,500,000 shares of our common stock, par value $0.001 per share (the
"Consideration Shares"), representing shares having an agreed upon value of
$7,000,000.
Upon the execution of the Voyager Agreement, we paid a performance deposit
of $800,000 to the Seller (the "Deposit"), which will be credited against the
Cash Portion paid at the Closing. If, however, the Seller terminates the Voyager
Agreement prior to the Closing due to our failure to perform or satisfy certain
pre-Closing conditions, including obtaining financing as discussed below, the
Seller will be entitled to retain as liquidated damages the Deposit. If the
Closing does not occur due to the Seller's or Voyager's failure to perform or
satisfy certain pre-Closing conditions, we will be entitled to the return of the
Deposit and to pursue all other remedies available to us at law or in equity. As
disclosed elsewhere in this Current Report under Item 2.03 Creation of a Direct
Financial Obligation, we financed our payment of the Deposit with proceeds from
the bridge loan consummated on May 21, 2008.
The Cash Portion will be increased at the Closing by the amount of the
value of all merchantable hydrocarbons of Voyager existing in pipelines, storage
tanks, or other processing or storage facilities upstream of the delivery points
to the purchasers of such production as of March 31, 2008, and by the amount (if
a positive number) of the working capital of Voyager determined as of March 31,
2008, on the basis of the financial information and data contained in the
unaudited balance sheet of Voyager for the first quarter ended March 31, 2008
using an agreed upon methodology for the working capital calculation.
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The Voyager Agreement provides that we will assume no long-term debt of
Voyager. At Closing, the Cash Portion will be reduced by an amount equal to all
amounts required to pay and discharge in full all indebtedness of Voyager under
its existing bank credit agreement as of March 31, 2008, together with any
prepayment penalty or premium incurred by Voyager, and we will pay and discharge
such indebtedness directly.
Prior to the Closing, we will have the right to conduct title and
environmental due diligence on the Assets and to assert title defects and
environmental defects if the value of each such defect exceeds, individually,
$25,000. The Cash Portion will be reduced with respect to uncured title defects
and unremedied environmental defects if, and only to the extent that, the
aggregate values of the uncured title defects and unremedied environmental
defects, as of the Closing Date, exceed $400,000. Either the Seller or we may
terminate the Voyager Agreement if the aggregate amount by which the Cash
Portion is reduced as the result of uncured title defects and unremedied
environmental defects, exclusive of amounts required to discharge debt secured
by liens against the Assets, equals or exceeds $8,400,000.
To enable our issuance of the Consideration Shares, as a condition to the
Closing, we are obligated: (i) to file with the Commission a definitive
Information Statement on Schedule 14C relating to an amendment of our Articles
of Incorporation to increase the number of authorized shares of common stock
that we may issue to 149,000,000 (the "Charter Amendment") and our stockholders'
consent thereto and (ii) to file, and cause to become effective, the Charter
Amendment with the State of Nevada.
The Consideration Shares will not be registered under state or federal
securities laws on the Closing Date. At the Closing, we will enter into a
registration rights agreement with the Seller pursuant to which we will agree to
file a registration statement covering the Consideration Shares for resale
within 90 days from the Closing Date, and to cause such registration statement
to become effective within 180 days following the Closing Date.
If there occurs a casualty loss prior to the Closing, Voyager will repair
the casualty, file all relevant insurance claims, and pursue all available
actions against third parties.
All of the directors, officers, and employees of Voyager will resign their
positions effective as of the Closing Date. We have no obligation to offer
employment to any of such individuals.
If the Closing occurs, the Voyager Agreement provides that we will
indemnify and hold harmless the Seller from all claims and liabilities resulting
from any breach by us of any of our representations, warranties, and covenants
under the Voyager Agreement, claims for securities law violations, as well as
all claims and liabilities resulting from the business and operations of Voyager
and the ownership, use, and operation of the Assets, except for certain specific
claims and liabilities discussed below, for which we may seek indemnification
from the Seller. Similarly, the Voyager Agreement provides that, subject to
certain limitations discussed below, the Seller will indemnify and hold us
harmless from all claims
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and liabilities resulting from any breach by the Seller or Voyager of any of
their representations, warranties, and covenants under the Voyager Agreement
(except for certain representations and warranties relating to title to and the
environmental condition of the Assets, for which our remedies are limited to
reductions of the Cash Portion), as well as all claims and liabilities related
to certain "Retained Liabilities". Retained Liabilities include (a) long term
debt of Voyager not paid and discharged in full at the Closing, (b) certain
residual well plugging liabilities of Voyager with respect to an oil and gas
field sold by Voyager in 2007, and (c) certain tax liabilities.
The foregoing indemnity obligations are subject to several additional
limitations. Neither the Seller nor we will be entitled to indemnification by
the other party for a breach of or inaccuracy in a representation or warranty of
the other party unless the claim for indemnification is asserted within nine (9)
months after the Closing Date. In addition, the Seller will not be entitled to
indemnification with respect to a breach by us of any of our representations,
warranties, or covenants under the Voyager Agreement, and we will not be
entitled to indemnification of any kind from the Seller, unless, in each case,
the liability for which indemnity is sought exceeds $50,000, and the aggregate
liabilities associated with claims for which the relevant party seeks
indemnification exceed $600,000, and then only to the extent of the excess.
Finally, the exposure of the Seller for claims by us for indemnification is
capped at $600,000, and all such claims by us (if any) will be satisfied out of
an escrowed fund of $600,000 held out of the Cash Portion paid at Closing.
We intend to finance the Cash Portion of the Base Consideration through a
combination of issuance of equity securities and borrowings under a lending
facility. There can be no assurances that we will be successful in our efforts
to procure such financing. If we fail to obtain the financing necessary to
enable us to purchase the Shares by the Closing Date, the Seller will be
entitled to terminate the Voyager Agreement and retain the Deposit.
Item 1.02 Termination of a Material Definitive Agreement
In connection with the bridge loan discussed elsewhere in this Current
Report under Item 2.03 Creation of a Direct Financial Obligation, certain of our
outstanding (i) convertible promissory notes, in the aggregate principal amount
of $965,000 and bearing interest at 12% per annum from September 1, 2007 (the
"12% Notes") and (ii) convertible promissory notes, in the aggregate principal
amount of $350,000 and bearing interest of 10% per annum, due October 31, 2008
(the "10% Notes" and, together with the "12% Notes," collectively the "Notes"),
were exchanged for shares of our Series A Preferred Stock (the "Series A
Preferred") and Series B Preferred Stock (the "Series B Preferred") in full
satisfaction of our obligations under the Notes (the "Exchange Transaction"),
including, without limitation, the repayment of principal and accrued unpaid
interest thereon.
The Exchange Transaction provided for (i) the issuance of 99,395 shares of
Series A Preferred in exchange for the 12% Notes, with each share of such
preferred stock being automatically convertible into 20 shares of our common
stock, as provided in the Certificate of Designation dated May 15, 2008
governing the Series A Preferred, for an aggregate of 1,987,900 shares of our
common stock and (ii) the issuance of 37,100 shares of Series B Preferred in
exchange for the 10% Notes, with each share of such preferred stock being
automatically convertible into 28.58 shares of our common stock, as provided in
the Certificate of Designation dated May 15, 2008 governing the Series B
Preferred, for an aggregate of 1,060,318 shares of our common stock.
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Reference is made to the exchange agreements between us and the
noteholders holding $1,315,000 aggregate principal amount of the Notes, forms of
which are filed as Exhibits 99.2 and 99.3 hereto and incorporated herein by this
reference, and the above summary of the exchange agreement is qualified in its
entirety by reference thereto. We previously disclosed the creation of the
Series A Preferred and the Series B Preferred, copies of which were included as
Exhibits 99.1 and 99.2 thereto, in our Current Report on Form 8-K filed with the
Commission on May 21, 2008. The form of the Notes was included as Exhibit 4.1 to
our Current Report on Form 8-K previously filed with the Commission on June 2,
2006. The above summary of these instruments is qualified in its entirety by
reference to these exhibits.
Item 2.03 Creation of a Direct Financial Obligation
On May 21, 2008, we entered into a Securities Purchase Agreement (the
"Bridge Agreement") with those purchasers identified therein (collectively, the
"Purchasers"), whereby we received proceeds of $800,000 evidenced by senior
secured convertible debentures (the "Debentures"). The proceeds from the
Debentures were used to fund our payment of the Deposit under the Voyager
Agreement.
The Debentures mature the earlier of September 30, 2008 or the Closing
Date under the Voyager Agreement, and may be satisfied in full by our payment of
the aggregate redemption price of $900,000 or, at the election of the
Purchasers, by the conversion of the Debentures into shares of our common stock
(the "Conversion Shares"), at an initial conversion price of $0.33 subject to
adjustments and full-ratchet protection under certain circumstances.
Alternatively, the Purchasers may elect to participate in a Subsequent Financing
(as such term is defined in the Bridge Agreement) by exchanging all or some of
their Debentures for securities issued in the Subsequent Financing, upon the
same terms being offered under the Subsequent Financing.
Under the Debentures, so long as any portion of the Debentures remain
outstanding we are precluded from incurring additional indebtedness or suffering
additional liens on our property, subject to limited exceptions therein,
including, without limitation, such indebtedness incurred by us in connection
with the financing of the Base Consideration owing under the Voyager Agreement.
As additional consideration for the bridge loan evidenced by the
Debentures, we issued common stock purchase warrants to the Purchasers and their
affiliates, exercisable to purchase up to 3,000,000 shares of our common stock
(the "Warrant Shares"), based upon an initial conversion price of $0.33 subject
to adjustments and full-ratchet protection under certain circumstances.
Our performance under the Debentures, including payment of the redemption
amount thereof or conversion thereunder, is secured by (i) our grant of a
security interest and first lien on all of our existing and after-acquired
assets, as evidenced by that security agreement dated May 21, 2008 in favor of
the Purchasers, (ii) the guarantee of our wholly-owned subsidiary, Energy
Venture, Inc., and (iii) the pledge of an aggregate of 14,151,000 shares of our
common stock (the "Pledged Shares") currently held by Alan Gaines, a director of
our Company, and his affiliates, as evidenced by the Pledge and Security
Agreement dated May 21, 2008 in favor of the Purchasers, which Pledged Shares
represent approximately 60.6% of the shares of our common stock issued and
outstanding as of the grant date.
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Neither the Conversion Shares (if any) nor the Warrant Shares are
registered under state or federal securities laws and are subject to a
registration rights agreement between us and the Purchasers pursuant to which we
agreed, subject to certain cutbacks as applicable, to file a registration
statement covering the Conversion Shares and the Warrant Shares for resale
within 90 days from the Closing Date, and to cause such registration statement
to become effective within 180 days following the Closing Date. Upon the
occurrence of certain events described in the registration rights agreement, we
will be obligated to pay to the Purchasers certain penalties.
Reference is made to the Bridge Agreement and each of the related
documents identified above, copies of which are filed as Exhibits 99.4 through
99.10 hereto and incorporated herein by this reference, and the above summary of
the Bridge Agreement and such collateral documents is qualified in its entirety
by reference thereto.
Item 3.02 Unregistered Sales of Equity Securities
Voyager Agreement:
As disclosed elsewhere in this Current Report under Item 1.01 Entry into a
Material Definitive Agreement, on May 22, 2008 we agreed to issue the
Consideration Shares to the Seller pursuant to the terms and conditions of the
Voyager Agreement. Issuance of the Consideration Shares is made specifically
subject to the effectiveness of the Charter Amendment in the State of Nevada and
is exempt from the registration requirements of the Securities Act under Section
4(2) thereof.
Bridge Loan:
As disclosed elsewhere in this Current Report under Item 2.03 Creation of
a Direct Financial Obligation, on May 21, 2008 we (i) issued Debentures
convertible, at the holders' option, into an aggregate of up to approximately
2,727,272 shares of our common stock, based upon the initial conversion price of
$0.33 per share, and (ii) granted warrants exercisable for up to 3,000,000
shares of our common stock, based upon the initial exercise price of $0.33 per
share. Issuance of the shares of common stock underlying the Debentures and the
Warrants is made specifically subject to the effectiveness of the Charter
Amendment in the State of Nevada and is exempt from the registration
requirements of the Securities Act under Section 4(2) thereof.
Exchange Transaction:
As disclosed elsewhere in this Current Report under Item 1.02 Termination
of a Material Definitive Agreement, we exchanged (i) 99,395 shares of our newly
created Series A Preferred for $965,000 principal amount of our then outstanding
12% Notes and (ii) 37,100 shares of our newly created Series B Preferred for
$350,000 principal amount of our then outstanding 10% Notes pursuant to the
Exchange Transaction. Upon the effectiveness of the Charter Amendment in the
State of Nevada, the shares of Series A Preferred and Series B Preferred are
automatically convertible into an aggregate of 3,048,218 shares of our common
stock. Issuance of the Series A Preferred and the Series B Preferred in exchange
for the 12% Notes and 10% Notes, and the underlying shares of common stock upon
conversion thereof, is exempt from the registration requirements of the
Securities Act under Section 3(a)(9) thereof.
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Employment Arrangements:
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 May 22, 2008 we
entered into the Employment Agreements (defined in Item 5.02 below) whereby we
(i) agreed to issue an aggregate of 2,625,000 Restricted Shares (as defined in
Item 5.02 below) and (ii) granted options to purchase up to an aggregate of
2,625,000 shares of our common stock to our newly appointed executive officers.
Issuance of the Restricted Shares and vesting of the stock options are made
specifically subject to the effectiveness of the Charter Amendment in the State
of Nevada and are exempt from the registration requirements of the Securities
Act under Section 4(2) thereof.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Resignation and Appointment of New Officers:
On May 22, 2008, we entered into two new employment agreements, copies of
which are filed as Exhibits 99.11 and 99.12 hereto (collectively, the
"Employment Agreements"), pursuant to which we engaged, effective as of May 22,
2008 (the "Effective Date"): (a) Robert P. Munn, to serve as our President,
Chief Executive Officer and Chairman, and (b) Carl A. Chase, to serve as our
Chief Financial Officer.
In connection with our engagement of Messrs. Munn and Chase, on the
Effective Date Steven Barrenechea resigned as President, Chief Executive Officer
and acting Chief Financial Officer of our Company.
We also entered into restricted stock agreements (collectively,
"Restricted Stock Agreements") and option agreements (the "Options") with
Messrs. Munn and Chase, pursuant to which we have agreed to issue up to an
aggregate of 5,250,000 shares of our common stock to these executive officers,
subject to the effectiveness of the Charter Amendment in the State of Nevada.
Reference is made to the Employment Agreements, the Restricted Stock
Agreements and the Options, copies of which are filed as Exhibits 99.11 through
99.20 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 Messrs. Munn and
Chase:
Robert P. Munn, age 49. Mr. Munn also serves as a member of our board of
directors, a position he has held since the Effective Date. His work experience
spans over 27 years' involvement in the United States and International oil and
gas arenas, where he has worked for both small and large independent E&P
companies in different basins throughout the United States, the Gulf of Mexico
and offshore West Africa. Prior to joining us, Mr. Munn served as President,
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Chief Executive Officer and a director of Unicorp, Inc., a publicly traded
independent E&P company now trading as Striker Oil and Gas Inc. (OTCBB:
SOIS.BB), from September 2007 until his resignation in February 2008. In 2003,
he opened the U.S. office for Sterling Energy, PLC (OTC BB: SGEYF) and, until
September 2007, served as Executive Vice-President and director for Sterling,
where he managed the growth of its U.S. operations by successfully adding oil
and gas reserves through drilling and acquiring producing properties. Prior to
his tenure with Sterling, Mr. Munn served as Vice-President of Exploration for
FW Oil. From 1987 through 2001, he served in supervisory and senior technical
roles with Amerada Hess working in oil and gas basins located both onshore and
offshore the United States. From 1981 to 1987, Mr. Munn worked as an exploration
and exploitation geologist for Buckhorn Petroleum and Harper Oil Company in
Denver, Colorado. Mr. Munn received a B.A. degree in Geology from the University
of Colorado in 1981.
Carl A. Chase, age 58. Mr. Chase has over 33 years' experience with major
and independent E&P companies and has held various financial and administrative
positions with publicly traded companies. Most recently, he served as Chief
Financial Officer and a director of Unicorp, Inc., a publicly traded independent
E&P company now trading as Striker Oil and Gas Inc. (OTCBB: SOIS.BB), from
August 2004 until his resignation in April 2008. From August 2000 to May 2006,
Mr. Chase served as both a consultant and senior vice president to Rockport
Healthcare Group, Inc. (OTC BB: RPHL), a publicly-traded preferred provider
organization, PPO, for work-related injuries and illnesses. From 2003 until
2006, Mr. Chase served as a director of eLinear, Inc., an integrated technology
solutions provider of security, IP telephony and network and storage solutions
infrastructure. In September 2006, eLinear filed a voluntary petition in the
United States Bankruptcy Court for the Southern District of Texas, Houston
Division, seeking relief under Chapter 7 of the United States Code. From August
1999 to May 2000, Mr. Chase was Chief Financial Officer of ClearWorks.net, Inc.,
an information technology company providing IT consulting and computer hardware
and software solutions. From December 1992 to August 1999, Mr. Chase served as
Chief Financial Officer of Bannon Energy Incorporated, a privately held,
independent E&P company, where his responsibilities included acquisitions,
financing and accounting and administration. Mr. Chase has held various
financial and administrative positions with various oil and gas companies,
including Amoco Production Company and Union Pacific Resources Corporation. Mr.
Chase received a Bachelor of Accountancy degree from the University of Oklahoma
in 1975.
Employment Agreements:
The Employment Agreements provide for:
o Robert P. Munn to serve as our President and Chief Executive
Officer, at an initial annual base salary of $225,000, which base salary
shall increase to $260,000 at the first anniversary date of his
employment, subject to increase upon review of our board of directors; and
o Carl A. Chase to serve as our Chief Financial Officer, at an
initial annual base salary of $180,000, which base salary shall increase
to $210,000 at the first anniversary date of his employment, subject to
increase upon review of our board of directors.
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The initial term of employment under the Employment Agreements 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 their base salaries, Messrs. Munn and Chase are guaranteed
an annual bonus of $45,000 and $36,000, respectively, on the first year
anniversary and an amount equal to 100% and 75%, respectively, of such officer's
then applicable base salary, 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. Each of
Messrs. Munn and Chase 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 an officer without "cause", upon the resignation of
either officer for "good reason", or upon his termination following a "change of
control" (each as defined in the Employment Agreements), such officer 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. Each such officer shall also be
entitled to any unpaid bonus from the preceding year of employment, and any
Restricted Stock granted to him shall immediately vest and 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 these executive officers an additional gross-up
amount equal to all Federal, state or local taxes that may be imposed upon them
by reason of the severance payments. Each executive officer has, with respect to
all of the Restricted Shares (whether or not vested), 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 Shares shall not be transferable until and unless they have
vested in accordance with the Restricted Stock Agreements.
Each of Messrs. Munn and Chase have 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. Each officer 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 Agreements:
Pursuant to the Restricted Stock Agreements, we have agreed upon the
effectiveness of the Charter Amendment to grant restricted stock awards (the
"Restricted Shares") to each of Messrs. Munn and Chase, as follows:
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o 1,500,000 shares of our common stock to Mr. Munn, 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 grant date;
o 1,125,000 shares of our common stock to Mr. Chase, 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 grant date.
The above vesting schedule is subject to the officer being continuously employed
by us at the applicable vesting date.
As provided in the Restricted Stock Agreements, we have also agreed to pay
each above executive officer an additional gross-up amount equal to all federal,
state or local taxes imposed upon him by reason of the restricted stock awards.
Each officer has, 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 dividend as may be
declared. Notwithstanding the proceeding 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. Munn, on May 22, 2008 we
granted stock options, exercisable for up to 1,500,000 shares of our common
stock, as follows:
o option exercisable for up to 500,000 shares, at an exercise price
of $0.52 per share (the closing price of our common stock, as reported by
the OTC Bulletin Board on May 22, 2008), which option vests with respect
to these shares on the effectiveness of the Charter Amendment in the State
of Nevada;
o option exercisable for up to 500,000 shares, at an exercise price
of $0.57 per share, which option vests with respect to these shares on May
22, 2009; and
o option exercisable for up to 500,000 shares, at an exercise price
of $0.62 per share, which option vests with respect to these shares on May
22, 2010.
As part of the Employment Agreement with Mr. Chase, on May 22, 2008 we
granted stock options, exercisable for up to 1,125,000 shares of our common
stock, as follows:
o option to Mr. Chase for up to 375,000 shares, at an exercise price
of $0.52 per share (the closing price of our common stock, as reported by
the OTC Bulletin Board on May 22, 2008), which option vests with respect
to these shares upon the effectiveness of the Charter Amendment in the
State of Nevada;
o option to Mr. Chase for up to 375,000 shares, at an exercise price
of $0.57 per share, which option vests with respect to these shares on May
22, 2009; and
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o option to Mr. Chase for up to 375,000 shares, at an exercise price
of $0.62 per share, which option vests with respect to these shares on May
22, 2010.
Options vesting on May 22, 2009 and May 22, 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 May 22, 2015.
The holders 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.
We granted "piggy-back" registration rights to the option holders
affording each of them the opportunity to include for sale in any registration
statement under the Securities Act (other than in connection with a Form S-8 or
any successor form registering any employment benefit plan ) we propose to file
with respect to our securities any time during the next five (5) years,
commencing May 22, 2009.
Resignation and Election of New Director:
On May 22, 2008, immediately following the funding of the Bridge Loan and
our delivery of the Deposit under the Voyager Agreement, as disclosed elsewhere
in this Current Report (the "Effective Date"), Steven Barrenechea resigned from
our board of directors, and the remaining board member appointed Robert P. Munn
to fill the vacancy created as a result of the above resignation. In accordance
with our by-laws, Mr. Munn shall serve as a director until his successor is duly
elected and qualified or upon his earlier resignation or removal.
As disclosed in our annual report on Form 10-KSB for the year ended June
30, 2007 previously filed with the Commission on September 28, 2007, our
directors are not compensated in cash for their services as directors but are
reimbursed for out of pocket expenses incurred in furtherance of our business.
Item 8.01 Other Events
On May 23, 2008, we issued two press releases, announcing (i) our entry
into the Voyager Agreement and (ii) our hiring of Robert P. Munn as our new
Chief Executive Officer, President and Chairman, and Carl A. Chase as our Chief
Financial Officer. A copy of these press releases, each dated May 23, 2008, are
attached as Exhibits 99.21 and 99.22 hereto and are incorporated herewith.
Item 9.01 Financial Statements and Exhibits
Exhibit Name of Document
------- ----------------
Exhibit 99.1 Stock Purchase and Sale Agreement, dated May 22, 2008,
among the Company, Voyager Gas Holdings, L.P. and
Voyager Gas Corporation.
Exhibit 99.2 form of Exchange Agreement between the Company and the
12% Note holder, with respect to Series A Preferred.
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Exhibit 99.3 form of Exchange Agreement between the Company and the
10% Note holder, with respect to Series B Preferred.
Exhibit 99.4 form of Securities Purchase Agreement, dated May 21,
2008, among the Company and the purchasers named therein
(the "Purchasers").
Exhibit 99.5 form of Senior Secured Convertible Debenture due
September 30, 2008, from the Company to the Purchasers.
Exhibit 99.6 form of Common Stock Purchase Warrant, dated May 21,
2008, from the Company to the Purchasers.
Exhibit 99.7 form of Security Agreement, dated May 21, 2008, among
the Company, Energy Venture, Inc. and the Purchasers. .
Exhibit99.8 form of Subsidiary Guarantee, dated May 21,
2008, by Energy Venture, Inc. for the benefit of the
Purchasers.
Exhibit 99.9 form of Security and Pledge Agreement, dated May 21,
2008, among the Company, each of Alan Gaines, Brent
Gaines, Derek Gaines and Ilana Gaines, as Pledgors, and
the Purchasers.
Exhibit 99.10 form of Registration Rights Agreement, dated May 21,
2008, among the Company and the Purchasers.
Exhibit 99.11 Employment Agreement, dated May 22, 2008, between the
Company and Robert P. Munn.
Exhibit 99.12 Employment Agreement, dated May 22, 2008, between the
Company and Carl A. Chase.
Exhibit 99.13 Restricted Stock Agreement, dated May 22, 2008, between
the Company and Robert P. Munn.
Exhibit 99.14 Restricted Stock Agreement, dated May 22, 2008, between
the Company and Carl A. Chase.
Exhibit 99.15 Stock Option Agreement, dated May 22, 2008, between the
Company and Robert P. Munn.
Exhibit 99.16 Stock Option Agreement, dated May 22, 2008, between the
Company and Robert P. Munn.
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Exhibit 99.17 Stock Option Agreement, dated May 22, 2008, between the
Company and Robert P. Munn.
Exhibit 99.18 Stock Option Agreement, dated May 22, 2008, between the
Company and Carl A. Chase.
Exhibit 99.19 Stock Option Agreement, dated May 22, 2008, between the
Company and Carl A. Chase.
Exhibit 99.20 Stock Option Agreement, dated May 22, 2008, between the
Company and Carl A. Chase.
Exhibit 99.21 Press Release, dated May 23, 3008, announcing the
Company's entry into the Voyager Agreement.
Exhibit 99.22 Press Release, dated May 23, 2008, announcing hiring the
Company's hiring of Robert A. Munn and Carl A. Chase as
new Chief Executive Officer, President, Chairman and new
Chief Financial Officer, respectively.
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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.
Dated: May 23, 2008 ABC Funding, Inc.
By: /s/ Robert P. Munn
-------------------------------
Name: Robert P. Munn
Title: Chief Executive Officer
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Exhibit Index
Exhibit Name of Document
------- ----------------
Exhibit 99.1 Stock Purchase and Sale Agreement, dated May 22, 2008,
among the Company, Voyager Gas Holdings, L.P. and
Voyager Gas Corporation.
Exhibit 99.2 form of Exchange Agreement between the Company and the
12% Note holder, with respect to Series A Preferred.
Exhibit 99.3 form of Exchange Agreement between the Company and the
10% Note holder, with respect to Series B Preferred.
Exhibit 99.4 form of Securities Purchase Agreement, dated May 21,
2008, among the Company and the purchasers named therein
(the "Purchasers").
Exhibit 99.5 form of Senior Secured Convertible Debenture due
September 30, 2008, from the Company to the Purchasers.
Exhibit 99.6 form of Common Stock Purchase Warrant, dated May 21,
2008, from the Company to the Purchasers.
Exhibit 99.7 form of Security Agreement, dated May 21, 2008, among
the Company, Energy Venture, Inc. and the Purchasers.
Exhibit 99.8 form of Subsidiary Guarantee, dated May 21, 2008, by
Energy Venture, Inc. for the benefit of the Purchasers.
Exhibit 99.9 form of Security and Pledge Agreement, dated May 21,
2008, among the Company, each of Alan Gaines, Brent
Gaines, Derek Gaines and Ilana Gaines, as Pledgors, and
the Purchasers.
Exhibit 99.10 form of Registration Rights Agreement, dated May 21,
2008, among the Company and the Purchasers.
Exhibit 99.11 Employment Agreement, dated May 22, 2008, between the
Company and Robert P. Munn.
Exhibit 99.12 Employment Agreement, dated May 22, 2008, between the
Company and Carl A. Chase.
Exhibit 99.13 Restricted Stock Agreement, dated May 22, 2008, between
the Company and Robert P. Munn.
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15
Exhibit 99.14 Restricted Stock Agreement, dated May 22, 2008, between
the Company and Carl A. Chase.
Exhibit 99.15 Stock Option Agreement, dated May 22, 2008, between the
Company and Robert P. Munn.
Exhibit 99.16 Stock Option Agreement, dated May 22, 2008, between the
Company and Robert P. Munn.
Exhibit 99.17 Stock Option Agreement, dated May 22, 2008, between the
Company and Robert P. Munn.
Exhibit 99.18 Stock Option Agreement, dated May 22, 2008, between the
Company and Carl A. Chase.
Exhibit 99.19 Stock Option Agreement, dated May 22, 2008, between the
Company and Carl A. Chase.
Exhibit 99.20 Stock Option Agreement, dated May 22, 2008, between the
Company and Carl A. Chase.
Exhibit 99.21 Press Release, dated May 23, 3008, announcing the
Company's entry into the Voyager Agreement.
Exhibit 99.22 Press Release, dated May 23, 2008, announcing hiring the
Company's hiring of Robert A. Munn and Carl A. Chase as
new Chief Executive Officer, President, Chairman and new
Chief Financial Officer, respectively.
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