EXHIBIT
99.5
ABC FUNDING, INC.
STOCK OPTION AGREEMENT
This Stock
Option Agreement (this "Agreement") is effective as of October 1,
2008, (the "Option Grant Date") by and between ABC Funding, Inc., a
Nevada corporation having its principal place of business at 4606
FM 1960 West Suite 400, Houston, Texas 77069 (the "Company"), and
Jim B. Davis, an individual residing in the State of Texas (the
"Optionee"). The Optionee and the Company hereby agree
as follows:
1. Grant. The Company
hereby grants to the Optionee, pursuant to the ABC Funding, Inc.
2008 Stock Incentive Plan, an option (the "Option") to purchase up
to an aggregate of 333,333 shares (the "Optioned Shares") of the
Company's common stock, par value $0.001 per share (the "Common
Stock"), at an exercise price (the "Exercise Price") of $0.65 per
Optioned Share.
2. Term. The Option
granted hereby shall terminate no later than at the close of
business on October 1, 2015 (the "Termination Date").
3. Exercisability; Termination of
Employment; Change of Control.
(a) Exercisability. Subject
to Sections 3(b) and 3(c) below, the Option shall vest and may be
exercised in whole or in part for up to 333,333 Optioned Shares at
any time from and after the second anniversary date of the Option
Grant Date (the "Vesting Date") until the Termination Date;
provided, that on such Vesting Date, the Optionee shall have been
continuously employed by the Company through such
date. To the extent the Option has become vested and is
exercisable, the Option may thereafter be exercised by the
Optionee, in whole or in part, at any time or from time to time
prior to the expiration of the Option as provided
herein. Optioned Shares that are available to be issued
to the Optionee upon exercise pursuant to this Section 3 are
referred to herein as "Exercisable Shares."
(b) Termination of
Employment.
(1) If the Optionee's employment
under his current employment agreement with the Company
("Employment Agreement") is terminated by the Company without Cause
(as defined in the Employment Agreement) or by the Optionee
pursuant to the requirements for his voluntary resignation for Good
Reason (as defined in the Employment Agreement) prior to the
Vesting Date, then Optioned Shares that had not yet vested and
become exercisable as of the employment termination date shall
immediately vest and become exercisable in a number that is equal
to (x) multiplied by (y), where (x) is the total number of Optioned
Shares that would have become exercisable on the Vesting Date, and
(y) is a fraction, the numerator of which is the number of whole
thirty-day periods the Optionee was employed from the Option Grant
Date through such termination date and the denominator of which is
twenty four (24).
(2) If the Optionee's employment with the Company is
terminated by the Company for Cause or by the Optionee other than
pursuant to the requirements for voluntary resignation for Good
Reason, or for any other reason (except as provided in Section
3(b)(1) above), then the unvested portion of the Option shall be
immediately forfeited and canceled, but any portion of the Option
that had vested prior thereto shall continue to be exercisable by
the Optionee pursuant to the terms hereof.
(c) Acceleration of Vesting Upon
Change of Control. Notwithstanding the provisions of
Sections 3(a) and 3(b) above, in the event the Company undergoes a
"change of control" as defined below, and provided that Optionee is
employed by the Company on such date, then all non-vested Optioned
Shares shall immediately vest and Optionee shall have the right to
exercise this Option for the full amount of Optioned Shares, less
any previously exercised shares. For purposes of this
Option, a change of control shall mean any of the following
events:
(i) a merger or consolidation to
which the Company is a party if the individuals and entities who
were stockholders of the Company immediately prior to the effective
date of such merger or consolidation have beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of less than 50% of
the total combined voting power for election of directors of the
surviving corporation following the effective date of such merger
or consolidation;
(ii) the
acquisition or holding of direct or indirect beneficial ownership
(as defined under Rule 13d-3 of the Exchange Act) of securities of
the Company representing in the aggregate 30% or more of the total
combined voting power of the Company's then issued and outstanding
voting securities by any person, entity or group of associated
persons or entities acting in concert, other than any employee
benefit plan of the Company or of any subsidiary of the Company, or
any entity holding such securities for or pursuant to the terms of
any such plan;
(iii) the sale of all or
substantially all of the assets of the Company to any person or
entity that is not a wholly-owned subsidiary of the Company;
or
(iv) the approval by the stockholders
of the Company of any plan or proposal for the liquidation of the
Company or its material subsidiaries, other than into the
Company.
4. Procedure
for Exercise.
