Document:

fnko-ex102_271.htm

 

Exhibit 10.2

 

AMENDMENT NO. 1 

TO 

SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

 

This Amendment No. 1 to the Second Amended and Restated Limited Liability Company Agreement (this “Amendment”) of Funko Acquisition Holdings, L.L.C., a Delaware limited liability company (the “Company”), is entered into as of May 10, 2018 by and among the Company, Funko, Inc., a Delaware corporation (the “Corporation” and, in its capacity as Manager under the Second A&R LLC Agreement (as defined below), the “Manager”), the Members of the Company listed on the signature pages hereof (collectively, the “Amending Members”) and, solely for purposes of Section 4 hereof, The Dale Schultz Family Trust, Dated December 8, 2011, and The Trevor Schultz Family Trust, Dated December 8, 2011.  Capitalized terms used and not defined herein shall have the meaning set forth in the Second A&R LLC Agreement (as defined below).  

 

WHEREAS, the Company and its Members entered into a Second Amended and Restated Limited Liability Company Agreement, dated as of November 1, 2017 (together with all schedules, exhibits and annexes thereto, the “Second A&R LLC Agreement”);

 

WHEREAS, Section 16.03 of the Second A&R LLC Agreement provides that the Second A&R LLC Agreement may be amended or modified upon the consent of the Manager and a majority of the Common Units entitled to vote then outstanding (excluding for purposes of such, all Common Units held directly or indirectly by the Corporation), which majority shall include the Common Units held by ACON and its Permitted Transferees for so long as ACON and such Permitted Transferees own five percent (5%) of the Common Units; and

 

WHEREAS, the Company, the Manager and the Amending Members desire to amend the Second A&R LLC Agreement as set forth herein.  

 

NOW THEREFORE, the parties hereto agree as follows:

 

1.Amendment to the Definition of “Distributable Cash.”  The definition of “Distributable Cash” is hereby amended to read as follows:

 

“Distributable Cash” means, as of any relevant date on which a determination is being made by the Manager regarding a potential distribution pursuant to Section 4.01(a) or Section 4.01(b), the amount of cash that could be distributed by the Company for such purposes in accordance with the Credit Agreements (and without (i) otherwise violating any applicable provisions of any of the Credit Agreements or, (ii) causing (or being reasonably expected to cause) the Company not to be in compliance with any of the covenants contained in the Credit Agreements as of the applicable date of determination of compliance for the applicable covenant, as determined in the good faith judgment of the Manager).”

 

 

 

2.Amendment to Section 3.05 of the Second A&R LLC Agreement.  Section 3.05 of the Second A&R LLC Agreement is hereby amended to read as follows:

 

Section 3.05 Repurchase or Redemption of shares of Class A Common Stock. If, at

any time, any shares of Class A Common Stock are repurchased or redeemed (whether by exercise of a put or call, automatically or by means of another arrangement) by the Corporation for cash, then the Manager shall cause the Company to either (a) immediately prior to such repurchase or redemption of Class A Common Stock, redeem a corresponding number of Common Units held (directly or indirectly) by the Corporation, at an aggregate redemption price equal to the aggregate purchase or redemption price of the shares of Class A Common Stock being repurchased or redeemed by the Corporation (plus any expenses related thereto) and upon such other terms as are the same for the shares of Class A Common Stock being repurchased or redeemed by the Corporation, or (b) in connection with such repurchase or redemption, effect a subdivision or combination (by reverse Common Unit split, reclassification, recapitalization or similar event) of the Common Units in order to maintain, following such repurchase or redemption, a one-to-one ratio between the number of outstanding Common Units owned by the Corporation and the number of shares of Class A common stock then outstanding in accordance with Section 3.04(a). Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make any repurchase or redemption if such repurchase or redemption would violate any applicable Law.

 

3.Amendments to Section 4.01(b) of the Second A&R LLC Agreement. 

 

	
 
	
(a)
	
 Section 4.01(b)(i) of the Second A&R LLC Agreement is hereby amended to read as follows:

 

“(i)With respect to each Fiscal Year, the Company shall, to the extent permitted by applicable Law, make cash distributions (“Tax Distributions”) to each Member in accordance with, and to the extent of, such Member's Assumed Tax Liability.  Tax Distributions pursuant to this Section 4.01(b)(i) shall be estimated by the Company on a quarterly basis and, to the extent feasible, shall be distributed to the Members out of Distributable Cash (together with a statement showing the calculation of such Tax Distribution and an estimate of the Company's net taxable income allocable to each Member for such period) on a quarterly basis on April 15th, June 15th, September 15th and January 15th (of the succeeding year) (or such other dates for which individuals are required to make quarterly estimated tax payments for U.S. federal income tax purposes) (each, a “Quarterly Tax Distribution”); provided, that the foregoing shall not restrict the Company from making a Tax Distribution on any other date. Quarterly Tax Distributions shall take into account the estimated taxable income or loss of the Company for the Fiscal Year through the end of the relevant quarterly period.  A final accounting for Tax Distributions shall be made for each Fiscal Year after the allocation of the Company's actual net taxable income or loss has been determined and any shortfall in the amount of Tax Distributions a Member received for such Fiscal Year based on such final accounting shall promptly be distributed to such Member out of Distributable Cash.  For the 

 

 

 

avoidance of doubt, any excess Tax Distributions a Member receives with respect to any Fiscal Year shall reduce future Tax Distributions otherwise required to be made to such Member with respect to any subsequent Fiscal Year.”

 

	
 
	
(b)
	
Section 4.01(b)(ii) of the Second A&R LLC Agreement is hereby amended to read as follows:

 

“(ii)To the extent a Member otherwise would be entitled to receive less than its Percentage Interest of the aggregate Tax Distributions to be paid pursuant to this Section 4.01(b) (other than any distributions made pursuant to Section 4.01(b)(v)) on any given date, the Tax Distributions to such Member shall be increased to ensure that all Distributions made pursuant to this Section 4.01(b) are made pro rata in accordance with the Members’ respective Percentage Interests.  If, on a Tax Distribution Date, Distributable Cash is not sufficient to distribute to the Members the full amount of the Tax Distributions to which such Members are otherwise entitled, Distributions pursuant to this Section 4.01(b) shall be made to the Members to the extent of Distributable Cash in accordance with their Percentage Interests and the Company may, but shall not be required to, make future Tax Distributions as soon as Distributable Cash becomes available that is sufficient to pay the remaining portion of the Tax Distributions to which such Members are otherwise entitled.”

 

	
 
	
(c)
	
Section 4.01(b)(iii) of the Second A&R LLC Agreement is hereby amended to read as follows:

 

“(iii)In the event of any audit by, or similar event with, a taxing authority that affects the calculation of any Member’s Assumed Tax Liability for any taxable year (other than an audit conducted pursuant to the Revised Partnership Audit Provisions for which no election is made pursuant to Section 6226 thereof), or in the event the Company files an amended tax return, each Member’s Assumed Tax Liability with respect to such year shall be recalculated by giving effect to such event (for the avoidance of doubt, taking into account interest or penalties).  Any shortfall in the amount of Tax Distributions the Members and former Members received for the relevant taxable years based on such recalculated Assumed Tax Liability promptly shall be distributed to such Members and the successors of such former Members out of Distributable Cash, except, for the avoidance of doubt, to the extent Distributions were made to such Members and former Members pursuant to Section 4.01(a) and this Section 4.01(b) in the relevant taxable years sufficient to cover such shortfall.”

 

4.Amendments to ARTICLE XII of the Second A&R LLC Agreement.  ARTICLE XII of the Second A&R LLC Agreement is hereby amended to add the following as Section 12.03.

 

“Section 12.03    Omitted Members.  Notwithstanding anything in this Agreement to the contrary, in the event that after the Effective Time, the Manager determines that any 

 

 

 

Person listed on Schedule 1 and Schedule 2 of this Agreement was not a member of the Company pursuant to the Initial LLC Agreement and did not hold Original Units prior to the Effective Time as contemplated in the recitals to this Agreement (any such person, a “Listed Non-Member”), the Manager is hereby authorized to correct the Schedule of Members to replace the name of such Listed Non-Member with the name of the member that held the Original Units (or any portion thereof) attributed to such Listed Non-Member on Schedule 1 hereto (any such Person, an “Omitted Member”). Upon the execution and delivery by such Omitted Member of (a) a duly executed joinder to this Agreement, duly acknowledged by the Listed Non-Member and in form and substance satisfactory to the Manager, and counterparts to any applicable Other Agreements, and (b) any other documents or instruments, duly executed by the Omitted Member and/or the Listed Non-Member, as may be reasonably requested by the Manager, such Omitted Member will be a Pre-IPO Member and a Member for all purposes under this Agreement, with the same force and effect as if such Omitted Member had been listed on Schedule 1 and Schedule 2 hereto as the holder of the Original Units and Common Units, respectively, attributed to such Listed Non-Member and had executed and delivered a counterpart to this Agreement, in each case, as of the Effective Time.  Notwithstanding anything to the contrary contained in this Agreement, a Listed Non-Member may transfer to an Omitted Member such number of shares of Class B Common Stock as shall equal the number of Common Units set forth opposite the name of such Omitted Member in the Schedule of Members (after giving effect to the amendment thereof by the Manager pursuant to the first sentence of this Section 12.03), and, as provided by the certificate of incorporation of the Corporation, such transfer shall constitute a “Permitted Transfer,” and such Omitted Member a “Permitted Class B Owner” for all purposes under the certificate of incorporation of the Corporation.”

 

5.Amendments to Section 16.01(a) of the Second A&R LLC Agreement.  Clause (i) of Section 16.01(a) is hereby amended to read as follows:

 

(i)execute, swear to, acknowledge, deliver, file and record in the appropriate public offices (A) this Agreement, all certificates and other instruments and all amendments thereof which the Manager deems appropriate or necessary to form, qualify, or continue the qualification of, the Company as a limited liability company in the State of Delaware and in all other jurisdictions in which the Company may conduct business or own property; (B) all instruments which the Manager deems appropriate or necessary to reflect any amendment, change, modification or restatement of this Agreement in accordance with its terms; (C) all conveyances and other instruments or documents which the Manager deems appropriate or necessary to reflect the dissolution and winding up of the Company pursuant to the terms of this Agreement, including a certificate of cancellation; and (D) all instruments relating to the admission, substitution or withdrawal of any Member pursuant to Article XII or XIII, including, for the avoidance of doubt, all instruments relating to the substitution of an Omitted Member for a Listed Non-Member in accordance with Section 12.03 hereof; and 

 

 

 

 

6.No Further Modifications or Amendment.  Except as amended hereby, the Second A&R LLC Agreement shall remain in full force and effect and the parties agree that no other modification or amendment exists or is valid or enforceable.

 

7.Counterparts.   This Amendment may be executed in separate counterparts, each of which will be an original and all of which together shall constitute one and the same agreement binding on all the parties hereto.

 

8.Applicable Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Any suit, dispute, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement shall be heard in the state or federal courts of the State of Delaware, and the parties hereby consent to the exclusive jurisdiction of such court (and of the appropriate appellate courts) in any such suit, action or proceeding and waives any objection to venue laid therein. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE SERVED ON ANY PARTY ANYWHERE IN THE WORLD, WHETHER WITHIN OR WITHOUT THE JURISDICTION OF ANY SUCH COURT (INCLUDING BY PREPAID CERTIFIED MAIL WITH A VALIDATED PROOF OF MAILING RECEIPT) AND SHALL HAVE THE SAME LEGAL FORCE AND EFFECT AS IF SERVED UPON SUCH PARTY PERSONALLY WITHIN THE STATE OF DELAWARE. WITHOUT LIMITING THE FOREGOING, TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES AGREE THAT SERVICE OF PROCESS UPON SUCH PARTY AT THE ADDRESS REFERRED TO IN SECTION 16.05 OF THE SECOND A&R LLC AGREEMENT (INCLUDING BY PREPAID CERTIFIED MAIL WITH A VALIDATED PROOF OF MAILING RECEIPT), TOGETHER WITH WRITTEN NOTICE OF SUCH SERVICE TO SUCH PARTY, SHALL BE DEEMED EFFECTIVE SERVICE OF PROCESS UPON SUCH PARTY.

 

9.Severability.  Whenever possible, each provision of this Amendment will be interpreted in such manner as to be effective and valid under applicable Law, but if any provision of this Amendment is held to be invalid, illegal or unenforceable in any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Amendment will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein

 

 

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IN WITNESS WHEREOF, the Company, the Manager and each Amending Member has executed this Amendment as of the date first set forth above.

 

The company:

 

funko acquisition holdings, l.l.c.

 

By: FUNKO, inc., its Manager

 

By: /s/ Russell Nickel                                           

Name: Russell Nickel 

Title:   CFO

 

the manager:

 

FUNKO, inc.

 

By: /s/ Russell Nickel                                           

Name: Russell Nickel

Title: CFO

 

 

amending member:

 

ACON FUNKO INVESTORS, L.L.C.

 

By ACON Funko Manager, L.L.C., its Manager

 

By:  /s/ Ken Brotman                                         

Name: Ken Brotman

Title: Manager

 

amending member:

 

BRIAN MARIOTTI

 

/s/ Brian Mariotti                                                         

 

 

amending members:

 

VICTORIA ANNE MARIOTTI, AS TRUSTEE OF MARIOTTI FAMILY IRREVOCABLE TRUST 

 

By: /s/ Victoria Mariotti ____________________

Name: Victoria Mariotti

Title:   Trustee

 

 

VICTORIA ANNE MARIOTTI, AS TRUSTEE OF BRIAN R. MARIOTTI GRANTOR RETAINED ANNUITY TRUST

 

By: /s/ Victoria Mariotti                                      

Name: Victoria Mariotti

Title:    Trustee

 

 

AMENDING MEMBER:

JOHANNA GEPFORD

 

/s/ Johanna Gepford                                              

 

 

AMENDING MEMBER:

ANDREW PERLMUTTER

 

/s/ Andrew Perlmutter                                           

 

 

AMENDING MEMBER:

RUSSELL NICKEL

 

/s/ Russell Nickel                                                   

 

 

AMENDING MEMBER:

TRACY DAW

 

/s/ Tracy Daw                                                         

 

 

AMENDING MEMBER:

LAURIE ANDERSON

 

/s/ Laurie Anderson                                                 

 

 

 

The undersigned hereby acknowledges and consents to the amendment set forth 

in Section 4 of this Amendment as of the date first set forth above.

 

 

The Dale Schultz Family Trust,  Dated December 8, 2011

 

By: /s/ Dale Schultz                                    

Name:  Dale Schultz

Title:  Trustee

 

The Trevor Schultz Family Trust, Dated December 8, 2011

 

By: /s/ Trevor Schultz________________

Name:  Trevor Schultz

Title:  TrusteeExhibit 10.1

 

NEITHER
THIS SECURITY NOR THE SECURITIES AS TO WHICH THIS SECURITY MAY BE EXERCISED HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,
THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF
THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.

 

 

COMMON
STOCK PURCHASE WARRANT GEX MANAGEMENT, INC.

Warrant
Shares: 25,000

Date of Issuance:
April 26, 2018 ("Issuance Date")

 

This
COMMON STOCK PURCHASE WARRANT (the "Warrant") certifies that, for value received
(in connection with the funding of purchase price of $90,000.00,
for the first tranche of $100,000.00 under the $500,000.00 convertible promissory note issued to the Holder (as defined
below) on April 26, 2018) (the "Note"), Crown
Bridge Partners, LLC (including any permitted and registered assigns, the "Holder"), is entitled, upon the
terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date
of issuance hereof, to purchase from GEX Management, Inc., a
Texas corporation (the "Company"), 25,000
shares of Common Stock (as defined below) (the "Warrant Shares") at
the Exercise Price per share then in effect (whereby such number may be adjusted from time to time pursuant to the te1ms and
conditions of this Warrant).

 

Capitalized
terms used in this Warrant shall have the meanings set forth in the Purchase Agreement unless otherwise defined in the body of
this Warrant or in Section 13 below. For purposes of this Warrant, the term "Exercise Price" shall mean $4.00
subject to adjustment as provided herein (including but not limited to cashless exercise), and the term "Exercise Period"
shall mean the period commencing on the Issuance Date and ending on 5:00 p.m. eastern standard time on the five-year
anniversary thereof.

 

1.                 
EXERCISE OF WARRANT.

 

(a)               
Mechanics of Exercise. Subject to the terms and conditions hereof,
the rights represented by this Warrant may be exercised in whole or in part at any time or times during the Exercise Period by
delivery of a written notice, in the form attached
hereto as Exhibit A (the "Exercise Notice"), of the
Holder's election to exercise this Warrant. The Holder shall not be required to deliver the original Warrant in order to effect
an exercise hereunder. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares
available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount
equal to the applicable number of Warrant Shares purchased. On or before the third Trading Day (the "Warrant Share Delivery
Date") following the date on which the Company shall have received the Exercise Notice, and upon receipt by the Company
of payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to
which all or a portion of this Warrant is being exercised (the "Aggregate
Exercise Price"
and together with the Exercise Notice, the "Exercise Delivery Documents") in cash or by wire transfer of immediately
available funds (or by cashless exercise, in

 

which
case there shall be no Aggregate Exercise Price provided), the Company shall (or direct its transfer agent to) issue and dispatch
by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company's share register
in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to
such exercise. Upon delivery of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes to have
become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date
of delivery of the certificates evidencing such Warrant Shares. If this
Warrant is submitted in connection with any exercise and the number of Warrant Shares represented by this Warrant submitted for
exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable
and in no event later than three Business Days after any exercise and at its own expense, issue a new Warrant (in accordance with
Section 6) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise
under this Warrant, less the number of Warrant Shares with respect to which this Warrant is
exercised.

 

If
the Company fails to cause its transfer agent to transmit to the Holder
the respective shares of Common Stock by the respective Warrant
Share Delivery Date, then the Holder will have the right to rescind such exercise in Holder's sole discretion, and such failure
shall be deemed an event of default under the Note.

 

If
the Market Price of one share of Common Stock is greater than the Exercise Price, the Holder
may elect to receive Warrant Shares pursuant to a cashless exercise, in lieu of a cash exercise, equal to the value of this Warrant
determined in the manner described below (or of any portion thereof remaining unexercised) by surrender of this Warrant and a Notice
of Exercise, in which event the Company shall issue to Holder a number of Common Stock computed using the following
formula:

X
= Y (A-B)

A

 

Where
 X =the
number of Warrant Shares to be issued to Holder.

 

Y
=the number of Warrant Shares that the Holder elects to purchase under this Warrant
(at the date of such calculation).

 

A=the
Market Price (at the date of such calculation).

 

B
=Exercise Price (as adjusted to the date of such calculation).

 

 

(b)              
No Fractional Shares.
No fractional shares shall be issued upon the exercise of this Wa1rnnt
as a consequence of any adjustment pursuant hereto. All Warrant Shares (including fractions) issuable upon exercise of this Warrant
may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. If,
after aggregation,
the exercise would result in the issuance of a fractional share, the Company
shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the
product resulting from multiplying the then-current fair market value of a Warrant Share by such
fraction.

 

(c)              
Holder's Exercise Limitations. The Company shall not effect any exercise of this
Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, to the extent that after giving effect
to issuance of Warrant Shares upon exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder's
Affiliates, and any other persons acting as a group together with the Holder or any of the Holder's Affiliates), would beneficially
own in excess of the Beneficial Ownership Limitation, as defined below. For purposes of the foregoing sentence, the number of shares
of Common Stock beneficially

owned
by the Holder and its Affiliates shall include the number
of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall
exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, non-exercised portion
of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or
non-converted portion of any other securities of the Company (including without limitation any other Common Stock Equivalents)
subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder
or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this paragraph (d), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act, it being acknowledged by the Holder that the Company
is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder
is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained
in this paragraph applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the
Holder together with any affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder's determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder together with any Affiliates)
and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company
shall have no obligation to verify or confirm the accuracy of such determination.

 

For
purposes of this paragraph, in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as reflected in (A) the Company's most recent periodic or annual report filed with the Commission,
as the case may be, (B) a more recent public announcement by the Company or (C)
a more recent written notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding.
Upon the request of a Holder, the Company shall within two Trading Days confirm to the Holder
the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined
after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its affiliates
since the date as of which such number of outstanding shares of Common Stock was reported. The "Beneficial Ownership
Limitation" shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect
to the issuance of shares of Common Stock issuable upon exercise of this Warrant. Upon no fewer than 61 days' prior notice to the
Company, a Holder may increase or decrease the Beneficial Ownership Limitation provisions of this paragraph, provided that the
Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of
this paragraph shall continue to apply. Any such increase or decrease will not be effective until the 61st day after such notice
is delivered to the Company and shall only apply to such Holder and no other Holder. The limitations contained in this paragraph
shall apply to a successor Holder of this Warrant. The Company covenants that this Warrant is outstanding, the Company will reserve
from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance
of Common Stock upon the full exercise of this Warrant. The Company is required at all times to have authorized and reserved five
times the number of shares that is actually issuable upon full exercise of the Warrant (based on the Exercise Price in effect at
that time)(the "Reserved Amount"). The Reserved
Amount shall be increased from time to time in accordance with the Company's obligations hereunder.

 

2.                 
ADJUSTMENTS. The Exercise Price and the number of Warrant Shares shall be adjusted
from time to time as follows:

 

(a)               
Distribution of Assets. If
the Company shall declare
or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock,
by way of return of capital or otherwise (including without limitation any distribution of cash, stock or other securities,
property or

 

options
by way of a dividend, spin off, reclassification, corporate rearrangement or other similar transaction) (a "Distribution"),
at any time after the issuance of this Warrant, then, in each such case:

 

(i)               
any Exercise Price in effect immediately prior to the close of business on the record date
fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution shall be reduced, effective
as of the close of business on such record date, to a price determined by multiplying such Exercise Price by a fraction (i) the
numerator of which shall be the Closing Sale Price of the shares of Common Stock on the Trading Day immediately preceding such
record date minus the value of the Distribution (as determined in good faith by the Company's Board of Directors) applicable to
one share of Common Stock, and (ii) the denominator of which shall be the Closing Sale Price of the shares of Common Stock on the
Trading Day immediately preceding such record date; and

 

(ii)              
the number of Warrant Shares shall be increased to a number of shares equal to the number
of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination
of holders of shares of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth
in the immediately preceding clause (i); provided, however, that in the event that the Distribution is of shares of common stock
of a company (other than the Company) whose common stock is traded on a national securities exchange or a national automated quotation
system ("Other Shares of Common Stock"), then the Holder may elect to receive a warrant to purchase Other Shares
of Common Stock in lieu of an increase in the number of Warrant Shares, the terms of which shall be identical to those of this
Warrant, except that such warrant shall be exercisable into the number of shares of Other Shares of Common Stock that would have
been payable to the Holder pursuant to the Distribution had the Holder exercised this Warrant immediately prior to such record
date and with an aggregate exercise price equal to the product of the amount by which the exercise price of this Warrant was decreased
with respect to the Distribution pursuant to the terms of the immediately preceding clause (i) and the number of Warrant Shares
calculated in accordance with the first part of this clause (ii).

 

(b)              
Anti-Dilution Adjustments to Exercise Price. If
the Company, at any time from and after the Issuance Date, shall sell or
grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of, sell or issue (or
announce any offer, sale, grant or any option to purchase or other disposition of) any Common Stock or Common Stock Equivalents
entitling any person, firm, association or entity to acquire shares of Common Stock at an effective price per share less than the
then-current Exercise Price (including but not limited to under the Note), as adjusted hereunder (any such issuance being referred
to as a "Dilutive Issuance," subject, however, to the proviso contained in the further definition of the term
"Dilutive Issuance" contained in Section 13 below), then (a) the Exercise Price shall be adjusted to match the lowest
price per share at which such Common Stock was issued or may be acquired pursuant to such Common Stock Equivalents in the Dilutive
Issuance, and (b) the number of Warrant Shares issuable upon the exercise of this Warrant shall be increased to an amount equal
to the number of Warrant Shares Holder could purchase hereunder for the aggregate Exercise Price, as reduced pursuant to this Section
2(b), equal to the aggregate Exercise Price payable immediately prior to such reduction in Exercise Price. Additionally, following
the occurrence of a Dilutive Issuance, all references in this Warrant to "Warrant Shares" shall be a reference to the
Warrant Shares as increased pursuant to this Section 2(b), and all references in this Warrant to "Exercise Price" shall
be a reference to the Exercise Price
as reduced pursuant to this Section 2(b), as the same
may occur from time to time hereunder.

 

3.                 
FUNDAMENTAL TRANSACTIONS. If,
at any time while this Warrant is outstanding, (i) the
Company effects any merger of the Company with or into another entity and the Company is not the surviving entity (such surviving
entity, the "Successor Entity"), (ii) the Company effects any sale of all or substantially all of its assets in
one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or by another individual
or entity, and approved by the Company) is completed pursuant to which

holders
of Common Stock are permitted to tender or exchange their shares of Common Stock for other securities, cash or property and the
holders of at least 50% of the Common Stock accept such offer, or (iv) the Company effects any reclassification of the Common Stock
or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities,
cash or property (other than as a result of a subdivision or combination of shares of Common Stock) (in any such case, a "Fundamental
Transaction"), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive the number
of shares of Common Stock of the Successor Entity or of the Company and any additional consideration (the "Alternate Consideration")
receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to such event (disregarding any limitation on exercise contained herein solely for
the purpose of such determination). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company
shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any
different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash
or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the
foregoing provisions, any Successor Entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with
the foregoing provisions and evidencing the Holder's right to exercise such warrant into Alternate
Consideration.

 

4.                  
NON-CIRCUMVENTION. The
Company covenants and agrees that it will not, by amendment of its certificate
of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as
may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not
increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then
in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally
issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, for so long as this
Warrant is outstanding, have authorized and reserved, free from preemptive rights, a sufficient number of shares of Common Stock
to provide for the exercise of the rights represented by this Warrant (without regard to any limitations on
exercise).

 

5.                
WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically
provided herein, this Warrant, in and of itself, shall not entitle the Holder to any voting rights or other rights as a stockholder
of the Company. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to
purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities
are asserted by the Company or by creditors of the Company.

 

		6.	REISSUANCE.

 

(a)               
Lost, Stolen or Mutilated Warrant. If this
Warrant is lost, stolen, mutilated or destroyed, the Company will, on such terms as to indemnity or otherwise as it may reasonably
impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination
and tenor as this Warrant so lost, stolen, mutilated or destroyed.

 

(b)               
Issuance of New Warrants. Whenever the Company
is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant shall be of like tenor with this Warrant,
and shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance
Date.

   

		7.	TRANSFER.

 

(a)               
Notice of Transfer. The
Holder agrees to give written notice to the Company before transferring this Wan-ant or transferring any Wan-ant Shares of such
Holder's intention to do so, describing briefly the manner of any proposed transfer. Promptly upon receiving such written notice,
the Company shall present copies thereof to the Company's counsel.
If the proposed transfer may be effected without registration or
qualification (under any federal or state securities laws), the Company, as promptly as practicable, shall notify the Holder thereof,
whereupon the Holder shall be entitled to transfer this Warrant or to dispose of Warrant Shares received upon the previous exercise
of this Warrant, all in accordance with the terms of the notice delivered by the Holder to the Company; provided, however,
that an appropriate legend may be endorsed on this Warrant or the certificates
for such Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel and satisfactory
to the Company to prevent further transfers which would be in violation of Section 5 of the Securities Act and applicable state
securities laws; and provided further that the prospective transferee or purchaser shall execute the Assignment of Warrant attached
hereto as Exhibit B and such other documents and make such representations, warranties, and agreements as may be required
solely to comply with the exemptions relied upon by the Company for the transfer or disposition of the Warrant or Warrant
Shares.

 

(b)              
If the
proposed transfer or disposition of this Warrant or such Warrant Shares described in the written notice given pursuant to this
Section 7 may not be effected without registration or qualification of this Warrant or such Warrant Shares, the Holder will limit
its activities in respect to such transfer or disposition as are permitted by law.

 

(c)               
Any transferee of all or a portion of this Warrant shall succeed to the rights and benefits
of the initial Holder of this Warrant under Sections 4.1 and 4.3 (subject, however, to the limitations set forth in Section 4.2),
4.4 and 4.5 of the Purchase Agreement (registration rights, expenses, and indemnity).

 

8.                 
NOTICES. Whenever notice is required to be given under this Warrant,
unless otherwise provided herein, such notice shall be given in accordance with the notice provisions contained in the Purchase
Agreement. The Company shall provide the Holder with prompt written notice
(i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable detail, the calculation of such adjustment
and (ii) at least 20 days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend
or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any stock or other securities
directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock or other property, pro rata to
the holders of shares of Common Stock or (C) for
determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that
such information shall be made known to the
public prior to or in conjunction with such notice being provided to the
Holder.

 

9.                 
AMENDMENT AND WANER. The terms of this Warrant may be amended or
waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of
the Company and the
Holder.

 

10.             
GOVERNING LAW. This Warrant and all rights, obligations and liabilities
hereunder shall be governed by, and construed in accordance with,
the internal laws of the State of Nevada, without giving effect
to the conflicts-of-law principles
thereof.

 

11.              
ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute acceptance of
and agreement to all of the terms and conditions contained herein.

 

12.              
CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have the
following meanings:

 

(a)               
"Nasdaq" means www.Nasdaq.com.

 

(b)               
"Closing Sale
Price" means, for
any security as
of any date,
(i) the last
closing trade price for
such security on
the Principal Market,
as reported by
Nasdaq, or, if
the Principal Market begins to
operate on an extended hours basis and does not designate the closing trade
price, then the last trade price of such security prior to 4:00 p.m., New York time, as rep01ted by Nasdaq, or (ii) if the foregoing
does not apply, the last trade price of such security in the over-the-counter market for such security as reported by Nasdaq, or
(iii) if no last trade price is reported
for such security
by Nasdaq, the average
of the bid and ask
prices of any
market makers for such security
as reported by the OTC Markets. If the Closing Sale Price cannot be calculated for a security on a particular date
on any of
the foregoing bases,
the Closing Sale
Price of such
security on such date
shall be the
fair market value as mutually determined by the Company and the Holder. All such determinations to be appropriately adjusted
for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

 

(c)                
"Common Stock" means the Company's common stock, and any other class of securities
into which such securities may hereafter be reclassified or changed.

 

(d)               
"Common Stock
Equivalents" means any securities of the Company that would entitle the holder thereof to acquire at any time Common Stock,
including without limitation any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

 

(e)               
"Dilutive Issuance" is any issuance of Common Stock or Common Stock
Equivalents described in Section 2(c) above; provided, however, that a Dilutive Issuance shall not include any Exempt Issuance.

 

(f)                
"Exempt Issuance" means the issuance of (i) shares
of Common Stock or options to officers or directors of the Company pursuant to any stock or option plan duly adopted by a majority
of the non employee members
of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for
such purpose, (ii) securities issued pursuant to acquisitions approved by a majority of the disinterested directors of the Company,
(iii) shares of Common Stock issued in connection with
regularly scheduled dividend payments on any preferred stock of the Company,
and (iv) shares of Common Stock issued pursuant to any real property leasing arrangement or financing from a national bank approved
by the Board of Directors of the Company.

 

(g)                
"Principal Market" means the pnmary national securities exchange on
which the Common Stock is then traded.

 

		(h)	"Market Price"
means the highest traded price of the Common Stock during the thirty

		(30)	Trading Days prior to the date of the respective Exercise
Notice.

 

(i)                 
"Trading Day" means (i) any day on which the Common Stock is listed or quoted
and traded on its Principal Market, (ii) if the Common Stock is not then listed or quoted and traded on any national securities
exchange, then a day on which trading occurs on any over-the-counter markets, or (iii) if trading does not occur on the over-the-counter
markets, any Business Day.

 

 

* * * *
* * *

IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the Issuance Date set forth above.

 

 

GEX MANAGEMENT, INC.

 

 

 

 

/s/ Carl Dorvil

Name: Carl Dorvil

Title: Chief Executive Officer

 

 

 

 

    	 	1	 

     

    

 

EXHIBIT
A

 

EXERCISE
NOTICE

 

(To be
executed by the registered holder to exercise this Common Stock Purchase Warrant)

 

 

THE
UNDERSIGNED holder hereby exercises the right
to purchaseof the shares of Common Stock ("Warrant Shares")
of GEX Management, Inc., a Texas corporation (the "Company"), evidenced by the attached copy of the Common Stock Purchase
Warrant (the "Warrant"). Capitalized terms used herein and not otherwise defined shall have the respective meanings set
forth in the Warrant.

 

		1.	Form of Exercise Price. The Holder intends that payment of the
Exercise Price shall be made as (check one):

 

D a
cash exercise with respect toWarrant
Shares; or

D
by cashless exercise pursuant to the Warrant.

  

		2.      
Payment of Exercise Price. If cash exercise is selected above, the holder shall pay
the applicable Aggregate Exercise Price in the sum of $______________the Company in accordance with the terms of the Warrant.

   

		3.       Delivery
                              of Warrant Shares. The Company shall deliver to the holder
                              _________________________Warrant Shares in accordance with the terms of the Warrant.

 

 

 

Date:________________

 

 

 

	 	______________________________________	 
	 	(Print Name of Registered Holder)	 
	 	 	 
	 	By: ___________________________________	 
	 	 	 
	 	Name: _________________________________	 
	 	 	 
	 	Title: __________________________________	 
	 	 	 

 

C

    	 		 

     

    

 

 

EXHIBIT B

 

ASSIGNMENT
OF WARRANT

 

(To be
signed only upon authorized transfer of the Warrant)

 

 

FOR VALUE
RECEIVED, the undersigned hereby sells, assigns, and transfers unto ______

the right to purchase
_________ shares of common stock of GEX Management, Inc.,
to which the within

Common Stock Purchase
Warrant relates and appoints
___________________ as attorney-in-fact,
to transfer

said
right on the books of GEX Management, Inc. with full power of substitution and re-substitution in the premises. By accepting such
transfer, the transferee has agreed to be bound in all respects by the terms and conditions of the within
Warrant.

 

 

	 	______________________________________	 
	 	(Signature)*
	 
	 	 	 
	 	______________________________________	 
	 	(Name)	 
	 	 	 
	 	 ______________________________________	 
	 	(Address)	
	 	 	 
	 	 ______________________________________	 
	 	(Social Security or Tax Identification No.)	 

 

 

*
The signature on this Assignment of Warrant must correspond to the name
as written upon the face of the Common Stock Purchase Warrant in every particular without alteration or enlargement or any change
whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and title(s)
with such entity.

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