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HomeMy WebLinkAboutCertificate of FormationCertificate of Resolutions Date: November 32 , 2012 Company: 303A Properties, LLC Date of Adoption: November, 2012 1, the member of the Company, a Texas limited 'liability company, certify that I have custody of the records of the Company and that I am authorized to execute and deliver this certificate of resolutions on behalf of the Company. 1 further certify as follows: 1. The resolutions below were duly adopted as of the Date of Adoption by written consent of the members of the Company as required by law and the regulations of the Company. The resolutions have not been amended, modified, or rescinded and are now in full force and effect. RESOLVED, that the Company is authorized to submit an application for rezoning, submit plats & replats, and dedicate easements and rights of way to the City of College Station, Texas. RESOLVED, that Fadi Kalouze, Managing Member of 303A is authorized to sign any and all documentation necessary to submit a an application for rezoning, submit plats & replats, and dedicate easements and rights of way. FURTHER RESOLVED that the transactions contemplated by this Certificate of Resolutions are in the best interests of the Company. 2. I further certify that the Company is duly organized and existing under the laws of the state of Texas, is qualified to do business here; and is in good standing; that no proceeding is pending for the forfeiture of the certificate of formation of the Company or for the dissolution, voluntary or involuntary, of the Company; that there is no provision of the regulations or certificate of formation of the Company limiting the powers of the members or managers of the Company to adopt the resolutions referred to above and that the resolutions are in conformity with the provisions of the regulations and the certificate of formation of the Company; that the undersigned is the keeper of the records and minutes of the proceedings of the Company; and that the following persons constitute all of the members of the Company: 1. Fadi Kalaouze 2. Hege Kalaouze /mod .- Fadi Kalaouze, Managing Member H e Kalouze, Managing Member State of Texas County of Brazos Before me, the undersigned authority, on this day personally appeared Fadi Kalouze known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that Fadi Kalouze executed the same as the Managing Member, for the purposes and consideration therein expressed. Given under my hand and seal of office this _ day of NOWn , 2012. a�p vuso PAIGE ELAINE PADDICK cj(�- Notary PublicState of Texas My commission Expires Noltary Publ ,State of Texas March 22, 2014 STATE OF TEXAS COUNTY OF BitAZOS } Before me, the undersigned authority, on this day personally appeared Hege Kalouze known to me to be the person whose name is subscribed to the foregoing instrument as managing member and acknowledged to me that Hege Kalouze executed the saute for the purposes and consideration therein expressed. /)� Given under my hand and seal of office this _ZJL_ day of VQWe-%1i;Y/c,2012. e, PAIGE ELAINE PADDICK e Notary Public, State of Texas My Commission Expires March 22, 2014 Not lry Public, Otate o Texas 4848-04994578, v. ! i :cretery of states t` Filed in the Office of the O. Box 13697 Secretary of State of Texas lstin, TX 78711-3697 Filing #: 800970610 04/28/2008 ky. 5121463-5709 Document #: 213611800002 Certificate of Formation Image Generated Electronically ing Fee: $300 Limited Liability Company for Web Filing ie filing entity being formed is a limited liability company. The name of the entity is: 13A Properties, LLC 3 name of the entity must contain the words Limited Liability Company' or 'Limited Company," or an accepted abbreviation of such terms, The me must notbe the same as, deceptively similar to or similar to that of an existing corporate, limited liability company, or limited partnership ne on file with the secretary of state. A preliminary check for "name availability": is recommended. A. The Initial registered agent is an organization (cannot be company named above) by the name of OR B. The initial registered agent is an individual resident of the state whose name is set forth below: ime: rdi J Kalaouze 16 of the registered agent and the registered office address is: Bryan TX 77803 he limited liability company is to be managed by managers. OR B. The limited liability company will not have managers. Management of the company is reserved to the members, e names and addresses of the governing persons are set forth below: nager t. Fadi Kalaouze Title: Manager dress 1516 Shiloh,,Ste A Bryan TX, USA 77803 nager2: Hege Kalaouze Title: Manager dress 1516 Shiloh, Ste A Bryan TX, USA 77803 to purpose for which the company is organized is for the transaction of any and all lawful business for which limited bility companies may be organized under the Texas Business Organizations Code -Supplemental ProWsionsInformation .a attaohed addendum, if any, is incorporated herein tiiy reference,] Organizer ve name and address of the organizer are set forth below. idi Kalaouze 1616 Shiloh, Ste A, Brvan. TX_77803 A. This document becomes effective when the document is filed by the secretary of state. OR B. This document becomes effective at a later date, which is not more than ninety (90) .days from the date of its Ining. The delayed effective date is: ie undersigned signs this document subject to the penalties imposed by law for the submission of a materially false fraudulent instrument. di Kalaouze nature of Organizer (LING OFFICE COPY COMPANY AGREEMENT OF 303A Properties, LLC, a Texas Limited Liability Company This Company Agreement of 303A Properties, LLC is executed as of May 1, 2008 (the "Effective Date") by the persons who sign and are identified as "Members" in this Agreement. ARTICLE DEFINITIONS 1.01 Definitions. As used in this Agreement, the following terms have the following meanings; "Affiliate" means; with reference to any person, any other person controlling, controlled by or under direct or indirect common control with such person. "Agreement" means this Company Agreement, as amended from time to time. "Assignee" means a person who receives a Transfer of all or a portion of the Membership Interest of a Member, but, who has not been admitted to the Company as a Member. "Bankrupt Member" means (except to the extent a Simple Majority consents otherwise) any Member (a) that (i) makes an assignment for the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii) becomes the subject of an order for relief or is declared insolvent in any federal or state bankruptcy or insolvency proceedings; (iv) files a petition or answer seeking for the Member a reorganization, arrangement; composition, readjustment, liquidation, dissolution, termination, or similar relief under any law; (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Member in a Proceeding of the type described in subclauses (i) through (iv) of this clause (a); or (vi) seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the Member's or of all or any substantial part of the Member's properties; or (b) against which a Proceeding seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any law has been commenced and one hundred twenty (120) days have expired without dismissal thereof or with respect to which, without the Member's consent or acquiescence, a trustee, receiver, or liquidator of the Member or of all or any substantial part of the Member's properties has been appointers and ninety(90) days have expired without the appointment's having been vacated =or stayed, or ninety (90) days have expired after the date of expiration of a stay, if the appointment has not previously been vacated. "Business Day" means any day other than a Saturday, a Sunday, or a holiday on which stational banking associations in the State of Texas are closed. "Capital Account" means a capital account maintained fora Member as provided by Treasury Regulation 1,704-1(b)(2)(iv) of the Regulations of the Internal Revenue Service. "Capital Contribution" means the amount of money and the Net Value of property other than money contributed to the Company by a Member. Z rC1nmu\Ka1aonze, Fadi (303A Properties, LLC) 26301Company Agreement (operating Agreement).(LLC),wpd Page I "Capital Commitment" of a Member represents the aggregate amount of capital that such Member has agreed to contribute to the Company. "Certificate of Formation" means the initial, amended, and restated certificate of formation of the Company, "Company" means 303A Properties, LLC, a Texas limited liability company. "Default Interest Rate" means a rate per annum equal to the lesser of (a) ten percent (10%) plus the prime rate published in The Wall Street Journal on the day the rate is determined (or the most recent day on which The Wall Street Journal was published if the paper is not published on the day the rate is determined), or, (b) the maximum rate permitted by applicable law. "Former Member" means any person who had executed this Agreement, as of the date of this Agreement as a Member, or hereafter admitted to the Company as a Member, as provided in the Agreement, but who is no longer a Member of the Company; however, this term does not include a person who ceases to be a Member as a result of bankruptcy, default or expulsion. "Fundamental Business Transaction" has that meaning assigned to it by the definitions in the TBOC, as may be amended from time to time, and includes (a) a merger, (b) an interest exchange, (e) a conversion, or (d) a sale of all or substantially all of an entity's assets (with or without good will), other than in the usual and regular course of the Company's business. "General Interest }late" means a rate per annum equal to the lesser of (a) the prime rate published in The Wall Street Journal on the day the rate is determined (or the most recent day on which The Wall Street Journal was published if the paper is not published on the day the rate is determined), or, (b) the maximum rate permitted by applicable law. "Internal Revenue Code" means the Internal Revenue Code of 1986 and any successor statute, as amended from time to time. "Manager" means any person named in the Certificate of Formation as an initial Manager of the Company and any person hereafter elected as a Manager of the Company as provided in this Agreement, but does not include any person who has ceased to be a Manager of the Company. "Member" means any person executing this Agreement as of the date of this Agreement as a Member or hereafter admitted to the Company as a Member as provided in this Agreement; but does not include any person who has ceased to be a Member of the Company. "Membership Interest" means the interest of a Member in the Company, including, without limitation, rights to distributions (liquidating or otherwise), allocations, information, and to consent or approve. "Net Value" means, in connection with a Capital Contribution of property, the value of the asset less any indebtedness to which the asset is subject when contributed. Z:\Clients\Kalaouze. radix (303A Properties, LLC) 3630\Company Agreement (Operating Agreement) (LLC),wpd Page 2 "Percentage Interest" means the ratio in which the Members shall share profits and losses, as provided in this Agreement. The sum of the Members' Percentage Interests shall be one hundred percent (100%). "Person" means any business entity, trust, estate, executor, administrator, or individual. "Proceedings" means any threatened, pending or completed action, suitor proceeding, whether civil, criminal, administrative, arbitrative or investigative. "Simple Majority" means one or more Members having among them more than fifty percent (50%) of the Percentage Interests of all Members. "Super Majority" means one or more Members having among them more than sixty-six and sixty-seven hundredths percent (66.67%) of the Percentage Interests of all Members. "TBOC" means the Texas Business Organizations Code, including any successor statute, as amended from time to time. "Transfer" means any sale, transfer, encumbrance, gift, donation, assignment, pledge, hypothecation, or other form of transfer of a Membership Interest or any portion of a Membership Interest, whether vohmtary or involuntary, whether attempted or completed, and whether during the transferor's lifetime or upon or after the transferors death, including by operation of law, court order, judicial process, foreclosure, levy or attachment. Other terms defined herein have the meaning so given them. ARTICLEII ORGANIZATION 2.01 Formation. The Company has been organized as a. Texas limited liability company by filing a Certificate of formation with the Secretary of State of Texas, which may be amended or restated from time to time. 2.02 Name. The name of the Company is "303A Properties, LLU and all Company business must be conducted in that name or such other names that comply with applicable law as the Managers may select from time to time. 2.03 Registered Office and Registered Agent. The registered office of the Company required by the TBOC to be maintained in the State of Texas, shall be the office of the initial registered agent named in the Certificate of Formation or such other office (which need not be a place of business of the Company) as the Managers may designate from time to time in the manner provided by law. The registered agent of the Company in the State of Texas shall be the initial registered agent named in the Certificate of Formation or such other person or persons as the Managers may designate from time to time in the manner provided by law. 2.04 Principal Office and Other Offices. The principal office of the Company in the United States shall be at such place as the Managers may designate from time to time, which need not be in the State of Texas. The Company may have such other offices as the Managers may designate from time to time. Z:\CBents\Kalaouze; Fad (303A:Properties, UX) 2630Tornpany Agreement (Operaling Agreement) (C.LC).wpd Page 3 2.05 Purposes. The primary purposes of the Company shall be any lawful purpose which may be undertaken by the company in accordance with the applicable provisions of the Texas Business Organizations Code. 2.06 Powers. The Company shall have all powers necessary, suitable or convenient for the accomplishment of the purposes of the Company, including without limitation (a) to make and perform all contracts; (b) to borrow or lend money and secure payment thereof; (c) to engage in all activities and transactions; and (d) to have all powers available to a limited liability company under (i) the TBOC, (ii) any other laws in the State of Texas, and (iii) the laws of any other jurisdiction where the Company conducts business. 2.07 Foreign Qualification. Priorto the Company's conducting business in anyjurisdiction other than Texas, the Managers shall cause the Company to comply, to the extent procedures are available and those matters are reasonably within the control of the Managers, with all requirements necessary to qualify the Company as a foreign limited liability company in that jurisdiction. At the request of the Managers, each Member shall immediately execute, acknowledge, swear to, and deliver all certificates and other instruments conforming with this Agreement that are necessary or appropriate to qualify, continue, and terminate the Company as a foreign limited liability company in all such jurisdictions in which the Company may conduct business. 2,08 Term. The Company will commence as provided in the Certificate of Formation for the Company filed with the Secretary of the State of Texas, and will continue until the Company terminates under the terms of this Agreement. 2.09 Mergers and Exchanges, The Company may be a party to a merger, an exchange, or acquisition under the TBOC, subject to the requirements of this Agreement. 2,10 No State -Law Partnership. The Members intend that the Company not be a partnership, a limited partnership, or a joint venture, and that no Member or Manager be a partner orjoint venturer of any other Member or Manager, for any purposes other than federal and state tax purposes, and this Agreement may not be construed to suggest otherwise. ARTICLE, III MEMBERSHIP 3.01 Initial Members, Capital Commitments, and Percentage Interests. The persons listed on Exhibit A are hereby admitted to the Company as a Member; effective contemporaneously with the Effective Date of formation of'the Company. Set forth opposite the name of each Member listed on Exhibit A is such Member's Capital Commitment and its Percentage Interest. Exhibit A may be amended from time to time to reflect changes in or additions to the membership of the Company, Any such amended Exhibit: A shall (a) supersede all prior Exhibit A's, (b) become part of this Agreement, and (c) be kept on file at the principal office of the Company. Each Member represents that the Member is acquiring an interest in the Company for the account of such Member and not with a view to distribution thereof within the meaning of the Securities Act of 1933, as amended, or any state securities taws, The Member will not transfer such interest in contravention of that act or any applicable state or federal securities laws. 3.02 Additional Members. Additional persons may be admitted to the Company as Additional Members on such terms and conditions as shall be determined by a Super Majority of the Members. The terms of admission or issuance must specify the Percentage Interests and the Capital Commitments applicable thereto. The terms of admission or issuance may also provide for the ZAClients\Kalaouze, Fadi (303A Properties, LIC) 2630\Company Agree meet (Operating Agreement) (I.I.C).wpd Page 4 creation of different classes or groups of Members having different rights, powers, and duties. The Managers shall reflect the creation of any new class or group in an amendment to this Agreement indicating the different rights, powers, and duties, and such an amendment need be executed only by the Managers. 3.03 Member Rights Specified in Agreement.. Except as otherwise specifically provided in this Agreement, no Member shall have the right (a) to sell, transfer or assign its interest in the Company; (b) to require partition of the property of the Company; (c) to compel the sale of Company assets; or (d) to cause the winding up of the Company. 3.04 No Authority. Except as otherwise specifically provided in this Agreement, no Member (other than a Manager or an officer) has the authority or power to (a) transact business in the name of or on behalf of the Company, (b) bind or obligate the Company, or (c) incur any expenditures on behalf of the Company. 3.05 Liability to Third Parties. No Member or Manager shall be liable for the debts, obligations or liabilities of the Company, including under a judgment decree or order of a court. 3.06 Withdrawal, A Member may withdraw from the Company with sixty (60) days notice to the Managers of the Company, subject to winding up or termination as provided in Article XVI of this Agreement. ARTICLE IV CAPITAL CONTRIBUTIONS 4.01 Initial Contributions. Contemporaneously with the execution of this Agreement, each Member shall make the initial Capital Contribution described for that Member in Exhibit A. 4,02 No Further Contributions. No Member shall be required to make any Capital Contributions other than those specifically described by this Agreement, unless agreed to in writing by the contributing Member or required by the TBOC. 4.03 Return of Contributions. No Member is entitled to the return of any part of its Capital Contributions or to be paid interest in respect of either its Capital Account or its Capital Contributions. An unrepaid Capital Contribution is not a liability of the Company or of any Member. 4.04 Loans by Members. If the Company does not have sufficient cash to pay its obligations, any Member that may agree to do so with the Managers' consent may advance all or part of the needed funds to or on behalf of the Company. An advance described in this paragraph constitutes a loan from the Member to the Company, bears interest at the General Interest Rate from the date of the advance until the date of payment, and is not a Capital Contribution, 4.05 Capital Accounts. A Capital Account shall be established and maintained for each Member. The Capital Account of each Member; (a) shall consist of (i) the amount of money contributed by that Member to the Company, and (ii) the fair market value of property contributed by that Member to the Company (net of liabilities secured by the contributed property that the Company is considered to assume or take subject to under Section 752 of the Internal Revenue Code); ZACtienWiCaleonze, Fadi (303A Properties, LLQ 26MCompany Agreement (Operating Agrwneno (Lt.Q.wpd page 5 (b)shall be increased by allocations to that Member of Company income and gain (or items thereof); including income and gain exempt from tax and income and gain described in "Treasury Regulation § 1.704-1(b)(2)(iv)(g), but excluding income and gain described in Treasury Regulation § 1.704-1(b)(4)(i); and (c) shall be decreased by (i) the amount of money distributed to that Member by the Company, (ii) the fair market value of property distributed to that Member by the Company (net of liabilities secured by the distributed property that the Member is considered to assume or take subject to under section 752 of the Internal Revenue Code), (iii) allocations to that Member of expenditures of theCompany described in Section 705(a)(2)(B) of the Internal Revenue Code, and (iv) allocations of Company loss and deduction (or items thereof), including loss and deduction described in Treasury Regulation § 1.704-1(b)(2)(iv)(g), but excluding items described in clause (c)(iii) above and loss or deduction described in Treasury Regulation § 1.704-1(b)(4)(i) or § 1.704-1(b)(4)(iii). The Capital Account of each Member also shall be maintained and adjusted as permitted by the provisions of Treasury Regulation § 1.704-1(b)(2)(iv)(f) and as required by the other provisions of Treasury Regulation § 1.704-1(b)(2)(iv) and 1.704-1(b)(4), including adjustments to reflect the allocations to the Members of depreciation, depletion, amortization, and gain or loss as computed for tax purposes, as required by"freasury Regulation §1.704-1(b)(2)(iv)(g). A Member that has more than one Membership Interest shall have a single Capital Account that reflects all its Membership Interests, regardless of the class of Membership Interests owned by that Member and regardless of the time or manner in which those Membership Interests were acquired. On the transfer of all or part of a Membership Interest, the Capital Account of the transferor that is attributable to the transferred Membership Interest or part thereof shall carry over to the transferee Member in accordance with the provisions of Treasury Regulation § 1.704-1(b)(2)(iv)(1). ARTICLE V ALLOCATIONS AND DISTRIBUTIONS 5.01 Allocations. (a) Except as may be required by Section 704(c) of the Internal Revenue Code and Treasury Regulation § 1.704-1(b)(2)(iv)(f)(4), all items of income, gain, loss, deduction and credit of the Company shall be allocated among the Members in accordance with their Percentage Interests. (b) All items ofincome, gain, loss, deduction, and credit allocable to any Membership Interest that may have been transferred shall be allocated between the transferor and the transferee based on the portion of the calendar year during which each was recognized as owning that Membership Interest, without regard to the results of Company operations during any particular portion of that calendar year and without regard to whether cash distributions were made to the transferor or the transferee during that calendar year; provided, however, that this allocation must be made in accordance with a method permissible under Section 706 of the Internal Revenue Code and the regulations thereunder. (c) In the event any Member unexpectedly receives any adjustments, allocations or distributions described in § 1.704-1(b)(2)(ii)(d)(4); (5) or (6) of the Treasury Regulations, items of the Company's income and gain shall be specially allocated as aqualified income offset to each such Member in an amotu3t and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Adjusted Capital Account Deficit of such Member as quickly as possible, provided that an allocation pursuant to this paragraph 5.01(c) shall be made only if and to the extent that such ZACIrenmKnlaouze, Fadi (303A hroporties, LLC) 26MCompany Agreement (Operating Agreement) (LL(:).wpd Page 6 Member has an Adjusted Capital Account Deficit after all other allocations provided for in this Article have been tentatively made as if this paragraph 5.01(c) were not in this Agreement. 5.02 Distributions. (a) From time to time (but at least once each calendar quarter) the Managers shall determine in their reasonable judgment to what extent (if any) the Company's cash on hand exceeds its current and anticipated needs, including, without limitation, for operating expenses, debt service, acquisitions, and a reasonable contingency reserve. If such an excess exists, the Managers shall cause the Company to distribute to the Members, in accordance with their Percentage Interests, an amount in cash equal to that excess. (b) From time to time the Managers also may cause property of the Company other than cash to be distributed to the Members; which distribution must be made in accordance with their Percentage Interests and may be made subject to existing liabilities and obligations. Immediately prior to such a distribution, the Capital Accounts of the Members shall be adjusted as provided in Treasury Regulation § 1.704-1(b)(2)(iv)(f). ARTICLE VI MANAGEMENT 6.01 Management by Managers. Except for situations in which the approval of the Members is required by this Agreement or bynonwaivable provisions of applicable law, and subject to the provisions of paragraph 6.02 of. this Agreement, the Managers shall have the sole and exclusive control of the management, business and affairs of the Company, and the Managers shall make all decisions and take all actions for the Company not otherwise provided for in this Agreement, including, without limitation, the following: (a) entering into, making, and performing contracts, agreements, and other undertakings binding the Company that may be necessary, appropriate, or advisable in furtherance of the purposes of the Company and making all decisions and waivers thereunder; (b) opening and maintaining bank and investment accounts and arrangements, drawing checks and other orders for the payment of money, and designating individuals with authority to sign or give instructions with respect to those accounts and arrangements; (c) maintaining the assets of the Company in good order; (d) collecting sums due the Company; (e) to the extent that funds of the Company are available therefor, paying debts and obligations of the Company; (f) acquiring; utilizing for Company purposes, and disposing of any asset of the Company; (g) borrowing money or otherwise committing the credit of the Company for Company activities and voluntary prepayments or extensions of debt; 2.\CIients\Kalaouxe, Fad (303A Properties, L!„C:,) 2630\Company Agreement(Qpuaiing Agreement) (LLC).wpd Page 7 (h) selecting, removing, and changing the authority and responsibility of lawyers, accountants, and other advisers and consultants; (i) obtaining insurance for the Company; 0) determining distributions of Company cash and other property as provided in paragraph 5.02 of this Agreement; (k) establishing a seal for the Company; and (1) designating one or more committees, each of which shall be comprised of one or more Managers, to exercise any authority of the Managers in the management, business and affairs of the Company. 6,02 Restrictions. Notwithstanding the provisions of paragraph 6.0 1 of this Agreement, the Managers may not cause the Company to do any of the following without complying with the applicable requirements set forth below: (a) enter into a Fundamental Business Transaction, without complying with the applicable procedures set forth in the TBOCregarding approval by the Members (unless such provision is rendered inapplicable by another provision of applicable law); (b) do any act in violation of this Agreement; (c) admit a Member, except as expressly permitted by this Agreement; (d) do any act which requires the prior approval of the Members; (e) possess Company property or assign rights in Company property, other than for a Company purpose; or (f) amend this Agreement, except as expressly permitted by this Agreement. 6.03 Conflicts of Interest. Subject to the other express provisions of this Agreement, each Manager, Member and officer of the Company at any time and from time to time may engage in and possess interests in other business ventures of any and every type and description, independently or with others, including ones in competition with the Company, with no obligation to offer to the Company or any other Member, Manager or officer the right to participate therein. The Company may transact business with any Manager, Member, officer or Affiliate thereof, provided the contract or transaction is fair to the Company as of the time it is authorized or ratified by Managers or Members, as the case may be. 6,04 Number and Term of Office. The numberof Managers of the Company shall be determined from time to time by resolution of the Managers, and shall consist of at least one (1) provided, however, that no decrease in the number of Managers that would have the effect of shortening the term of an incumbent Manager may be made by the Managers. If the Managers make no such determination, the number of Managers shall be the number set forth in the Certificate of Formation as the number of Managers constituting the initial Managers. Each Manager shall hold office for the term for which he is elected and thereafter until his successor shall have been elected and qualified, or until his earlier death, resignation or removal, Unless otherwise provided in the Certificate of Formation, Managers need not be Members or residents of the State of Texas. Z.X ientslKslaauze, Fadi (303A Properties, LL() 2630\Company Agreement (Operating Agreemmi) (t.t.C).wpd Page 8 6,05 Vacancies; Removal; Resignation. Any Manager position to be tilled by reason of an increase in the number of Managers or other reason may be filled by election at an annual or special meeting of Members called for that purpose. A Manager elected to fill a vacancy occurring other than by reason of an increase in the number of Managers shall be elected for the unexpired term of his predecessor in office. At any meeting of Members at which a quorum of Members is present called expressly for that purpose, or pursuant to a written consent adopted pursuant to this Agreement, any Manager may be removed, with or without cause, by a Super Majority. Any Manager may resign at any time, Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time be specified, at the time of its receipt by the remaining Managers. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation. 6.06 Compensation. For their services in the management of the Company and its operations, the Managers may receive such compensation, if any, as may be designated from time to time by a Simple Majority of the Members. 6.07 Reimbursement. The Managers are not required to advance any funds to pay costs and expenses of the Company. However, in the event the Managers advance such funds, the Managers shall be entitled to be reimbursed for out-of-pocket costs and expenses incurred in the course of their service hereunder, including the portion of their overhead reasonably allocable to Company activities. 6.08 Meetings. (a) Unless otherwise required by law or provided in the Certificate of Formation or this Agreement, a majority of the total number of Managers fixed by, or in the manner provided in, the Certificate of Formation or this Agreement shall constitute a quorum for the transaction of business of the Managers, and the act of a majority of the Managers present at a meeting at which a quorum is present shall be the act of the Managers. A Manager who is present at a meeting of the Managers at which action on any Company matter is taken shall be presumed to have assented to the action unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as secretary of the meeting before the adjournment thereof or shall deliver such dissent to the Company immediately after the adjournment of the meeting. Such right to dissent shall not apply to aManager who voted in favor of such action. (b) Meetings of the Managers may be held at such place or places as shall be determined from time to time by resolution of the Managers. At all meetings of the Managers, business shall be transacted in such order as shall from time to time be determined by resolution of the Managers. Attendance of a Manager at a meeting shall constitute a waiver of notice of such meeting; except where a Manager atterids a meeting for the purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. (c) In connection with any annual meeting of Members at which Managers were elected, the Managers may, if a quorum is present, hold their first meeting for the transaction of business immediately after and at the same place as such annual meeting of the Members. Notice of such meeting at such time and place shall not be required. (d) Regular meetings of the Managers shall be held at such times and places as shall be designated from time to time by resolution of the Managers. Notice of such regular meetings shall not be required. Z:\Chums\Kalaouze, Fadi (303A Properties, LLC) 2630\Company Agreement (Operating Agreement) (LLQ wpd Page 9 (e) Special meetings of the Managers may be called by any Manager on at least 24 hours notice to each other Manager. Such notice need not state the purpose or purposes of, nor the business to be transacted at, such meeting, except as may otherwise be required by law or provided for by the Certificate of Formation or this Agreement. Notice of special meetings may be given by facsimile or electronic message (e-mail). 6.09 Approval or Ratification of Acts or Contracts by Members. The Managers in their discretion may submit any act or contract for approval or ratification at any annual meeting of the Members, or at any special meeting of the Members called for the purpose of considering any such act or contract. Any act or contract that shall be approved or be ratified by a majority of the Managers shall be as valid and as binding upon the Company and upon all the Members as if it shall have been approved or ratified by every Member of the Company. 6.10 Action Without Meeting. Any action permitted or required by the TBOC, the Certificate of Formation or this Agreement to be taken at a meeting of the Managers or any committee designated by the Managers may be taken without a meeting if a consent in writing, setting forth the action to be taken, is signed by all the Managers or members of such committee, as the case may be. Every written consent shall bear the date of signature of each Manager who signs the consent, and the consent may be in one or more counterparts. A telegram, telex, cablegram or similar transmission by a Manager, or a photographic, photostatic, facsimile or similar reproduction of a writing signed by a Manager, shall be regarded as signed by the Manager for purposes of this paragraph. Such consent shall have the same force and effect as a unanimous vote at a meeting and may be stated as such in any document or instrument filed with the Secretary of State of Texas, and the execution of such consent shall constitute attendance or presence in person at a meeting of the Managers or any such committee, as the case may be. The signed consent or a signed copy of the consent shall be kept on file at the principal office of the Company. 6,11 Action by Telephone Conference or Other Remote Communications Technology. Subject to the requirements of the TBOC, the Certificate of Formation or this Agreement for notice of meetings, unless otherwise restricted by the Certificate of Formation, Managers, or members of any committee designated by the Managers, may participate in and hold a meeting of the Managers or any committee of Managers, as the case may be, by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other. Or, another suitable electronic communications system may be used including video-conferencing technology or the Internet, but only if each Manager entitled to participate in the meeting consents to the meeting being held by means of that system and the system provides access to the meeting in a manner or using a method by which each Manager participating in the meeting can communicate concurrently with each other participant. Participation in such meeting shall constitute attendance and presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. 6.12 Broad Discretion and Authority of Managers. Each Member acknowledges and understands that the Managers are granted broad discretion and authority under this Agreement and that the Managers' exercise of such broad discretion and authority may impair the value of the Membership Interest of the Member. Such Member further acknowledges and understands that the Managers would not cause the Company to issue a Membership Interest to the Member if the Managers did not have such broad discretion and authority, and such Member agrees not to challenge the Manager's exercise of such discretion and authority. ZACIIentslKalaouze, Fadi (303A Properties; LLC) 2630\Company Agreement (Operating Agreumont) (LLC),wpd Page 10 ARTICLE VII CONFIDENTIAL INFORMATION 7.01 Confidential Information. The Members agree that the Managers from time to time may determine, due to contractual obligations, business concerns, or other considerations, that certain information regarding the business, affairs, properties, and financial condition of the Company should be kept confidential and not provided to some or all other Members, and that it is not just or reasonable for those Members or assignees or representatives thereof to examine or copy that information. The Members acknowledge that, from time to time, they may receive information from or regarding the Company in the nature of trade secrets or that otherwise is confidential, the release of which may be damaging to the Company or persons with which it does business. Each Member shall hold in strict confidence any information it receives regarding the Company that is identified as being confidential (and if that information is provided in writing, that is so marked) and may not disclose it to any person other than another Member or a Manager, except for disclosures (i) compelled by law (but the Member must notify the Managers promptly of any request for that information, before disclosing it, if practicable), (ii) to advisers or representatives of the Member or persons to which that Member's Membership Interest may be transferred as permitted by this Agreement, but only if the recipients have agreed to be bound by the provisions of this paragraph, or (iii) of information that Member also has received from a source independent of the Company that the Member reasonably believes obtained that information without breach of any obligation of confidentiality. 7.02. Specific Performance. The Members acknowledge that breach of the provisions of paragraph 7.01 of this Agreement may cause irreparable injury to the Company for which monetary damages are inadequate, difficult to compute, or both. Accordingly, the Members agree that the provisions of paragraph 7.01 of this Agreement may be enforced by specific performance. ARTICLE VIIl MEETING OF MEMBERS 8.01 Meetings. (a) A quorum shall be present at a meeting of Members if the holders of a Simple Majority are represented at the meeting in person or by proxy. With respect to any matter, other than a matter for which the affirmative vote of the holders of a specified portion of the Percentage Interests of all Members entitled to vote is required by the TBOC or this Agreement, the affirmative vote of a Simple Majority at a meeting of Members at which a quorum is present shall be the act of the Members, except as provided by paragraph 8.01(b) or by another specific provision in this Agreement. (b) The vote of a Super Majority of the Members shall be required for the Company to enter into a Fundamental Business Transaction. (c) All meetings of the Members shall be held at the principal place of business of the Company or at such other place within or outside the State of Texas as shall be specified or fixed in the notices or waivers of notice thereof, provided that any or all Members may participate in any such meetings by means of conference telephone or similar communications equipment pursuant to paragraph 8.06 of this Agreement. (d) Notwithstanding the other provisions of the Certificate of Formation or this Agreement, the chairman of the meeting or the holders of a Super Majority shall have the power to ZACllents\Kataoktze, Fadi (303A Properties, LLC). 263MCompany Agreement (Operating Agreement) (LI.C).wpd Page 11 adjourn such meeting from time to time, without any notice other than announcement at the meeting of the time and place of the holding of the adjourned meeting. If such meeting is adjourned by the Members, such time and place shall be determined by a vote of the holders of a Super Majority. Upon the resumption of such adjourned meeting, any business may be transacted that might have been transacted at the meeting as originally called. (e) An annual meeting of the Members, for the election of the Managers and for the transaction of such other business as may properly come before the meeting, shall be held at such place, within or outside the State of Texas, on such date and at such time as the Managers shall fix and set forth in the notice of the meeting, which date shall be within thirteen (13) months subsequent to the date of organization of the Company or the last annual meeting of Members, whichever most recently occurred. (f) Special meetings of the Members for any proper purpose or purposes may be called at any time by the Managers or the holders of at least ten percent of the Percentage Interests of all Members. If not otherwise stated in or fixed in accordance with the remaining provisions hereof, the record date for determining Members entitled to call a special meeting is the date any Member first signs the notice of that meeting. Only business within the purpose or purposes described in the notice (or waiver thereof) required by this Agreement may be conducted at a special meeting of the Members. (g) Written or printed notice stating the place, day and hour of the meeting and; in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally or by mail, by or at the direction of the Managers or person calling the meeting, to each Member entitled to vote at such meeting. If mailed, any such notice shall be deemed to be given when deposited in the United States mail, addressed to the Member at his address on the voting list provided for in paragraph 8,02 of this Agreement, with postage thereon prepaid. (h) The date on which notice of a meeting of Members is mailed or the date on which the resolution of the Managers declaring a distribution is adopted, as the case may be, shall be the record date for the determination of the Members entitled to notice of or to vote at such meeting, including any adjournment thereof, or the Members entitled to receive such distribution. (i) Notice of meetings may be given to Members by facsimile or electronic message (e-mail). 8.02 'Voting List. The Managers shall make, at least ten (10) days before each meeting of Members, a complete list of the Members entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, wiih the address of and the Percentage Interests held by each. For a period of ten (10) days prior to such meeting; such list shall be kept on file at the registered office or principal place of business of the Company and shall be subject to inspection by any Member at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any Member during the whole time of the meeting. The original membership records shall be prima -facie evidence as to who are the Members entitled to examine such list or transfer records or to vote at any meeting of Members. Failure to comply with the requirements of this paragraph shall not affect the validity of any action taken at the meeting. 8.03 Proxies. A Member may vote either in person or by proxy executed in writing by the Member. A telegram, telex, cablegram or similar transmission by the Member, or a photographic, Z \Clients\Kalaouze, Fadi (303A Properties, L.LC)2630\Company Agreement (Operating Agreement) (L,L.C),wpd Page 12 photostatic, facsimile or similar reproduction of a writing executed by the Member shall be treated as an execution in writing for purposes of this paragraph. Proxies for use at any meeting of Members or in connection with the taking of any action by written consent shall be filed with the Managers, before or at the time of the meeting or execution of the written consent, as the case may be, All proxies shall be received and taken charge of and all ballots shall be received and canvassed by the Managers, who shall decide all questions touching upon the qualification of voters, the validity of the proxies, and the acceptance or rejection of votes, unless an inspector or inspectors shall have been appointed by the chairman of the meeting, in which event such inspector or inspectors shall decide all such questions. No proxy shall be valid after eleven (11) months from the date of its execution unless otherwise provided in the proxy. A proxy shall be revocable unless the proxy form conspicuously states that the proxy is irrevocable and the proxy is coupled with an interest. Should a proxy designate two or more persons to act as proxies, unless that instrument shall provide to the contrary, a majority of such persons present at any meeting at which their powers thereunder are to be exercised shall have and may exercise all the powers of voting or giving consents thereby conferred, or if only one be present, then such powers may be exercised by that one; or, if an even number attend and a majority do not agree on any particular issue, the Company shall not be required to recognize such proxy with respect to such issue if such proxy does not specify how the Percentage Interests that are the subject of such proxy are to be voted with respect to such issue. 8.04 Conduct of Meetings. All meetings of the Members shall be presided over by the chairman of the meeting, who shall be a Manager (or representative thereof) designated by a majority of the Managers. The chairman of any meeting of Members shall determine the order of business and the procedure at the meeting, including the regulation of the manner of voting and the conduct of discussion. 8.05 Action by Unanimous Written Consent Without Meeting. (a) Any action required or permitted to be taken at any annual or special meeting of Members may be taken without a meeting, without prior notice, and without a vote, by unanimous written consent of the Members or committee members, as the case may be, setting forth the action so taken. No written consent shall be effective to take the action that is the subject to the consent unless, within sixty (60) days after the date of the earliest dated consent delivered to the Company in the manner required by this paragraph, the signed consent or consents are delivered to the Company by delivery to its registered office, its principal place of business; or the Managers. Delivery shall be by hand or certified or registered mail, return receipt requested. Delivery to the Company's principal place of business shall be addressed to the Managers. Every written consent shall bear the date of signature of each Member who signs the consent, and the consent may be in one or more counterparts. A telegram, telex, cablegram or similar transmission by a Member, or a photographic, photostatic, facsimile or similar reproduction of a writing signed by a Member, shall be regarded as signed by the Member for purposes of this paragraph. The signed consent or a signed copy of the consent shall be kept on file at the principal office of the Company. (b) The record date for determining Members entitled to consent to action in writing without a meeting shall be the first date bn which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Company by delivery to its registered office, its principal place of business, or the Managers. Delivery shall be by hand or by certified or registered mail, return receipt requested. Delivery to the Company's principal place of business shall be addressed to the Managers. (c) If any action by Members is taken by written consent, any articles or documents filed with the Secretary of State of Texas as a result of the taking of the action shall state, in lieu of Z \Cllents\Kahiopze, Fadi (397A Properties, LLC)26JD\Company Agminent (Operating Agreement) (LLC),wpd Page 13 any statement required by the TBOC concerning any vote of Members, that written consent has been given in accordance with the provisions of the TBOC and that any written notice required by the TBOC has been given. 8.06 Action by Telephone Conference or Other Remote Communications Technology. Members may participate in and hold a meeting by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other. Or, another suitable electronic communications system may be used including video-conferencing technology or the Internet, but only if each member entitled to participate in the meeting consents to the meeting being held by means of that system and the system provides access to the meeting in a manner or using a method by which each member participating in the meeting can communicate concurrently with each other participant. Participation in such meeting shall constitute attendance and presence in person at such meeting; except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. 8.07 Classes of Members; Voting. At an annual or special meeting called for that purpose, the Members may from time to time establish classes or groups of Members. One or more of the Members' groups or classes may have certain expressed relative rights, powers, and duties, including voting rights, to be established at the time when the classes or groups are created, with seniority granted to one or more class or group as designated by the Members. ARTICLE IX OFFICERS 9.01 Qualification. The Managers may, from time to time, designate one or more persons to be officers of the Company. No officer need be a resident of the State of Texas, a Member or a Manager. Any officers so designated shall have such authority and perform such duties as the Managers may, from time to time, delegate to them. The Managers may assign titles to particular officers,. Unless the Managers decide otherwise, if the title is one commonly used for officers of a business corporation, the assignment of such title shall constitute the delegation to such officer of the authority and duties that are normally associated with that office, subject to any specific delegation of authority and duties made to such officer by the Managers pursuant to this paragraph. Each officer shall hold office until his successor shall be duly designated and qualify for such office, until his death, or until he shall resign or shall have been removed in the manner hereinafter provided. Any vacancy occurring in any. office of the Company (other than Manager) may be filled by the Managers. Any number of offices may be held by the one person. 9.02. Compensation. The salaries or other compensation, if any, of the officers and agents of the Company shall be fixed from time to time by the Managers. However, election or appointment of an officer or agent shall not of itself, nor shall anything in this, Agreement, create contract rights. 9.03. Resignation. Any officer may resign as such at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time be specified, at the time of its receipt by the Managers. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation. 9.04. Removal. Any officer may be removed as such, either with or without cause, by the Managers whenever in their judgment the best interests of the Company will be served thereby; 2:\C4ientsTataouze,Fadi(303At'roperties, LLQ 2630\Company Agreement(Operating Agreameno([,1.Q.wpd Page 14 provided, however, that such removal shall be without prejudice to the contract rights, if any, of the person so removed. ARTICLE X INDEMNIFICATION 10.01 Right to Indemnification. Subject to the limitations and conditions as provided in this Article, each person who was or is made a party or is threatened to be made a party to or is involved in any Proceeding, or any appeal in such a Proceeding, or any inquiry or investigation that could lead to such a Proceeding, by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a Member or Manager of the Company or while a Member or Manager of the Company is or was serving at the request of the Company as a Manager, director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee bene fit plan or other enterprise shall be indemnified by the Company to the fullest extent permitted by the TSOC, as the same exist or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than said law permitted the Company to provide prior to such amendment) against judgments, penalties (including excise and similar taxes and punitive damages), fines, settlements and reasonable expenses (including, without limitation, attorney's fees) actually incurred by such person in connection with such Proceeding, and indemnification under this Article shall continue as to a person who has ceased to serve in the capacity which initially entitled such person to indemnity hereunder. The rights granted pursuant to this Article shall be deemed contract rights, and no amendments, modification or repeal of this Article shall have the effect of limiting or denying any such rights with respect to actions taken or Proceeding arising prior to any such amendment, modification or repeal. Itis expressly acknowledged that the indemnification provided in this Article could involve indemnification for negligence or under theories of strict liability. 10.02 Advance Payment. The right to indemnification conferred in this Article shall include the right to be paid or reimbursed by the Company the reasonable expenses incurred by a person of the type entitled to be indemnified under paragraph 10.01 of this Agreement who was, is or is threatened to bemade a named defendant or respondent in a Proceeding in advance of the final disposition of the Proceeding and without any determination as to the person's ultimate entitlement to indemnification; provided, however, that the payment of such expenses incurred by any such person in advance of the final disposition of a Proceeding, shall be made only upon delivery to the Company of a written affirmation by such person of his or her good faith belief that he has met the standard of conduct necessary for indemnification under this Article and a written undertaking, by or on behalf of such person, to repay all amounts so advanced if it shall ultimately be determined that such indemnified person is not entitled to be indemnified under this Article or otherwise. 10,03 Indemnification of Officers, Employees and Agents. The Company, by adoption of a resolution of the Managers, may indemnify and advance or reimburse expenses to an officer; employee or agent of the Company to the same extent and subject to the same conditions under which it may indemnify and advance expenses to Managers under this Article; and, the Company may indemnify and advance or reimburse expenses to persons who are not or were not Managers, officers, employees, or agents of the Company but who are or were serving at the request of the Company as a Manager, director, officer, partner, venturer, proprietor, trustee; employee, agent or similar functionary of another foreign or domestic limited liability company, corporation, partnership,joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in such a capacity or arising out his status Z:1C1ientstKa1aouze, Pad; (303A Propertiex, LLQ 263MCompanyAgmement(Operating Agreement) (LLC).wpd Page 15 as such a person to the same extent that it may indemnify and advance expenses to Managers under this Article. 10.04 Appearance as a Witness. Notwithstanding any other provision of this Article, the Company may pay or reimburse expenses incurred by a Member or Manager in connection with his appearance as a witness or other participation in a Proceeding at a time when he is not a named defendant or respondent in the Proceeding. 10.05 Nonexclusivity of Rights. The right to indemnification and the advancement and payment of expenses conferred in this Article shall not be exclusive of any other right which a Member or Manager or other person indemnified pursuant to paragraph 10.03 of this Agreement may have or hereafter acquire under any law (common or statutory), provision of the Certificate of Formation or this Agreement, agreement, vote of disinterested Managers or otherwise. 10.06 Insurance. The Company may purchase and maintain insurance, at its expense, to protect itself and any person who is a Member or was serving as a Manager, officer, employee or agent of the Company or is or was serving at the request of the Company as a Manager, director, officer, partner; venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under this Article. 10.07 Member Notification. To the extent required by law, any indemnification of or advance of expenses to a Member or Manager in accordance with this Article shall be reported in writing to the Members with or before the notice or waiver of notice of the next Members' meeting or with or before the next submission to Members of a consentlo action without a meeting and, in any case; within the twelve month period immediately following the date of the indemnification or advance. 10.08 Savings Clause. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify and hold harmless each Member or Manager or any other person indemnified pursuant to this Article as to costs, charges, and expenses (including attorney's fees), judgments, fines and amounts paid in settlement with respect to any action, suit or Proceeding, whether civil, criminal, administrative or investigative to the full extent permitted by any applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law, ARTICLE: ICI TAXES 11.01 Tax Returns. The Managers shall cause to be prepared and filed all necessary federal and state income tax returns for the Company; including making the elections described in paragraph 11.02 of this Agreement. Each Member shall furnish to the Managers all pertinent information in its possession relating to Company operations that is necessary to enable the Company's income tax returns to be prepared and filed. 11.02 Tax Elections. The Company shall make the following elections on the appropriate tax returns: (a) to adopt the calendar year as the Company's fiscal year; 7.9Clien1s\Ka1aoaze, Fadi (303A Properties, LLC) 2630\Company Agreement (Operating Agreement) (LI.C).wpd Page 16 (b) to adopt the cash method of accounting for keeping the Company's books and records; (c) if a distribution of Company property as described in Section 734 of the Internal Revenue Code occurs or if a transfer of a Membership Interest as described in Section 743 of the Internal Revenue Code occurs, on written request of any Member, to elect, pursuant to Section 754 of the Internal Revenue Code, to adjust the basis of Company properties; (d) to elect to amortize the organizational expenses of the Company and the startup expenditures of the Company under Section 195 of the Internal Revenue Code ratably over a period of sixty (60) months as permitted by Section 709(b) of the Internal Revenue Code; and (e) any other election the Managers may deem appropriate and in the best interest of the Members. Neither the Company nor any Manager or Member may make an election for the Company to be excluded from the application of the provisions of subchapter K of chapter I subtitle A of the Internal Revenue Code or any similar provisions of applicable state law, and no provision of this Agreement shall be construed to sanction or approve such an election. 11.03 "Tax Matters Partner." A majority of the Managers shall designate one Manager that is a Member to be the "tax matters partner" of the Company pursuant to Section 6231(a)(7) of the Internal Revenue Code; or, if there is no Manager that is a Member, the "tax matters partner" shall be a Member that is designated as such by a Simple Majority. Any Member who is designated "tax matters partner" shall take such action as may be necessary to cause each other Member to become a 'notice partner within the meaning of Section 6223 of the Internal Revenue Code. Any Member who is designated "tax matters partner" shall inform each other Member of all significant matters that may come to its attention in its capacity as "tax matters partner" by giving notice thereof on or before the fifth Business Day after becoming aware thereof and, within that time, shall forward to each other Member copies of all significant written communications it may receive in that capacity. Any Member who is designated "tax matters partner" may not take action contemplated by Section 6222 through 6232 of the Internal Revenue Code without the consent of a Simple Majority, but this sentence does not authorize such Manager (or any other Manager) to take any action left to the determination of an individual Member under Sections 6222 through 6232 of the Internal Revenue Code. ARTICLE XII BOOKS; RECORDS, REPORTS, AND BANK ACCOUNTS 12.01 Maintenance of Books. The Company shall keep books and records of accounts and shall keep minutes of the proceedings of its Members, its Managers and each committee of the Managers. The books of account for the Company shall be maintained on a cash basis in accordance with the terms of this Agreement, except that the Capital Accounts of the Members shall be maintained in accordance with Article IV of this Agreement. The calendar year shall be the accounting year of the Company. 12.02 Accounts. The Managers shall establish and maintain one or more separate bank and investment accounts and arrangements for Company funds in the Company name with financial institutions and firms that the Managers determine. The Managers may not commingle the Company's funds with the funds of any. Member; however, Company funds may be invested in a Z \ClientsWalaouze, Fam (303A Properties, tLLC) 263(rCompany Agreement (Operating Agreement) (LAC). wpd Page 17 manner the same as or similar to the Managers' investment of their own funds or investments by their Affiliates. ARTICLE XIII TRANSFERS 13.01 Limited Right to Transfer. No Member or Assignee shall make any Transfer of all or any part of its Membership Interest, whether now owned or hereafter acquired, except (a) with the consent of a Super Majority of the Members; (b) as provided by Article XIV of this Agreement; (c) as a Defaulting Member as provided by paragraph 15.01(f) of this Agreement; or (d) upon winding up or termination, as provided by paragraph 16.03 of this Agreement. Any attempted Transfer by a person of an interest or right, or any part thereof, in or in respect of the Company other than as specifically provided by this Agreement shall be, and is hereby declared, null and void ob inidlo. 13.02 Rigbts of an Assignee. (a) Unless and until an Assignee becomes a Substituted Member of the Company as provided in this Agreement, the Assignee shall be entitled only to (i) allocation of income, gam, loss, deduction, credit, or similar items, and to receive distributions to which the assignor is entitled to the extent these items were assigned, and (ii) reasonable information or account of transactions of the Company and to make reasonable inspection of the books and records of the Company. The Membership Interest of the Assignee shall not be considered in the voting requirements of the Company, and the Assignee shall have no right to participate in the operations or management of the Company. (b) In the event that the Members make additional contributions to the Company which the Membership Interest is held by an Assignee, the Assignor Member and its Assignee shall bejointly and severally liable for the corresponding contribution inconnection with the Membership Interest held by Assignee. If the Assignor Member or Assignee does not make such contribution in accordance with the provisions of this Agreement, then the Assignor Member and Assignee shall be treated as being in Default. In the event that one or more new Members are admitted into the Company, or one or more existing Members increase their Membership Interest, the Membership Interest of the Assignee may be correspondingly reduced and no consent or other action on the part of such Assignee shall be required. 13.03 Legal Opinion. For the right of a Member to transfer a Membership Interest or any part thereof or of any Person to be admitted to the Company in connection therewith to exist or be exercised, the Company must receive an opinion from legal counsel acceptable to the Managers that states (a) the Transfer is exempt from registration under federal and state securities laws, (b) the Transfer will not cause the Company to be in violation of federal and state securities laws, (c) the Transfer will not adversely affect the status of the Company as a partnership under the Internal Revenue Code or Treasury Regulations, and (d) the Transfer will not result in the Company's being considered to have terminated within the meaning of the Internal Revenue Code or Treasury Regulations, The Managers, however, may waive the requirements of this paragraph. 13.04 Admission as Substituted Member. An Assignee has the right to be admitted to the Company as a Substituted Member with the Percentage Interest and the Capital Commitment so transferred to such person, in the event that: (a) the Member making such Transfer grants the Assignee the right to be so admitted; ZACHenOKahouze, Fam (303A Properties, LLQ 2630Tmnpany Agreemen( (Operating Agreement) (.LC),wm Page 18 (b) such Transfer is consented to in accordance with paragraph 13.01 of this Agreement; and (c) awritten, signed and dated instrument evidencing the Transfer has been filed with the Company in form and substance reasonably satisfactory to the Managers, and said instrument contains (i) the agreement by the Assignee to be bound by all of the terms and provisions of this Agreement, (ii) any necessary or advisable representations and warranties, including that the Transfer was made in accordance with all applicable laws, regulations, and securities laws, (iii) the Percentage Interests and the Capital Commitments after the Transfer of the Member effecting the Transfer and the person to which the Membership Interest of part thereof is transferred (which together must total the Percentage Interest and the Capital Commitment of the Member effecting the Transfer before the Transfer) and (iv) the name, address and any other pertinent information necessary for amended Exhibit A and to make distributions. 13.05 Transfer to Existing Member. In the event of a Transfer to an existing Member, the existing Member shall be automatically deemed to be a Substituted Member. 13.06 Third Party Offer. In the event a Member desires to sell all or any portion of its Membership Interest to another person (other than an existing Member), the selling Member shall first offer to sell the Membership Interest to the other existing Members. Upon the receipt of an offer from a Third Party to purchase such Membership Interest, the selling Member shall promptly deliver a copy of the Third Party offer to all other Members. Each Member will have fifteen (15) days from the date of receipt of the Third Party offer to notify the selling Member in writing that the other Member intends to purchase the Iyiembeiship Interest upon the terms and conditions of the Third Party offer. If more than one other Member desires to purchase the Membership Interest, each of the purchasing Members shall purchase a portion of the Membership Interest that is proportional to that Member's Percentage Interest. If none of the other Members give notification within fifteen (15) days of an intention to purchase the Membership Interest, then the selling Member shall be permitted to sell the Membership Interest to the Third Party upon the terms and conditions of the Third Party offer. 13.07 Reasonable Expenses. The Member effecting a Transfer and the Substituted Member shall pay, or reimburse the Company for, all costs incurred by the Company in connection with the admission of the Substituted Member (including, without limitation, the legal fees incurred in connection with the legal opinions referred to in paragraph 13,03 of this Agreement) on or before the tenth (I bth) day after the receipt by that person of the Company's invoice for the amount due. If payment is not made by the date due, the person owing the amount shall pay interest on the unpaid amount from the date due until paid at a rate per annum equal to the Default Interest Rate. ARTICLE XIV BUYOUT OF MEMBERSHIP INTEREST 14.01 Termination of Marital Relationship. (a) If the marital relationship of a Member is terminated by death or divorce and such Member does not succeed to all of such Member's spouse's community or separate interest, if any, in the Membership Interest (such spouse is referred to hereafter in this Article as the "Assignee Spouse"), either as outright owner of such Membership Interest or as a trustee of a trust holding such Membership Interest, whether or not such Member is a beneficiary of such trust, then such Member shall have the option to purchase at Fair Value (determined as of the date of the death or divorce of ZACtaraMKalaouze, Fadi (303A properties, U,C) 2630\Cmnpany Agreement (Operating Agreement) (1.L.C).Mpd Page 19 the Member) the Assignee Spouse's interest in the Membership Interest to which such Member does not succeed. Such option must be exercised within ninety (90) days after the death of or the Member's divorce from the Assignee Spouse. Should the Member fail to exercise such option within such 90-day period, then the Company shall have the option to purchase such Membership Interest at Fair Value for a period of ninety (90) days after the lapse of the initial 90-day period. (b) Any Membership Interest of the Company held by a Member as a trustee of a trust as a result of the death of or the Member's divorce from the Assignee Spouse shall be treated as owned by such Member for purposes of this agreement. If such Member ceases to act as trustee of such trust for any reason, then such Member shall have the option to purchase all of the Membership Interest at Fair Value held in such trust, Such option must be exercised within ninety (90) days after such Member ceases to act as trustee of such trust. Should such Member fail to exercise such option within such 90-day period, then the Company shall have the option to purchase such Membership Interest for a period of ninety (90) days after the lapse of the initial 90-day period. 14.02 Death of Member. Commencing upon the death of a Member, the surviving Members shall for a period of ninety (90) days have the option to purchase all or any portion of the deceased Member's Membership Interest at Fair Value (determined as of the date of the death of the Member); provided, however, the exercise of said option shall require the approval of a Super Majority of the surviving Members. Upon the expiration of ninety (90) days after the death of a Member, the Company shall be obligated to purchase all, and not less than all, of the deceased Member's Membership Interest at Fair Value which the surviving Members do not elect to purchase pursuant to the option granted in the preceding sentence. The Assignee (which may include spouse and executors or administrators of the deceased Member) shall sell all of the deceased Member's Membership Interest to the Company and/or the other Members in accordance with the option or obligation established by this paragraph, 14.03 Bankruptcy of Member. If any Member becomes a Bankrupt Member, the Company shall have the option, exercisable by notice from the Managers to the Bankrupt Member (or its representative) at any time prior to the one hundred eightieth (I80th) day after receipt of notice of the occurrence of the event causing it to become a Bankrupt Member, to purchase all or any portion of the Bankrupt Member's Membership Interest at Fair Value (determined as of the date that notice of the exercise of such option is given by the Managers); provided, however, the exercise of said option shall require the approval of Super Majority of the other Members. In the event that notice of the exercise of such option is given by the Managers to the Bankrupt Member (or its representative), the Bankrupt Member shall sell its interest to the Company as provided by this Article. 14.04 Insufficient Surplus, If the Company shall not have sufficient surplus to permit it lawfully to purchase the Membership Interest under paragraph 14,01, 14.02 or 14.03 of this Agreement at the time of the closing, the other Members may take such action to vote their respective Membership Interests to reduce the capital of the Company or to take such other steps as may be appropriate or necessary in order to enable the Company lawfully to purchase such Membership Interest. 14.05 Option by Other Members. If the Company fails or declines to exercise an option to purchase a Membership Interest of a Member as provided by this Agreement within the period of time specified for such option, then the other Members shall have the option for a period of ninety (90) days thereafter to purchase such Membership Interest in such proportions as they mutually agree or in proportion to their respective Percentage Interests for the same price and upon the same terms available to the Company. Z.'Chenl5ixalaouze, Fadi (303A Properties; LLC) 26301Company Agreement (Operating Agreement) (LLC),wpd Page, 20 14.06 Exercise of Option. Any option to purchase a Membership Interest as provided by this Agreement shall be deemed exercised at the time the purchasing party delivers to the selling party written notice of intent to exercise such option along with an initial payment in the form of a certified or cashier's check in the amount of ten percent (10%) of the estimated purchase price anticipated by the purchaser, in person or by United States registered mail, properly stamped and addressed to the last known address of the selling party. 14.07 Determination of Fair Value. The "Fair Value" of a Membership Interest shall be the amount that would be distributable to the Member holding such interest in the event that the assets of the Company were sold for cash and the proceeds, net of liabilities, were distributed to the holders of all Membership Interests pursuant to this Agreement. In the event that the Fair Value of a Membership Interest is to be determined under this Agreement, the Managers shall select a qualified independent appraiser to make such determination, and the Managers shall make the books and records available to the appraiser for such purpose. The determination of Fair Value made by such appraiser shall be final, conclusive, and binding on the Company, all Members, and all Assignees of a Membership Interest. 14.08 Fees and Expenses of Appraiser. In the case of a purchase and sale of Membership Interest under paragraph 14.01 or 14.02 of this Agreement (in the event of death or divorce of a Member); the fees and expenses of such appraiser shall be paid by the Company. In the case of a purchase and sale of Membership Interest under paragraph 14.03 or 15,01 (in the event of the bankruptcy or default of a Member), the fees and expenses of such appraiser shall be paid by the Bankrupt Member or Defaulting Member, by deducting at closing such fees and expenses from the purchase price to be paid to such Bankrupt Member or Defaulting Member, and remitting the same to the Company. Otherwise, the fees and expenses of such appraiser shall be shared equally by the purchaser and seller. 14.09 Right to Withdraw Option. In the event that a Member has exercised an election to purchase a Membership Interest under this Agreement and Fair Value has been determined as provided by paragraph 14.07 of this Agreement, such Member may elect to terminate its right to purchase within fifteen (15) days following its receipt of the determination of Fair Value, by delivery of written notice to the Company and to the Assignee. In such an event, the initial payment shall be returned to the Member withdrawing the option, and the other Members may elect to purchase the Membership Interest (or portion thereon in such proportions as they mutually agree or in proportion to their respective Percentage Interests. 14.10Terms of Purchase. (a) The closing date for any sale and purchase made pursuant to this Article shall be the later of (i) thirty (30) days after the notice of the exercise of option has been received by the selling party, or (ii) thirty (30) days after the parties have received notice of the Fair Value of the Membership Interest. (b) Payment of the purchase price for a Membership Interest may be made by the Company and/or the other Members as follows: (i) a down payment equal to ten percent (10%) of the Fair Value to be made at closing, and (ii) the balance of the purchase price, bearing interest at the General Interest Rate determined on the date of closing, to be paid in twenty-four (24) equal monthly installments, with the first payment due thirty (30) days after the date of closing. Any such purchaser shall have the right to pay all or any part of such obligation at any time or times in advance of maturity without penalty. In the event that the Company becomes a party to a Fundamental Z:\ChontstKalaouze, Fadi (303A. Properties, LLC) 2630\Coirpany Agreement (4perating Agrcement) (LLC),wpd. page 21 Business Transaction, such obligation (or remaining portion thereof) shall be paid in full within thirty (30) days of the date that the Company becomes a party to such transaction. (c) At the closing, the person selling the Membership Interest will transfer the Membership Interest free and clear of any liens or encumbrances, other than those which may have been created to secure any indebtedness or obligations of the Company. (d) In each event that a Membership Interest in the Company is purchased as described in this Agreement, upon the execution and delivery of the notes or payment of the cash as required herein, this Agreement shall operate as an automatic transfer to the purchaser of the Membership Interest in the Company. The payment to be made to the selling Member, Assignee, or its representative shall constitute complete release, liquidation and satisfaction of all the rights and interest of the selling Member; Assignee, or its representative (and of all persons claiming by, through, or under the selling Member, Assignee; or its representative) in and in respect of the Company, including, without limitation, any Membership Interest, any rights in specific Company property, and any rights against the Company and (insofar as the affairs of the Company are concerned) against the Members. The parties shall perform such actions and execute such documents that may be reasonably necessary to effectuate and evidence such purchase and sale, and release as provided by this paragraph. ARTICLE XV DEFAULT OF A MEMBER 15.01 Failure to Contribute. If a Member does not contribute by the time required all or any portion of a Capital Contribution that Member is required to make as provided in this Agreement, the Company may exercise, on notice to that Member (the "Defaulting Member"), one or more of the following remedies: (a) taking such action (including, without limitation, court proceedings) as the Managers may deem appropriate to obtain payment by the Defaulting Member of the portion of the Defaulting Member's Capital Contribution that is in default, together with interest thereon at Default Interest Rate from the date that the Capital Contribution was due until the date that it is made, all at the cost and expense of the Defaulting Member; (b) permitting the otherMembers in proportion to their Percentage Interests or in such other percentages as they may agree (the "Lending Member," whether one or more), to advance the portion of the Defaulting Member's Capital Contribution that is in default, with the following results: (i) the sum advanced constitutes a loan from the Lending Member to the Defaulting Member and a Capital Contribution of that sum to the Company by the Defaulting Member pursuant to the applicable provisions of this Agreement, (ii) the principal balance of the loan and all accrued unpaid interest thereon is due and payable in whole on the tenth (10th) day after written demand therefor by the Lending Member to the Defaulting Member, (iii) the amount tent bears interest at the Default Interest Rate from the day that the advance is deemed made until the date that the loan, together with all interest accrued on it, is repaid to the Lending Member, 7:\Clien�sWalaoue, Fadi (303A Properties, LLC) 2630\Canpany .Agreement (Operating Agreement) (LLQ upd Page 22 (iv) all distributions from the Company that otherwise would be made to the Defaulting Member (whether before or after termination of the Company) instead shal l be paid to the Lending Member until the loan and all interest accrued on it have been paid in full to the Lending Member (with payments being applied first to accrued and unpaid interest and then to principal), (v) the payment of the loan and interest accrued on it is secured by a security interest in the Defaulting Members Membership Interest, as more fully set forth in paragraph 15.02 of this Agreement, and (vi) the Lending Member has the right, in addition to the other rights and remedies granted to it pursuant to this Agreement or available to it at law or in equity, to take any action (including, without limitation, court proceedings) that the Lending Member may deem appropriate to obtain payment by the Defaulting Member of the loan and all accrued and unpaid interest on it, at the cost and expense of the Defaulting Member; (c) exercising the rights of a secured party under the Uniform Commercial Code of the State of Texas; (d) reducing the Defaulting Member's Membership Interest or other interest in the Company; (e) subordination of the Defaulting Member's Membership Interest to the nondefaulting Member; (0 aforced sale of the Defaulting Member's Membership Interest at Fair Value and upon the terms of purchase as provided in Article XIV; (g) forfeiture of the Defaulting Member's Membership Interest; or (h) exercising any other rights and remedies available at law or inequity. 15.02 Security. Each Member grants to the Company, and to each Lending Member with respect to any loans made by the Lending Member to that Member as a Defaulting Member under this Article, as security, equally and ratably, for the payment of all Capital Contributions that Member has agreed to make and the payment of all loans and interest accrued on them made by Lending Members to that Member as a Defaulting Member pursuant to paragraph 15.01(b) of this Agreement, a security interest in, and a general lien on its Membership Interest and the proceeds thereof, all under the Uniform Commercial Code of the State of Texas. It is expressly agreed that the security interest created thereby shall be governed by Chapter 8 of the Uniform Commercial Code of the State of "Texas. On any default in the payment of a Capital Contribution or in the payment ofsuch a loan or interest accrued on it; the Company or the Lending Member, as applicable, is entitled to all the rights and remedies of a secured party under the Uniform Commercial Code of the State of Texas with respect to the security interest granted in this Article. Each Member shall execute and deliver to the Company and the other Members all financing statements and other instruments that the Managers or the Lending Member, as applicable; may request to effectuate and carry out the preceding provisions of this Article. At the option of the Managers or a Lending Member, this Agreement or a carbon, photographic, or other copy hereof may serve as a financing statement. ZX3jents\Ka1a0uze, Padi (303A Properties, LLC) 2630\Company Agreement (Operating Agreement) (LLC),wpd Page 23 15.03 Compromise or Release. The obligation of a Defaulting Member or its legal representative or successor to make a contribution or otherwise pay cash or transfer property or to return cash or property paid or distributed to the Defaulting Member in violation of the TBOC or this Agreement may be compromised or released only with the approval of a Super Majority of the other Members. Notwithstanding the compromise or release, a creditor of the Company who extends credit or otherwise acts in reasonable reliance on that obligation, after the Member signs a writing that reflects the obligation and before the writing is amended or canceled to reflect the compromise or release, may enforce the original obligation. 15.04 Expulsion. A Member may be expelled from the Company by unanimous vote of all other Members (not including the Member to be expelled) if that Member (a) has willfully violated any provision of this Agreement; (b) committed fraud, theft, or gross negligence against the Company or one or more Members of the Company, or (c) engaged in wrongful conduct that adversely and materially affects the business or operation of the Company. Such a Member shall be considered a Defaulting Member; and the Company or other Members may also exercise any one or more of the remedies provided for in Article 15.01. The Company may offset any damages to the Company or its Members occasioned by the misconduct of the expelled Member against any amounts distributable or otherwise payable by the Company to the expelled Member. ARTICLE XVI WINDING UP AND TERMINATION 16.01 Event Requiring Termination. The Company shall begin to wind up its affairs upon the first of the following to occur: (a) the execution of an instrument approving the termination of the Company by a Super Majority of the Members„ (b) the occurrence of any event that terminates the continued membership of the last remaining Member of the Company; provided, however, that the Company is not dissolved if, no later than ninety (90) days after the termination of the membership of the last remaining Member, the legal representative or successor of the last remaining Member agrees to cancel the event requiring winding up, to continue the Company and to become a Member, or to designate another person who agrees to become a Member, as of the date of termination of the membership of the last remaining Member; (c) entry of a decree of judicial dissolution of the Company; (d) the occurrence of a inonwaivable event under the terms of the TBOC which requires the Company to be terminated; or (e) by the act of Simple Majority of the Members, if no capital has been paid into the Company, and the Company has not otherwise commenced business. 16.02 Business May Be Continued. Except as provided in paragraph 16.01(b) of this Agreement: (a) an event that requires the winding up of the Company's business shall not terminate the Company if, no later than one year after the date of the event, the Members unanimously consent to 'cancel the event requiring winding up. ZAClienMKulaouzc, Fadi (303A Properties, CLC) 26361Compnny Agreement (Operating Agreement) (LLC).wpd Page 24 (b) the expiration of a period of duration that requires the winding up of the Company's business shall not terminate the Company if, no later than three years after the date the period of duration expires, the Members unanimously consent to amend the Company's Certificate of Formation and this Agreement to extend the Company's period of duration. 16.03 Purchase of Former Member's Membership Interest. Upon an event requiring winding up as provided in 16.01 of this Agreement, the Company's books shall be closed upon the date of such event, so as to determine the Former Member's Membership Interest value on the date ending all of the Former Member's financial interest in the Company. Within one hundred eighty (180) days of such event, the Company shall purchase the Former Member's Membership Interest at Fair Value (as determined by paragraph 14.07 of this Agreement), upon terms of purchase as provided in Article XIV of this Agreement. 16,04 Liquidation. As soon as possible following an event requiring termination of the Company, the Managers shall act as liquidator or may appoint one or more Managers or Members as liquidator. The liquidator shall proceed diligently to wind tip the affairs of the Company and make final distributions as provided herein and in the TBOC. The costs of liquidation shall be borne as a Company expense. Until final distribution, the liquidator shall continue to operate the Company properties with all of the power and authority of the Managers. The steps to be accomplished by the liquidator are as follows: (a) as promptly as possible after such event and again after final liquidation, the liquidator shall cause a proper accounting to be made by a recognized firm of certified public accountants of the Company's assets, liabilities, and operations through the last day of the calendar month in which the termination occurs or the final liquidation is completed, as applicable; (b) the liquidator shall cause the notice described in Section 11.052 of the TBOC to be delivered to each known claimant against the Company; (c) the liquidator shall pay, satisfy or discharge from Company funds all of the debts, liabilities and obligations of Company (including, without limitation, all expenses incurred in liquidation and any advances described in paragraph 4.04 of this Agreement) or otherwise make adequate provision for payment and discharge thereof (including, without limitation, the establishment of a cash escrow fund for contingent liabilities in such amount and for. such term as the liquidator may reasonably determine); and (d) all remaining assets of the Company shall be distributed to the Members as follows: (i) the liquidator may sell any or all Company property, including to Members, and any resulting gain or loss from each sale shall be computed and allocated to the Capital Accounts of the Members; (ii) with respect to all Company property that has not been sold, the fair market value of that property shall be determined and the Capital Accounts of the Members shall be adjusted to reflect the manner in which the unrealized income, gain, loss, and deduction inherent in property that has not been reflected in the Capital Accounts previously would be allocated among the Members if there were a taxable disposition of that property For the fair market value of that property on the date of distribution; and ZAClients\Kalaouze, Fadi (303A Properties, LLC) 2630\Comparry Agreement (Operating A$memenl) (LLCiwpd Page 25 (iii) Companyproperty shall be distributed among the Members in accordance with the positive Capital Account balances of the Members, as determined after taking into account all Capital Account adjustments for the taxable year of the Company during which the liquidation of the company occurs (other than those made by reason of this clause (iii)); and those distributions shall be made by the end of the taxable year of the Company during whichthe liquidation of the Company occurs (or, if later, ninety (90) days after the date of liquidation). All distributions in kind to the Members shall be made subject to the liability of each distributee for costs, expenses, and liabilities theretofore incurred or for which the Company has committed prior to the date of termination and those costs, expenses, and liabilities shall be allocated to the distributee pursuant to this paragraph. Upon completion of all distributions to the Member, such distribution shall constitute a complete return to the Memberof its Capital Contributions and release all claims against the Company. To the extent that a Member returns funds to the Company, it has no claim against any other Member for those funds. 16.05 Deficit Capital Accounts. Notwithstanding anything to the contrary contained inthis Agreement, and notwithstanding any custom or rule of law to the contrary, to the extent that the deficit, if any, in the Capital Account of any Member results from or is attributable to deductions and losses of the Company (including non -cash -items such as depreciation), or distributions of money pursuant to this Agreement to all Members in proportion to their respective Percentage Interests, upon termination of the Company such deficit shall not be an asset of the Company and such Members shall not be obligated to contribute such amount to the Company to bring the balance of such Member's Capital Account to zero. 16.06 Certificate of Termination. On completion of the distribution of Company assets as provided herein, the Company is terminated, and the Managers (or such other person or persons as the TBOC may require or permit) shall execute, acknowledge and cause to be filed a Certificate of Termination, at which time the Company shall cease to exist as a limited liability company. ARTICLE XVII AMENDMENT OR MODIFICATION 17.01 Amendment or Mortification. This Agreement may be amended or modified from time to time only with a written instrument executed by a Super Majority of the Members. 17.02 Special Provisions for Certain Amendments or Modifications. (a) An amendment or modification reducing a Member's Percentage Interest or increasing its Capital Commitment (other than to reflect changes otherwise provided by this Agreement) is effective only with that Member's consent. (b) An amendment or modification reducing the required Percentage Interest orother measure for any consent or vote in this Agreement is effective only with the consent or vote of Members having the Percentage Interest or other measure theretofore required, (c) An amendment to establish the relative rights and preferences of the Membership Interests of any class or series may be made by a committee of Managers, within the authority of Managers or otherwise provided in the Certificate of Formation, the TBOC, or resolutions by Members forming the committee. ZXIien t;tK.alaouze, Fadl (303A Properties, I,LC) 2636VCompany Agreement (operating Agreement) (LLC) wpd Page 26 (d) An amendment or modification made solely to reflect the admission or withdrawal of a Member (such as to Exhibit A) need not be approved by any Member if the requirements set forth in this Agreement with respect to the admission or withdrawal of the Member are otherwise satisfied. ARTICLE XVIII GENERAL PROVISIONS 18.01 Construction. Whenever the context requires, the gender of all words used in this Agreement includes the masculine, feminine, and neuter. In the event there is only one Member, then references to Members in the plural should be construed as singular; likewise, in the event there is only one Manager, then references to Members in the plural should also be construed as singular. 18.02 Offset. Whenever the Company is to pay any sum to any Member, any amounts that Member owes the Company may be deducted from that sum before payment. 18,03 Notices. Except as expressly set, forth to the contrary in this Agreement, all notices, requests, or consents provided for or permitted to be given under this Agreement must be in writing and must be given either by depositing that writing m the United States mail, addressed to the recipient, postage paid, and registered or certified with return receipt requested or by delivering that writ ng to the rectpient m person, by courier, or by facsimile transmission; and a notice, request, or consent given under this Agreement Is effective on receipt by the person. All notices, requests, and consents to be sent to a Member must be sent to or made at the addresses given for that Member on Exhibit A or such other address as that Member may pecify by notice to the other Members, Any notice, request, or consent to the Company or the Managers must be given to the Managers at the following address:' 1516 Shilhor Ste A Bryan; Texas 77803 Whenever any notice is required to be given by law, the Certificate of Formation or this Agreement, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. 18.04 Entire Agreement; Supersedes Other Agreements. This Agreement includes the entire agreement of the Members and their Affiliates relating to the Company and supersedes all prior contracts or agreements with respect to the Company, whether oral or written. 18.05 Effect of Waiver or Consent. A waiver or consent, express or implied, to or of any breach or default by any person in the performance by that person of its obligations with respect to the Company is not a consent or waiver to or of any other breach or default in the performance by that person of the same or any other obligations of that person with respect to the Company. Failure on the part of a person to complain of any act of any person or to declare any person in default with respect to the Company, irrespective of how long that failure continues, does not constitute a waiver by that person of its rights with respect to that default until the applicable statute -of -limitations period has run. 18,06 Binding Effect. Subject to the restrictions on Transfers set forth in this Agreement, this Agreement is binding on and inure to the benefit ofthe Members and their respective heirs, legal representatives, successors, and assigns. I-iowever, unless and until properly admitted as a Member, "L:\Clients\Kalaouze, Padi (303A Propenies, LLC) 26301Comnany Agreement (operating Agreement) (L1.Q,wpd Page 27 no Assignee will have any rights of a Member beyond those provided expressly set forth in this Agreement or granted by the TBOC to assignees. 18.07 Governing Law. THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICT -OF -LAWS RULE, OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. 18.08 Severability. If any provision of this Agreement or the application thereof to any person or circumstance is held invalid or unenforceable to any extent, the remainder of this Agreement and the application of that provision to other persons or circumstances is not affected thereby and that provision shall be enforced to the greatest extent permitted by law. 18.09 Further Assurances. In connection with this Agreement and the transactions contemplated 'hereby, each Member shall execute and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate and perform the provisions of this Agreement and those transactions. 18.10 'Waiver of Certain Rights. Each Member irrevocably waives any right it may have to maintain any action for dissolution of the Company or for partition of the property of the Company. 18.11 Indemnification. To the fullest extent permitted by law, each Member shall indemnify the Company, each Manager and each other Member and hold them harmless from and against all losses, costs, liabilities, damages, and expenses (including, without limitation, costs of suit and attorney's fees) they may incur on account of any breach by that Member of this Agreement, 18.12 Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signing parties had signed the same instrument. ARTICLE XIX NOTICES AND DISCLOSURES 19.01 Compliance with Regulation D of the Securities Act of 1933, THE OWNERSHIP INTERESTS THAT ARE THE SUBJECT OF THIS COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, THE INTERESTS MAY NOT BE OFFERED FOR SALE, SOLD,; PLEDGED, TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL, THE HOLDER THEREOF PROVIDES EVIDENCE SATISFACTORY TO THE MANAGERS (WHICH, IN THE DISCRETION OF THE MANAGERS, MAY INCLUDE AN OPINION OF COUNSEL) THAT SUCH OFFER, SALE, PLEDGE, TRANSFER, OR OTHERDISPOSITION WILLNOT VIOLATE APPLICABLE FEDERAL OR STATE SECURITIES LAWS. THE OWNERSHIP INTERESTS THAT ARE THE SUBJECT OF THIS COMPANY AGREEMENT ARE SUBJECT TO RESTRICTIONS ON THE SALE, PLEDGE, TRANSFER, OR OTHER DISPOSITION AS SET FORTH IN THIS COMPANY AGREEMENT, 19,02 Notice to Members. By executing this Agreement, each Member acknowledges that it has actual notice of all of the provisions of this Agreement, including, without limitation, the restrictions on the transfer of Membership Interests set forth in this Agreement, and all of the provisions of the Certificate of Formation. Except as otherwise expressly provided by law, each 2:\CliensK alauuza, Fad! (303A PrUperties, LC 263CumPanr Agrezmem(acruiinsAgreement)(LLC).wvd Page 28 Member hereby agrees that this Agreement constitutes adequate notice of any notice requirement under Chapter 8 of the Uniform Commercial Code, and each Member hereby waives any requirement that any further notice thereunder be given. 19.03 Limitation of Liability. Pursuant to Article 58 1 -1 et seq. of the Texas Revised Civil Statutes (the "'Texas Securities Act"), the liability under the Texas Securities Act of a lawyer, accountant, consultant, the firm of any of the foregoing, and any other person engaged to provide services relating to an offering of securities of the Company ("Service Providers") is limited to a maximum of three times the fee paid by the Company or seller of the Company's securities, unless the trier of fact finds that such Service Provider engaged in intentional wrongdoing in providing the services. By executing this Agreement, each Member hereby acknowledges the disclosure contained in this paragraph. IN WITNESS HEREOF, the Managers have adopted this Company Agreement and the Members have executed this Company Agreement, as of the Effective Date. MANAGERS: Fadi I Kalaouze t Q Date signed: ! Hege kalaouze % Date signed: t , O F MEMBERS; -"� Fadi I. Kalaouze Date signed: VI % m 5� Hege Kalaouze / Date signed: 1 1 jog Z:\ClientMaiaovze, Fadi (303A Properties, LLC) 2636\Company Agreement (Operating Agreement) ([-LC).Napd Page 29 EXHIBIT A )4EMBERS OF 303A Pro ep rties, LLC Initial Capital Capital Member's Name and Address Contribution Commitment Fadi J. Kalaouze 1516 Shilho, Ste A Bryan, Texas 77803 Hege Kalaouze 1516 Shilho, Ste A Bryan, Texas 77803 $500.00 $0 Percentage Interest 50% $500.00 $0 50% 7,:4C1ie13ts\Ka1aouzc, Pam (303A Properties, LLC) 263MCpmpany Agreement (Operating Agreement) (LI,C).wpd Page 30 Certificate of Resolutions Date: November jg 2012. Company: Kalgroup Properties, LP Date of Adoption: November 30, 2012 _I, the member of the Company, a Texas limited partnership, certify that I have custody of the records of the Company and that I am authorized to execute and deliver this certificate of resolutions on behalf of the Company. I further certify as follows: 1. The resolutions below were duly adopted as of the Date of Adoption by written consent of the members of the Company as required by law and the regulations of the Company. The resolutions have not been amended, modified, or rescinded and are now in full force and effect. RESOLVED, that the Company is authorized to submit an application for rezoning, submit plats & replats, and dedicate easements and rights of way to the City of College Station, Texas. RESOLVED, that Fadi Kalaouze, Managing Member of Kalgroup Partners, LLC, general partner of Kalgroup Properties, LP and limited partner of Kalgroup Properties, LP is authorized to sign any and all 'documentation necessary to submit a an application for rezoning, submit plats & replats, and dedicate easements and rights of way. FURTHER RESOLVED, that the transactions contemplated by this Certificate of Resolutions are in the best interests of the Company. 2. I further certify that the Company is duly organized and existing under the laws of the state of Texas, is qualified to do business here, and is in good standing; that no proceeding is pending for the forfeiture of the certificate of formation of the Company or for the dissolution, voluntary or involuntary, of the Company; that there is no provision of the regulations or certificate of formation of the Company limiting the powers of the General Partner of the Company to adopt the resolutions referred to above and that the resolutions are in conformity with the provisions of the regulations and the certificate of formation of the Company; that the undersigned is the keeper of the records and minutes of the proceedings of the Company; and that the following persons constitute all of the partners of the Company: 1. Kalgroup Partners, LLC, General Partner 2. Fadi Kalaouze, Limited Partner 3. Hege Kalaouze, Limited Partner General Partner: Kalgroup Partners, LLC Fadi Kalaouze, Managing Member Limited Partners: Fadi Kalaouze Fteg /�a--- STATE OF TEXAS COUNTY OF BRAZOS Before me, the undersigned authority, on this day personally appeared Fadi Kalaouze known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that Fadi Kalaouze executed the same as the act of Kalgroup Partners, LLC a Texas limited liability company, as the general partner of Kalgroup Properties, LP, for the purposes and consideration therein expressed. Given under my hand and seal of office this _ day of _ A/ 2011 � �'$ Notary Public, State of Texas Not Publi , State f Texas My Commission Expires y ;fa,l;' March 2z, zoia My commission expires :Grrc�?t f¢ STATE OF TEXAS ) COUNTY OF BRAZOS ) Before me, the undersigned authority, on this day personally appeared Fadi Kalaouze known to me to be the person whose name is subscribed to the foregoing instrument as Limited Partner and acknowledged to me that such Limited Partner executed the same for the purposes and consideration therein expressed. JJ Given under my hand and seal of office this �4 day of nf0 &11,2>2012. t PAICvE ElA(NE PAilGIC.K �� N tar Publ State of Texas Notary i'ur he Str#tb alirexas My Co;rinisarun Expires My GOf191111SS1Un eXptresr �/a'r-�JC4 IR61 : rort� Match 22, Fi114 STATE OF TEXAS ) COUNTY OF BRAZOS Before me, the undersigned authority, on this day personally appeared Hege Kalaouze known to me to be the person whose name is subscribed to the foregoing instrument as Limited Partner and acknowledged to me that such Limited Partner executed the same for the purposes and consideration therein expressed, Given under my hand and seal of office this J� l� day of lV6 &J22 2012. +° , Notary Pu6lfc State of Texas ��j /, t.. - *tE my Commission Expires 1 w >` Matcn 2z, sot a N ry Publa , State of Texas My commission expires: 4812-5097.7298,v. 1 Form 207 4 y. Filed in the Office of the Secretary of State O. Box 13697 Secretary of State of Texas .dstin, TX 78711-3697 Filing M 800970614 04/28/2008 FAX: 5121463.5709 Document M 213611800003 Certificate of Formation Image Generated Electronically 'Filing Fee: $750 Limited Partnership for Web Filing [group Properties LP � .,..._._m name must contahihe words itetl�'{�arinership,' ar L{mrtetl;' or the abbreviation L P LP;' or"Ltd,"The name Must not be the same as, .ptively similar to or similar to that of an existing. corporate, limited liability company, or limited partnership name on file with the secretary of A preliminary check for'.name ayaltabllity M f -c nmrended , f address ofthe pnncipal office in the 0 s;td States where recohis of the pa lhership are to be kept or made available Is set forth below:. an orgaiiiation (cannot be limited partnership named above) by the name OR %B The initial registered agent is an mil w.., ai resident of the statewhose name is set forth below "Names Fadi Kalaouze C. the business address of the registered :ryent and the registered office address is. eat Address: r616 Shiloh, Ste A Bryan TX 77'03 '(The attached addendum, if any, Is lneprpor'nrd k-^ference.l This document becomes effeal ve urrc,:.us document fs filed by the secretary of state, ORrb. This document becomes effective al fl ;r date, which is not more than ninety (90) days from the date of Its raudulent instrument_ Signature, of General Part FILING OFFICE COPY- AGREEMENT OF LIMITED PARTNERSHIP OF KALGROUP PROPERTIES, LP THE LIMITED PARTNERSHIP INTERESTS CREATED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES ACT OF THE STATE OF TEXAS AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. THE SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF SUCH INTERESTS IS ALSO SUBJECT TO CERTAIN RESTRICTIONS WHICH ARE SET FORTH IN THIS AGREEMENT OFLIMITED PARTNERSHIP. DURING THE PERIOD IN WHICH SUCH LIMITED PARTNERSHIP INTERESTS ARE BEING OFFERED AND SOLD BY THE ISSUER, AND FOR A PERIOD OF NINE MONTHS FROM THE LAST SALE BY THE ISSUER OF ONE OF SUCH LIMITED PARTNERSHIP INTERESTS, ALL RESALES OF ANY OF THE LIMITED PARTNNERSHIP INTERESTS, BY ANY PERSON, MUST BE MADE ONLY TO THE PERSONS RESIDENT 'WITHIN THE STATE OF TEXAS WITHIN THE MEANING OF RULE 147 OFTHE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933. NO SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF ANY LIMITED PARTNERSHIP INTEREST WILL BE RECOGNIZED BY THE PARTNERSHIP UNLESS SUCH SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS MADE IN COMPLIANCE WITH ALL APPLICABLE PROVISIONS OF THIS AGREEMENT; OF THE SECURITIES ACT OF 1933, AS AMENDED; AND THE SECURITIES ACT OF THE STATE OF TEXAS, AS AMENDED, INCLUDING, WITHOUT LIMITATION, REGISTRATION UNDER SUCH ACTS IF REQUIRED UNDER THE PROVISIONS THEREOF. THIS AGREEMENT OF LIMITED PARTNERSHIP (hereinafter referred to as the "Agreement"), is made effective as of April 30, 2008, by and between Kalgroup Partners, LLC ("General Partner"), and Fadi Kalaouze and Hege Kalaouze ("Limited Partners"). ARTICLE I FORMATION CERTIFICATES TERM 1.1 Formation of Partnership. The parties hereto hereby form, pursuant to Chapters 151, 153 and 154 and Title 1, to the extent applicable to limited partnerships; of the Texas Business Organizations Code (hereinafter, as from time to time amended, referred to as the "TBOC") a Limited Partnership, which organization is hereinafter referred to as the "Partnership." The rights; duties, status and liabilities of the Partners shall, except as hereinafter expressly stated to the contrary, be as provided for in the TBOC. 1.2 Certificate of Formation; Other Documents The parties hereto shall execute, file, record and/or publish the Certificate of Formation and other documents conforming hereto, and take all other appropriate action to comply with all legal requirements for the formation of a Limited Partnership under the TBOC, and for its operation in the State of Texas. The Partnership shall not conduct any business until the filing and acknowledgment of filing of such Certificate of Formation. ZAClientsiKalaoan, Padi (Kalgroup Properties, 1,P)26MAgrcemm of Limited Parmership.wpd Page 1 1.3 Partnership Name. The business of the Partnership shall be conducted under the name of Kalgroup Properties, LP or such other name as the General Partner may select from time to time, The General Partner shall promptly execute, file, record and/or publish with the proper offices an assumed name certificate. 1.4 Registered Agent Registered Address andPrincipal Office, The registered agent and registered affrce address for the Partnership in the State ofTexas ts: Fadt Kalaouze,1516 Shiloh, Ste A, Bryan, Texas 77803. The principal place of business of the Partnership shall be at 1516 Shiloh, Ste A, Bryan, Texas 77803, but substitute or additional places of business may be established at such other locations as may, fram time to time, be determined by the GeneralPartner. All records of the :Partnership required by Section 153.551 of the TBOC will be maintained at the Principal Office. 1.5 Term of Partnershiu. The Partnership shall become effective upon the execution of this Agreement and the filing of the Certificate of Formation with the Secretary of State of the State of Texas, and shall remain effective until the Partnership is terminated pursuant to the TBOC. 1.6 Amendment to Certificate of Formation. The General Partner shall file amendments to the Certificate of Formation whenever required by the TBOC. If a General Partner is unwilling or unable to sign a required amendment to the Certificate of Formation, the amended Certificate of Formation maybe signed by any remaining or successor General Partners. Each General Partner appoints his successor and any remaining General Partners, if any, as his attorney in fact to sign such amended Certificate of Formation. ARTICLE II DEFINITIONS Whenever used in this Agreement, the terms set forth below shall be defined as follows: 2.1 "Additional Capital Contribution" shall mean that amount of money or other property, if any, that the Partners may contribute to the Partnership for additional capital, if any, to be used for operating capital. 2.2 "Adjusted Capital Account Deficit" means, with respect to any Limited Partner, the deficit balance, if any, in such Limited Partner's capital account as of the end of the relevant fiscal year, after giving effect to the following adjustments: (a) Credit to such capital account any amounts which such Limited Partner is obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to restore pursuant to Section 704 of the Code and the Regulations thereunder, and (b) Debit to such capital account the items described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations. The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Section 1.704-1(b)(2)(iii)(d) of the Regulations and shall be interpreted consistently therewith, 2.3 "Affiliate" means, with respect to a Partner, any Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or under common control with such Partners. The term "control," as used in this definition means, with respect to a Person that is a ZACtientsWalwon, PBdi (Kalgroup Properties, LP)26241Agmement of United Partnership wpd Page 2 corporation, the right to exercise, directly or indirectly, more than ten percent (10%) of the voting rights attributable to the shares of the controlled corporation, and with respect to a Person that is not a corporation; the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled Person. 2.4 "Assignee" shall mean a Person who has acquired all or a portion of an interest in the Partnership by assignment or Transfer as of the date the assignment or Transfer of such interest becomes effective. An Assignee has only the rights granted to an assignee as provided by Subchapter F, Chapter 153 of the TBOC. An Assignee does not have the right to become a Partner, except as provided in this Agreement or unless all partners consent as provided by Section 153,253 of the TBOC. An Assignee shall have no right to any information or accounting of the affairs of the Partnership, shall not be entitled to inspect the books or records of the Partnership, and shall nothave any of the rights of a General Partner or a Limited Partner under the TBOC or this Agreement. In addition, no Assignee of an interest in the Partnership shall have the right to assign any transferred interest except as otherwise provided in this Agreement. 2.5 "Capital Contribution" means the total contribution to the capital of the Partnership which a Partner is legally bound and obligated to make, which amount is designated as a Capital Contribution for such Partner pursuant to Article IV of this Agreement. 2.6 "Certificate of Formation" shall mean the Certificate of Formation of Limited Partnership to be filed on behalf of the Partnership as required by the appropriate provisions of Chapter 3 of the TBOC, and all amendments thereto and substitutions thereof. 2.7 "Code" means the Internal Revenue Code of 1986, as amended from time to time. 2.8 "Contribution Agreement" means, with respect to each of the Partners, the agreement respecting the original Capital Contribution to be made by, or on behalf of, each such Partner pursuant to Section 4.2 hereof, as described more fully in Section 4.3 hereof. 2.9 "Default Rate of Interest" shall mean the rate per annum equal to the lesser of (a) the Wall Street Journal prime rate as quoted in the money rates section of the Wall Street Journal which is also the base rate on corporate loans at large United States money center commercial banks as its prime commercial or similar reference interest rate, with adjustments to be made on the same date as any change in the rate, and (b) the maximum rate permitted by applicable law. 2.10 "Depreciation" means, for each fiscal year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such year or other period; provided, however, that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, further that if the federal income tax depreciation, amortization or other cost recovery deduction for such year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the General Partner. 2,11 "Distributable Cash" shall mean, at the time of determination for any period (on the cash receipts and disbursements method of accounting), all Partnership cash derived from the conduct ofthe Partnership's business, including distributions from entities owned by the Partnership, cash from operations or investments, and cash from the sale or other disposition of Partnership Z:\Clients\Kalaouze, FaAi (Kfllgroup Properties, LP)2629V+;reumeM of Limited Pmtnership.wpd Page 3 Property, other than (a) Capital Contributions with interest earned pending its utilization; (b) financing or other loan proceeds; (c) reserves for working capital; and (d) other amounts that the General Partner reasonably determines should be retained by the Partnership in accordance with the General Partner's discretion under section 6.1 hereof. 2.12 "General Partner" or "General Partners" shall mean all Persons designated as a General Partner on Exhibit "A" and any successor General Partners pursuant to the terms of this Agreement, but does not include any Person who has ceased to be a General Partner. 2.13 "Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: (a) The initial Gross Asset Value of any asset contributed by a Partner to the Partnership shall be the gross fair market value of such asset, as determined by the contributing Partner and the Partnership, provided that the initial Gross Asset Values of the assets contributed to the Partnership shall be as set forth in Exhibit "A", and provided further that if the contributing Partner is a General Partner, the determination of the fair market value of a contributed asset shall require the agreement of a majority in interest (at least 51 % of the then outstanding ownership interest) of the Limited Partners (such agreement need not be in writing, and any such agreement will be presumed to have been made by the required percentage ownership interest unless there is clear and convincing evidence to the contrary), except that the determination of the fair market value of a contributed asset of a General Partner may, if such General Partner chooses, be made by written appraisal from a qualified appraiser, and such written appraisal shall control; (b) The Foss Asset Values of all Partnership assets shall be adjusted to equal their respective gross fair market values, as determined by the General Partner, as of the following times: (1) the acquisition of an additional interest in the Partnership by any new or existing Partner in exchange for more than a de minimis Capital Contribution; (2) the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership Property as consideration for an interest in the Partnership,, and (3) the liquidation of the Partnership within the meaning of Section 1.704-1(b)(2)(ii)(9) of the Regulations; provided, however, that adjustments pursuant to clauses (1) and (2) above shall be made only if the General Partner reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership; (e) The Gross Asset Value of any Partnership asset distributed to any Partner shall be the gross fair market value of such asset on the date of distribution; and (d) The Gross Asset Values of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b); but only to the extent that such adjustments are taken into account in determining the Partners capital accounts pursuant to Section 1,704-1(b)(2)(iv)(m) of the Regulations and Section 5.2(c) hereof; provided, however, that Gross Asset Values shall not be adjusted pursuant to this Section to the extent the General Partner determines that an adjustment pursuant to Section 2.13(b) hereof is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this Section 2,13(d). Z:\Clients\Kalaourx, Padi (Kalgroup Properties, LP)2629\Agreement Of Limited Pannership.wpd Page 4 If the Gross Asset Value of an asset has been determined or adjusted pursuant to Section 2.13(a), 2.13(b), or 2.13(d) hereof, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses. 2,14 "initial Capital Contribution" shall mean that amount of money or property initially contributed by the Partners as set forth in Exhibit "A" hereto. 2.15 "Limited Partner" or "Limited Partners" shall meanthePersons admitted to the Partnership as original, additional or substituted Limited Partners as reflected on Exhibit "A" as amended. 2.16 "Partner" or "Partners" shall mean individually a General Partner, or Limited Partner, or collectively the General Partners and the Limited Partners. 2.17 "Partnership Property" shall mean that property, real or personal, including but not limited to real estate, investment limited partnerships, cash, stocks, bonds and similar investments; which is contributed to or acquired by the Partnership. 2.18 "Person" shall mean any individual, business trust, registered limited liability partnership, association, limited liability company, government, governmental subdivision, governmental agency, governmental instrumentality, partnership, limited partnership, trust, estate, corporation, custodian, trustee, executor, administrator, nominee, or any other legal or commercial entity. 2.19 "Profits" or "Losses" means, for each fiscal year or other period, an amount equal to the Partnership's taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all item( of )i income, gain, loss, or deduction required to be stated separately pursuant to Code Section 703 a 1 shall be included in taxable income or loss), with the following adjustments: (a) Any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this Section shall be added to such taxable income or loss; (b) Any expenditures of the Partnership described in Code Section 705(a)(2)(B) or ( treated as Code Section 705(a)(2)(B) expenditures pursuant to Section 1.704-1 b)( )( 2 iv c)tl of the Regulations and not otherwise taken into account in computing Profits or Losses pursuant to this Section shall be subtracted from such taxable income or loss; (c) In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to Section 2.13(a) or Section 2.13(c) hereof, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses; (d) Gain or loss resulting from any disposition of Partnership Property, with respect to which gain or loss is recognized for federal income tax purposes, shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value; (e) In lieu of the depreciation,amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Z:\Clients\Knlwuze, Padi (Kalgmup Properties, LP)MMAgreement of Limited Pirtnership,wpd Page 5 Depreciation for such fiscal year or other period, computed in accordance with Section 2.10 hereof; and (f) Notwithstanding any other provision in this Section, any items which are specially allocated pursuant to Section 5.2 or Section 5.3 hereof shalt not be taken into account in computing Profits or Losses. 2.20 "Regulations" means the Income Tax Regulations, including Temporary Regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). 2.21 "Securities Act" shall mean the Securities Act of 1933, as amended, 2,22 "Transfer" when used as a noun shall mean any voluntary or involuntary transfer, sale, pledge, hypothecation, assignment or other disposition, and as a verb shall mean voluntarily or involuntarily to transfer, sell, pledge, hypothecate, assign or otherwise dispose. 2.23 Wholly Owned Affiliate" of any Person shall mean an Affiliate of such Person 100% of the voting stock or beneficial ownership of which is owned by such Person, directly or indirectly, through one or more Wholly Owned Affiliates, or by any Person who, directly or indirectly, owns 100% of the voting stock or beneficial ownership of such Person, and an Affiliate of such Person who, directly or indirectly, owns 100% of the voting stock or beneficial ownership of such Person, ARTICLE III PURPOSE 3.1 Purposes of the Partnership. The purposes of the Partnership shall be (a) to own, hold, sell, develop, lease, dispose of, exchange, convert, manage, exercise voting rights with respect to, and otherwise exercise all of the rights, duties and obligations of an owner of the Partnership Property; (b) to reinvest, in any manner and in any real or personal property which the General Partner deems appropriate, all proceeds derived from the Partnership Property; (c) to invest the Partnership Property in any manner deemed reasonable by the General Partner, in any real or personal property; and (d) to conduct any other business or make any investment which a limited partnership may make without violating the TBOC or any other applicable law. 3.2 Powers. The General Partner may make, enter into, deliver and perform all contracts, agreements or undertakings, pay all costs and expenses and perform all acts deemed appropriate by the General Partner to carry out the Partnership purposes, subject to the limitations ofthis Agreement and the TBOC. 3.3 Other Transactions of Partners. (a) It is acknowledged that the Partners may in the future, from time to time, obtain additional opportunities to acquire property for investment, development or otherwise. Each Partner shall be free to acquire such interests in other property as such Partner may in such Partner's sole discretion deem desirable without having to offer interests in such property to the other Partners of this Partnership, and such action on the part of any Partner shall not be deemed a breach of any fiduciary relationship owed by that Partner to the other Partners or the Partnership. Participation in the Partnership shall not in any way act as a restraint on the other present or future business activities or investments of a Partner (or any Affiliate of a Pa e 6 Z:\Glients\lCalaouze, Pad (Kalgroup Properties, LP)26244Agrcemen1 of Limited Pannarship.tvpd g Partner), or any employee, officer, director, member, manager; or shareholder of a Partner, whether or not such activities are competitive with the business of the Partnership. As a result of this Agreement, no Partner (or Affiliate of any Partner) shall be obligated or bound to offer or present offered to them or the Partnership or any of the other Partners any business opportunity presented to or offered to them or the Partnership as a prerequisite to the acquisition of or investment in such business opportunity by such Partner (or any Affiliate of a Partner) or any employee, officer, director, member, manager, or shareholder of such Partner for its account or the account of others. In furtherance thereof, the Partners hereby agree that any business activity in which a Partner (or any Affiliate of a Partner), or any employee, officer, director, member, manager, or shareholder of a Partner engages, conducts, or participates outside the Partnership shall be conclusively deemed not to be a business activity in competition with, or an opportunity of the Partnership. Any such business or activity of a Partner (or any Affiliate of a Partner), or any employee, officer, director, member, manager, or shareholder of a Partner may be undertaken with or without prior notice to or participation therein by the Partnership or the other Partners. Each Partner and the Partnership hereby waive any right or claim such Partner or the Partnership may have against a Partner (or any Affiliate of a Partner), or any employee, officer; director, member, manager, or shareholder of a Partner with respect to such business or activity or the income or profits thereof. (b) The Partnership may contract with any of the Partners or their Affiliates for the purchase of goods and services for the benefit of the Partnership at any time provided that the compensation paid to such Person shall be commensurate with rates prevailing for such services at the time such services are performed, and any charges so incurred shall be deemed expenses of the Partnership. The General Partner shall have the authority to enter into any transaction on behalf of the Partnership despite the fact that another party to the transaction may be (a) a trust of which a Partner is a trustee or beneficiary; (b) an estate of which a Partner is a personal representative or beneficiary; (c) a business controlled by one or more Partners or a business of which any Partner is also a director, officer or employee; (d) any Affiliate, employee, stockholder, associate, manager, partner, or business associate; (e) any Partner, acting individually; or (f) any relative of a Partner; provided the terms of the transaction are no less favorable than those the Partnership could obtain from unrelated third parties. ARTICLE IV CAPITAL CONTRIBUTIONS AND SHARES OF PROFITS AND LOSSES 4.1 OwnershiRPercentaees. The percentage interest of each Partner will be determined by dividing the balance of such Partner's capital account by the total of all of the capital accounts of all Partners. A Partner's percentage interest will be determinative of: (a) a Partner's ownership interest in the Partnership as an entity; (b) a Partner's interest in the distribution of Distributable Cash; (c) aPartner's allocable share of the items of Profits and Losses; and (d) a Partner's distributive share of cash and other property upon winding up of the Partnership. 4.2 Initial Capital Contributions. Receipt is hereby acknowledged for each Partner's Initial Capital Contribution. 4.3 Contribution Agreements. The Capital Contributions made by each of the Partners pursuant to Section 4.2 hereof shall be subject to the terns and provisions of the Contribution ?.:\ClientslKalnou2e, Fadi (Kalgrmip Properties, LP)2b29\A6reement of Limited Partnership.wpd Page Agreement of each Partner referenced in Exhibit "C" attached hereto. The General Partner, on behalf of the Partnership, shall enter into the Contribution Agreements, and any agreement referred to therein, without requirement of any further act, approval, or vote of any other Person, and such agreements shall be deemed to satisfy all requirements of this Agreement. 4.4 Additional Capital Contributions. The Partners shall not be permitted to make Additional Capital Contributions to the Partnership without the consent of all of the Limited Partners. 4.5 Capital Accounts, A Partnership capital account shall be established for each Partner and shall be maintained at all times throughout the existence of the Partnership in a manner so as to correspond to the rules set forth in Article V. The amount in a Partner's capital account shall initially be the amount of such Partner's initial Capital Contribution which shall be the fair market value of the assets such Partner contributed. A Partner's capital account shall be credited with its Additional Capital Contribution, and any other voluntary Capital Contribution made by such Partner when made, and such Partner's share of Partnership Profits. A Partner's capital account shall be decreased by the amount of money and the fair market value of property distributed to such Partner (net of liabilities securing such distributed property that the Partner is considered to assume or take subject to under Section 752 of the Code) and by the amount of losses allocated to such Partner, by such Partner's distributive share of the items described in Section 705(a)(1)(B) and 705(a)(2)(B) of the Code, and by other items of deduction specially allocated to such Partner. The capital accounts shall not bear interest. Additional Capital Contributions shall he recorded at the fair market value of the assets contributed by the Partner and the distributions to a Partner shall also be recorded at the fair market value of the assets distributed. The provisions in this Agreement regarding the formation and maintenance of capital accounts are intended to comply with Sections 1.704-1(b) and 1.704-1(c) of the Regulations and shall be interpreted and applied in a manner consistent with such Regulations. In the event the General Partner shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto (including, without limitation, debits or credits relating to liabilities which are secured by contributed or distributed property or which are assumed by the Partnership, the General Partner, or the Limited Partners), are computed in order to comply with such Regulations, the General Partner may make such modification, provided that it is not likely to have a material effect on the amounts distributable to any Person pursuant to Article X1 hereof upon the winding up of the Partnership, The General Partner also shall (a) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Partners and the amount of Partnership capital reflected on the Partnership's balance sheet, as computed for book purposes, in accordance with Section 1,704-1(b)(2)(iv)(g) of the Regulations, and (b) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Section I.704-1(b) of the Regulations. 4,6 Limitation of Liability. No Limited Partner herein shall be liable for any sum of money in excess of the total sums which have been contributed and agreed to be contributed by such Limited Partner in this Agreement. 4.7 Return of Capital. No Partner shall have the right to withdraw, demand a return or reduce his Capital Contribution to the Partnership. In the event return of or reduction in the capital account of a Partner is made, any amounts paid to such Partner shall be reduced by all costs, fees and other expenses incurred by the Partnership in facilitating such return of or reduction in capital. 4,8 Additional Operating Capital. Z3C1iena\Ka1aon7,e, Fad (Kalproup Properties, LP)26291Agrectnenl or Limited partoership.evpd Page 8 (a) Each Partner may from time to time be required to make an Additional Capital Contribution pursuant to this Section. Any such contribution shall be made within thirty (30) days from the date of written notice by the General Partner. If the cash receipts are insufficient to pay the obligations of the Partnership, the General Partner is hereby expressly authorized to borrow, on behalf of the Partnership, such sums of money sufficient to offset negative cash flow. To secure any such loan, the General Partner or record title holder, is hereby authorized and empowered to pledge, mortgage or otherwise encumber or hypothecate the Partnership Property. Should the General Partner not be able to borrow on behalf of the Partnership such funds as are necessary to timely discharge Partnership obligations, then the General Partner may assess each Partner, based upon such Partner's pro rata ownership interest in the Partnership, such sum or sums as are necessary to timely discharge Partnership obligations. All sums raised by the General Partner pursuant to this section shall be used solely for Partnership purposes. Nothing contained in this Section shall be construed as giving any non -partner the right to seek payment of any Partnership obligation from any Limited Partner. (b) If a Partner fails to make a required Additional Capital Contribution pursuant to Section 4.8 hereof, the Partnership may exercise, on notice to that Partner (the "Delinquent Partner"), one or more of the following remedies: (1) Taking such action, atthe cost and expense of the Delinquent Partner, to obtain payment by the Delinquent Partner, of the portion of the Delinquent Partner's Additional capital Contribution that is in default, together with interest on that amount at the Default Rate of Interest from the date that the Additional Capital Contribution was due until the date that it is made; (2) Permitting the Partners in proportion to their ownership interests in the Partnership, or in such other percentages as they may agree (the 'Lending Partner", whether one or more), to advance the portion of the Delinquent Partner's Additional. Capital Contribution that is in default, with the following results: (i) The sum advanced constitutes a loan from the Lending Partner to the Delinquent Partner and an Additional Capital Contribution of that sum to the Partnership by the Delinquent Partner; (ii) The principal balance of the loan and all accrued unpaid interest is due and payable on the tenth day after written demand by the Lending Partner to the Delinquent Partner; (iii) The amount lent bears interest at the Default Rate of Interest from the date that the advance is deemed made until the date that the loan; together with all interest accrued, is repaid to the Lending Partner; (iv) All distributions from the Partnership that would be made to the Delinquent Partner shall be paid to the Lending Partner until the loan and all interest accrued have been paid in full; (v) The payment of the loan and interest accrued to the Lending Partner is secured by a security interest in the Delinquent Partners ownership interest in the Partnership; Z:\Clients\Kalaouie, Fadi (Katgroup Properties, LP)2629\A9MeMCot oCLimded Parnnership.wpd Page 9 (vi) The Lending Partner has the right, in addition to the other rights and remedies granted to the Lending Partner under this Agreement or at law or in equity, to take any action, at the cost and expense of the Delinquent Partner, that the Lending Partner may deem appropriate to obtain payment by the Delinquent Partner of the loan and all accrued and unpaid interest; (5) Exercising the rights of a secured party under the Uniform Commercial Code of the State of Texas; or (4) Exercising any other rights available at law or in equity.. Each Partner grants to the Partnership, and to the Lending Partner with respect to any loans made by the Lending Partner to a Delinquent Partner, as security, equally and ratably for the payment of all Additional Capital Contributions that Partner has agreed to make and the payment of all loans and interest accrued made by the Lending Partner to that Partner, a security interest in such Partner's ownership interest in the Partnership under the Uniform Commercial Code of the State of Texas. On any default in the payment of a required Additional Capital Contribution or in the payment of a loan or interest accrued, the Partnership or the Lending Partner, as applicable, is entitled to all the rights and remedies of a secured party under the Uniform Commercial Code of the State of Texas with respect to the security interest granted_ 4.9 Use of Contributions. The cash and property contributed by the Partners, initially being the aggregate amounts reflected on Exhibit "A," will be utilized by the Partnership for the purposes of the Partnership set forth in Article III. 4.10 Nature of Interests. All propertyownedbythe Partnership, whether real orpersonal, tangible or intangible, shall be deemed to be owned by the Partnership as an entity. No Partner shall have any direct ownership of any Partnership property. ARTICLE V ACCOUNTING 5.1 Profits and Losses. After giving effect to the special allocations set forth in Sections 5.2 and 5.3 hereof and subject to the limitations of Sections 5.1(a) and 5.1 (b), Profits or Losses for any fiscal year shall be allocated among the Partners in proportion to their ownership interests in the Partnership. (a) Notwithstanding the foregoing, the Losses allocated pursuant to this Section 5.1(a) shall not exceed the maximum amount of Losses that can be so allocated without causing any Limited Partners to have an Adjusted Capital Account Deficit at the end of any fiscal year, All Losses in excess of the limitations set forth in this Section 5.1(a) shall be allocated to the General Partner. (b) In the event Losses have been allocated to the General Partner pursuant to Section 5.1(a) hereof, 100% of the Profits shall be allocated to the General Partner until the cumulative Profits allocated pursuant to this Section 5 l (b) for the current and all prior fiscal years are equal to the cumulative Losses allocated pursuant to Section 5.l(a) hereof for all prior fiscal years. Z:\Clients\Kalaouze; Path (Kai group Properties, LP)MMAgreemenl of Limited Partaership.wpd Page 10 5.2 Special Allocations. The following special allocations shall be made inthe following order: (a) walified Income Offset. In the event any Limited Partner unexpectedly receives any adjustments, allocations or distributions described in Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, items of Partnership income and gain shall be specially allocated to each such Limited Partner in an amount and manner sufficient to eliminate, to the extent required by the Regulations,the Adjusted Capital Account Deficit of such Limited Partner as quickly as possible, provided that an allocation pursuant to this Section 5.2(a) shall be made only if and to the extent that such Limited,Partner has an Adjusted Capital Account Deficit after all other allocations provided for in this Article V have been tentatively made as if this Section 5.2(a) were not in this Agreement. (b) Gross Income Allocation. In the event any Limited Partner has a deficit capital account at the end of any Partnership fiscal year which is in excess of the sum of (1) the amount such Limited Partner is obligated to restore pursuant to any provision of this Agreement, and (2) the amount such Limited Partner is deemed to he obligated to restore, each such Limited Partner shall be specially allocated items of Partnership income and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this Section 5.2(b) shall be made only if and to the extent that such Limited Partner has a deficit capital account in excess of such sum after all other allocations provided for in this Article V have been tentatively made as if Section 5.2(a) hereof and this Section 5.2(b) were not in this Agreement. (e) Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code section 734(b) or Code Section 743(b) is required, pursuant to Section 1.704-1(b)(2)(iv)(m)(2) or Section 1 .704-1 (b)(2)(iv)(m)(4) of the Regulations, to be taken into account in determining Capital Accounts, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Partners in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Regulations, 5.3 Curative Allocations. The General Partner shall have reasonable discretion, with respect to each Partnership fiscal year, to (a) apply the provisions of Sections 5.2(a) and 5.2(b) hereof in whatever order is likely to minimize the economic distortions that might otherwise result from such allocations, and (b) divide all allocations pursuant to Sections 5.2(a) and 5.2(b) hereof among the Partners in a manner that is likely to minimize such economic distortions. 5.4 Other Allocation Rules. (a) For purposes of determining the Profits, Losses, or any other items allocable to any period, Profits, Losses, and any such other items shall be determined on a daily, monthly or other basis, as determined by the General Partner using any permissible method under Code Section 706 and the Regulations thereunder. (b) All allocations to the Partners pursuant to this Article V shall, except as otherwise provided, be divided among them in proportion to the Partners' ownership interests in the Partnership. Pa e 1l Z:\Clienta\Kaluouze, Fadi (Knlgroup Properties, LP)2629V�greement. ol'i,imited Partnership.wptl g (c) Except as otherwise provided in this Agreement; all items of Partnership income, gain, loss, deduction and any other allocations not otherwise provided for shall be divided among the Partners in the same proportions as they share Profits or Losses, as the case may be, for the year. 5.5 Tax Allocations: Code Section 704(c). In accordance with Code Section 704(c) and the Regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Partnership shall, solely for tax purposes, be allocated among the Partners so as to account for any variation between the adjusted basis of such property to the Partnership for federal income tax purposes and its initial Gross Asset Value (computed in accordance with Section 2.13(a) hereof), in the event the Gross Asset Value of any Partnership asset is adjusted pursuant to Section 2.13(b) hereof, subsequent allocations of income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Gross Asset V alue in the same manner asunder Code Section 704(c) and the Regulations thereunder. Any elections or other decisions relating to such allocations shall be made by the General Partner in any manner that reasonably reflects the purpose and intention of this Agreement. Allocations pursuant to this Section are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any Person's Capital Account or share of Profits, Losses, other items or distributions pursuant to any provision of this Agreement. 5.6 Fiscal Year and Annual Accounting. The Partnership fiscal year shall be the calendar vear, The Partnership books shall be kept on the cash receipts and disbursements method of accounting or in accordance with generally accepted accounting principles, at the discretion of the General Partner. The General Partner shall furnish to the Partners, on an annual basis, accounting reports reflecting Partnership income and expenses. In addition, the General Partner shall provide the Partners with the full annual Partnership tax return for the preceding year in a timely manner to comply with all Code reporting deadlines. ARTICLE VI DISTRIBUTIONS 6.1 Distributions of Partnership Funds. Distributions of Distributable Cash shall be made in such amounts and atsuch times as may be determined at the sole discretion of the General Partner, as provided in this Section 6.1. Unless, agreed in writing by a transferor and transferee, Distributable Cash allocable to a transferred Partnership interest which may have been transferred during any year shall be distributed to the holder of such Partnership interest who was recognized as the owner on the date of such distribution, without regard to the results of Partnership operations during the year. With regard to Distributable Cash and other Partnership Property, the General Partner shall make a determination, in accordance with such General Partner's duty of care and loyalty to the Partnership, as to the need for the Partnership Property in the operation of the Partnership business, considering current needs for operating capital, prudent reserves for future operating capital, current investment opportunities, and prudent reserves for future investment opportunities, all in keeping with the partnership's purposes. It is the duty of the General Partner, in determining the amount of Distributable Cash available for the payment of distributions, to take into account the needs of the Partnership in its business and sums necessary in the operation of its business until the income from further operations is available, the amounts of its debts, the necessity or advisability of paying its debts, or at least reducing such debts within the limits of the Partnership's credit, and the preservation of its capital as represented in the Partnership Property as a fund for the protection of its creditors. Any contributed Partnership Property or borrowed funds by the Partnership shall be considered as needed for Partnership investment purposes, and any cash Z:1C1eotslKat1ouze, Hndi,(Kaigroup Properties, LP)2629lRgreement ofLimited Partnership.wpd Page 12 produced from the sale of Partnership Property contributed to the Partnership or from the sale of any Partnership Property purchased with borrowed funds, or any reinvestment of any of the Partnership Property, including the portion of the sale proceeds representing capital appreciation, shall be considered as needed reserves for Partnership investment purposes. Any Distributable Cash derived from income may, to the extent deemed unnecessary for the purposes of the Partnership by the General Partner under the foregoing standard, be distributed in accordance with this Agreement. 6.2 Confidentiality of Information. Each Partner is entitled to all information under the circumstances and subject to the conditions stated in this Agreement and the TBGC. The Partners agree, however, that the General Partner or 80% of the then outstanding ownership interest of the Limited Partners may determine, due to contractual obligations, business concerns, or other considerations, that certain information regarding the business, affairs, Partnership Property, and financial condition of the Partnership shall be kept confidential and not provided to some or all of the Limited Partners or any Assignee, and that it is not just or reasonable for those Partners or Assignees or their representatives to examine or copy that information. In addition, the Partners acknowledge that they may receive information regarding the Partnership in the nature of trade secrets or that otherwise is confidential, the release of which may be damaging to the Partnership or Persons with which it does business. Each Partner shall hold in strict confidence any information it receives regarding the Partnership that is identified as being confidential (and if that information is provided in writing, that is so marked) and may not disclose it to any Person other than another Partner, except for disclosures compelled by law, or disclosures made to advisers or representatives of the Partner (if they have agreed to be bound by the provisions of this section). The Partners agree that the provisions of this section may be enforced by specific performance. 6.3 Loans, Any Person may, with the consent of the General Partner, lend or advance money to the Partnership. lfany Partner shall make any loan or loans to the Partnership or advance money on its behalf, the amount of any such loan or advance shall not be treated as a Capital Contribution but shall be a debt due from the Partnership. The amount of any such loan or advance by a lending Partner shall be repayable out of the Partnership's cash and shall at interest at such rate as the General Partner and the lending Partner shall agree but not in excess of the maximum rate permitted by law. If a General Partner; or an Affiliate of a General Partner, is the lending Partner, the zate of interest Shall be determined by the General Partner taking into consideration, without limitation, prevailing interest rates and the interest ratessuch General Partner or an Affiliate of such General Partner would be required to pay in the event such General Partners or Affiliate of such General Partner had itself borrowed funds to loan or advance to the Partnership, and the terms and conditions of such loan, including the rate of interest, shall be no less favorable to the Partnership than if the lender had been an independent third party. 6.4 Tax Distributions. if for any Partnership Year, the Partnership reports taxable income (including gains from the disposition of Partnership Assets), the General Partner shall cause the Partnership to distribute Distributable Cash in amounts sufficient to pay the federal income tax liability of each Partner associated with the Partnership's taxable income. Such distribution shall be made to the Partners in proportion to the taxable income allocated to them in accordance with the provisions of this Agreement and shall be in an amount equal to the taxable income so allocated multiplied by the maximum rate of federal income tax imposed upon individuals under the Code at the time such allocation is made. Pa e 13 Z:\Clienis\Kalaouze, Fadi:(Kalgoup}'roperzieS,Lp)2639CA;;rnement Of Limited Partnership. wpd g 7.1 Management. If there is only one General Partner, such General Partner shall be the Managing Partner. If there is more than one General Partner and no Managing Partner is serving, then 80% of the then outstanding ownership interest of the General Partners shall appoint a Managing Partner. A Managing Partner shall serve until the designation is revoked, until such Managing Partner is removed by vote of 51% of the then outstanding ownership interest of the General Partners, or until the Managing Partner ceases to serve for any other reason. If a Managing Partner is designated, the Managing Partner is authorized and directed to manage and control the assets and the business of the Partnership. The Managing Partner may exercise all of the powers which could be exercised by majority consent of the General Partners. It is understood and agreed that the Managing Partner shall consult and confer with the General Partners before taking any steps resulting in any substantial change in the operation or policies of the Partnership affairs, or the sale of any portion of the Partnership assets other than in the usual course of business, or in any manner which affects the Partnership business in a manner judged unusual by the Partners in the ordinary operation of the Partnership business. If a Managing Partner is serving as such, any reference to "General Partner" in this Agreement shall also include "Managing Partner" if applicable. 7.2 Successor General Partners. If there are multiple General Partners and one or more of them withdraws or ceases to serve for any reason and there is at least one remaining General Partner, the business of the Partnership is permitted to continue by the remaining General Partner without amendment to this Agreement.. Prior to the withdrawal of all multiple General Partners or the withdrawal of a sole General Partner, additional General Partners may be appointed to serve as successor General Partners (each such General Partner is referred to herein as a "Designated Successor General Partner") by all of the remaining Partners acting unanimously. If a General Partner, serving alone, withdraws or ceases to serve for any reason and there are no Designated Successor General Partners remaining, then without amendment to this Agreement, the Limited Partners by vote of 66.67% of the outstanding ownership interests of the Limited Partners entitled to vote (excluding from such election any limited partnership interest controlled by the General Partner who brought aboutsueh withdrawal or cessation of service), may agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of such event, of one or more General Partners, Any Designated Successor General Partner will not have the duties nor the liabilities of a General Partner until such time as the successor actually accepts and assumes the position of a General Partner. A General Partner who ceases to be a General Partner will not be personally liable for the debts and obligations of the Partnership incurred following the termination of service as a General Partner. 7.3 Resignation b General Partner. No General Partner shall have the right to withdraw from the Partnership before the Partnership is terminated. If such General Partner does attempt to withdraw as a General Partner, such attempt shall be considered a breach of this Agreement, and such General Partners general Partnership interest shall convert to that of a Limited Partner. 7.4 Authority of General Partner. Subject to the limitations of this Agreement, and to the fiduciary obligations and limitations imposed upon the General Partner at law, the General Partner shall manage the day-to-day operations of the Partnership. The General Partner shall have the authority to take any action which the General Partner believes in good faith to be in furtherance of the Partnership business and purposes and to exercise all rights and powers generally conferred by law in connection therewith. No Person dealing with the Partnership shall be required to inquire into, or obtain any consents or other documentation as to the authority of the General Partner to take any such action or to exercise any such rights or powers. Specifically: 2\CIienu\Kalaouze, Fadi (Kalgroup Properties, LP)26294Agreemenl of Limited Partnership.wpd Page 14 (a) The General Partner shall have the right, power and authority on behalf of the Partnership: (1) To receive. and hold all Partnership Property in the name of the Partnership; (2) To obtain and maintain such insurance as is deemed to be desirable and appropriate by the General Partner; (3) To open, maintain, and close bank accounts, brokerage accounts and checking accounts in the name of the Partnership, to designate and change signatories on such accounts, and to draw checks and other orders for the payment of monies; (A) To engage accountants, attorneys and any and all other agents and assistants, both professional and non-professional, which may include the General Partner, and to compensate them reasonably for services rendered; (5) To collect all sums due to the Partnership; (6) To prepare and file all tax returns of the Partnership and to make all elections for the Partnership thereunder; (7) To the extent that funds of the Partnership are available therefor, to pay as they become due all debts and obligations of the Partnership; (8) To sell, assign, lease, exchange, convert or otherwise transfer or dispose of all or part of the Partnership Property, on such terms and conditions as the General Partner may determine in the General Partner's sole discretion; (9) To mortgage, pledge, grant a security interest in, or incur, renew, or refinance any indebtedness of the Partnership, on such terms and conditions as the General Partner may determine in the General Partner's sole discretion; (10) To vote and exercise all other rights available to the holder of any securities included in the Partnership Property; (11) To take any and all other action, including legal action, that the General Partner deems necessary, appropriate or advisable in furtherance of the Partnership's business and purposes; and (12) To enter into any transaction on behalf of the Partnership despite the fact that another party to the transaction may be (i) a trust of which a Partner is a trustee or beneficiary; (n) an estate of which a Partner is a personal representative or beneficiary; (iii) a business controlled by one or more Partners or a business of which any Partner is also a director, officer or employee; (iv) any Affiliate, employee, stockholder, associate, manager, partner, or business associate; (v) any Partner, acting individually; or (vi) any relative of a Partner; provided the terms of the transaction are no less favorable than those the Partnership could obtain from unrelated third parties. Pa e 15 Z:\Clienls\Kalnouu; E'adi (Kalgruup Properties, LP)2629V+;reemenl of Limited Pnrtnership.wpd g (b) The General Partner or his nominee shall hold legal title to the Partnership Property and shall have the sole authority to manage, deal with, negotiate and contract with respect to, and convey the Partnership Property on behalf of the Partnership. (c) The General Partner shall act in good faith in the performance of the General Partner's obligations hereunder, but shall have no liability or obligation to any of the Limited Partners or the Partnership for any decision made or action taken in connection with the discharge of the General Partner's duties hereunder if such decision or action is made or taken in good faith and in the exercise of due care in connection with the Partnership business. (d) The General Partner shall have the power to designate, from time to time, a depository of Partnership funds, and to draw upon the same for Partnership purposes. (e) Any person dealing with the Partnership or the General Partner may rely on a certificate signed by the General Partner concerning: (1) The identity of the General Partner or any other Partner; (2) The existence or nonexistence of any fact or facts that constitute conditions precedent to acts by the General Partner or in any other manner germane to the business and affairs of the Partnership; (3) The person or persons who are authorized to execute and deliver any instrument or document of the Partnership; or (4) Any act or failure to act by the Partnership or concerning any other matter whatsoever involving the Partnership or any Partner. 7.5 Requirement of Unanirnous Consent, The General Partner shall not have the authority to enter into any of the following transactions without the unanimous consent of all the Partners: (a) Terminate, liquidate and wind up the Partnership, except as otherwise provided in this Agreement; (b) Admit additional or substitute Partners, except as otherwise provided in this Agreement; (e) Do any act that would make it impossible to carry on the purposes of the Partnership and business of the Partnership (provided, however, that the sale or other disposition of all or any Partnership Property shall not be deemed to be an act making it impossible for the Partnership to carry on its business); (d) Engage in any business activity other than that which is consistent with the purposes of the Partnership; (e) Amend this Agreement, except as otherwise provided in this Agreement L.\ClientslKalaouze, fntli (Kalgroup Properties. LP)2629\A;reemenrof LimitedPartnership.wpd Page 16 7.6 Restrictions on General Partners. The General Partner will not have the authority to enter into any of the following transactions without the consent of 80% of the outstanding ownership interest of the Limited Partners: (a) Prior to the actual termination of the Partnership, sell substantially all of the Partnership Property in liquidation or cessation of business; (b) Compromise any claim or dispute having an amount or value in issue in excess of 50% of the total value of the Partnership Property; (c) Confess ajudgment against the Partnership; (d) Do any act in violation of this Agreement; (e) Make, execute or deliver any assignments for the benefit of creditors; (f) Do any act for which the consent of the Limited Partners is required by the TBOC. 7.7 Dissolution or Bankruptcy of a Partner. On the dissolution, winding up, termination, or bankruptcy of a Partner, such Partner and his successors shall thereafter have the status of an Assignee and shall receive distributions to which such Assignee is entitled. For purposes of this Agreement, the bankruptcy of a Partner shall be deemed to have occurred upon the happening of any event described in subsections (4) and (5) of Section 153.155(a) of the TBOC. 7.8 Indemnification of the General Partners. The General Partners shall bejointly and severally indemnified and held harmless by the Partnership and by each other to the extent of each Partner's individual ownership in the Partnership from and against any and all claims, demands, liabilities, costs, damages and causes of action of any nature whatsoever, arising out of or incidental to the management of the Partnership affairs or to any Persons acting as an employee while in the course of managing the Partnership affairs; provided, however, that no General Partner shall be entitled to indemnification hereunder where the claim at issue is based upon any of the following (a) A matter entirely unrelated to such General Partner's management of the Partnership affairs. (b) The proven gross negligence, misconduct, fraud or bad faith of such General Partner. (e) The proven breach by such General Partner of any provisions of this Agreement. The indemnification rights herein contained shall be cumulative of, and in addition to, any and all other rights, remedies, and resources to which the General Partner, shall be entitled, whether pursuant to some other provisions of this Agreement, at law or inequity. A General Partner will not have liability for loss of income from or decrease in the value of the property which was retained in the form which such General Partner received it. In addition, the General Partner will not owe a fiduciary duty to the Partnership or to any Partner. The General Partner will owe a duty of loyalty and a duty of care to the Partnership. To the extent Texas law will permit, a General Partner who succeeds another will be responsible only for the property and records delivered by or otherwise acquired from the preceding General Partner, and may accept as correct the records of the preceding Pa e 1.7 Z:\ClientslKalaouze,fadi(KaigcoupProperties, .L29\ P)2dhgreetnm of Limited Partnership.wpd g General Partner without duty to audit the records or to inquire further into the administration of the predecessor and without liability for a predecessor's errors or omissions. 7.9 General Partner with Interest as Limited Partner. if a General Partner has or acquires an interest in the Partnership as a Limited Partner, such General Partner will, with respect to such limited Partnership interest, enjoy all the rights and be subject to all of the obligations and duties of a Limited Partner. With respect to such General Partner's general Partnership interest, such General Partner will continue to enjoy all the rights and remain subject to all of the obligations and duties of a General Partner. 8.1 Requirements for Admission of Transferee as Limited Partner. A transferee of an interest in the Partnership shall be admitted to the Partnership as a substituted Limited Partner only upon satisfaction of the conditions set forth in this Section: (a) Execution of this Agreement or a counterpart of this Agreement, as provided in Exhibit "B" to this Agreement, and such other documents and instruments of conveyance as may be necessary or appropriate in the opinion of counsel to the Partnership to effect such Transfer and to confirm the agreement of the transferee to be bound by the provisions of this Agreement; (b) Contribution of capital, if any, required by such transferee; (c) Obtaining consent from the General Partner, such consent to be granted in the sole and absolute discretion of the General Partner; and (d) Acquisition of such interest by such transferee by means of a Permitted Transfer. 8.2 Power of Attorney. Each Limited Partner does irrevocably constitute and appoint the General Partner, as his or her true and lawful attorney in fact and agent, which power of attorney is hereby declared to be coupled with an interest, in his or her name, place and stead to execute, acknowledge and file (a) the original Certificate of Formation and any later certificate, to be executed in compliance with the requirements of law, to be filed in the Office of the Secretary of the State of Texas; (b) the original assumed name certificate, and any later assumed name certificate, to be executed in compliance with the requirements of law, to be filed in the appropriate County Clerk's office; (c) all instruments required to effectuate the winding up or termination of the Partnership. The power of attorney granted herein shall not terminate upon the death or disability of a Limited Partner. No Person need inquire further than this Agreement of Limited Partnership for other evidence or proof of the General Partner's right and authority to bind the Partnership. 8.3 Riehts and Restrictions of Limited Partners. (a) Except as otherwise limited by the terms and provisions contained in this Agreement, the Limited Partners shall have all of the rights, and be afforded the status, of limited partners as set forth in the TBOC. No Limited Partner shall have any right or power to (1) take part in the management or control of the Partnership or its business or affairs, (2) transact any business for the Partnership, or (3) sign for or bind the Partnership in any way.. Pa e 18 Z:\ClientslKalaouxe, Fadi (Kalgroup Properties, LI')2G295Agreement of Limited Patmership.wpd g (b) No Limited Partner shall have the right to withdraw from the Partnership. A Limited Partner will breach this Agreement if he (1) attempts to withdraw from the Partnership; (2) interferes in the management of the Partnership affairs; (3) engages in conduct which could result in the Partnership losing its tax status as a partnership; (4) engages in conduct that tends to bring the Partnership into disrepute; (5) breaches any confidentiality provisions of this Agreement; (6) fails to meet any commitment to the Partnership; or (7) owns a Partnership interest that becomes subject to a charging order, attachment, garnishment, or simaar legal proceedings A Limited Partner who is in breach of this Agreement shall be liable to the Partnership for damages caused by such breach. The Partnership may offset for the damages against any distributions or return of capital to the Limited Partner who has breached this Agreement. (c) No Limited Partner shall have the right or power to cause the winding up or termination of the Partnership by court decree or otherwise. (d) The Limited Partners shall refer all bona fide offers for the purchase or sale of all or any part of the Partnership Property to the General Partner for negotiation. (e) Nothing contained herein to the contrary, no Limited Partner shall be liable for any of the debts or other obligations of the Partnership or for any of the losses thereof beyond the Initial Capital Contribution and any Additional Capital Contributions of such Limited Partner unless the Limited Partners expressly assume such liability, (f) All Limited Partners hereby agree to execute any and all instruments that they may be required to execute by any purchaser of said property in order to effect a sale of the Partnership Property. 8.4 Removal of a General Partner. Notwithstanding any provision herein to the contrary, a General Partner may not be removed unless there is at least one remaining General Partner. The Limited Partners may remove a General Partner upon the vote of 80% of the then outstanding ownership interest of the Limited Partners. Written notice of such determination setting forth the effective date of such removal shall be served upon such General Partner, and as of the effective date, shall terminate all of such Person's rights and powers as a General Partner hereunder, except for any accrued rights to receive payments authorized by Article XI hereunder. Such Partner shall thereafter cease to be a General Partner, and the removed General Partner shallautomatically become a Limited Partner, and such removed General Partner's partnership interest shall be converted to a limited partnership interest. The remaining General Partners shall continue the business of the Partnership.. Notwithstanding the foregoing, if a General Partner is in material breach of such General Partners obligations and does not cure, or commence and diligently prosecute the curing of, such breach within ninety (90) days after notice thereof by any of the Limited Partners, or if he has committed any act or omission of fraud or malfeasance to the injury of the Partnership, then such General Partner may be removed upon agreement of 5 1 % of the then outstanding ownership interest of the Limited Partners, For purposes of the preceding sentence, a General Partner shall be considered to be in material breach of such General Partner's obligations (1) if a court oflastresort determines that such General Partner has committed an act of willful misconduct, gross negligence, or fraud; or (2) if a General Partner declares bankruptcy, becomes insolvent or terminated, or assigns all of such General Partner's assets for the benefit of such General Partner's creditors. 8.5 Investment Representations and Warranties of the Limited Partners. Each Limited Partner hereby represents and warrants with respect to such Limited Partner's execution of Pa e 19 Z:\Clients\Kalaouze, t'adl (Kalgrputl Properties, Lfi)2624\Agreement of Limited'. Pattoership wpd g this Agreement (or by such Limited Partner's subscription and acceptance of this Agreement) and the interest in the Partnership to be acquired by him hereunder as follows; (a) Such Limited Partner will not sell, assign or otherwise transfer such Limited Partner's interest in the Partnership to any Person except in accordance with this Agreement; such Limited Partner will obtain from any transferee of such Limited Partner's interest in the Partnership representations and warranties for the benefit of such Limited Partner and of the Partnership similar to those made in this Section and has made representations and warranties similar to those made in this Section; (b) During the course of the discussion of this Agreement and prior to the execution thereof, such Limited Partner had adequate opportunity to ask questions of, and to receive answers from, the General Partner concerning the terms and conditions of this Agreement, the background and experience of the General Partner; the plans of the General Partner for the operation of the Partnership and all other matters related to this Agreement concerning which such Limited Partner desired to ask, and that such Limited Partner has asked and has had answered to the satisfaction of such Limited Partner all questions which such Limited Partner desired to ask; (c) Such Limited Partner is acquiring the interest in the Partnership for investment and not with a view to a distribution thereof within the meaning of the Securities Act of 1933 and the Securities Act of the State of Texas; (d) Such Limited Partner has such knowledge and experience in matters of finance, securities and investments, generally, that such Limited Partner is capable of evaluating the risks of entering into this Agreement; (e) Such Limited Partner has experience and skill in investments based on actual participation; (f) The General Partner has made available to such Limited Partner the opportunity to obtain any additional information necessary to verify the accuracy of the information given to such Limited Partner by the General Partner; (g) Such Limited Partner has been informed by the General Partner that such Limited Partner may have to continue to bear the economic risk of entering into this Agreement for an indefinite period because of the restrictions on disposition of limited partnership interests in the Partnership; (h) The limited partnership interest acquired pursuant to this Agreement will not be sold, transferred or encumbered in contravention to this Agreement; (i) Such Limited Partner recognizes that the Partnership will be newly organized and has no history of operations or earnings and is of a speculative nature; (}) Such Limited Partner.understands that no state or Federal governmental authority has made any finding or determination relating to the fairness for public investment of the ownership interests offered by the Partnership and that no state or Federal government authority has or will recommend or endorse these said ownership interests; Pa e 20 Z:\Clionts\KalxovzF Fadi (KnlgroUp Properties, LP)26291Agreemen[ of Limited Aartnershigwpd g (k) Such Limited Partner recognizes that prior to this offering there has been no public market for the ownership interests offered by the Partnership, and it is likely that after the offering there will be no such market for these interests; (1) Such Limited Partner is financially able to comply with his obligations hereunder; and such Limited Partner has adequate means of providing for current financial needs and possible personal contingencies, exclusive of the investment of such Limited Partner in the Partnership;. (m) Such Limited Partner understands that the Internal Revenue Service (the "Service") may disallow some or all of the deductions to be claimed by the Partnership and that the Service may attempt to treat the Partnership as an association taxable as a corporation which could have an adverse economic effect on the Partners by (1) taxation at the Partnership level resulting in double taxation and no flow through of loss, and (2) substantial reduction in yield, if any, on the Partners' investment in the Partnership; and (n) Such Limited Partner is aware that the General Partner may be or may engage in business which is competitive with that of the Partnership, and such Limited Partner agrees to such activities even though there are conflicts of interest inherent therein. ARTICLE IR MANAGEMENT FEES AND 0 HER EXPENSES 9.1 Management Fees, Except as provided in this Article, no Partner shall receive any salary, fee, or draw for services rendered to or on behalf of the Partnership, nor shall any Partner be reimbursed for any expenses incurred by such Partner on behalf of the Partnership. In connection with the conduct, operation and sale of the Partnership Property and the operation of the Partnership, the General Partner may charge the Partnership management fees for managing the Partnership and shall be reimbursed for any direct expenses reasonably incurred in connection with the Partnership's business; provided, however, that no such expense shall be incurred other than at a price which reflects a competitive market rate for such expense; and provided further, that no contract or arrangement entered into by a General Partner on behalf of the Partnership with such General Partner or an Affiliate shall be on terms less advantageous to the Partnership than that generally available from an unaffiliated third party. The General Partner shall not be required to devote full time to the affairs of the Partnership, but shall diligently and faithfully devote whatever time, effort, and skill may be necessary for the conduct of the Partnership's business, and shall perform all of the duties of a General Partner which are provided for in this Agreement and the TBOC. 9.2 Expenses. The General Partner may charge to the Partnership and pay or recover out of Partnership funds, as and when available, the following: All fees that may be required by applicable state or local authorities relating to the formation and operation of the Partnership or in compliance with the terms of this Agreement, including but not limited to, all filing fees for assumed name certificates, the Certificate of Formation and all amendments thereto, all reasonable expenses incurred by the General Partner in connection with the organization and formation of the Partnership, all reasonable expenses incurred by the General Partner to acquire, preserve, protect, or perfect the title to the Partnership Property or to operate and maintain such property, including, but not limited to, travel expenses, attorneys' fees; accountants' fees and court costs incurred in connection with such matters and any sums owed by the Partnership pursuant to any contract entered by the General Partner pursuant to its authority under this Agreement; the cost of public liability insurance carried in connection with the business of the Partnership; taxes on property of the Partnership; principal and interest, and any other amounts whatsoever owing on any indebtedness of the Partnership, or any Fa e 21 Z:1Clienis\Kalaouze, Fadi (Kalgroup Properties, LP)26291Agteement of Limited Partnership.wpd g part hereof, or any instruments securing any of same, together with any expenses incurred in connection with renewing or rearranging such or any other indebtedness incurred for the benefit of the Partnership deemed necessary by the General Partner; and normal closing costs reasonably incurred in the event of the lease, sale or other disposition of the Partnership Property. ARTICLE X TRANSFERS OF PARTNERSHIP INTERESTS 10.1 Generally. Except as set forth herein, no Limited Partner may transfer all or any portion of such Partner's interest in the Partnership, without the prior consent of the General Partner, which consent may be granted or withheld in the sole discretion of the General Partner. Each Limited Partner agrees with the Partnership and all of the other Partners that such Limited Partner will not make or permit a disposition of all or any portion of its Partnership Interest in violation of the provisions of this Article X. 10.2 Permitted Transfers of Limited Partnership Interests. Notwithstanding the foregoing provisions of Section 10.1, a Limited Partner may Transfer all or any part of the interest of such Limited Partner in the Partnership to: (a) the trustee of a trust created for the benefit of such Limited Partner or such Limited Partner's spouse, children or grandchildren; (b) any Wholly Owned Affiliate of such Limited Partner; (e) the guardian or legal representative of a Limited Partner as to whose estate a guardian or legal representative is appointed and to the executor or administrator of the estate of a deceased Limited Partner, or (d) to any other Person approved by all of the Partners (any such Transfer described above is referred torn this Agreement as a "Permitted Transfer"), To be a Permitted Transfer, in addition to meeting the other requirements in this Agreement, the Transfer must be in writing, the terms of which are not in contravention of any of the provisions of the Agreement; and the Transfer must be received by the General Partner and recorded on the books of the Partnership. Until the effective date of a Permitted Transfer, both the Partnership and the Partners shall be entitled to treat the assignor of the transferred interest as the absolute owner thereof in all respects. Upon the Transfer to a trust described in 102 (a) above, legal title shall rest in such trust; but such interest shall be subject to the same events and circumstances as if the transferring Limited Partner continued to own such interest, and said transferring Limited Partner shall continue to exercise all rights and be liable for all duties imposed by this Agreement. If a transfer is made to a Person approved by al I of the Partners, as permitted by Section 10.2(d) above, and the Limited Partner making such transfer will be receiving consideration in return for making such transfer, then prior to approving such transfer, the Partnership shall have the option for thirty (30) days to acquire such interest upon the same price and terms as the Person to whom such interest is being transferred. Any Assignee of a Limited Partner under the terms of this Section shall be entitled to receive the share of the Partnership Profits, Losses and distributions to which the Limited Partner from or under whom such interest was acquired would have been entitled; however, any such Assignee shall not automatically become a substituted Limited Partner unless the conditions of Section 8.1 are satisfied. 10.3 Additional Restrictions on Transfers. Notwithstanding Section 10.2, no disposition by a Partner, whether voluntary or involuntary, shall be effective unless (a) the General Partner shall have received a favorable opinion of the Partnership's legal counsel, or of legal counsel acceptable to the General Partner (which opinion shall be rendered at the expense of the transferor), to the effect that such disposition will not (1) violate the Securities Act or the registration requirements of any applicable state securities laws; (2) cause the Partnership or the General Partner to be subjected to any additional regulatory requirement; (3) cause the Partnership to be deemed terminated pursuant to Section 708 of the Code; (4) violate the laws of any state or the rules or regulations of any government agency applicable to such disposition; or (5) result in the Partnership being treated as an association taxable as a corporation for federal income tax purposes. Pa e 22 Z:\Clien611falaouze, Fddi (Knlgmup Properties, L�2G291A�'eement of Limited PartnerShip:wpd g 10.4 Transfers of General Partnership Interests. Except as otherwise provided in this Agreement, additional General Partners shall not be admitted to the Partnership without the consent of all the Partners. Notwithstanding the foregoing, each General Partner may Transfer all but not less than all of its General Partner interest in the Partnership at any time to (a) any Person who is such General Partner's Wholly Owned Affiliate, or (b) to any Person who is approved by all of the Partners. A transferee of a General Partner's interest hereunder shall be admitted as a General Partner with respect to such General Partner's interest if, and only if, all of the other Partners consent to such admission. In the event that the transferee of a General Partner's interest is admitted hereunder, such transferee shall be deemed admitted to the Partnership as a General Partner immediately prior to the Transfer, and such transferee shall continue the business of the Partnership without winding up. A transferee who acquires a General Partner's interest hereunder by means of a Transfer that is permitted under this section, but who is not admitted as a General Partner, shall have no authority to act for or bind the Partnership, to inspect the Partnership's books, or otherwise to be treated as a General Partner. 10.5 Prohibited Transfers. Any purported Transfer by any Partner of an interest in the Partnership that is not a Permitted Transfer or a transfer permitted under Section 10.4 of this Agreement shall be null and void and of no effect whatever; provided that if the Partnership is required to recognize a Transfer that is not permitted (or if the Partnership, in its sole discretion, elects to recognize a Transfer that is not permitted), the interest transferred shall be strictly limited to the transferor's rights to allocations and distributions as provided by this Agreement with respect to the transferred interests, which allocations and distributions may be applied (without limiting any other legal or equitable rights of the Partnership) to satisfy any debts, obligations or liabilities for damages that the transferor or transferee of such interests may have to the Partnership. In the case of a Transfer or attempted Transfer of an interest that is not a Permitted Transfer or a transfer permitted under Section 10.4 of this Agreement, the parties engaging or attempting to engage in such Transfer shall be liable to indemnify and hold harmless the Partnership and the other Partners from all cost, liability, and damage that any of such indemnified Persons may incur (including, without limitation, incremental tax liability and lawyers' fees and expenses) as a result of such Transfer or attempted Transfer and efforts to enforce the indemnity granted hereby. 10.6 AcuuisitionofanlnterestConvevedtoAnother Without Authority.IfanyPerson acquires a Partnership Interest, or becomes an Assignee, as the result of an order of a court which the Partnership is required by law to recognize, if a Partner's interest in the Partnership is subjected to a lawful "charging order", or if a Partner makes an unauthorized Transfer of an interest in the Partnership, the Partnership will have the unilateral option to acquire the interest of the Assignee, or any fraction or part thereof, upon the following terms and conditions: (a) The Partnership will have the option to acquire the interest by giving written notice to the Assignee of its intent to purchase within ninety (90) days from the date it is finally determined that the Partnership is required to recognize the Transfer. If the Partnership fails to exercise its option within such 90-day period, the remaining Partners shall have the option to acquire pro rata shares of such interest by giving written notice to the Assignee of their intent to purchase within ninety (90) days following the expiration of the expired 90-day option period held by the Partnership. (b) The valuation date for the determination of the purchase price of the interest will be the first day of the month following the month in which the notice is delivered. (c) Unless the Partnership and the Assignee agree otherwise, the purchase price for the interest, or any fraction to be acquired by Partnership, shall be its fair market value Z:1ClientstKela">s, Fad (Kalgmup CcOpertict; Lp)26291Agrcunen1of Limited Pnrtnership.wpd Page 23 as determined by a written valuation report prepared by a Person qualified to perform business valuations of partnerships and ownership interests in partnerships describing the value of the ownership interest in the Partnership. Such written valuation report shall take into account all appropriate discounts which are applicable to such interest. Payment for the cost of such valuation report shall be made by such Assignee. Closing of the sale will occur at the principal office of the Partnership at 10:00 a.m. on the first Tuesday of the month following the month in which the Appraisal is rendered. The purchase price paid by the Partnership shall be reduced by any costs or fees incurred by the Partnership in acquiring the interest of such Assignee, (d) In order to reduce the burden upon the resources of the Partnership, the Partnership will have the option, to be exercised in writing delivered at closing, to pay its purchase money obligation in fifteen equal annual installments (or for a period of time equal to the remaining term of the Partnership if such period is less than fifteen years) with interest at the Default Rate of Interest. The first installment of principal, with interest, will be due and payable on the first day of the calendar year following closing, and subsequent annual installments, with accrued interest, will be due and payable on the first day of each succeeding calendar year until the entire amount of the obligation is paid. The Partnership will have the right to prepay all or any part of the purchase money obligation at any time without penalty. (e) Neither the Assignee of an unauthorized Transfer nor the Partner causing the unauthorized Transfer shall have the right to vote on Partnership matters during the prescribed option period or, if the option to purchase is timely exercised, until the sale is closed. 10.7 Survival of Liabilities. It is expressly understood and agreed that no Transfer of a Partnership Interest, even if it subsequently results in the substitution of the Assignee as a Limited Partner herein, shall release the transferor or assignor from those liabilities as to the Partnership which survive such Transfer as a matter of law. 10.$ Partnership Interest fledge or Encumbrance. No Partner may grant a security interest or otherwise pledge, hypothecate or encumber his interest in this Partnership or such Partner's distributions without the consent of all the Partners. It is understood that the Partners are under no obligation to give consent nor are they subject to liability for withholding consent. 10.9 NonrecoQ_ nition of an Unauthorized Transfer. The Partnership will not be required to recognize the interest of any transferee who has obtained a purported transferred interest as the result of a Transfer that is not authorized by this Agreement and the Transfer shall be null and void for all purposes. If there is doubt as to ownership of an interest in the Partnership or who is entitled to distributions or liquidating proceeds or other property, the General Partner may accumulate such property until the issue is resolved to the satisfaction of the General Partner, ARTICLE XI AxirntnTNC rtr AND 7 ,RMiNATION Of. THE PARTNERSHIP 11.1 Winding Un and Termination of the Partnershiu. The Partnership shall be immediately wound up upon the occurrence of any of the following (a "Liquidating Event"): (a) The expiration of the term set forth in Section 1.5; z:\GlientslKalaouze, padi (Kalgroup Properties, Lp)2G29lApreemcntofLimited Partnership.wpd Page 24 (b) The withdrawal or removal of a General Partner, the assignment by a General Partner of its entire interest in the Partnership, or any other event that causes a General Partner to cease to be a general partner under the TBOC, provided that any such event shall not constitute a Liquidating Event if the Partnership is continued pursuant to this Article. (c) The express written agreement executed by all of the Partners; or (d) Within a reasonable period of time, as determined by the General Partner, after the sale, condemnation, foreclosure or other similar disposition of all of the Partnership Property or upon the happening of any other event which makes it unlawful, impossible, or impractical to carry, on the business of the Partnership. 11.2 Withdrawals,• Reconstitution. Winding up may occur pursuant to Section 11.1(b) of this Agreement, but if there is a remaining General Partner or if the Limited Partners by vote of 66.67% of the outstanding ownership interests of the Limited Partners entitled to vote (excluding from such election any limited partnership interest controlled by the General Partner who brought about such event), agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of such event, of one or more General Partners, the Partnership will be reconstituted and continued. A General Partner may have the power but not the right to withdraw at any time from the Partnership and cease to be a General Partner under the provisions of Section 153.155(b) of the TBOC by giving written notice to the other Partners, Any General Partner who withdraws or ceases to be a General Partner pursuant to Section 153.155(a) of the TBOC, before the expiration of the stated term of this Partnership violates this Agreement, and the Partnership may recover damages from the withdrawing General Partner, including the reasonable cost of obtaining replacement of the services the withdrawn Partner was obligated to perform, for breach of the Agreement. The Partnership may, in addition to pursuing any remedies otherwise available under applicable law, effect that recovery by offsetting those damages against the amount otherwise distributable to the withdrawing General Partner, reducing the Limited Partner's interest into which the withdrawing General Partner's interest may beconverted under Section 153.158(a)(1) of the TBOC. Subject to the liability created under Section 153.155(b) of the TBOC, a General Partner who ceases to be. a General Partner under Section 153155(a) of the TBOC shall, at the option of the remaining General Partners or, if there are no remaining General Partners, at the option of a majority in interest ;(at least 5 1 % of the then outstanding ownership interest) of the Limited Partners in a vote that excludes any Limited Partner interest held by the withdrawing General Partner, convert the interest in that General Partner's capital account, including such General Partner's share of Profits, Losses and distributions, to that of a Limited Partner; or pay to the withdrawn General Partner in cash or other Partnership property of equivalent value, or secure by bond approved by a court of competent jurisdiction, the fair market value of such General Partner's interest in the Partnership, less the damages caused by such General Partner's breach of this Agreement. 11.3 Final Accountine. Upon winding up of the Partnership, an accounting shall be made of the accounts of the Partnership, the account of each Partner thereof, and of the Partnership's assets, liabilities and operations, from the date of the last previous accounting to the date of such winding up. 11.4 Liquidation and Priorities on Distribution. If the Partnership is terminated under Section 11.1, then in such event the Managing Partner shall act as the Liquidating Trustee and shall liquidate the Partnership as herein provided. Pa e 25 2:1ClienulKalaouze, Psdi (Kalgroup Properties, LP)2b291Agrcemeni of Limited PartnershiQ.wpd g (a) If there is no Managing Partner or if the Managing Partner declines or ceases to serve as Liquidating Trustee, the Liquidating Trustee shall be elected by agreement of those Partners whose percentage interests aggregate 80% percent of the ownership interests of the Partners. The General Partner shall execute such documents that are reasonably required to enable the Partner(s) to perform and function as Liquidating Trustee. (b) The Liquidating Trustee shall proceed to liquidate the assets of the Partnership and the proceeds of such liquidation shall be applied to the Partners in the amount equal to the credit balances in their capital accounts so that the capital account of each Partner shall be brought to zero. For the purpose of determining distributions and liquidation, an Adjusted Capital Account Deficit will be considered to be a loan from the Partnership to a Partner. Said loan will be paid in cash within thirty (30) days after written demand therefor has been made by any of the other Partners. The balance, if any, will be paid to the Partners (both General and Limited), in an amount equal to each Partner's percentage interest in the Partnership, as determined immediately prior to the distribution of the credit balances of the Partner's capital accounts. Any property which is distributed in kind in liquidation shall be treated as if such property had been sold for its fair market value, the gam or losses from such property had been distributed to the Partners in accordance with the provisions herein, and the cash proceeds from the sale of such property had been distributed. (c) After the foregoing distributions, this Agreement shall terminate and none of the parties shall have any further rights or obligations hereunder. (d) If a disposition of the Partnership Property has been made on terms that produce a note or contract receivable to the Partnership, the dollar value attributable to each interest in such note or contract receivable distributed pursuant to this Section shall be, as to any distributee thereof, such distributee's pro rata portion of the face amount thereof, and the Liquidating Trustee shall be obliged to make a liquidating distribution in a fashion such that the Partners each are distributed a rateable share of cash items and a rateable share of receivables according to their respective total rights to liquidating distributions. (e) Notwithstanding anything to the contrary set forth hereinabove, if, after the payment of current Partnership liabilities and obligations to the extent of the funds and/or properties available for that purpose, either any portion of a Partnership borrowing remains unpaid or the Liquidating Trustee determines that additional funds will be required to meet Partnership costs and expenses thereto incurred or for which the Partnership may become responsible, then the Liquidating Trustee shall be obligated to retain such required amounts, if available (or as when they become available), before any Partnership cash or property is distributed to any Partner. 11.6 Powers and Duties of Liquidating Trustee. Notwithstanding anything to the contrary contained in this Agreement, the Liquidating Trustee shall be entitled to exercise such of the powers and authorities granted to the General Partner under Article VII hereof as are necessary and appropriate for the winding up and termination of the Partnership, and also shall be subject to the duties and obligations imposed upon the General Partner under Article VII. 11.7 Indemnification of the Liquidating Trustee, The Liquidating Trustee shall be indemnified and held harmless by the Partnership from and against any and all claims, demands, liabilities, costs, damages and causes of action of any nature whatsoever, arising out of or incidental to the Liquidating Trustee taking any action authorized under, or within the scope of, this Article; z:\ClientsWalaouze..Padi (Kalgroup properties, LP)26MAgreement of Limited Partnership.wpd Page 26 provided, however, that the Liquidating Trustee shall be entitled to no indemnification hereunder where the claim at issue arose out of: (a) A matter entirely unrelated to the Liquidating Trustee's acting under the provisions of this Article; (b) The proven gross negligence, willful misconduct, fraud or bad faith of the Liquidating Trustee; or (c) The proven breach of the Liquidating Trustee of its obligations under this Article. The indemnification rights herein contained shall be cumulative of, and in addition to, any and all other rights, remedies, and resources to which the Liquidating Trustee shall be entitled, at law or in equity. ARTICLE XII MISCELLANEOUS 12.1 Notices. Any notices required hereunder shall be sent to the Partners (i)by electronic transmission, including e-mail, (ii) by personal service, or (iii) by certified or registered mail, return receipt requested at the address set forth for such parties, respectively, on Exhibit "A" of this Agreement. By giving to each General Partner written notice thereof, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses and each shall have the right to specify as its address any other address within the United States of America. No transferee of any interest of any Partner shall be entitled to receive a notice independent of the notice sent to the Partner making such transfer. 12.2 Additional Instruments. Each Partner hereby agrees to execute all such agreements, certificates, tax statements, tax returns and other documents as may be required by law to effectuate the provisions contained herein. 12.3 A»Plicable to Successors: This Agreement and each provision herein shall be binding upon and applicable to, and shall inure to the benefit of, the parties hereto and their respective heirs,legatees,devisees,successors, assigns and legal representatives, except as otherwise expressly provided herein. 12A Waiver. No consent or waiver, express or implied, by any parties hereto of the breach or default by any other party or parties hereto in the performance by any such party or parties of its or their obligation hereunder shall be deemed or construed to be a consent to or waiver of any other breach of default in the performance of such other or others of the same or any other obligations of such other or others hereunder. Failure on the part of any party hereto to complain of any act of any of the other parties or to declare any of the other parties hereto in default, irrespective of how long such failure continues, shall not constitute a waiver by such party of its rights hereunder. 12,5 Seyerability. If any provision of this Agreement or the application thereof to any Person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provisions to other Persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law. Pa e 27 ZaClientslKaltiouze,Fadi (Kxlgrnup Properties, LP)2B29\Agreementot Limited Partnership.wpd g 12.6 Amendment. This Agreement may be amended or modified at any time only if all Partners agree to such amendment or modification in writing. 12.7 Waiver of Rights to Partition. Inasmuch as all real and personal property owned by the Partnership is owned by the Partnership as an entity, and no parry hereto, individually, has any ownership in such property, none of the parties hereto shall have any right to partition any of the Partnership Property, and all parties hereto hereby irrevocably waive any and all rights that any party hereto might have to maintain any action for partition of any of the Partnership Property with respect to their undivided interest, if any, therein, either as a partition in kind or a partition by sale. 12.8 Meetings of the Partners. Meetings of the Partners may be called by the General Partner and shall be called upon the written request of 51%0 of the then outstanding ownership interests of the Limited Partners. Notice of any such meeting shall be given to all Partners not less than seven (7) business days nor more than thirty (30) business days prior to the date of such meeting and shall state the nature of any business to be transacted thereof. Partners may vote in person or by proxy at such meeting. Whenever the vote or consent of Partners is permitted or required under this Agreement, such vote or consent may be given at a meeting of Partners. Except as otherwise expressly provided in this Agreement, the vote of a majority in interest (at least 5 1 % of the then outstanding ownership interest) of the Partners shall control. For the purpose of determining the Partners entitled to vote on, or to vote at, any meeting of the Partners or any adjournment thereof, the General Partner or the Limited Partners requesting such meeting may fix, in advance, a date as the record date for any such determination. Such date shall not be more than thirty (30) business days nor less than ten (10) business days before any such meeting. Each Limited Partner may authorize any Person or Persons to act for it by proxy on all matters in which a Limited Partner is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting.. Every proxy must be signed by the Limited Partner or its attorney-m-fact. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable by the Limited Partner executing it. Each meeting of the Partners shall be conducted by the General Partner or such other Person as the General Partner may appoint pursuant to such rules for the conduct of the meeting as the General Partner or such other Person deem appropriate. 12.9 Action Without Meetine. Any action required or permitted to betaken at a meeting of the Partners (including meeting of the General Partners) maybe taken without meeting if written consent setting forth the action to be taken is signed by all Partners (or General Partners, if applicable) entitled to vote. This consent will have the same force as a unanimous vote of the Partners (or General Partners, if applicable). The original signed consents shall be kept with the Partnership records. 12.10 Counterparts. This Agreement may be signed in a number of counterparts, each of which shall be an original for all purposes, but all of which taken together shall constitute only one agreement. The production of any executed counterpart of this Agreement shall be sufficient for all purposes without producing or accounting for the other counterparts hereof. 12.11 Gender. Wherever in this Agreement, words, including pronouns, are used in the masculine, they shall be read and construed in the feminine or neuter whenever they would so apply, and wherever in this Agreement, words, including pronouns, are used in the singular or plural; they shall be read and construed in the plural or singular, respectively, wherever they would so apply. Pa e 28 Z\Clients\Kalaouze, Fad (Knl�,roup Properties', LP)2629\Agreement of Limited Partncrship.wpd g 12.12 Attorney Fees. In the event a dispute arises between any Partner(s) and the Partnership or between the Partners, the prevailing party shall be entitled to recover reasonable attorney's fees and court costs incurred. 12.13 Tax Audit. In the event the Partnership is audited by the Service, the costs and expenses incurred to defend and comply with the audit shall be an expense of the Partnership. Any audit of any individual Partner shall not be deemed to be an audit of this Partnership. 12.14 Foreign Qualification. Prior to the qualification of the Partnership to conduct business in any jurisdiction other than Texas, the General Partner shall cause the Partnership to comply, to the extent procedures are available and those matters are reasonably within the control of the General Partner, with all requirements necessary to qualify the Partnership as a foreign limited partnership in that jurisdiction. At the request of the General Partner, each Partner shall execute, acknowledge, swear to, and deliver all certificates and other instruments conforming with the terms of this Agreementthat are necessary or appropriate to qualify, continue and terminate the Partnership as a foreign limited partnership in all jurisdictions in which the Partnership may conduct business. 12.15 Governing Law. This Agreement shall be subject to, and governed by, the laws of the State of Texas. 12.16 Reliance by Third PParties. Notwithstanding any other provision ofthis Agreement, any action taken by the General Partner on behalf of the Partnership shall be binding as to any Person who acts in reliance on the authority of the General Partner taking such action, and such Person shall have no duty to ascertain whether such General Partner has such authority even if such action appears to be prohibited by this Agreement. Any Person dealing with the Partnership or the General Partner may rely upon a certificate signed by the General Partner as to: (a) the identity of the Partners; (b) any conditions precedent to acts by the Partnership; (c) the Persons who are authorized to execute any documents and bind the Partnership; and (d) any other matter involving the Partnership or any Partner. 12,17 Entire Agreement. The Agreements and representations in this Partnership Agreement contain all of the Agreements and representations of the parties hereto, and it is expressly provided that the General Partner shall not be liable for any claim that may hereafter be made alleging any verbal agreement by and between the Parties hereto and the General Partner, or any General Partner's agents, employees or associates. 12.18 Headines. The heading of each of the articles and sections of this Agreement are inserted for convenience only and shall not be considered in construing the terms of this Agreement. EXECUTED in multiple counterparts, by the General Partner and by the Limited Partners on the date indicated opposite their respective signatures below, all effective on the date aforementioned. Pa e 29 2'.lClienUlKalabuze, padi (Knlgroup Properties, LP)26291Agrecmcnt of Limited Pnrtnership.wpd h' AGREEMENT OF LIMITED PARTNERSHIP OF KALGROUP PROPERTIES, LP The undersigned agrees to the terms and conditions of the Agreement of Limited Partnership of Kalgroup Properties, LP. GENERAL PARTNER: Kalgroup Partners, LLC By; Gwy Fadi Kalaouze, Managing Member Date:. May 1, 2008 THE STATE OF TEXAS § COUNTY OF BRAZOS BEFORE ME, the undersigned authority, on this day personally appeared Fadi Kalaouze, known to me to be the person whose name is subscribed to the foregoing instrument as Managing Member of the General Partner and acknowledged to me that such Managing Member executed the same for the purposes and considerations therein expressed, in the capacity therein slated, Given under my hand and seal of office on r �A CHR7q.IWuiPEt> No Public; State o exas 'C{� MS10N FJ(PIRES s"1 14, 2010 Pa e 30 Z;1Cllenla\Kalxouze, Fadi (Kalgroup Properties, LP)2829\Agreement of Limited Partnershiry.wpd g AGREEMENT OF LIMITED PARTNERSHIP OF KALGROUP PROPERTIES, LP The undersigned agrees to the terms and conditions of the Agreement of Limited Partnership of Kalgroup Properties, LP, including the terms and conditions ofthe Subscription Agreement attached as Exhibit "B" to this Agreement. LIMITED PARTNER: Fadi Kalaouze Date:. May 1, 2008 THE STATE OF TEXAS § COUNTY OF BRAZOS BEFORE ME, the undersigned authority, on this day personally appeared Fadi Kalaouze, known to me to be the person whose name is subscribed to the foregoing instrument as Limited Partner and acknowledged tome that such Limited Partner executed the same for the purposes and considerations therein expressed, in the capacity therein stated. Given under my hand and seal of office on 4 P s CHFi15TQPHERWII.I MPMRWN MY COMMISSION EXPIRES Ju�ta,zotu Notary --Public, State oTexas ZAClients\Kalawn, Fadi (Kalgroup Properties, 1,P)26MAgreement of Limited Partnership.wpd Page 31 AGREEMENT OF LIMITED PARTNERSHIP OF KALGROUP PROPERTIES, LP The undersigned agrees to the terms and conditions of the Agreement of Limited Partnership of Kalgroup Properties, LP, including the terms and conditions of the Subscription Agreement attached as Exhibit "B" to this Agreement, LIMITED PARTNER: Hege KaI46uze Date: May 1, 2008 THE STATE, OF TEXAS COUNTY OFBRAZOS § BEFORE ME, the undersigned authority, on this day personally appeared Hege Kalaouze, known to me to be the person whose name is subscribed to the foregoing instrument as Limited Partner and acknowledged to me that such Limited Partner executed the same for the purposes and considerations therein expressed, in the capacity therein stated. Given under my hand and seal of off pFTEFS6N'1 ��,.,cr+a�sroPaEaw�uu� ,g -�`� a's MY GGMMISSION EXFtRES ZACIiants\Kalaoms,'Fadi (Kalgroup Properties, 1,P)2 MAgreemait of Limited Partnership.wpd Page 32 AGREEMENT OF LIMITED PARTNERSHIP OF KALGROUP PROPERTIES, LP EXHIBIT "A" Name and Address General Partner: Kalgroup Partners, LLC 1516 Shilho, Ste A, Bryan, Texas 77803 Limited Partners: Fadi Kalaouze 1516 Shilho, Ste A, Bryan, Texas 77803 Hege Kalaouze 1516 Shilho, Ste A, Bryan, Texas 77803 Percentage Partnership Interest 1.0% 49.5% 49.5% Initial Capital Contribution $10.00 $495.00 $495.00 Z:\Clients\Kalaouze, Fad (Kalgroup Properties, LP)262%Agrcement of Looked Par mership.wpd Page 3.3 AGREEMENT OF LIMITED PARTNERSHIP OF KALGROUP PROPERTIES, LP EXHIBIT "B" SUBSCRIPTION AGREEMENT 1, individually or as the authorized representative of a Limited Partner, have subscribed to an interest in Kalgroup Properties, LP (the "Partnership") formed by written contract to which this acceptance is appended, and: (1) Acknowledge that I have received and reviewed the Agreement of Limited Partnership (the "Agreement") of the Partnership with the opportunity and encouragement to seek the advice and consultation of independent legal and tax counsel; (2) Acknowledge and confirm my subscription to a Limited Partnership Interest in the Partnership equal to the value of the Limited Partnership Interest given to me; (3) Acknowledge that this subscription agreement and my ownership interest in the Partnership will be subject to the restrictions against transfer stated in the Agreement and the following restriction: THE PARTNERSHIP INTERESTS HAVE NOT, NOR WILL BE, REGISTERED OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES LAWS. THE PARTNERSHIP INTERESTS MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED, OR UNLESS AN EXEMPTION FROM REGISTRATION OR QUALIFICATION EXISTS. THE AVAILABILITY OF ANY EXEMPTION FROM REGISTRATION OR QUALIFICATION MUST BE ESTABLISHED By AN MUST BEINION OF COUNSEL REASONABLY SATISFAR THE CTORY TO THEWHICH OPINION AND COUNSEL E PARTNERSHIP. (4) Agree to be bound by the terms and conditions of the Agreement and Certificate of Formation of Limited Partnership. (5) Acknowledge that the following disclosures have been made prior to my execution of this subscription agreement: THE PERCENTAGES OF OWNERSHIP OF THE PARTNERSHIP HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE. THE PERCENTAGES OF OWNERSHIP ARE OFFERED AND SOLD IN RELIANCE ON EXCEPTIONS FROM THE REGISTRATION REQUIREMENT OF THE SECURITIES ACT AND SUCH LAWS, AND PARTICULARLY REGULATIOND. THE PARTNERSHIP WILL NOT BE SUBJECT TO THE REPORTING REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND WILL NOT FILE REPORTS, PROXY STATEMENTS AND OTHER INFORMATION WITH THE SECURITIES AND EXCHANGE COMMISSION. Dated and effective: 2:\C1ienlstKulnouu;, radi (Kalgroup Properties, LP)26291Agreement orUmited Partnership.wpd Page 34 [Signature of Limited Partner] The undersigned consent to the subscription and acceptance of the Limited Partnership interest by the Limited Partner named above. [Signatures of General Partners] ZACliems\Kalaourn,Badi (Kalgroup Properties, LP)262MCreement of Limited Partnership,wpd Page 35 AGREEMENT OF LIMITED PARTNERSHIP OF KALGROUP PROPERTIES, LP Exhibit "C" CONTRIBUTION AGREEMENT This Contribution Agreement is made effective as of May 1, 2008, by Kalgroup Partners, LLC ("General Partner") and Fadi Kalaouze and Hege Kalaouze ("Limited Partners), and Kalgroup Properties, LP (the "Partnership"). The General Partner and the Limited Partners have contributed or agreed to contribute to the Partnership, effective as of the first date above written, in consideration for general and limited partnership interests in the Partnership aggregating 100% of the total partnership interests of the Partnership, the properties listed and described on the schedule attached hereto. The respective partnership interests of the General Partner and the Limited Partners shall be in the ratio of the present fair market values of their contributed properties, with the interests of each Partner as reflected on the attached schedule to this Contribution Agreement. ASSIGNORS: General Partner Kalgroup Partners, LLC By: Fadi Kalaouze, Managing Member Limited Partners Fadi Kalaouze Heg�auze ASSIGNEE: Kalgroup Properties, LP By its Managing General Partner: Kalgroup Partners, LLC ZAChentsiKalaouze, Fadi (Kalgroup Properties, LP)26 Mo-jeement of limited Pannership.wpd Page 36 By: e6s 1 Fadi Kalaouze, Managing Member 21ClientsWalaouze,. Fadi (Kalgroup'Properlies, LP)2629UAgreement of Limited Partnmfiip,wpd page. 37 AGREEMENT OF LIMITED PARTNERSHIP OF KALGROUP PROPERTIES, LP SCHEDULE TO CONTRIBUTION AGREEMENT Assignor Kalgroup Partners, LLC Fadi Kalaouze Hege Kalaouze Contributed Proper Cash Cash Cash ziClienlMilaoUze, Fadi (Kalgroup Properties, LP)26MAgreement of Limited Partwship.wpd Page 38