Crawford Medical Supplies, LLC, Sam Maddali, Prem Swaroop Kalidindi, and Maddali Realty, LLC v. Huntleigh Home Medical, Ltd. and Jane Elizabeth Flores

Opinion

ACCEPTED 04-15-00427-CV FOURTH COURT OF APPEALS SAN ANTONIO, TEXAS 8/17/2015 6:58:46 PM KEITH HOTTLE CLERK

NO. 04-15-00427-CV FILED IN IN THE 4th COURT OF APPEALS SAN ANTONIO, TEXAS

COURT OF APPEALS FOR THE 08/17/2015 6:58:46 PM FOURTH COURT OF APPEALS D KEITH E. HOTTLE ISTRICT Clerk SAN ANTONIO, TEXAS ______________

CRAWFORD MEDICAL SUPPLIES, LLC, SAM MADDALI, PREM SWAROOP KALIDINDI, AND MADDALI REALTY, LLC APPELLANTS VERSUS

HUNTLEIGH HOME MEDICAL, LTD. AND JANE ELIZABETH FLORES APPELLEES ______________

APPEAL FROM THE 57TH JUDICIAL DISTRICT COURT, BEXAR COUNTY, TEXAS NO. 2013-CI-00404

APPENDIX TO BRIEF OF APPELLANTS

PULMAN, CAPPUCCIO, PULLEN, BENSON & JONES, LLP Elliott S. Cappuccio Texas State Bar No. 24008419 Leslie Sara Hyman Texas State Bar No. 00798274 Etan Z. Tepperman Texas State Bar No. 24088515 2161 NW Military Highway, Suite 400 San Antonio, Texas 78213 (210) 222-9494 (Telephone) (210) 892-1610 (Facsimile) Attorneys for Appellants APPELLANTS REQUEST ORAL ARGUMENT TABLE OF CONTENTS

Document Tab

June 16, 2015 Order Granting in Part and Denying in Part Defendants’ Plea in Abatement and Motion to Compel Arbitration ......................... 1

Operating Agreement .................................................................................................2

Plaintiffs’ Third Amended Petition ............................................................................3 Tab 1 DOCUMENT SCANNED AS FILED

2013CI00404 -0057 '"~.- - -·- ·· - --...---·

CAUSE No. 2013-CI-00404

HUNTLEIGH HOME MEDICAL, LTD., § IN THE DISTRICT COURT JANE ELIZABETH FLORES, AND § MICHAEL FLORES, § § PLAINTIFFS § § v. § 57m JUDICIAL DISTRICT § CRAWFORD MEDICAL SUPPLIES, LLC, § SAM MADDALI, PREM SWAROOP KALIDINDI, § AND MADDALI REALTY, LLC, § § DEFENDANTS § BEXAR COUNTY, TEXAS

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' PLEA IN ABATEMENT AND MOTION TO COMPEL ARBITRATION

On this date the Court considered Defendants' Plea in Abatement and Motion to Compel

Arbitration. After careful consideration of the motion and Plaintiffs' response, and having taken

judicial notice of Plaintiffs' Second and Third Amended Petitions, the Court is of the opinion

that the motion should be granted in part and denied in part.

Accordingly, it is hereby ORDERED that Defendants' Plea in Abatement and Motion to

Compel Arbitration is GRANTED IN PART such that, consistent with the Court's Order dated

August 30, 2013, any claims by and against Michael Flores that arise out of or relate to his

employment agreement with Crawford Huntleigh Medical Supplies, LLC nlk/a Crawford

Medical Supplies, LLC shall be decided in arbitration and this lawsuit is abated and stayed

pending arbitration only as to such claims.

p G lr." 7 6 570 DOCUMENT SCANNED AS FILED

It is further ORDERED that Defendants' Plea in Abatement and Motion to Compel

Arbitration is in all other respects DENIED.

SIGNED AND ENTERED this ~day of June, 2015.

APPROVED AS TO FORM:

ecappuccio@pulmanlaw.com Leslie Sara Hyman Texas State Bar No. 00798274 lhyman@pulmanlaw.com PULMAN, CAPPUCCIO, PULLEN, BENSON & JONES, LLP 2161 NW Military Highway, Suite 400 San Antonio, Texas 78213 www .pulmanlaw.com (21 0) 222-9494 Telephone (210) 892-1610 Facsimile

8/ ATTORNEYS FOR DEFENDANTS 1 7 /

61 tv\~~.L . ' 5 Mark Murph)TO(j U~ v State Bar No. 24002667 0 DAVIS & SANTOS L Attorneys & Counselors, P.C. 4 112 E. Pecan Street, Suite 900 4 San Antonio, Texas 78205 ~~ Telephone: (210) 853-5882 Facsimile: (210) 200-8395 g ATTORNEYS FOR PLAINTIFFS

1 5 7 7 571 2 Tab 2 OPERATING AGREEME:NT

OF CRAWFORU BUNTLEIGHMEDICAL -SUFPLlES, LLC

A TEXAS LIMITEDLIABI':LITY-COMl>ANY ' . '.- - ·- . -

THIS QP'BRATJNO, AGREeMENt c·Agreement'~) is m?de a.s of t}lis L' 2~ day of Dc;:cember, 401 1 by ~pd -a!}.19J1& P-REM: SWAROOP KALlDINDI {"Kalidim:U)))? an .indlvidttal having an address at 171 :Foiesf Drive, Piscataway:~ New Jersey .(}88.5.4, ANNAPURNA MADOALI ("Mi

WITNESSETH!

VlHEREAS:.. th'e Metttbei:s .desire· to ·enter ji1to th1s Operatjng Agreeo1ent' 10petating t Agr~emeiit" .b t "Agre·em.enn· fo:r .the pth"pose_s of g9v¢i)lillg CRAWFORD HlJWTLEIGH ME:01CA,t; SI]PPLIES, t;~O, a Tex~s lirrnted liabijity cotnlJailY '{~QIJ1parly'')'.Qerein formed, to and' for t4_e purpose of o"'rn.ing, and operany other hus)ness tii1Jess related .to the ~usi:nesS', unless appl:oved as provid~· beto~v.

NOW THER,EFQR,E, it1 cons1Q.~ra:tiO~t>:ft4e ¢utual'pKeq1ise~.:helow,:,anc\ othe(goo_d and valuable Gonsidetariou receipt and :suffici'ency of whicl). l_s' h~teby -a9.knowledg~d, th~ Membe.rs hereby ag~:ee as follows:

ARTICLEl. DEFINITIONS Sectior'l l.Oi Definitions, Tf}e· felloWitig. t'~tn'is used in thi$ Agt:eemtmt have the~ n1eaniugs specifi~d in tliis_Art·id~ -orelsec\Yhet~in f~ Agt1eei.nehf. ·

(~) "Act" m.eans, the Title .3 ot; th~ T~X:as BusitJesS Qrga!lf;za.tfons Act~ ·whi¢h pettains;}q the fotl}J~frqg .a.!Jd-ope1·ation 9f limited: liability .cofupan1es, includhl.g ai.ilendmeitts thereto .frOJil time to .,ti.ffie~

(b) ''Agceement" means tl1iS: opei·ating agreement~ -as: origlnally execiifed and a~ am~ndGd fr\im tfrne to lime.

505 (c) "Assignee11 means a person who has acquired a Member's Economic lnterest in the Company, by way of a Transfer in accordance witb the tenns of tbjs Agreement, but who has not become a Member.

(d) "Assigning Member11 means a Member who by means of a Transfer has transferred an Economic h1terest in the Companiy to an Assiguee.

(e) "Business" means the sale of home medical supplies and durable medical equipment.

(f) "Capital Account" means, as to any Member, a separate account maintajned and adjusted in accordance with Section 3.02.

(g) "Capital Contribution" means, vr.rith respect to any MembeJ:, the amot!nt of the money, the forgiveness of any debt, and the Fair Market Value of any services or property (other than money) contributed to the Company (net of liabilities secured by such contributed property that the Company is considered to assume or take "subject to 11 under IRC section 752) in consideration of a Percentage Intefest held by such Member. A Capital Contribution shall not be deemed a loan.

Q1) "Capital Event'' means a sale or disposition of any of the Company's capital assets, the receipt of insurance and other pmceed:s derived from the voluntary or involuntary conversion of Company property~ the receipt of proceeds from a refinancing of Compar!y property, or a similar event with respect to Company pmperty or assets.

(i) "Cet1ificate of Formation" means the document required! t.o be filed with the applicable office of the state of Texas to establish a limited liability company in Texas.

G) "Code" m "IRC" means the Internal Revenue Code of l986, as amended, and any successor provision.

(k) "Company'' and/or "LLC" means the company named in Section 2.02.

(1) ''Contributing Member" is defined m Section 3.03(a).

(m) "Economic Interest" means a Persall's right to share in the income, gains, losses, deductions, credit or similar items o4 and

506 to req~iv'~ distributio!l~ from, the, Co~:np_~y, but dbes not inqhtde any other tights of.a Met).!ber) including tlre right to vote·or to participate in management.

(u} •rE1i1ployment Agi·eeihent'' means the employment agreement clated Decembe1· __, 20li benveen the Company~ as employer, an:d.lvticb(!el D_avid Flores, as ·en1.ployee.

(o} 1 ~Eneumber" means .the a~l of creating or pmpOJting to -creare! an· Enc~m~rance, wheilier ot not p~rfected under applicable law.

(p) "Encumbrance" means, with T.espect te any Membership liitetest,_ or any element thereof, .a n1ortgage, pledge~ security interest, lien, proxy coupled w.i1h ·an interest (other than as GOOiemplated in thl~: ·f..gr~emt:;nt); optio;n, o.r preferentiaf tight to pUfC:hase:. 1 (q), "F.ai_~ 1yfa~ket Val:\11~ ' means, witb. respect to any itetn. of propetty ef.the Company. the--i{eni's adjusted. basis for federal income tax purposes', exc.ept as-follows;

The EC!.it Mru·]:(¢t Vah1~ of ~llY prope1ty cont1iliuted (i) by a Member to the-Company shalf be the--valtle of such ptopeJ.ty~ as ~ittqally agt'eed by the contributing Member and the Company; · -

(ii) The Fair Market Vatu~ of any- itern of C

(ill) Faii Market Value for purposes of Section 8.06 shall o~. detennined under ·section ·8.08... (i) "Initial Member'; or "Initial Members" ·nieans thQSe Persons \-Vhose .q,~m,.es are set forth , in t~e fir~t sente11ce of this Agreement. A reference to an 11 Initial Member11 means an.y of the InitHtl Members.

(s) "lilVoluntary· Trailsfer'; means,_with respect to any Memb~rship Intel-est, or any ~le¢~nt thereat any Transfer or Encmuhrancef. whether by op,eratio1l ·of law, pul'suant 1o coutt orde1·, foreoJQS.!llre of a s~C\Jri~y iqterest, exeqution of a Judgment {)r other legal pr.ocess, or otheJ..wl.se;.including a pmp.ot1ed h:ansfe1; to or fi-om a trustee in bankruptcy~ i'eeeiver_, or assigtiee f-or the benefit of creditors. (t) ''Losses". See. "Pr.ofits a1~d Losses".

507 (u) ''Majority of Members" means a MenJber or Members whose Percentage Interest represent more than 50 percent of the Percentage Interests of all the Members.

(v) "Managing Member(s)" means such Member· or Members who constitute a Majority of Members.

(w) "Meeting" is defined in Section 5.03.

(x) "Member'' means an Initial Member or a Pe~·son who otherwise acquires a Membership Interest, as permitted under this Agreement, and who remains a Member.

(y) 11 Non-Contributing MembeJ" is defmed in Section 3.02.

(z) "Notice11 means a written notice required or permitted under this Agreement. A notice shall be deemed given or sent when deposited, by certified mail or for overnight delivery, postage and fees prepaid, in the United States mail; when delivered to Federal Express, United States Postal Service Express Mail or United Parcel Service, for overnight delivery, charges prepaid or charged to the sender's account; when personally delivered to the recipient; when transmitted by electronic means, and such transmission is electronically confir.tned as having been successfully n·ansmitted; or when delivered to the home or office of a recipient in the care of a person whom the sender has reason to believe will promptly communicate the notice to the recipient.

(aa)"Percentage Interest" of each Member in the Company is the same percentage -as each such Member's allocation of Profits and Losses is to all Pmfits and Losses. as set fot1h in Section 4.01.

(bb) "Person" means an individual, partnership, limited patinership, trust, estate, association, corporation, limited liability company, or other entity~ whether domestic or foreign.

(cc)"Profits and Losses" means, for each fiscal year or other period specified in this Agreement, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with IRC section 703 (a).

(dd) ''Regulations" ("Reg'') means the income tax regulations promulgated by the United States Department of the Treasmy and published in the Federal Register for the purpose of interp1·eting and applying the provisions of the Code, as such

508 Regulations may be amended from time to time, including corresponding provisions of applicable successor regulations.

(ceY'Substituted Member'' is defined in Section 8.09.

(ff) ''Successor in Interest'' means an Assignee, a successor of a Person by merger or otherwise by operation of law, or a transferee of all or substantiaBy all of the business or assets of a Person.

(gg) "Supermajority" shall mean Members owning an aggregate of 76% or more of 1he Percentage Interests of the Company.

(hh) "Transfern means, with respect to a Percentage Interest, or any element of a Percentage Interest, any sale, assignment, gift, Involuntary Transfer, or other disposition of a Membership Interest or any element of such a Men1bership Interest, djrectly or indirectly, other than an Encumbrance that is expressly pennitted under this Agreement.

(ii) "Triggering Event" is defined in Section 8.05.

Gj) "Vote" means a written consent or approval, a ballot cast at a Meeting, ot a voice vote.

(kk) "Voting Tnterest'' means, with respect to a Member, the right to Vote or pal1icipate in management and any right to information conceming the business and affairs of the Company provided under the Act, except as limited by the provisions of this Agteement. A Member's Voting Interest shall be dit·ectly propottional to that Member's Percentage Interest.

ARTICLE II. FORMATION Section 2.01 Formation. The Members hereby associate themselves into a limited liability company pursuant to the ptov:isions of the Act upon the terms and conditions hereinafter set forth.

Section 2.02 Name. "the narne of the Company shall be CRAWFORD HUNTLEIGH MEDICAL SUPPLIES, LLC.

Section 2.03 Company Registered Agent; Office.

(a) The Company shall have its registered office at 5601 Granite Parkway, Suite 400, Plano Texas 75024.

509 (b) The name of the registered agent of the Company is Jeffrey Yates.

Section 2.04 PriucjpaJ Office. The principal executive office of the Company shall be 5626 Randolph Boulevard~ Ste. 2, San Antonio, Texas 78233 or at such location as may be designated by the Majority of the Members. The Managing Member shall give Notice to each Member of any change in office, agent and principal place of business.

Section 2.05 Purpose. The purpose for which the Company is organized is for the ownership and operation of the Business. The Company shall engage in no other business or venture~ except upon the unanimous written agreement of all the Members.

Section 2.06 Existence. The term of existence of th.e Company shall commence on the effective date of filing of the Certificate of Formation with the responsible state of Texas office which accepts such filings, and shall continue until the winding up and liquidation of the Company in accordance to this Agreement m as provided by law. Section 2.07 Company's Property. All tangible and intangible, real and personal prope1ty owned by the Company shall be owned by the Company as an entity and, insofar as permitted by applicable law, no Member shall have any ownership interest in such property in its individual name or right) and each Member's interest in the Company shall be pefsonal property for all purposes.

ARTICLE Ill. CAPITAL CONTRIBUTIONS Section 3.01 Contribution. Each Member shall contribute to the Company the Member's Capital Contribution in the amounts respectively set forth in Exhibit A.

Section 3.02 Failure to Make Capital Contdbution. If a Member fails to make the required initial Capital Contdbution as set f01th in Section 3.01 above within 10 days after demand frolil the Company or any member that has made its required Capital Contribution, then the unfunded Member's entiTe Membership Interest shall tenninate and that Member shall inde11ll1if:Y and hold the Company and the other Members harmless from any loss, cost, or expense. including reasonable attorney fees incurred> caused by the failme to make such Capital Con11·ibution. The remaining Members shall have the right to own the defaulting Members interest in percentage to their interest in the Company.

Section 3.03 Capital Call. Subject to Section 3.04, upon an affirmative vote of by a St1pennajority of the Members, the Members shall contribute to the capital ofthe Company fi'om time to time and in prop01tion to their respective percentage Membership Interests in the Company~ such sums of money as shall have been detetmined by the Members to be necessary in order to pay the debts and obligations of the Company as the same become due and payable, to make necessary capital improvement, and to prudently operate the Company's business. Each Member shall be severalty obligated to the Company for such Member's proporHonate share of the contributions to be made by the Members, and a contribution by a Member shall be made upon request being made therefore by the Company as described in this Section 3.03. A Member shall be in default of such Member's obHgation to make additional Capital Contribution under this Section 3.03 (a "Non-Contributing Member") if (i) the Non-Contributing Men1ber fails or

510 refuses to fund such Member's share of tb.e additional cash required by the Company within ten days after delivery of the written capital call notice l'equired under this Section 3.03,and (ii) the Non-Contributing Member fruls or refuses to cure such default within five days after written notice of the failure is delivered (or deemed to have been delivered) by any Member who has satisfied such Member's obligation to make additional Capital Contdbutions with respect to the capital called and being funded (a "Contributing Member"). lf a Non-Contributing Member is in default on such Member's obligation to make additional Capital Contributions, the exclusjve remedy shall be that the Contributing Members may, but shall not be obligated to, exercise, by delivery of written notice to that effect to the Non-Contributing Member, the followjng actions or remedies from the failure of the Non-Contributing Member to make such Member's requited additional Capital Contributions:

(a) any Contributing Member may advance to the Company the Non-Contributing Member's proportionate share (in proportion to the relative Membership Intetests of all Contributing Members, or sncb other proportion as may be agreed by such Members) of the defaulted amount on the following terms:

(i) the advance shall constitute a loan by the Contributing Member to the Non-Contributing Members, which loan is used by the Non-Contributit1g Member to make such Member's additional Capital Contribution to the Company.

(ii) the amount loaned shall bear interest at a rate of interest equal to the prime rate of interest as published in The Wall Street Journal from time to time (the "Prime Rate") plus two percent (2%) per annum (or the maximum rate pel'mitted by applicable law, if less) from the day the advance is made utltil the Joan, together with all interest accmed thereon, is repaid to the Contributing Member;

(iii) aU distributions from the Company that otherwise would be made to the Non-Contributing Member shall instead be paid to the Contributing Member until the loan ~nd all interest accrued shall have been repaid in full; and

(iv) upon making the advance to the Company, the Contributjng Member shall have a co1Hinuing security interest, which is hereby granted by each Member to the extent such Member becomes a Non-Contributing Membet·, in the Non-Contributing Member's Membersrup Interest, now owned and hereafter acquired, and the Contributing Member shall be entitled to all the rights and remedies of a secln·ed pa11y tmderthe Te:xas Uniform Commercial Code; or

(b) Any Contributing Member may tnake an additional Capital Contribution to the Company in an am01mt up to such Member's prop01tionate share (in proportion to the relative Membership Interests of all Lending Members and Coniributing Members, or such other proportion as may be agreed by such Members) of the defaulted amount, ill which event (i) the Membership

511 Interest of the Contributing Member shall be increased to that percentage which equals such Member's total Capital Contribution divided by the total Capital Contributions made by all Members to date, and (ii) the Membership interest of the Non-Contributing Member shall be correspondingly decreased.

(c) In connection with any advances made by Contributing Members under Section 3.03, this Agreement shall constitnte a security agreement fol' purposes of the Unifonn Conuncrcial Code. Each Member, to the extent he becomes a Non- Contributing Membet, hereby agrees to execute !U1d deliver to each Contributing Member such Uniform Commercial code financing statements as the Contributing MembcJ: may l'equest from time to time coverin~: the security interest created hereunder. The Contributing Membet shall be entiHed to record such financing statements (or photocoJpies thereof) for the purposes of perfecting the security interests created hereunder and pt'oviding public notice thereof.

Section 3.04 Capital Call Option. Notwithstanding the provisions of Section 3.03, any Member shall have the right to dedare a Capital Call to the Company upon the occurrence of any of the following:

(a) default of a Joan, contract or agreement, where the liquidahld amount to satisfY the debt is in excess of $15,000 provided there ate~ insufficient funds in the working capital fund;

(b) the filing or imminent threat of a filing of mortgage or lien foreclostu·e, tax lien, litigation, judgment, summary disposse:ssion or eviction proceeding affecting the business premises of the Company, replevin proceeding, involuntary Chapter 7 Bankruptcy petitio.n, against the Company or any of the Company's assets; or

(c) default of any loan, contract or agreement that has been personally guaranteed by any Member or its principals.

Section 3.05 Capital Accounts. An individual Capital Account shall be maintained for each Member consisting of that Membl~r·s Capital Contl'ibution, (1) in.creased by that Member's share of Profits, (2) decreased by that Member's share of Losses, and (3) adjusted as reqt1ired in accordance with applicable provis.ions ofthe Code and Regulations.

Section 3.06 No Withdrawals of Capital Contribution. A Member shall not be entitled to withdraw any part of th.e Member's Capital Contribution or to receive any distributions, whether of money or property fi·om the Company, except as provided in this Agreement.

Section 3.07 No Interest. No interest shall be paid on funds or property contribllted to the capital of the Company or on the balance of a Member's Capital Account.

Section3.08 No Personal LiabiJity. A Member shall not be bound by, nor be personally Hable

512 for, the expenses, liabilities, or obligations of the Company, except as otherwise pJ'ovided in the Act, in this Agreement, or in a separate written agreement executed by such Member.

Section 3.09 No Priority. Except as set forth otherwise, no Member shaH have priority over any other Member with respect to the return of a Capital Contribution, or distributions or allocations of income, gain, losses, deductions, credits, or items thereof

ARTICLE IV. ALLOCATIONS AND DISTRIBUTIONS Section 4.01 Rese1·ves. Subject to maintaining the Company in a sound financial and cash position (which. without limiting the generality of the foregoing, shall include the provision for losses affecting the cash position of the Company and the payment or provision for payment, when due, of obligations of the Company) and establishing such Reserves as aro dete1mined by a Majority of the Members, in their reasonable discretion, the Company shall distribute funds to the Members as provided herein.

Section 4.02 Allocations. The Profits and Losses of the Company and all items of Company income, gain, loss, deduction, or credit shall be allocated, for Company book purposes and tot· tax purposes, to each Member in accordance with their MembershijJ Interests. If any Member unexpectedly receives any adjustment, allocation, or distribution described in Reg. sections l.704-l (b)(2)(ii)(d)(4), 1.704-l (b)(2)(ii)(d)(S)) or 1.704-1 (b)(2)(ii)(d)(6), as same may be amended from time to time, or tlnder any successor statutes thereof, items of Company gross income and gain shall be specially allocated to that Member in au amow1t and manner sufficient to eliminate any deficit balance in the Member's Capital Account cteated by such adjustment, allocation, or distribution as quickly as possible. Any special allocation under this Section 4.02 shall be taken into account in computing subsequent· allocations of Profits and Losses so that the net amount of allocations of income and loss and all other items shall, to the extent possible, be equal to the net amount that would have been allocated if the unexpected adjustment, allocation, or distribution had not occurred. The provisions of this Section 4.02 and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Reg sections 1.704-1(b) and 1.704-2, as same may be amended from time to time, or under any successor regulations thereof, and shall be interpreted and applied in a manner consistent with such Regulations.

Section 4.03 Um·ealizcd Appteciation!Depa•eciation. Any umealized appreciation or um·ealized depreciation in the values of Company property distributed in kind to all the Members shall be deemed to be Profits or Losses realized by the Company immediately prior to the distribution of the property, and such Profits or Losses shall be allocated to the Members' Capital Accotmts in the same proportions as Profits are allocated under Section 4.01. Any property so distributed shall be treated as a distribution to the Members to the extent of the Fair Market Value of tbe property Jess the amount of any liability secured by and related to the prope1ty. Nothing contained in this Agreement is intended to treat or cause such distributions to be treated as sales for value. For the purposes of this Section 4.03, "unrealized appreciation" or "unrealized depreciation" shall mean the difference between the Fair Market Value of such property and the Company's basis for such property.

Section 4.04 Transfer of Interest. 1n the case of a Trattsfer of an Economic Interest during

513 any fiscal year1 the Assigning Member and Assignee shall each be allocated a share of Pt·ofits or Losses based on the number of days each held r.he Economic Interest dming that fiscal year.

Section 4.05 Operating Profits. Except as set forth otherwise~ cash resulting from the normal business operations of the Company and from a Capital Event shall be distributed among the Members at least each fiscal quarter, after accounting for reasonable reserves under Section 4.01 , in prop01tion to each Member's Percentage Interest. Without limiting the foregoing, provided there are sufficient proceeds, each Member shall receive distributions necessary to satisfy their respective tax obligations for any income realized from the Company.

Section 4.06 Non-cash Proceeds. If the proceeds from a sale or other disposition of an item of the Company consists of propetty other than cash, the value of such property shall be as determined by the Members. Such non-cash proceeds shall then be allocated among all the Members in proportion to their Percentage Interests. If such non-cash proceeds are subsequently reduced to cash, such cash shall be distributed to each Member in accordance with Section 4.0 1.

Section 4.07 Liquidation Distributions. Notwithstanding any other provisions of this Agreement to the contraty, when there is a distribution in liquidation of the Company, or when any Member's interest is liquidated, all items of income and loss flrst shall be allocated to the Members' Capital Accounts under this ARTiCLE IV, and other credits and deductions to tl1c Members' Capital Accounts, shall be made before the final distribution is made. The fmal disttibution to the Membel'S shall be made to the Members to the extent of and in proportion to their positive Capital AccOtmt balances.

Section 4.08 Guaranteed Payments to Obdulia, LLC. Notwithstanding anything to the contrary, the Company shall make the following guaranteed payments to Obdulia~ LLC:

(a) No later than January 31, 2013, the Company shall make a guaranteed payment to Obdulia, LLC in the sum of$130,000 if the Gross Receipts for the calendar year 2012, equals or exceed $2,000,000.

(b) No later than January 31, 2014, the Company shall make a guaranteed payment to Obdulia, LLC in the sum of $130,000 if the Gross Receipts for the calendar year 2013 equals or exceeds $3,000,000.

(c) "Gross Receipts'~ as used in this Section 4.08 means actual funds received by the Company fi·om jts operations and ol'dinal'y course of business dming the pertinent time period. calculated on a cash basis. Gross Receipts shall not include receipt of funds from non- operating activities such as loans and investment income.

ARTICLE V. MANAGEMENT AND OPERATIONS Section 5.01 Managing Member. For so long as it constittttes a Majority of the Members, the following shall serve as the Managing Member:

514 ANNAPURNA MADDALI

Section 5.02 Company's Management. Except as otherwise set forth in this Agreement, including, without limitation Section 7.03 below, all decisions concerning the operation and management of the Company's business shall be made by the Managing Member. A declaration by the Managing Member, staling that it has approved any specific action concerning the management of the Company's business as set fo1th in this Section 5.02, shall be conclusive to any tbi1·d party that a Majority ofMembers have approved such stated specific action and that the Managing Member is authorized to perform such action on behalf of the Company. The Managing Member may take any action set fm1h above by a written consent executed with or without a meeting. The Managing Member shall be authorized to obtain financing for the Business and sign and deliver any credit documents on behalf of the Company; provided however no Member shall cause the Company to inctu· a debt in excess of $20,000 without the unanimous consent of the Members.

Section 5.03 Meetings. The Members are not required to hold meetings, and decisions may be reached through one or more inforn1al consultations followed by agreement among a 1vfajority of Members, provided that aU such Members are consulted (although all Members need not be present during a particular consultation), or by a written consent signed by a Majority of Members. In the event that Members wish to hold a formal meeting (a "Meeting'') for any reason, the following procedures shall apply:

(a) Any two Members may call a Meeting of the Members by giving Notice ofthe time and place ofthe Meeting at least 48 holU's prior to the time of the holding of the Meeting. The Notice shall reasonably specify the putpose, location and time of the Meeting.

(b) A Majority of Members shall constitute a quorum for the transaction of business at any Meeting of the Members.

(c) The transactions of the Members at any Meeting, however caUed or noticed, or wherever held, shall be as valid as though transacted at a Meeting duly held after call and notice if a quorum is present and if, either befote or after the Meeting, each Member not present signs a written waiver of Notice, a consent to the holding of the Meeting, or an approval ofthe minutes of the Meeting.

(d) Any action required or pe1mitted to be taken by the Members under tbis Agteement may be taken without a Meeting if a Majority of the Members individually or collectively consent in writing to such action.

(e) Members may participate in the Meeting through Hte use of a conference telephone or similar commun\cations equipment, provided that all Members participating in the Meeting can hear one another.

515 (t) 1l1e Members shall keep or cause to be kept with tbe books and records of the Company full and accurate minutes of all Meetings, Notices, and waivers of :Notices of Meetings, and all written consents in lieu of Meetings.

Section 5.04 Assets. AU assets of the Company, whether real or personal, may be acquired and he!d for the Company's purposes set forth in this Agreement in the Company name.

Section 5.05 Payment of Taxes, Debts and Obligations. At all times prior to the termination or dissolution of the Company, the cash proceeds of the Company, together with any net reduction in the reserves of the Company, shall be allied first to 1he payme1tt of all taxes, debts and other obligations and liabilities (including the interest on and the principal of any loan owing to any Member thereof) of the Company which are then due and owing, and the establishment of Ieasonable reserves for contingent and future liabilities and distributions of the Company, as detennined by the Managing Member.

Section 5.06 Delegation. The Managing Member may from time to time cat~se the Company to employ Persons, including any Affiliate of the Managing Member, to operate the business of the Company, including performing any function that the Managing Membe(" would otherwise perform, and to pay such Person any fee that the Managing Member deterJnines to be reasonable; provided, however, that no fee shall be paid to an Aft11iate of a Member, except as othenvise provided in this Agreement.

Section 5.07 No Compensation. No Member shall be entitled to any fees, commissions or other compensation from the Company for any services rendered to or performed for the Company, except as specifically provided .in this Agreement, otller ancillary agreements (including Employment Agreements with Members) or as approved by a Supenn!!iority of Members in accordance with this Agreement.

Section 5.08 Member's Indemnification. Each Member (the 11Indemnifying Patty';) shall indemnify the Company and each other Member (the "Indemnified Party") for, and shall hold the Indemnified ParCy, and for, from and against, any and all liability to any Person incurred by the Indemnified Party by reason of any fratldulent, criminal, or grossly negligent act or omission of or breach of this Agreement by such Indemnifying Party or any of the shareholders, officers, agents, emp!oyees or Affiliates of such Jndelhnifyiug Pruty, and for, from and against all cost, expense and loss incutred by the Indenmified Party in connection therewith.

Section 5.09 Company"'s Indemnification. The Company shall indemnify the Members for, and shall hold the Members harmless from and against, any liability of the Members to any Person arising or incurred in, COlltlection with the good faith discharge of the l\tfembers• obligations w1der this Agreement, except for Jiability imposed on the Members as a result of any fraudulent, criminal, 01· grossly negligent act or omission of or breach of this Agreement by the Members or any of the shareholders, officers, agents or employees of the Members.

Section 5.10 Bank Accounts. All funds of the Company shall be deposited in one or more accouuts with one or more recognized financial institutions in tbe name of the Company, at such locations as shall be determined by the Managing Member. Withdrawal from such accounts

516 shall require the signature of such person or persons as a Majority of Members may designate.

(a) Any one Membet where there are more d1an one, designated by a Majority of the Members, may fi·om time to time open bank accounts in the name of the Company.

(b) Only persons approved by the Majority of the Members shall have the authority to deposit and withdraw funds from any Company bank account, or sign checks or other instruments on behalf of the Company.

(c) All funds of the Company shall be maintained in a bank accolmt or accounts and no nmds of the Company shall be commingled with funds or accounts of any Member, or person related to any Member.

(d) No Member shall have the right to borrow money on behalf of any other party or the Company, or to use the credit of any other party or the Company, for any putpose, except as specificalLy set f01th in this Agree,ment and for the advancement of the Business.

ARTICLE VI. ACCOUNTING RECORDS, AND TAX MATTERS Section 6.01 Fiscal Year. The fiscal year of the Company shall be the calendar year.

Section 6.02 Accounting Metho(l. The books and records of the Company shall be maintained on the method of accounting chosen by the Members and otherwise in accordance with generally accepted accounting principles consistently applied and shall show all items of income and expense.

Section 6.03 Company's Books. Complete books of account of the Company's business, in which each Company transac6on shall be fully and accurately entered, shall be kept at the Company's principal executive office and shall be open to inspection and copying by each Member or the Member's authorized representatives on reasonable Notice dm·ing nonnal business hours. The costs of such inspection and copying shall be borne by the Member requesting same.

Sectioo6.04 Financial Statements. Financjal books and records of tile Company shall be kept on the cash method of accounting, which shall be the method of accounting followed by the Company for federal income tax purposes. A balance sheet, income statement, and tax returns of the Company shall be prepared promptly fo!Jowing the close of each fiscat year in a manner appropriate to and adequate for the Company's business and for canying out the provisions of this Agreement and copies t11ereof shaU be distributed to the Members.

Section 6.05 Company's Records. At all times dtu·ing the term of existence of the Company, and beyond that term if a Majority of Members deem it necessary, the Company sbaU keep or cause to be kept the books ofaccow1t referred to in Section 6.03, and the following:

517 (a) A cuiTent list of the full name and 1ast known business or residence address of each Member, together with the Capital Contribution and the share in Profits and Losses of each Member;

(b) A copy of the Certificate ofFormation, as amended;

(c) Copies of the Company's federal, state, and local income tax or information returns and reports, if any, for the six most recent taxable yearsi

(d) Executed counte~parts of this Agreement, as amended;

(e) Any powers of attorney under which the Certificate of Formation or any amendments thereto were executed;

(t) Financial statements of the Company for the six most Jecent fiscal yearsi and

(g) The Books and Records of the Company as they relate to the Company's internal affairs for the cutTent and past fom fiscal yeats.

(h) If a Majority of Members deem that any of the foregoing items shall be kept beyond the te1·m of existence of the Company, the repository of said items shaU be as designated by a Majority ofMembers.

Section 6.06 Partnership Tax Election. Each of the Members hereby recognizes that the Company will be recognized as a partnership for Federal and New Jersey tax purposes and will be subject to all provisions of Subchaptet' K of Chapter 1 of Subtitle A of tbe Code.

Section 6.07 Tax Returns. Within 60 days after the end of each taxable year, the Company shall send to each Member all infonnation necessary fot the Members to complete their federal and state income tax or information returns, and a copy of the Company's federal, state, and local income tax or information rehlt'ns for such year. Subject to Section 4.01, the Company shall make minimum distributions to cover each Members tax liability arising out of income generated by the Company.

Section 6.08 Tax Matters. The Managing Member shall be the "tax matters pm1ner" for purposes of the Code and shall notify the Members of any audit or other matters of which the Managing Member is notified or becomes aware.

ARTICLE VII. MEMBERS' RIGHTS AND VOTING Section 7.01 No Authority. Except as provided under Section 5.02above, or as provided otherwise with respect to the Member's duties or as specifically provided in writing by the all of

518 the Members, the Members shall not act in the name of or as the representative of the Company and shall not deal with the Company's assets in any way. and shall not incur any obligation for which the Company or the other Member will or may be Hable, and the Members shall not otherwise bind the Compa11y or the other Member, and any violation of this sentence shall be deemed to constitute willful misconduct.

Section 7.02 Voting Proportion. Each Member shall Vote in proportion to the Member's Percentage Interest as of the governing record date.

Section 7.03 Prohibited Acts. Notwithstanding anything to the contrary in this Agreement, the following actions shall require the 1.manimous Vote of the Members:

(a) issumg additional ownership interests in the Company to new or existing Members or otherwise taking any actions which would dilute the Percentage Interests ofthe existing Members;

(b) the admissjon of the Assignee as a Substituted Member;

(c) any amendment of the Cettificate of Formation o1· this Agreement; or

(d) entering into any contract with the Managing Member or Annapurna Maddali, or any affiliates, employees or family members of either (collectively, a "Related Party"), or otherwise paying or agreeing to pay any remuneration to any Related Patty other than distributions to the Managing Member in its capacity as Member in accordance with the terms of this Agreement. .

Section 7.04 Record Date. The record date for determining the Members entitled to Notice of any Meeting, to vote, to receive any distribution, or to exercise any right in 1-espect of any other lawful action, shall be the date set by a M~ority of Members, provided that such rec01·d date s11atl not be more than 60, nor less than 10 days prior to the date of the Meeting, nor more than 60 days prior to any other action. In the absence of any action setting a record date the record date shall be determined in accordance with the applicable laws ofTexas.

Section 7.05 Proxy. At all Meetings of Members, a Member may Vote in person or by Proxy, Such pl'Oxy shall be filed with any Member before or at the time of the Meeting, and may be filed by facsimile transmission to the principal executive oftice of the Company or such other address as may be given by a Majority of Members to the Members for such pm-poses.

Section 7.06 Jntellectual Property. All copyrights, patent'S, web sites, trade names, trade secrets, or other intellectual pmperty rights associated with any ideas, concepts, techniques. inventions, pl'Ocesses, or works of authorship developed or created by the Member ot the Members during the course of performing Company's wotk shall belong exclusively to Company and its Members and/or the third pa1ty end client and shall be considered a work made for hire. Each Member herewith assigns, without any requirement of ft1rU1er consideration, any right, title, or interest that each such Membe1' may have in such work pmdttct including any 15

519 copyrights, patents, trade secrets or other itltellectual prope11y rights pet1aining thereto. Each Member wiH provide full information regarding the rights being assigned and will take such further actions, including but not limited to, execution and delivery of instruments of conveyance, as may be appropriate to give full and proper effect to such assignment.

ARTICLE Vll. TRANSFERS OF MEMBERSHIP INTERESTS Section 8.01 Transfer Restrictions. Each Member acknowledges and agrees that the restrictions on the transfer of membership interest contained in this Agreement is a material factor in each Member investing in the Company and is necessary to maintain hannony, continuity, and success.

Section 8.02 Withdrawal. A Member- may withdraw from the Company at any tune by giving Notice of such Membet·'s intent to withdraw to all other Members, at least 180 calendar days before the effective date of withdmwal. Withdrawal shall not release a Member from any obligations and liabilities under thls Agreement which were accrued or incuned before the effective date of withdl·awal. A withdrawing Member shall divest the Member's entire Membership Interest before the effective date of withdrawal in accordance with the transfer restrictions and option dgllts set fotih below.

Section 8.03 Right of First Refusal. Except as otherwise provided herein, no Member shall sell, transfer, pledge, encumber or otherwise dispose of her or his Membership Inte1·est to any person, fum, Company or other entity, without the consent of the Company as detennined by a Supermajority of the Members, unless the Member desiring to make the transfer or encumbrance, hereinafter referred to as the "Selling Member," shall have first made the offer to sell hereinafter described ("Offer"), and such Offer shall not have been accepted, and such transfer or encumbrance is ultimately made on the same tem1s set f011h in the Offer.

(a) The Offer which shall be given to the Company and the other Member shall consist of an offer to sell all of the Membership Interest of the Company O\\'ned by the Selling Member, to which shall be attached a statement of intention to transfer or encumber, as the case may be, the name and address of the prospective purchaser or lien or, the percentage of Membership Interests involved in any such proposed transfer or enculnbrance, and the price and tem1s of any such b·ansfer or encumbrance («Bonafide Offer"), in accordance with the provisions ofSection 8.03(b) hereof.

(b) If any such Selling Member has received a bonafide written offer to purchase all ofher or his Membetsbip Interest which she or he wishes to accept or a bona fide written offer to receive a loan or an advance of money which loan or advance involves an encumbrance upon said Membership Interest to secUI'e the loan or advance as refened to in Section 8.03{a) above, the Selling Member shall submit to the Company within fourteen (14) days after receipt of such Bonafide Offer, a written notice including a copy of such Bonafide Offer~ as re

520 the name and address of the principal or principals if the offer is made through an agent (hereinafter collectively referred to as the «Bonafide Offerors"), and sufficient fact concerning the Bonafide Offerors to enable the Company and other Members of the Company to anive at an informed judgment as to the bonafides of such Offer. The Selling Member shall then offer, or be deemed to have offered, .in writing to sell, first to the Company al1 of the Membership Interest held by the Selling Member at the purchase price set forth in the Bonafide Offer ("Lifetime Purchase Price"), and upon the terms and conditions set forth therein; provided, however, the Selling Member has complied with all of the procedural conditions thereof. Within thirty (30) days after receipt by the Company of the Bonafide Offer, the Company may, at its option, elect to purchase or encumber all of the Membership Interest of the Selling Member which is the subject of the Bonafide Offer for the Lifetime Pmchase Price. If such offer is not accepted by the Company, any other Member of the Company may, within forty- five (45) days after the receipt by the Company of the Bonafide Offer, or Members pursuant to their pro rata interest in the Company (if mote than one Member), elect to purchase or encumber, as the case may be, all of the Membership Interest of the Selling Member which is the subject of the Bonafide Offer for the Lifetime Purchase Price on the terms set forth in the Bonafide Offer. The Company shall exercise its election to purchase by giving written notice thereof to the Selling Member and the other Members. The other Members shall expose their election to purchase by giving written notice thereof to the Selling Member and to the Company. In either event, the notice shaH specify a date for the closing of the purchase, which shall not be more than thit·ty (30) days after the date of the giving of such notice of acceptance,

(c) If the offer to sell as provided fot• in Section 8.03(b) hereof is not accepted by the Company or any ofthe other Members as set forth therein, the Selling Member may make a bonafide transfer or encumbrance to the ptospective purchaser or lien or named in the statement attached to the Bona Fide Offer with such sale or encumbrance to be made only in strict accordance with the terms stated therein. The Company and the other Members shall be grven full access to all closing documents relating to such sale m· encttmbrance to the Bonafide Offemrs, so that adherence to the terms and conditions of the Bonafide Offer can be demonstrated. However, if the Selling Member shall fail to make such transfer or encumbrance within thilty (30) days following the expiration of the time hereinabove provided for the election to purchase by the othe1· Member, in accordance with Section 8.03(b), Ol' if there is any modification in price or any of the terms and conditions of the Bonafide Offer, such Membership Interest shall again become subject to all the restrictions of this Agreement, and the Selling Member shall not have the right to complete the

521 proposed sale of encumbrance without again offering the Membership Intere~ in writing, anew to the Company and the other Member put'suant to the procedures set forth in this Section 8.03. Notwithstanding anything in this Agreement to the contrary, all Membership Interest purchased by the Bonafide Offerors from a Selling Member shall be acquired subject to the terms and conditions of this Agreement and the Bonafide Offerors shall not sell, assign, pledge, encumber, hypothecate, mortgage, or in any other manner transfer 1lhe whole or any part of the Membership Interest purchased, or any other Membership Interest thereafter held or owned, without the prior 'WJritten consent of the other Member of the Company as determii1Led by a Supermajority of the Members, and otherwise except as specifically provided in this Agreement. It shall be the affhmative obligation of the Selling Member to notify the Bona fide Offerors that the Membership Intel'est proposed to be sold by the Selling Member and pumhased by the Bonafide Offerors will remain subject to the terms and provisions of this Agreement following the proposed sale and purchase.

(d) In the event of any attempted sale, assignment, transfer, hypothecation, pledge, encumbrance or disposition of Membership Interest by any Member not in accordance with the terms of this Agreement, shall be deemed null and void and of no effect.

(e) At the time of closing, as set fotth in this Section 8.03, tht~ Selling Member shall deliver to the purchaser, certificates reptesenting all of the Membership Interest owned by the Selling Member, free and clear of all liens, c]aims and encumbrances, duly executed Assignment of Membership Interest with any necessary Membership Interest transf-er chal'ges or stamps affixed, in order to effectuate the sale and purchase.

Section 8.04 Transfer Condititons. E7lcept as expressly provided in this Agreement, a Member shall not transfer any part of the Member's Membership Interest in the Company, whether now owned or hereafter acquired, unless (1) the Company and/or other Members have exercised, or have declined to exercise, thei1' right to purchase the withdtawing Membet's Membership InteJest pursuant to Section 8.03(b) above and (2) the Membership Interest to be transferred, when added to the total of all other Membership Interests transferred in the preceding 12 months, wi11 not cause the termination of the Company under the Act or revocation of the Company's tax election as a pattnersbip St1bchapter "K" ofthe Code. No Member may encumber or permit or suffer any encumbrance of all or any part of the Member's Membership Interest in the Company tmless such encumbrance has been approved in writing by all the other Members. An:y transfer or encumbrance of a Membership Interest in violation of this Section shall be void. Notwithstanding any other provision of this Agreement to the contrary, provided the transfer does not result in a change in the Company's partnership stat11s, a Member may transfer all or any p01tion of his or het Membea·ship Interest to a revocable trust created for the benefit of the Member, or any ~combination between or among the Member, the Membet·'s

522 spouse, and the Member's issue; provided that tlte Member l'etains a beneficial interest in the trust and all of the Voting Jnterest included in such Membership lnterest. A transfer of a Member's beneficial interest from such trust to another entity, or failure to retain such Voting Interest shall be deemed a Transfer of a Membership Interest, unless such later transfer is to the grantor of such trust, or to another tntst which would qualify as a revocable trust in a first-time transfer.

Section 8.05 Triggering Events. On the happening of any of the following events ("Triggering Events") with respect to a Member, and assuming the remaining Members vote to continue the Company per ARTICLE IX below, the Company, first, and the other Members in proportion to their respective percentage of Membership Interests, second, shall haYe the option to purchase all or any portion of the Membership Interest in the Company of such Member ("Selling Membet11 ) at the price and on the terms provided in Section 8.08 of this Agreement:

(a) the bankruptcy of a Member;

(b) the winding up and dissolution of a corporate Member, or merger or other corporate reorganization of a corporate Member as a result of which the corporate Member does not survive as an entity;

(c) the withdrawal of a Member; and

(d) except for the events stated in Section 8.03, the occm1·ence of any other event that is, or that would cause, a transfer of such Member's interest to an Assignee.

Each Member agrees to promptly give Notice of a Triggering Event to all other Members.

Section 8.06 Company's E lectiion to Purchase. On the receipt of Notice by the other Members as contemplated by Sec1tion 8.03 through Section 8.05, and on receipt of actual notice of any Triggering Event, the Company, first, and the othe1· Members in proportion to their respective percentage of Membe'J:ship Interests, second, sbaU have the option, but not the obligation, for a period ending 30 calendar days following the determination of the p\trchase price as provided in Section 8.08, to purchase the Membership Interest in the Company to which the option relates, at the price and on the terms provided in Se.ction 8.08, and the other Members, pro rata in accordance wit:l1 their }:1rior Membership Interests in the Company, shall then have the option, for a period of 30 days th,ereafter, to purchase the Membership Interest in the Company not purchased by the Company, on the same terms and conditions as apply to the Company. If aU other Members do not elect to purchase the entire remaining Membership Interest in the Company, then the Members eleoting to purchase shall have the right, pro rata in accordance with their prior Membership Interest in the Company, to purchase the additional Membership Interest in the Company available: for purchase. Any Membership Interest in the Company not purchased may be transferred to au1 Assignee, but such Assignee shall not become a Substituted Member without the approval of atll Members according to Section 7.02 above. The transferee of the Membership Interest in the Company that is not ptU·chased shall hold such Membership Interest in the Company subject to all ofthe provisions of this Agreement.

523 Section 8.07 Voting Restriction. No Member shall participate in any Vote or decision in any matter pertaining to the disposition of that Member's Membership Interest in the Company under thls Agreement.

Section 8.08 Purchase Price. The purchase price of the Membership Interest that is the subject of an option per Section 8.06 above shall be the Fair Market Value of such Membership lnterest as determined under this Section 8.08. Each of the selling and purchasing parties shall use hjs, her, or its best effotts to mutually agree on the Fair Market Value. If the parties are unable to so agree within 30 days of the date on which the option is first exercisable (the Option Date), the selling party shall appoint, within 20 days of the Option Date, one appraiser, and the purchasing party shall appoint within 20 days of the Option Date, one appraiser. The two appraisers shall within a period of five additional days, agree on and appoint an additional appraiser. The three appraisers shall, within 30 days after the appointment ofthe third appraiser~ determine the Fair Market Value of the Membership Interest in writing and submit their report to aU the parties. The Fair Market Value shall be determined by dhcegarding the appraisels valuation that diverges the greatest fi·om each of the other two appraisers' valuations, and the arithmetic mean of the remaining two appraisers' valuations shall be the Fair Market Value. The selling and purchasing party shall pay for the services of the appraiser selected by it, plus one- half of the fee charged by the third appraiser. The option purchase price as so determined shall be payable in cash no later than Uwee (3) months following the determination of the appraisers' determination ofthe purchase price.

Section 8.09 Substituted Member. Except as expressly permitted under Section 8.03, a prospective transferee (other than an existing Member) of a Membership Interest may be admitted as a Member with respect to such Membership Interest (a "Substituted Member'') only (1) on the S·upctmajority Vote of the other Members in favor of the prospective transferee's admission as a Member, and (2) on such prospective transferee's executing a counterpart of this Agreement as a party hereto. Any prospective transferee of a Membership Interest shall be deemed an Assignee, and, therefore, the owner of only an Econoinic Interest nntil such prospective transferee has been admitted as a Substituted Member. Any person admitted to the Company as a Substituted Member shall be subject to all provisions of this Agreement.

Section 8.10 No Registt'ation. The initial sale of Membership Interests in the Company to the initial Members has not been qualified or registered under the sectu·ities laws of any state, or registered under the Securities Act of 1933, as amended, in reliance upon exemptions from the registration provisions of those Jaws. No attempt has been made to qualify the offering and sale of Membership Interests to Members under the secttrities or corporate laws of Texas. Notwithstanding any other provision of this Agreement, Membership JnteJests may not be Transfened or Encumbered unless registered or qualified under applicable state and federal securities law or unless, in the opinion of legal cmmsel satisfactory to the Company, such qualification or registration is not required. The Member who desires to transfer a Membership Interest shall be responsible for all legal fees incurted in connection with said opinion.

Section 8.11 Orag Along. In the event that a majority of the Members ("Majority Members") of the outstanding interest accept an offer to purchase their Interest from a bona fide third party, the Majority Members may send a written notice (the "Drag-Along Notice") to the other Interest Holders (the "Drag-Along Sellers") specifying the name of the purchaser, the consideration

524 payable per share and a summary of the material terms of such proposed purchase. Upon receipt of a Drag-Along Notice, Each Drag-Along Seller shall be obligated to: (i) seU all of its Interest, free of any encumbrat1ces, in the transaction contemplated by the Drag-Along Notice on the same terms and conditions as the Majority Members (including payment of its pro-rata shal'e of all costs associated with such transaction), and (ii) othetwise take all necessary action to cause the consummation of such transaction, including voting its interest in favor of such transaction and not exercising any appraisal rights in connection therewith. Each Drag-Along Seller (i) further agrees to take aU actions (including executing documents) in connection with consummation of the proposed transaction as may be reasonably requested of it by the Majority Members, and (ii) hereby appoints the Majority Holders, acting jointly, as its attorney-in-fact to do the same on its behalf

Section 8.12 Transfer by Obdulia, LLC upon Tetmination of tbe EmpJoytnent Agreement.

(a) Upon the tenni11ation of the Employment Agreement due to an Involuntary Termination (as defined in Section 7 of the Employment Agreement), death of the employee, nonrenewal of the Employment Agreement after expiration of the initial tem1 of employment, Other Than for Cause (as defined in Section 8 of the EmploymeJlt Agreement) or termination by Employee for Good Reason (as defined in Section 8 of the Employment Agreement), then no later than fourteen (14) days ofthe Termination Date (as defined in Section l l of the Employment Agreement), the Company shall buy and Obdulia, LLC shall sell all of its membership interests in the Company at the bjgher of Fair Market Va1ue or the balance ofObdulia, LLC's capital account as of the Termination Date.

(b) Upon the termination of Employment Agreement due to Termjnation for Cause (as d.efined in Section 9 of the Employment AgTeeroent) or due to Employee electing to terminate his employment other than for Good Reason (as defined in Section 10 of the Employment Agreement), then no later than fourteen (14) days of the Termination Date~ the Company shall buy and Obdulia, LLC shall sell all of its membership interests in the Company at the lower of the Fair Market Value or the balance ofObdulia, LLC's capital accotmt in the Company as of the Termination Date.

(c) In the event the purchase pdce for the sale of Obdulia, LLC's shares exceeds $50,000, the Company shall have the right to pay for the purchase price of the Employee~s membership interests by providing a 25% down payment and financing the remaining portion over five (5) years to be secured by a promissory note. The promissory note shall be fu11y am01tizing and require monthly installments over a period of five (5) years, witl1lnterest being imposed at the annual rate equal to the Prime Rate (as published in the Wall Street Journal) of intetest in effect as of the Closing Date plus

525 two (2%) percent, and shall be adjusted annually thereafter on each successive anniversary of the Closirtg Date. The monthly installments shall be due at on the first day of each calendar month and the holder of the Note shall be entitled to prepaid interest at the Closing, if applicable. The promissory note shall provide fur acceleration of the unpaid balance, together with all accrued interest, upon written notice to the Company of a default in the payment of any one monthly installment, which default remains unsecured for a period of thirty (30) days. Tne Company shall possess the uurestdcted right to prepay all or any part of the promissory note, without premium or penalty, and with interest only to "date of payment".

Section 8.13 Restrictio)tS on Transfer of ObduUa, LLC's Membership Interests. The Parties understand and agree that the Company is engaged in a business that is highly regulated, that require, inter alia, notice requirements for change of ownership and backgronnd checks of all owners. Therefore, Obdulia, LLC agrees that no member of Obdulia, LLC shall be allowed to transfer their membership interests in Obdulia, LLC without the prior written consent of the Company, which consent shall be withheld only if the proposed transferee will have an adverse effect on the Company's licenses and/or qualifications with regulatory authorities and other third party payers.

ARTICLE IX. DISSOLUTION AND WINDING UP Section9.01 Dissolntiou. The Company shall be dissolved on the fu·st to occur of the following events:

(a) The written agreement of all Members to dissolve the Company.

(b) The sale or other disposition of substantially a11 of the Company assets.

(c) The entry of a decree of judicial dissolution by any Texas Court.

Section 9.02 Winding Up. On the dissoh1tion of the Company, the CmnpruJy shall engage in no fmther business other than that necessary to ').r:ind up the business ru1d affairs of the Company. The Members who have not caused a Triggering Event shall wind up the affairs of the Company. The Persons winding up the affairs of the Company shall give written Notice of the commencement of winding tJp by mail to all known creditors and claimants against the Company whose addresses appeat in the tecords of the Company. After paying or adequately providing for the payment of all known debts of the Company (except loans owing to Members) the remaining assets of the Company shaH be distributed or applied in the following order of priority:

(a) To pay the expenses of liquidation.

526 (b) To repay outstanding loans .11-om Members. If there are insufficient funds to pay such loans in full, each Member shall be repaid in the raJio that the Member's respective loan, together with interest accrued and unpaid thereon, bears to the total of all such loans from Members, including all interest accrued and unpaid on those loans. Such repayment shall fu·st be credited to accmed and unpaid interest due and the remainder shaH be credited to principaL

(c) Among the Membet·s iu accordance with the provisions of Section 4.06.

Section 9.03 No Rccom·se against Members. Each Member shall look solely to the assets of the Company for the return of the Member's investment, and ifthe Company prope1ty remaining after the payment or discharge of all prior debts and obligations is consumed in full, then such Member shall have no recourse against any other Members for indemnification, contribution, or reimbursement

ARTICLE X. GENERAL PROVISIONS Section 10.01 Complete Agl'eemeut. TWs Agreement constitutes the whole and entire agreement of the Members with respect to the subject matter of this Agreement, and it shall not be modified or amended in any respect ex_cept by a written instrument executed by all the Members. Tills Agreement replaces and supersedes all prior written and oral agreements by and among the Members or any of them.

Scctiou 10.02 Counterparts. This Agreement may be executed in one or more counter parts, each of which shall be deemed an original~ bttt all of which together shall constitute one and the same instrument,

Section 10.03 Choice of Law; Forum. This Agreement shall be construed and enforced in accordance with the intemallaws of the State of Texas. If any provision of tb.is Agreement is determined by any court of <:ompetent jurisdiction or arbitrator to be invalid, illegal, or unenforceable to any extent, that provision shall~ if possible> be construed as though more narrowly drawn, if a nan·ower construction would avoid such invalidity, illegality, or unenforceability or, if that is not possible, such provision shall, to the extent of such invalidity, illegality or unenforceability, be severed, and the remaining provisions of this Agreement shaH remain in effect. The intent of the parties hereto is that the Company is recognized as a limited liability company under the Code, and all provisions herein are to be intel'preted under Texas law to conform to such intent.

Section 10.04 Arbitration. Except as otherwise provided in this Agreement, any dispute, controversy or claim arising out of or relating to this Agreement, or any breach thereof, including without limitation any cl~im that this Agreement, or any part hereof, is invalid, illegal or othenvise voidable or void, shall he submitted to binding arbitration by an American Arbitration Association ("AAA") arbitrator, or such other arbitrator as may be agreed upon by the parties. Hearings on such al'bitration shall be conducted in Bexar County in the State of Texas or jf no arbitrator is available in such county, any cotmty in the State of Texas. A single arbitrator shall

527 arbitrate any such controversy. The arbitrator shall hear and determine the controversy in accordance with applicable law and the intention of the parties as expressed in this Agreement, upon the evidence produced at an arbitration hearing scheduled at the request of eithex party. Judgment on the award of the arbitratortuay be entered in any coutt having jurisdiction thereof.

(a) Power And Authority Of Arbitrator. The arbitrator shall not have any power to alter, amend, modify or change any of the terms of this Agreement nor to grant any remedy which is either prohibited by the tettns of this Agreement, or not available in a court of law.

(b) Goveming Law. AU questions in respect of procedure to be followed in conducting the arbitration as well as the enforceability of this Agreement to arbitrate which may be resolved by state law shall be resolved according to the laws of the State of Texas.

Section 10.05 Binding Effect. This Agreement shall be binding on and inure to the beneftt of the Members and tbeir heirs, personal representatives, and pem1itted successors and assigns.

Section 10.06 Protlouns; Statutory References. All pronouns and all variations thereof shall be deemed to refer to the masculine, feminine, or neuter, singular or pltu'al, as the context in which they are used may require. Any reference to the Act or other statutes or laws will include aU amendments, modifications, or replacements of (he specific sections and provisions concemed.

Section 10.07 Notices. Any notice, demand, consent, election, offer, approval, request~ or other communication (collectively, "Notice") given under this Agreement shall be in -writing and shall be sen,ed personalJy or delivered by first class, registered or certified, retum receipt requested U.S. mail, postage prepaid. Notices may also be given by tJ:ansmittal over electronic transmitting devices st1ch as Telex, facsimile or telecopy machine, if the party to whom the notice is being sent has such a device in its office, provided a complete copy of any notice so transmitted shall also be mailed in the same manner as required for a mailed notice. Notices shall be deemed received at the earlier of actual receipt or three (3) days following deposit in U.S. mail, postage prepaid. Notices shall be directed to the Company at the Company's principal place of business as specified in Section 2.04 of this Agreement, and to the Members at the addresses shown in the first page of tbis Agreement pmvided a Member may change such Member's address fol' notice by giving written notice to all other Members in accordance with this Section 14.15.

Section 10.08 Additional Documents and Acts. The parties to this Agreement shall promptly execute and deliver any and all additional documents~ instnunents, notices, and other assurances, and shall do any and all other acts and things, reasonably necessary in cotmection with Lhe perfonnance of their respective obligations 1.mder this Agreement and to carry out tl1e intent of the Members.

Section 10.09 No Authority. Except as provided in this Agreement, no provision of this Agreement shall be construed to constitute a Member, in the Member's capacity as such. the agent of any other Member.

528 Section 10.10 Severability. If any provision of this Agreement or the application of such provision to any person or circwnstance shall be he1d invalid, the remainder of this Agreement or the application of such provision to persons or circumstances other than those to which it is held invalid shall not be affected thereby.

Section 10.11 Requisite Authority. Each Member represents and warrants to the othe1• Members that the Member has the capacity and authority to enter into this Agreement.

Section 10.12 Headings. The alticle1 section, and paragraph titles and headings contained in this Agreement are inserted as matter of convenience and for ease of reference only and shall be disregarded for all other purposes, including the construction or enfmcement of this Agreement or any of its provisions.

Section 10.13 No Third P~rty Beneficiaries. This Agreement is made solely for the benefit of the parties to this Agreement and their respective pe1mitted successors and assigns, and no other person or entity shall have or acquire any right by virtue of t1)is Agreement.

[Stgnatures.follow on next page]

529 JN WITNESS, WHEREOFr fhe parfi.es haveexectlted or .caused to be exe.culed this Operating Agreement of CRAWfC)lr~P, .H'UNTL.EIGRMEPlCAL SUPPLIESYLLC on the ·day f)i1Qy.e,a:t fL,tSt ~QQVe. Writt¢n.

COMPANY.:

CRAWFORDimN'fLEIGHME·DlCAL SUPPLIES, Lt-C #.,, ~· I By: PRE5s.it~PMIND~r P.,uthQt·iz-ed Represei1tafive ·

MEMi.lER(S)X

ANNAPURNAMADDALl

530 EXHIBIT A

Membership Interest Table

Name Capital Contribution Percentage

PREM SWAROOP KALIDINDI $187.50 l8.75%

ANNAPURNA MADDALI $562.50 56.25%

OBDULIA, LLC $250.00 25%

531 Tab 3 FILED 3/31/2015 4:07:26 PM Donna Kay McKinney Bexar County District Clerk Accepted By: Anthony Barrow

HUNTLEIGH HOME MEDICAL, LTD. § IN THE DISTRICT COURT AND JANE ELIZABETH FLORES, AND § MICHAEL FLORES, § § Plaintiffs, § § v. § 57TH JUDICIAL DISTRICT § CRAWFORD MEDICAL SUPPLIES, LLC, § SRINIVAS "SAM" MADDALI, § PREM SWAROOP KALIDINDI, AND § MADDALIREALTY,LLC, § § Defendants. § BEXAR COUNTY, TEXAS

PLAINTIFFS' THIRD AMENDED PETITION

TO THE HONORABLE COURT:

Plaintiffs Huntleigh Home Medical, Ltd., Jane Elizabeth Flores and Michael Flores file

this third amended petition and would respectfully show:

DISCOVERY LEVEL

The patties are conducting discovery under a Level 3 discovery control plan.

PARTIES

Plaintiff Huntleigh Home Medical, Ltd. ("Huntleigh") is a Texas limited partnership.

Plaintiff Jane Elizabeth Flores is an individual resident of Bexar County, Texas.

Plaintiff/Counter-plaintiff Michael Flores is an individual resident of Bexar County,

Texas.

Defendant Crawford Medical Supplies, LLC ("CMS") 1s a Texas limited liability

company and has already entered an appearance in this case.

Defendant Sam Maddali is an individual who, upon information and belief, is a resident

of New Jersey. He has already entered an appearance in this case.

425 Defendant Prem Swaroop Kalidindi is an individual who, upon information and belief,

is a resident of Texas. He has already entered an appearance in this case.

Defendant Maddali Realty, LLC ("Maddali Realty") is a Texas limited liability

JURISDICTION

This Court has jurisdiction over Defendants CMS and Maddali Realty because they are

both Texas limited liability companies. The Comt has jurisdiction over Defendant Kalidindi

because, upon information and belief, he is a Texas resident, and because he is the managing

member of CMS.

This Court has personal jurisdiction over Defendants Maddali and Kalidindi because

Plaintiffs' causes of action arise from and relate to their contacts with Texas, and because they

purposefully availed themselves of the privilege of conducting activities in Texas.

Maddali traveled to Texas on many occasions to meet with Plaintiffs Jane Elizabeth

"Belle" Flores and her son, Michael Flores. All of these meetings concerned Huntleigh and the

assets at issue in this case. Maddali committed wrongful actions complained of in this petition in

Even if Kalidindi were a resident of another state, the same analysis applies to him. He

also traveled to San Antonio on many occasions to meet with Plaintiffs. All of these meetings

concerned Huntleigh and Huntleigh assets. Kalidindi committed wrongful actions complained of

in this petition in Texas.

Maddali and Kalidindi have committed torts, in whole or in part, in Texas. This includes

making misrepresentations in Texas that give rise, in whole or in part, to Plaintiffs' claims. They

made these misrepresentations to Michael Flores, who they knew was a Texas resident, and to

2 426 Huntleigh, who they knew was a company based wholly in Texas, with the intent to wrongfully

deprive Plaintiffs of assets located in Texas. Maddali also ordered an employee he knew was in

Texas to purposefully interfere with a contract between two Texas companies. Kalidindi signed

an employment contract with Michael on behalf of CMS in Texas, and did so at a time at which

he had no intention (and therefore CMS had no intention) of complying with the agreement.

Maddali and Kalidindi undertook contacts with Texas by purposefully availing themselves of the

privilege of conducting activities here, and their liability arises from or relates to those contacts.

Maddali and Kalidindi have also subjected themselves to the general jurisdiction of Texas

courts because Maddali owns or controls several Texas companies, including Maddali Realty,

and regularly conducts business in this state. Kalidindi lives in Texas or spends substantial time

here.

Maddali and Kalidindi have purposefully availed themselves of the privilege of

conducting activities within Texas, and the Court's assertion of jurisdiction over them meets

traditional notions of fair play and substantial justice.

The damages at stake are within the jurisdictional limits of the Court.

VENUE

Venue is proper in Bexar County, Texas because that is the county in which:

a. all or a substantial part of the events or omissions giving rise to the claims occurred;

b. CMS has its principal place of business;

c. Huntleigh has its principal place of business; and

d. Plaintiffs Belle Flores and Michael Flores have their residences.

3 427 BACKGROUND FACTS

Defendants convinced Plaintiffs they wanted to work together to build a new home health

care company. Once Defendants were able to gain Plaintiffs' confidence however, they took

everything they could from Huntleigh and pushed Michael and Belle aside.

Before Defendants came into the picture, Huntleigh had provided high quality home

health care services to patients in the San Antonio area since 1981. Michael Flores and his

mother, Jane Elizabeth "Belle" Flores, are the principals ofHuntleigh.

Maddali wanted to get involved in the health care industry in San Antonio and reached

out to Michael and Belle to buy Huntleigh. They expressed interest, and provided Maddali

information about Huntleigh - including the fact that the IRS asserted a tax lien against

Huntleigh. In connection with the negotiations, Plaintiffs provided Maddali, and later Kalidindi,

with valuable trade secrets, including Huntleigh's customer list and customer infonnation, billing

software, customer contracts, pricing data, supplier and vendor lists (the "Trade Secrets").

Maddali then said he was no longer interested in buying Hunt1eigh 's operations, but

instead proposed to start a new home health care company with Huntleigh, Michael and Belle.

The parties - Maddali, Michael , Belle, and Huntleigh- agreed that they would begin the process

of starting the new home health care company and all that required, such as gaining accreditation

and negotiating contracts with third party payors, while Huntleigh wound down its operations.

Maddali proposed that he and his people be allowed to use Huntleigh's offices to do so, and that

Huntleigh provide employees and other support during the transition period. In tum, Maddali

agreed to provide support for Hunt1eigh to allow it to wind down its operations, including

providing business expertise and, if necessary, financing. Plaintiffs agreed. Maddali told

Plaintiffs they could trust him, saying he "always made a success from [his] business dealings."

4 428 The patties agreed that Michael would be an employee of the new entity, and would help

start the new entity's operations, while continuing to manage Huntleigh 's operations. Before the

new entity was ready to begin operations, Huntleigh would continue to take care of its existing

patients, meet its obligations under existing contracts, bill for its services and collect payments.

The parties agreed that, when the new entity was ready to begin operations, after it had

gained accreditation and secured contracts from payers, Plaintiffs would assist the new entity in

possibly taking over Huntleigh's existing patients. The patients would have to agree, but if they

did, the new entity would be able to seamlessly transition care to itself from Huntleigh, thereby

ensuring continuous care for the patients. Huntleigh had equipment out on rent to these patients,

and the parties agreed that, for those patients who agreed to transfer their care from Huntleigh to

the new entity, Maddali would simply buy from Huntleigh its equipment that was out on rent to

these patients. The parties agreed that Maddali would pay a reasonable, fair market value for the

equipment and other Huntleigh assets at the time it needed it.

As an employee, Michael would help the new entity ramp up its back office operations,

including using setting up billing software and other requirements for the new entity to bill for its

services and collect payments. In the meantime, Huntleigh was to continue providing care and

collecting for its work.

In December 2011, the new entity, Crawford Huntleigh Medical Supplies, LLC 1

("CMS"), came into existence. Michael became an employee of CMS as the parties had agreed.

Maddali brought several people in to Huntleigh's facility, including Kalidindi and Nanda

Katepalli, to work on CMS' preparations, and Michael began helping them as the parties agreed.

Maddali later dropped "Huntleigh" from the name of the entity, changing it to Crawford Medical Supplies, LLC.

5 429 For instance, Michael was successful in getting accreditation for CMS from the

Accreditation Commission for Health Care, Inc. , a vital step for doing business in the home

health care field. Maddali also provided Michael a template contract for Huntleigh to "share"

staff with CMS.

Also in March 2012, Michael began working on Huntleigh's Medicare Part B

Competitive Bidding application. CMS could not patiicipate in the Competitive Bidding process

because it did not have a Medicare Provider number, and it could only begin to pursue a

Medicare Provider number after it was accredited. On March 9, 2012, due in large part to

Michael's expertise and efforts, CMS passed its accreditation. But Defendants still needed

Plaintiffs' help, because it would still take months for CMS's Medicare Provider Number

application to be processed. CMS could not bill Medicare until it acquired this number.

While they were happy to accept the benefits of Michael 's efforts on behalf of CMS,

Maddali and Kalidindi began to interfere with Michael's ability to wind down the operations of

Huntleigh as the parties had agreed. Instead, they set about to force Huntleigh to pay the bills,

keep the revenues for themselves, and simply take Huntleigh's assets.

Defendants ruin the Hospice Source deal

In December 2011, Huntleigh Home Medical received notice that it was losing a contract

with Odyssey Hospice. The new company taking over the contract, Hospice Source, offered to

buy the Huntleigh equipment that was out on rent to over 300 patients. Hospice Source

conducted due diligence on the equipment by riding with Huntleigh delivery personnel to review

the brand and quality of the Huntleigh equipment.

On January 13, 2012, Huntleigh and Hospice Source agreed that Hospice Source would

buy the equipment being used by those patients. Hospice Source agreed to pay $110,000 for the

6 430 equipment.

Soon thereafter, Maddali teamed of the Huntleigh equipment sale to Hospice Source and

had to figure out a way to kill it, because he planned on simply taking the Huntleigh equipment

for CMS. On Maddali's orders, a CMS employee cancelled the Hospice Source contract. This

cost Huntleigh $110,000, but more importantly to Defendants, allowed them to keep the

equipment.

Defendants take Huntleigh equipment and assets

After stopping the Hospice Source deal , Maddali ordered CMS employees to take the

Huntleigh labels and other identifying information off of the equipment and put on CMS labels.

Maddali said this would fool the banks and the IRS, and would allow CMS to simply take them

free and clear.

In April 2012, Maddali again came to San Antonio with the intent to solidify his hold on

the Huntleigh assets. He told Huntleigh employees that revenues coming in for Huntleigh

patients using Huntleigh equipment now belonged to CMS. He prevented employees from

paying Huntleigh expenses.

Defendants take over the Frost Bank account

Huntleigh had for years held its operating account at Frost Bank. In April 2012, Maddali

asked Michael for access to the Frost Bank account. Michael agreed because Maddali told him

he would have his manager Nanda Katepalli handle office matters, and that Michael was more

valuable as a salesman generating business.

lt did not take Maddali long to take advantage of his control over the Frost account. In

August 2012, the account became perilously low for payroll. Kalidindi demanded Michael

deposit Huntleigh funds to cover payroll, even though CMS was now using former Huntleigh

7 431 employees to carry out its business.

Huntleigh negotiated with the IRS to settle the tax lien for a relatively small amount. The

IRS settlement was only available as long as Huntleigh paid all current taxes as they came due.

Now that they had control over the Frost Bank account however, Defendants simply took

the money that would and should have gone to pay the IRS agreement and current taxes.

Michael asked Defendants to leave at least enough funds in the account to cover the taxes, but

they refused.

Defendants interfered with Huntleigh's ability to satisfy not only the IRS settlement, but

also its ability to make current tax payments, by taking Huntleigh's money and receivables.

Defendants push Michael and Belle out

By September 2012, Maddali had gained enough levers of control over Huntleigh to start

moving Michael and Belle out. He told Michael he was not to be involved in any negotiations

for CMS. He also directed Michael to stay out of any negotiations on behalf ofHuntleigh.

On September 17, 2012, Michael expressed concern to Kalidindi that he was taking

revenues owed to Huntleigh and using them to pay CMS bills.

Kalidindi assured Michael that CMS would take over payroll starting on September 17,

2012. Michael agreed to have Huntleigh issue payroll checks covering payroll up until that date,

and that was supposed to be Huntleigh's last payroll processing.

On October 3, 2012, Nanda demanded Michael have Huntleigh process payroll under

Huntleigh. CMS had already agreed it would cover payroll starting September 17, so Michael

refused Nanda's demand. Kalidindi became incensed. He told Michael that CMS would not

process payroll, and that Michael needed to tell "his" staff that they are not getting paid. CMS

also refused to pay Michael his salary.

8 432 A few weeks after forwarding Huntleigh's mail to his house, Michael noticed he was

receiving an unusually low volume of mail for Huntleigh. After checking with the post office,

he discovered CMS had falsely told the postal carrier the change of address fonn was invalid,

and demanded that Huntleigh mail be delivered to CMS. While Michael was eventually able to

get the Huntleigh mail forwarded to him, Defendants had received Huntleigh mail, including

checks for Huntleigh.

On October 5, 2012, Defendants had completed their plan to gut Huntleigh, and ban·ed

Michael and Belle from the premises.

Since Defendants' takeover, they have acted in concert to launder funds belonging to

Plaintiffs. Maddali Realty is a limited liability company owned and controlled by Sam Maddali

and his wife. Defendants transferred to Maddali Realty at least $37,000 in 2013, with over

$23,000 transferred in December 20 13 alone.

CAUSES OF ACTION

BREACH OF CONTRACT/QUANTUM MERUIT- The Maddali Agreement - all Plaintiffs against Maddali

Huntleigh, Michael and Belle agreed with Maddali to start a new home health care

company, which eventually became CMS. Michael would help with the start-up, such as helping

gain accreditation and negotiating contracts with third party payors. Plaintiffs would allow

Maddali to use Huntleigh's offices while CMS was starting the paperwork necessary to become a

home health care company, and Maddali would allow Huntleigh to continue its business while it

wound down its operations. Maddali agreed to provide Huntleigh support, both business

expertise and financing, in exchange for use of the Huntleigh facility and for assistance in

transferring operations to CMS.

9 433 Michael would be an employee of the new entity, and would help start the new entity's

operations, while continuing to manage Huntleigh's operations. Before the new entity was ready

to begin operations, Huntleigh would continue to take care of its existing patients, meet its

obligations under existing contracts, bill for its services and collect payments.

The parties agreed that, when the new entity was ready to begin operations, after it had

gained accreditation and secured contracts from payors, Plaintiffs would assist the new entity in

possibly taking over Huntleigh's existing customers. The customers would have to agree, but if

they did, the new entity would be able to seamlessly transition care to itself from Huntleigh,

thereby ensuring continuous care for the patients. CMS would pay a reasonable price for the

Huntleigh equipment, inventory, and other assets.

As an employee, Michael would help the new entity ramp up its back office operations,

including using setting up billing software and other requirements for the new entity to bill for its

services and collect payments. Belle would also provide her business expertise in helping start

the new entity. In the meantime, Huntleigh was to continue providing care and collecting for its

work.

Maddali breached this contract (the "Maddali Agreement") by refusing to allow Plaintiffs

to wind down the operations. Instead, he took or ordered the other Defendants to simply take

Huntleigh's assets. He also refused to pay for the Huntleigh equipment and its other assets.

Maddali' s breach caused damages to Plaintiffs.

In the alternative, Maddali is liable to Plaintiffs under quantum meruit.

BREACH OF CONTRACT/QUANTUM MERUIT - The Employment Agreement - Michael against CMS

CMS entered into an employment contract with Michael, under which it agreed to pay

10 434 him an annual salary. Michael perfotmed his part of the bargain, but never received any

payment for his services. CMS breached the contract by failing to pay, and owes Michael under

the contract.

In the alternative, CMS is liable to Michael under quantum meruit.

PROMISSORY ESTOPPEL - all Plaintiffs against Maddali

Maddali is also liable for promissory estoppel. He promised to provide support for

Huntleigh, both financial and business consulting expertise, in continuing and winding down its

operations. He promised to allow Michael and Belle to continue winding down Huntleigh

operations if they allowed him to use Huntleigh office space and if they helped statt the new

health care entity. He also promised to pay Huntleigh a reasonable cost for its equipment and

other property that it would use. All Plaintiffs relied on these promises to their detriment.

Plaintiffs allowed Maddali to use Huntleigh's offices, and provided material support in starting

the new health care entity. Plaintiffs also provided Maddali access to Huntleigh's Trade Secrets.

Maddali should have known that Plaintiffs would rely on these statements, and injustice

can be avoided only by enforcing Maddali 's promises.

CONVERSION - Huntleigh against all Defendants

Defendants are liable for conversion. Huntleigh owned, possessed and had a right to

immediate possession of its property (the "Property"), including:

a. equipment;

b. inventory;

c. bank accounts and accounts receivable; and

d. Trade Secrets.

Defendants have wrongfully exercised dominion or control over the Property, and

11 435 Huntleigh has suffered damages due to Defendants' wrongful actions.

TORTIOUS INTERFERENCE WITH CONTRACT - The Maddali Agreement - Plaintiffs against CMS and Kalidindi

These Defendants' interference with Plaintiffs' agreement with Maddali constitutes

tortious interference. Their interference was will:ful and intentional, and their actions

proximately caused damages to Plaintiffs.

TORTIOUS INTERFERENCE WITH CONTRACT - The Hospice Source Agreement - Huntleigh against all Defendants

Defendants' interference with Huntleigb's contract with Hospice Source constitutes

tortious interference with contract. Defendants' interference was willful and intentional, and its

actions proximately caused Huntleigb to lose that contract. Huntleigh suffered damages as a

result.

MISAPPROPRIATION OF TRADE SECRETS - Huntleigh against Maddali. Kalidindi, and CMS

These Defendants' actions and representations shown in this petition also constitute

common-law misappropriation of Huntleigh 's Trade Secrets.

These Trade Secrets, including its customer list and customer information, customer

contracts, billing software, pricing data, supplier and vendor lists. Defendants used or disclosed

this proprietary information without authorization after acquiring it by improper means or

through breach of a confidential relationship. Huntleigh provided Defendants with access to its

trade secrets because Maddali said he wanted to buy Huntleigh or its assets, or because

Defendants represented they wanted to use Huntleigh's facility only to start CMS. Instead,

Defendants wrongfully used the trade secrets to take over Huntleigh's existing operations and to

profit themselves. Huntleigh suffered damages as a result.

12 436 Huntleigh used and had the right to use this proprietary infonnation in its business of

home health care.

FRAUD/FRAUD BY NONDISCLOSURE/FRAUDULENT INDUCEMENT - all Plaintiffs against Maddali, Kalidindi and CMS

These Defendants are liable for common-law fraud. Defendants made representations

that were materially false. These statements included Maddali telling Plaintiffs and Michael he

wanted to work with them to start a new home health care company, and that he would allow

Huntleigh to wind down its operations while the new entity got started. He also told them that,

when the new entity was ready to begin operations, Huntleigh would be paid for the equipment

and other assets it would use in its operations. He also told them they could ttust Maddali.

Kalidindi assured Plaintiffs CMS would start making payroll on September 17, 2012. They also

misrepresented that they would pay reasonable value for Huntleigh equipment and inventory.

They made these statements both before and after CMS was formed, and before and after they

began using the Huntleigh offices. These statements were false.

Maddali and Kalidindi (and therefore CMS) knew these representations were false, and

that they were simply using Michael and Belle to gain access to, and ultimately take, Huntleigh's

Property. In the alternative, they made these representations recklessly, as positive assertions,

and without knowledge of their truth.

Plaintiffs relied on these representations to their detriment and they suffered damages.

In the alternative, Defendants concealed certain facts from Plaintiffs that they had a duty

to disclose, including the fact they had no intention of starting a new home health care company

with Michael and Belle, and simply wanted to use them to gain access to, and to ultimately take,

Huntleigh's Property without paying for it.

13 437 Defendants were deliberately si lent when they had a duty to speak on these issues, and by

failing to disclose these facts, intended to induce Plaintiffs to take some action or refrain from

acting. Plaintiffs relied on these nondisclosures and suffered injuries as a result.

NEGLIGENT MISREPRESENTATION- all Plaintiffs against Maddali, Kalidindi, and CMS

Defendants' actions and representations shown in this petition also constitute negligent

misrepresentations.

CIVIL CONSPIRACY- all Plaintiffs against all Defendants

Defendants conspired to defraud Plaintiffs, take Huntleigh's Property, and commit the

acts outlined in this petition. They agreed to steal Huntleigh's Property to the detriment of

Plaintiffs.

Additionally, Belle is the assignee of a UCC granted in favor of Jefferson State Bank

against Huntleigh and its assets, and is therefore a secured creditor of Huntleigh. Defendants'

actions constitute civil conspiracy to defraud Belle as a secured creditor, by taking Huntleigh

assets. This is a conspiracy to commit fraud, to hinder, delay or defraud creditors, and to commit

fraudulent conveyance, among others.

Defendants were members of a combination of two or more persons, the object of which

was to accomplish an unlawful purpose or a lawful purpose by unlawful means. The members

had a meeting of the minds on the object or course of action, and one of the members committed

an unlawful, overt act to further the object or course of action. These acts include:

a. changing the identification numbers and other identifiers on Huntleigh's equipment;

b. obtaining Huntleigh's mail by deception or other unlawful means, violating 18 U .S.C. 1701 and 1708;2

2 Plaintiffs make no claims under federal law.

438 c. defrauding the IRS by converting or transferring assets that otherwise could be used to satisfy the IRS lien;

d. unlawfully interfering with Huntleigh's contract with Hospice Source;

e. unlawfully interfering with the Maddali Agreement;

f. unlawfully interfering with Michael's employment agreement;

g. taking or converting Huntleigh's Property;

h. transferring to themselves funds that belonged to Huntleigh or were generated using Huntleigh assets;

1. other unlawful actions shown in this petition.

In a civil conspiracy, each defendant is liable for his or her own acts and for acts done by

coconspirators in furtherance of the unlawful combination. Defendants are jointly and severally

liable for all damages suffered by Plaintiffs.

FRAUDULENT TRANSFER ACT- Belle against all Defendants

Defendants' actions in taking or conveying Huntleigh's assets are fraudulent transfers

under the Unifonn Fraudulent Transfer Act, Texas Business & Commerce Code Chapter 24.

Belle is entitled to all relief under section 24.008 of that chapter.

Defendants transfened assets of Huntleigh with the actual intent to hinder, delay, or

defraud Belle, who was a creditor of Huntleigh, or without receiving a reasonably equivalent

value in exchange for the transfer or obligation. Defendants intended to have Huntleigh incur, or

believed or reasonably believed that Huntleigh would incur, debts beyond its ability to pay as

they became due.

Defendants took Huntleigh's Propetty, or conveyed it to themselves, including cash,

accounts receivable, equipment, and Trade Secrets. Defendants knew that Huntleigh was

winding down its business and that these actions would cause Huntleigh to incur debts beyond its

439 ability to pay as they came due. Huntleigh did not receive a reasonably equivalent value in

exchange for these transfers.

Belle's claim arose in October 2012, and these transfers occmTed after this time. Ful1her,

Huntleigh did not receive reasonably equivalent value in exchange for the transfer and Huntleigh

was either insolvent at the time of these transactions or became insolvent as a result of these

transactions.

For instance, Defendants changed the identification labels on Huntleigh's equipment in

January 2013. Defendants transferred to Maddali Realty at least $37,000 in 2013, with over - $23,000 transferred in December 2013 alone. Because they have conspired to commit the actions

outlined in this petition, each Defendant is jointly and severally responsible for all such actions.

ASSISTING AND ENCOURAGING/ASSISTING AND PARTICIPATING/AIDING AND ABETTING - all Plaintiffs against all Defendants

All Defendants were aware that they would take Huntleigh's Property, and all intended

to, and did, assist. Defendants' actions were a substantial factor in causing the hann to Plaintiffs.

Defendants are jointly and severally liable for all damages suffered by Plaintiffs.

UNJUST ENRICHMENT - all Plaintiffs against all Defendants

Defendants were unjustly enriched when they obtained benefit from Plaintiffs by fraud,

duress, or the taking of an undue advantage. All Defendants wrongly secured or passively

received benefits through the taking of Plaintiffs' assets and business.

MONEY HAD AND RECEIVED - Huntleigh against all Defendants

Defendants hold money that in equity and good conscience belongs to Huntleigh. They

should be required to return it.

440 RESPONDEAT SUPERIOR

CMS and Maddali Realty are fully responsible for the actions of its employees,

representatives, and agents, including Kalidindi and Maddali.

DAMAGES

Defendants are general and special damages, including lost profits of Huntleigh and/or

reasonable royalties for the unlawful use of its Trade Secrets. Plaintiffs request consequential

damages and restitution damages. Defendants are jointly and severally liable. Pursuant to Texas

Rule of Civil Procedure 47, Huntleigh and Belle specify that $2 million is the maximum amount

of damages claimed by each, and Michael specifies that $200,000 is the maximum amount of

damages claimed by him.

EXEMPLARY DAMAGES

Defendants are jointly and severally liable for exemplary damages under Plaintiffs'

claims for or under fraud or tortious interference with contract, or because their conduct was

conducted with malice. Defendants are jointly and severally liable for exemplary damages under

Plaintiffs' claims for or under:

a. tortious interference with contract;

b. the Theft Act;

c. consptracy;

d. fraud;

e. negligent misrepresentation; and

f. trade-secret misappropriation.

Any exemplary damages in this case are not subject to the statutory caps. TEX. Crv.

PRAC. & R EM. CODE § 41.008(c)(10),(11),(12),(13). Defendants misapplied the Trade Secrets

17 441 provided by Plaintiffs in the course of negotiations for the potential purchase of Huntleigh, and

these are fiduciary property. Defendants also secured by deception the execution of documents

including Michael's employment agreement and the Aug. 23, 2012 letter signed by Michael.

ATTORNEYS' FEES

Defendants are liable for Plaintiffs' attorneys' fees under Texas Civil Practice &

Remedies Code section 38.001. Defendants are liable for Belle's attorneys' fees under the

Uniform Fraudulent Transfer Act, section 24.013 of the Texas Business & Commerce Code.

Maddali is liable for Plaintiffs' attorneys' fees under promissory estoppel.

CONDITIONS PRECEDENT

All conditions precedent have been performed, have occurred or are excused.

PRAYER

Plaintiffs ask the Court to enter a judgment against Defendants, jointly and severally, for:

a. Actual damages;

b. Exemplary damages;

c. Prejudgment and postjudgment interest;

d. Costs of suit; and

e. Attorney's fees , both at trial and on appeal.

They also ask for all other relief to which they may be entitled.

442 Dated: March 3/ <;)· , 2015. Respectfully submitted,

DAVIS & SANTOS ATTORNEYS & COUNSELORS, P.C.

By: ?Ja~~ State Bar No. 24002667 mmurphy@dslawpc. com Guillermo "Jeff' Benavides State Bar No. 24087160 j benavides@dslawpc. com 112 E. Pecan Street, Suite 900 San Antonio, Texas 78205 Tel: (210) 853-5882 Fax: (21 0) 200-8395

ATTORNEYS FOR PLAINTIFFS

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of this document will be sent to the following by:

Elliott S. Cappuccio Regular Mail Leslie Sara Hyman Certified Mail, RRR P ULMAN, CAPPUCCIO, P ULLEN, BENSON & Hand Delivery J ONES, LLP Facsimile 2161 N.W. Military Highway, Suite 400 Email San Antonio, Texas 78213

Attorneys for Defendants

on the 3\~ day of March, 2015.

19 443