EXHIBIT 10.36


 


OPERATING AGREEMENT


 


OPERATING AGREEMENT OF 2011-12
OPPORTUNITY FUND 6-1, LLC


 


THIS OPERATING AGREEMENT (this “Agreement”)
was made and entered into as of the 10th day of October, 2012, by and among Bayou City Exploration, Inc. and Blue Ridge Group,
Inc. as managing members of Opportunity Fund VI, LLC, Bayou City Opportunity Fund I, LLC and Opportunity Fund VII, LLC (the “Members”),
and 2011-12 Opportunity Fund 6-1, LLC, a Delaware limited liability company (the “Company” or “Fund”).


  


WITNESSETH


 


WHEREAS, the Members and the Company desire to enter
into an Operating Agreement to govern the Company’s operations;


 


NOW, WHEREFORE, in consideration for the mutual
agreements, covenants and premises set forth herein, the Operating Agreement is hereby adopted:


 


ARTICLE 1


DEFINITIONS


 


Defined Terms. Unless
otherwise stated, the terms used in this Agreement shall have the usual and customary meanings associated with their use, and shall
be interpreted in the context of this Agreement. Certain capitalized terms which are used in this Agreement shall have the meanings
given in this Agreement or Schedule 1.1.


 


ARTICLE II


FORMATION;
PURPOSE


 


2.1 Organization; Governance. The
Members have caused the formation of the Company on October 10th, 2012 (the “Effective Date”) as a limited liability
company effective with the filing of the Articles of Organization (the “Articles”) with the Delaware Secretary of State.
The Company has been formed pursuant to the provisions of the Delaware Statutes and upon the terms and conditions set forth in
the Articles and in this Agreement. The Initial Member(s) together with all Persons who may hereafter become Members of the Company
from time to time in accordance with this Agreement (collectively, the “Members”) are and shall be bound by the terms
and provision of this Agreement. The Manager is authorized to execute and cause to be filed additional Amendments to the Articles
whenever required by the Act or this Agreement. Except as otherwise required by the Act, this Agreement shall govern the business
and affairs of the Company and the relationships of the Members to one another as members of the Company. The Members intend that
the Company be treated as a partnership for federal and state income tax purposes but that the Company shall not be treated as
a partnership for purposes of Section 303 of the Federal Bankruptcy Code. No Member shall act inconsistently with this intent.


 


2.2 Term. The term of
the Company commenced on the date the Articles were filed as described in Section 2.1 and continue perpetually unless earlier terminated
under the provisions of this Agreement or by operation of law.


 






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2.3 Name. The business of the Company shall be
carried on under the name “2011-12 Opportunity Fund 6-1, LLC.”


 


2.4 Purpose. The primary purpose of the Company
is to house and manage the loan assets purchased by Opportunity Fund VI, VII and BYCX I and to distribute revenue based on pro-rata
ownership and do all things reasonably related thereto.


 


2.5 Place of Business. The
principal place of business of the Company is and will be located at 632 Adams Street, Suite 700, Bowling Green, Kentucky 42101,
until the Manager changes it after giving the Members notice. In addition, the Company may maintain such other offices and places
of business in the United States as the Manager may deem advisable. The Manager will file all necessary or desirable documents
to permit the Company to conduct its business lawfully in any state or territory of the United States.


 


2.6 Agent for Service of Process.
The name and business address of the agent for service of process for the Company is Travis Creed, 632 Adams Street, Suite
700, Bowling Green, Kentucky 42101, or such other person as the Manager shall appoint from time to time, utilizing the Manager’s
reasonable discretion.


 


2.7 Nature of Members' Membership
Units. The Membership Units of the Members in the Company shall be directly proportionate to the member’s contributions.


  


THE MANAGER


 


3.1 Control in Manager. Subject to the provisions of
Section 3.2 and except as otherwise expressly stated elsewhere in this Agreement, the Manager has exclusive control over the business
of the Company (with all acts and decisions being in its sole discretion except as specifically set forth in this Agreement), including
the power to assign duties, to determine how to invest the Company’s assets, to sign bills of sale, title documents, leases,
notes, assignments, security agreements, documents evidencing Note Investments and contracts, and to assume direction of the business
operations. As Manager of the Company and its business, the Manager has all duties generally associated with that position, including
dealing with Members, being responsible for all accounting, tax and legal matters, performing internal reviews of the Company’s
investments and loans, determining how and when to invest the Company’s capital, and determining the course of action to
take for Company loans and land contracts that are in default. The Manager also has all of these powers for ancillary matters.
Without limiting the generality of the foregoing, the powers include the right (except as specifically set forth in Section 3.2
and elsewhere in this Agreement):


 


3.1.1: To evaluate potential Company investments,
to expend the capital of the Company in furtherance of the Company’s business;


  


3.1.2: To acquire, hold, lease,
sell, trade, exchange, or otherwise dispose of all or any portion of Company property or any interest therein at a price and upon
the terms and conditions as the Manager may deem proper;


 






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3.1.3: To cause the Company
to become a joint venturer, general or limited partner or member of an entity formed to own, develop, operate and dispose of real
and personal properties owned or co-owned by the Company acquired through foreclosure of a Note Investment.


 


3.1.4: To manage, operate
and develop Company property, including Real Property acquired by the Company in connection with the foreclosure of the Mortgage
securing a Mortgage Note, or to employ and supervise managers who may, or may not, be an Affiliate of the Manager;


 


3.1.5: To maintain, at the
expense of the Company, adequate records and accounts of all operations and expenditures and furnish the Members with annual statements
of account as of the end of each calendar year, together with all necessary tax-reporting information;


 


3.1.6: To purchase, at the expense of the Company,
liability and other insurance to protect the property of the Company and its business;


 


3.1.7: To refinance, recast, modify, consolidate,
extend or permit the assumption of a Note Investment or other investment owned by the Company;


 


3.1.8: To pay all expenses incurred in the operation
of the Company;


 


3.1.9: To file tax returns on behalf of the Company
and to make any and all elections available under the Code;


 


3.1.10: To modify, delete, add to or correct from time
to time any provision of this Agreement as permitted under Section 15.4 hereof; and


 


3.1.11: To admit Persons as additional members
of the Company in Manager’s sole discretion.


 


3.2 Limitations on Manager’s Authority.
The Manager has no authority to:


 


3.2.1: Do any act in contravention of this Agreement;


 


3.2.2 : Do any act which would make it impossible to
carry on the ordinary business of the Company;


 


3.2.3: Confess a judgment against the Company;


 


3.2.4: Possess Company property or assign the
rights of the Company in the property for other than a Company purpose;


 


3.2.5: Admit a person as a Manager without the prior
affirmative vote or consent of a Super Majority or any higher vote as may be required by applicable law;


 


3.2.6: Sell all or a majority
of the assets of the Company in one or a series of related transactions that is not in the ordinary course of business, without
the prior affirmative vote or consent of a Super Majority;


 






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3.2.7: Amend this Agreement without the prior
affirmative vote or consent of a Majority, except as permitted by Section 15.4 of this Agreement;


 


3.2.8: Dissolve or terminate the Company without
the prior affirmative vote or consent of a Super Majority except as otherwise provided in this Agreement;


 


3.2.9: Cause the merger or other reorganization
of the Company without the prior affirmative vote or consent of a Super Majority;


 


3.2.10: Grant to the Manager or any of its Affiliates
an exclusive right to sell any Company assets;


 


3.2.11: Use or permit another Person to use the Company’s
assets in any manner, except for the exclusive benefit of the Company or permit the Company to engage in any activities inconsistent
with or in addition to the stated purposes of the Company;


 


3.2.12: Pay or award, directly
or indirectly, any commissions or other compensation to any Person engaged by a potential investor for investment advice as an
inducement to the advisor to advise the purchase of units in the Company; or


 


3.2.13: Make loans to the Manager or an Affiliate of
the Manager.


 


3.3 Extent of Manager’s
Obligation and Fiduciary Duty. The Manager shall devote the portion of its time to the business of the Company as it determines,
in good faith, to be reasonably necessary to conduct the Company’s business. The Manager shall not be bound to devote all
of its business time to the affairs of the Company, and the Manager and its Affiliates may engage for their own account and for
the account of others in any other business ventures and employments, including ventures and employments having a business similar
or identical or competitive with the business of the Company. The Manager has fiduciary responsibility for the safekeeping and
use of all funds and assets of the Company, whether or not in the Manager’s possession or control, and the Manager will not
employ, or permit another to employ the Company’s funds or assets in any manner except for the exclusive benefit of the Company.


 


3.4
Indemnification of Manager. Except as limited by law, the Fund shall indemnify the Manager for all expenses, losses, liabilities
and damages the Manager actually and reasonably incurs in connection with the defense or settlement of any action arising out of
or relating to the conduct of the Fund’s activities, except an action with respect to which the Manager is adjudged to be
liable for breach of a fiduciary duty owed to the Fund or the Members under the Act or this Agreement. The Fund shall advance the
costs and expenses of defending actions against the Manager arising out of or relating to the management of the Fund, provided
it first receives the written undertaking of the Manager to reimburse the Fund if ultimately found not to be entitled to indemnification.


 






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3.5 Resignation of Manager.
The Manager may resign from the Company provided, however, that the resignation shall not be effective until the earlier of
the appointment of a replacement Manager by a Super Majority or 120 days following the date that Manager gave written notice to
the Members of its resignation. Failure of a Super Majority to designate and admit a new Manager within said 120 days shall dissolve
the Company, in accordance with the provisions of Article 12 of this Agreement. The resigning Manager shall not be liable for any
debts, obligations or other responsibilities of the Company or this Agreement arising after the effective date of the resignation.


 


3.6 Removal of Manager.
The Members may remove the Manager (i) upon Manager’s dissolution or bankruptcy or (ii) by written consent or vote of
a Super Majority (excluding any Units of the Manager being removed). This removal of the Manager, if there is no other Manager,
shall not become effective until the earlier of the appointment of a replacement Manager by a Super Majority or 120 days following
the date that the Super Majority consented to the removal. Failure of a Super Majority to designate and admit a new Manager within
120 days from the date that the Super Majority elected to remove the Manager shall dissolve the Company, in accordance with the
provisions of Article 12 of this Agreement. The removed Manager shall not be liable for any debts, obligations or other responsibilities
of the Company or this Agreement arising after the effective date of the removal. The appointment of a new Manager, if any, shall
be effective upon written acceptance of the duties and responsibilities of a Manager by the new Manager. The new Manager shall
thereupon execute, acknowledge and file an amendment to the Articles of Organization of the Company in the manner required by Delaware
Statutes.


 


3.7 Payments at Resignation
or Removal. Upon the resignation or removal of the Manager, the Company shall pay to the Manager a sum equal to all amounts
then accrued and owing to the Manager.


 


3.8 Appointment of Additional Manager(s). An
additional Manager may be admitted to the Company with the consent of all Managers and a Super Majority.


  


 


ARTICLE 4


DISTRIBUTIONS; PROFITS AND LOSSES


 


4.1 Distributions.


 


4.1.1: Distributions of “Cash
for Distribution”. Except as otherwise provided in Sections 7.2 and 12 of this Agreement, Cash for Distribution shall be
distributed to the Members for each calendar quarter in arrears, to each Member in proportion to the Participation Percentage of
the Member as of the last day of the quarter to which the distribution pertains.


 


4.1.2:Reserved


 


4.1.3: Cash Distributions
Upon Dissolution. Upon dissolution and winding up of the Company, the Company shall thereafter distribute all Cash for Distribution
available for distribution, if any, to the Members in accordance with the provisions of Section 12.3 of this Agreement.


 






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4.2 Restriction on Distributions.
The Company shall make no distribution to the Members unless the assets of the Company following such distribution will exceed
the total liabilities of the Company, excluding liabilities to Members based on their contributions.


 


4.3 Allocation of Profits
and Losses. After giving effect to the special allocations set forth in Section 7.5, the Manager shall allocate all Company
Profits and Losses for any fiscal year to the Members in proportion to their respective Participation Percentages. In determining
the allocations to Members for any quarterly period during a fiscal year, the Manager may allocate to the Members all Profits and
Losses realized by the Company during such quarter as of the close of business on the last day of such calendar quarter without
regard to Profits and Losses realized for time periods within the quarter, or in such other manner selected by the Manager and
permitted under Section 706 of the Code and the Treasury Regulations hereunder.


 


4.4 Reserved


 


4.5 Special Allocation Rules.


 


4.5.1: Any Member with a deficit
Capital Account balance resulting in whole or in part from allocations of loss or deduction (or item thereof) attributable to non-recourse
debt which is secured by Company property shall, to the extent possible, be allocated income or gain (or item thereof) in an amount
not less than the Minimum Gain at a time no later than the time at which the Minimum Gain is reduced below the sum of the deficit
Capital Account balances. This section is intended and shall be interpreted to comply with the requirements of Treasury Regulation
Section 1.704-2(f).


 


4.5.2: If any Member unexpectedly
receives any adjustment, allocation,or distribution described in Sections 1.704-1(b)(2)(ii)(d)(4) through 1.704-1(b)(2)(ii)(d)(6)
of the Regulations which causes or increases a deficit in the Member’s Capital Account as of the end of the tax year to which
the adjustment, allocation or distribution relates, items of Company income and gain shall be specially allocated to such Member
in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the Capital Account deficit of the
Member as quickly as possible, provided that an allocation pursuant to this Section 7.5.2 shall be made if and only to the extent
that the Member would have a Capital Account deficit after all other allocations provided for in Section 7.3 through 7.6 have been
tentatively made as if this Section 7.5.2 were not in the Agreement.


  


4.5.3: To the extent an adjustment
to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts as the result of a distribution
to a Member in complete liquidation of his Interest in the Company, the amount of the adjustment to the Capital Accounts shall
be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis)
and the gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to such Section of the Regulations.


 


4.5.4:For purposes of determining the Profits,
Losses or any other items allocable to any period, these other items shall be determined on a daily, monthly, quarterly or other
basis, as determined by the Manager using any permissible method under Section 706 of the Code and the Treasury Regulations hereunder.


 






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4.5.5: Notwithstanding Section
7.3, Profits and Losses, if any, allocable to the period before the admission of any Members shall be allocated to the Initial
Member. Profits or Losses allocable to the period commencing with the admission of Members and all subsequent periods shall be
allocated in accordance with Section 7.3.


 


4.5.6: Except as otherwise
provided in this Agreement, all items of Company income, gain, loss, deduction, and any other allocations not otherwise provided
for shall be divided among the Members in the same proportions as they share Profits or Losses, as the case may be, for the year.


 


4.5.7: The Members are aware
of the income tax consequences of the allocations made by this Article 7 and hereby agree to be bound by the provisions of this
Article 7 in reporting their shares of Company Profits, Losses and other allocable items for income tax purposes.


  


4.6 Code Section 704(c) Allocations.


 


4.6.1: Income, gains, losses
and deductions, as determined for Federal income tax purposes, for any Company asset which has a Gross Asset Value that differs
from its adjusted basis for Federal income tax purposes shall, solely for Federal income tax purposes, be allocated among the Members
so as to take account of any variation between the adjusted basis of the Company asset to the Company for Federal income tax purposes
and its initial Gross Asset Value in accordance with Code Section 704(c) and the Treasury Regulations hereunder. In furtherance
of the foregoing, it is understood and agreed that any income, gain, loss, or deduction attributable to Code Section 704(c) property
shall be allocated to the Members in accordance with the traditional method of making Code Section 704(c) allocations, in accordance
with Treasury Regulation Section 1.704-3(b).


 


4.6.2: If the Gross Asset
Value of any Company asset is adjusted, subsequent allocations of income, gain, losses and deductions, as determined for Federal
income tax purposes, for the Company asset shall, solely for Federal income tax purposes, take account of any variation between
the adjusted basis of the Company asset for Federal income tax purposes and its Gross Asset Value in the same manner as under Code
Section 704(c) and the Treasury Regulations hereunder.


 


4.6.3: Allocations under
this Section 7.6 are solely for purposes of Federal, state and local income taxes and shall not affect, or in any way be taken
into account in computing any Member’s Capital Account.


 


4.6.4: Except as otherwise
set forth in this Agreement, any elections or other decisions relating to allocations under this Section 7.6 shall be made by the
Manager, with the review and concurrence of the Company’s accountants, in a manner that reasonably reflects the purpose and
intention of this Agreement.


 






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4.7 Intent of Allocations.
It is the intent of the Company that this Agreement comply with the safe harbor test set out in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d) and 1.704-2 and the requirements of those Sections, including the qualified income offset and minimum gain
charge- back, which are hereby incorporated by reference. If, for whatever reasons, the Company is advised by counsel or its accountants
that the allocation provisions of this Agreement are unlikely to be respected for federal income tax purposes, the Manager is granted
the authority to amend the allocation provisions of this Agreement, to the minimum extent deemed necessary by counsel or its accountants
to effect the plan of allocations and distributions provided in this Agreement. In addition, if the Manager is required to make
any special allocations of Company Profits, Losses, income, gain or deductions to comply with the requirements of the Regulations,
the Manager shall make such special allocations in whatever manner it determines appropriate so that, after such allocations are
made, each Member's Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member would
have had if the allocations mandated by the Regulations were not required to be made. The Manager shall have the discretion to
adopt and revise rules, conventions and procedures as it believes appropriate for the admission of Members to reflect Members’
Participation Percentages in the Company at the close of the years.


 


4.8 Quarterly Valuation
of Assets. For each of the Company’s Note Investments and other investments, the Manager shall review the investments
at the end of each calendar quarter and determine if a Write-down is required with respect thereto. The Manager shall cause the
Company’s accountants, within thirty (30) days of the end of each calendar quarter, to verify that the Manager’s determination
was made in compliance with generally accepted accounting principles. Any Write-down of an asset resulting from the valuation shall
be effective on the last day of the respective calendar quarter during the term of this Agreement.


 


4.9 Limitation on Distributions. The Company
shall make no distribution to the Members unless the assets of the Company following such distribution will exceed the total liabilities
of the Company, excluding liabilities to Members based on their contributions.


  


ARTICLE 5


[RESERVED]


 


 


 


ARTICLE 6


BOOKS AND RECORDS, REPORTS AND RETURNS


 


6.1 Books and Records.
At the expense of the Company, the Manager shall: (a) cause the Company to keep all books and records required by Delaware
Statutes; and (b) shall cause the Company to keep adequate books and records at its principal place of business, setting forth
a true and accurate account of all business transactions arising out of and in connection with the conduct of the Company. Upon
five (5) day written notice all books and records shall be available for inspection and copying by, and at the sole expense of,
any Member, or any Member’s duly authorized representatives, during the Company’s normal business hours.


 






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6.2 Annual Statements.


 


6.2.1: The Manager shall cause
to be prepared at least annually, at the Company’s expense, financial statements prepared in accordance with generally accepted
accounting principles. The financial statements will include: (i) a balance sheet, (ii) statements of income or loss, (iii) Members’
equity and (iv) a statement of cash flows.


 


6.2.2: The Company’s
accountants will itemize the costs of any verification performed by them and may be reimbursed to the Manager by the Company only
to the extent that the reimbursement when added to the costs for administrative services rendered, does not exceed the competitive
rate for the services as determined under Article 9.2.1.


 


6.2.3: Notwithstanding the
120-day period specified in Section 9.2.3(b) below, the Manager shall cause to be prepared and distributed to the Members not later
than seventy-five (75) days after the close of each Fiscal Year of the Company all Company information necessary in the preparation
of the Members’ federal income tax returns.


 


6.3 Filings. The Manager,
at Company expense, shall cause the income tax returns for the Company to be prepared and timely filed with the appropriate authorities.
The Manager, at Company expense, shall also cause to be prepared and timely filed with and/or delivered to appropriate federal
and state regulatory and administrative bodies and/or the Members applicable, all reports required to be filed with or delivered
to those entities or Members under applicable law, including those described in the Company’s undertakings in any securities
filing. The reports shall be prepared using the accounting or reporting basis required by the relevant regulatory bodies. The Company
will provide a copy of the reports to each Member who requests one, without expense to the Member. The Manager, at Company expense,
shall file, with the appropriate agency in the states in which this Company is registered, as required by these states, a copy
of each report referred to under this Article 9.


 


6.4 Suitability Requirements.
The Manager, at Company expense, shall maintain for a period of at least six (6) years, a record of the documentation indicating
that a Member complies with the suitability standards set forth in the Memorandum.


 


6.5 Fiscal Matters.


 


6.5.1: The Company has adopted
the Fiscal Year for tax and accounting purposes. Subject to the provisions of Section 706 of the Code and approval by the Internal
Revenue Service and the applicable state taxing authorities, in the Manager’s sole discretion and without the approval of
the Members, from time to time the Manager may change the Company’s fiscal year to a period to be determined by the Manager.


 


6.5.2: The Company shall continue
to use the cash basis method of accounting for both income tax purposes and financial reporting purposes. We may exclude C corporations
as potential members (except for personal holding companies), if they will jeopardize our cash basis method of accounting.


 


6.5.3: Upon the transfer of
a unit in the Company, the Company may, at the sole discretion of the Manager, elect under Code Section 754, to adjust the basis
of the Company property as allowed by Sections 734(b) and 743(b) thereof.


 






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6.5.4: The Manager shall act
as the “Tax Matters Partner” (“TMP”) and shall have all the powers and duties assigned to the TMP under
Sections 6221 through 6234 of the Code and the Treasury Regulations hereunder. The Members agree to perform all acts necessary
under Section 6231 of the Code and Treasury Regulations hereunder to designate the Manager as the TMP.


  


ARTICLE 7


TRANSFER OF COMPANY UNITS


 


7.1 Intentionally left blank


 


7.2 Transfer of Member’s
Unit. To the extent any of the following restrictions are not necessary to the Company, in the discretion of the Manager reasonably
exercised; the Manager may eliminate or modify any restriction. Subject to the immediately preceding sentence, no assignee of the
whole or any portion of a Member’s interest in the Company shall have the right to become a substituted Member in place of
his assignor, unless the following conditions are first met:


 


7.2.1: Members may only transfer whole units unless
the Member is transferring his entire Membership Interest;


 


7.2.2: The assignor shall designate its intention
in a written instrument of assignment, which shall be in a form and substance reasonably satisfactory to the Manager;


 


7.2.3: The transferring Member
shall first obtain written consent of the Manager to the substitution. The Manager shall not unreasonably withhold its consent,
but the Manager will withhold its consent to the extent necessary to prohibit transfers that could cause the Company to be classified
as a publicly traded partnership. The Manager will also withhold consent if it determines that the sale or transfer will otherwise
jeopardize the continued ability of the Company to qualify as a “partnership” for federal income tax purposes or that
the sale or transfer may violate any applicable securities laws (including any investment suitability standards);


 


7.2.4: The assignor and assignee
named therein shall execute and acknowledge any other instruments as the Manager may deem necessary or desirable to effect the
substitution, including, but not limited to, a power of attorney;


 


7.2.5: The assignee shall accept, adopt and approve
in writing all of the terms and provisions of this Agreement as the same may have been amended;


 


7.2.6: The assignee shall pay
or, at the election of the Manager, obligate himself to pay all reasonable expenses connected with the substitution, including,
but not limited to, reasonable attorneys’ fees associated therewith; and


 






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7.2.7: The Company has received,
if required by the Manager, a legal opinion satisfactory to the Manager that the transfer will not violate the registration provisions
of the Securities Act of 1933, as amended, or any applicable state securities laws, which opinion shall be furnished at the Member’s
expense.


 


Assignments complying with the above shall be recognized
by the Company on the first day of the calendar month following the month in which the above conditions are met.


 


A Person who acquires an unit
but who is not admitted as a substitute Member by the Manager pursuant to the provisions of this Section 7.2 shall be entitled
only to allocations and distributions with respect to such unit in accordance with this Agreement, but shall have no right to any
information or accounting of the affairs of the Company, shall not be entitled to inspect the books and records of the Company,
and shall not have any of the rights of a member under Delaware Statutes or this Agreement.


  


7.3 Further Restrictions
on Transfers. Notwithstanding any provision to the contrary contained in this Agreement, the following restrictions shall also
apply to any and all proposed sales, assignments and transfer of units, and any proposed sale, assignment or transfer in violation
of same shall be void and of no effect:


 


7.3.1: No Member shall make any transfer or assignment
of all or any part of its unit if said transfer or assignment would, when considered with all other transfers during the same applicable
twelve month period, cause a termination of the Company for federal or Delaware state income tax (if any) purposes;


 


7.3.2: Notice to California
residents: IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY UNIT THEREIN OR TO RECEIVE ANY CONSIDERATION
THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED
IN THE COMMISSIONER’S RULES.


 


7.3.3: Appropriate legends
(including the legend above) under applicable securities laws shall be affixed to any certificates evidencing the units and issued
or transferred to purchasers in other states. For a detailed list, see pages 1-7 of the Company’s Private Placement Memorandum.


 


7.3.4: No Member shall make any transfer or assignment
of all or any of its interest if the Manager determines that the transfer or assignment would result in the Company being classified
as a “publicly traded partnership” with the meaning of Section 7704(b) of the Code or Treasury Regulations. To prevent
that:


 


(a) The Manager will not permit trading of units
on an established securities market within the meaning of Section 7704(b);


 


(b) The Manager will prohibit any transfer of unit
which would not comply with any applicable safe harbors; and


 






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(c) The Manager will not permit any withdrawal of any
unit.


 


7.4 Distributions and Allocations
with Respect to Transferred Units. If any unit is assigned during any accounting period in compliance with the provisions of
this Section 7, all Profits, Losses, each item thereof, and all other items attributable to the assigned unit for such period shall
be divided and allocated between the assignee and the assignor by taking into account their varying rights during the period in
accordance with Code Section 706(d), using any convention permitted by law and selected by the Manager. All distributions on or
before the date of such assignment shall be made to the assignor and all distributions thereafter shall be made to the assignee.


  


ARTICLE 8 


WITHDRAWAL OF A MEMBER;


PLANNED TERMINATION OF THE FUND


 


8.1 Withdrawal of Members.
Absent extreme circumstances, members may not withdraw from the Fund. After the Fund Termination Date the assets of the Fund
will be sold and the Fund will be wound up in orderly fashion as set forth in Article 12 below. The Manager may, at its discretion,
allow withdrawal of a member if conditions dictate such.


 


8.2 Planned Existence and Termination of Fund.
The Fund is intended to have a limited existence as follows.


 


8.2.1: The Fund will terminate
its existence after all loans have been liquidated and the proceeds thereof have been distributed to investors/members. The Investment
Manager intends to begin liquidating the loans held in the Fund in accordance with the operating agreements of the contributing
members.


 


 ARTICLE 9


DISSOLUTION OF THE COMPANY


 


9.1 Events Causing Dissolution. The Company
shall dissolve and commence winding up and liquidating upon the first to occur of any of the following (“Liquidating Events”):


 


9.1.1: The Fund Termination
Date as established by the participating members.


 


9.1.2: The sale of or other disposition of all or
substantially all of the Company Property (without receipt of an exchange property);


 


9.1.3: Affirmative vote or consent of a Super
Majority to dissolve, wind up, and liquidate the Company;


 


9.1.4: The happening of any other event that makes
it unlawful or impossible to carry on the business of the Company;


 






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9.1.5: The resignation or removal of the sole
Manager without appointing a replacement therefore in accordance with Sections 3.5 or 3.6 above;


 


9.1.6: The entry of a judgment of dissolution under
Section 1335 of the Act.


 


The Members hereby agree that, notwithstanding any
provision of the Act, the Company shall not dissolve prior to the occurrence of a Liquidating Event.


 


As soon as possible following
the occurrence of a Liquidating Event, Manager shall comply with the provisions of Section 1336 of the Act, giving notice of the
dissolution of the Company and the commencement of the winding up of its affairs.


 


9.2 Winding Up. Upon
the occurrence of a Liquidating Event, the Company shall immediately be dissolved, but shall continue until its affairs have been
wound up according to the provisions of the Delaware Statutes. Upon dissolution of the Company, the Manager will wind up the Company’s
affairs as follows:


 


9.2.1: No new Note Investments shall be invested in
or purchased;


 


9.2.2: The Manager(s) shall liquidate the assets
of the Company by sale to third parties;


 


9.2.3:
All sums of cash held by the Company as of the date of dissolution, together with all sums of cash received by the Company during
the winding up process from any source whatsoever, shall be distributed as follows:


 


(a) first, to the payment
and discharge of all of the Company’s debts and liabilities, if any, to creditors other than Members;


 


(b) second, to the payment and discharge of all
of the Company’s debts and liabilities, if any, to Members; then


 


(c) the balance, if any,
to the Members in accordance with their Participation Percentage as of the Fund Termination Date.


 


9.3 Compliance with Timing
Requirements of Regulations. If the Company is “liquidated” within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g),
distributions shall be made under this Article 12 (if such liquidation constitutes a dissolution of the Company) or Article 7 hereof
(if it does not) to the Members who have positive Capital Accounts in compliance with Treasury Regulation Section 1.704-1(b)(2)(ii)(b)(2).


 


9.4 Distributions Held
in Trust Reserves. In the discretion of the Manager, a pro rata share of the distributions that would otherwise be made to
the Members pursuant to this Section 12 may be:


 






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9.4.1: Distributed to a trust
established for the benefit of the Members for the purposes of liquidating Company assets, collecting amounts owed to the Company,
and paying any contingent or unforeseen liabilities or obligations of the Company or of the Members arising out of or in connection
with the Company. The assets of any such trust shall be distributed to the Members from time to time, in the reasonable discretion
of the Manager in the same proportions as the amount distributed to such trust by the Company would otherwise have been distributed
to the Members pursuant to this Agreement; or


 


9.4.2: Withheld to provide a reasonable reserve
for Company liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to
the company, provided that such withheld amounts shall be distributed to the Members as soon as practicable.


 


9.5 Deemed Distribution and
Re-contribution. Notwithstanding any other provision of this Section 12, in the event the Company is liquidated within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(i), but no Liquidating Event has occurred, the Company property shall not be liquidated,
the Company's liabilities shall not be paid or discharged, and the Company's affairs shall not be wound up. Instead, the Company
shall be deemed to have distributed the Company Property in kind to the Members, who shall be deemed to have assumed and taken
subject to all Company liabilities, all in accordance with their respective Capital Accounts. Immediately thereafter, the Members
shall be deemed to have re-contributed the Company property in kind to the Company, which shall be deemed to have assumed and taken
subject to all such liabilities.


 


9.6 Certificate of Dissolution.
At such time as all of the debts, liabilities and obligations of the Company have been paid, discharged or otherwise provided
for, a certificate of dissolution shall be prepared, signed, and filed by the Manager as provided in Section 1340 of the Act.


 


9.7 No Recourse to Manager.
Upon dissolution and winding up under the Act, each Member shall look solely to the assets of the Company for the return of his
Capital Account, and if a Member’s Participation Percentage of the Company assets remaining after the payment or discharge
of the debts and liabilities of the Company are insufficient to return the amounts of the Capital Account of Members, Members shall
have no recourse against the Manager or any other Member. The winding-up of the affairs of the Company and the distribution of
its assets shall be conducted exclusively by the Manager. The Manager is hereby authorized to do any and all acts and things authorized
by law for these purposes. If the Manager is removed or resigns and no replacement Manager is appointed by the Super Majority,
the winding-up of the affairs of the Company and the distribution of its assets shall be conducted by the person or entity selected
by a vote of a Super Majority, which person or entity is hereby authorized to do any and all acts and things authorized by law
for such purposes.


 


ARTICLE 10


[RESERVED]


 


 


ARTICLE 11


[RESERVED]


 


 


 


 






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ARTICLE
12


MISCELLANEOUS


  


12.1 Covenant to Sign Documents.
Each Member covenants, for itself and its successors and assigns, to execute, with acknowledgment or verification, if required,
any and all certificates, documents and other writings which may be necessary or expedient to form the Company and to achieve its
purposes, including, without limitation, any amendments to the Articles of Organization and any filings, records or publications
necessary or appropriate under the laws of any jurisdiction in which the Company shall conduct its business.


 


12.2 Notices. Except
as otherwise expressly provided for in this Agreement, all notices which any Member may desire or may be required to give any other
Members shall be in writing and shall be deemed duly given when delivered personally or when deposited in the United States mail,
first-class postage pre-paid. Notices to Members shall be addressed to the Members at the last address shown on the Company records.
Notices to the Manager or to the Company shall be delivered to the Company’s principal place of business, as set forth in
Section 2.5 above or as hereafter changed as provided herein.


 


12.3 Right to Engage in
Competing Business. Nothing contained in this Agreement shall preclude any Member from purchasing or lending money upon the
security of any other property or rights therein, or in any manner investing in, participating in, developing or managing any other
venture of any kind, without notice to the other Members, without participation by the other Members, and without liability to
them or any of them. Each Member waives any right he may have against the Manager for using for its own benefit information received
as a consequence of the Manager’s management of the affairs of the Company. This Section 15.3 shall be subject in its entirety
to the fiduciary duty of the Manager set forth in Section 3.4.


 


12.4 Amendment. This
Agreement is subject to amendment by the affirmative vote of a Majority in accordance with Section 6.2; provided, however, that
no amendment shall be permitted if the effect of such amendment would be to increase the duties or liabilities of any Member or
materially adversely affect any Member’s interest in Profits, Losses, Company assets, distributions, management rights or
voting rights, except as agreed by that Member. In addition, and notwithstanding anything to the contrary contained in this Agreement,
the Manager shall have the right to amend this Agreement, without the vote or consent of any of the Members, if, in the reasonable
judgment of the Manager, such amendment does not adversely affect the rights of the Members, including, without limitation, an
amendment:


 


12.4.1:
To grant to Members (and not solely the Manager in its capacity as an Initial Member) additional rights, remedies, powers or authority
that may lawfully be granted to or conferred upon them;


 


12.4.2:
To cure any ambiguity, to correct or supplement any provision which may be inconsistent with any other provision, or to make any
other provisions for matters or questions arising under this Agreement which will not be inconsistent with the provisions of this
Agreement;


 


12.4.3: To conform this Agreement
to applicable laws and regulations, including, without limitation, federal and state securities and tax laws and regulations;





12.4.4: In the form of a revision
to or updating of Schedule A in accordance with Section 5.1 hereof; and


 






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12.4.5:
To elect for the Company to be governed by any successor Delaware statute governing limited liability companies. The Manager shall
notify the Members within a reasonable time of the adoption of any amendment.


 


12.5 Entire Agreement. This
Agreement and the Memorandum constitutes the entire agreement between the parties and supersedes any and all prior agreements and
representations, either oral or in writing, between the parties hereto regarding the subject matter contained herein.


 


12.6 Waiver. No waiver
by any party hereto of any breach of, or default under, any provision of this Agreement by any party shall be construed or deemed
a waiver of any breach of or default under any other provision of this Agreement, and shall not preclude any party from exercising
or asserting any rights under this Agreement for any future breach or default of the same provision of this Agreement.


 


12.7 Severability.
If any term, provision, covenant or condition of this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the provisions of this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.


 


12.8 Application of Delaware
Law. This Agreement and the application or interpretation thereof shall be governed, construed, and enforced exclusively by
its terms and by the law of the State of Delaware.


 


12.9 Captions. Section
titles or captions contained in this Agreement are inserted only as a matter of convenience and for reference and in no way define,
limit, extend or describe the scope of this Agreement.


 


12.10 Number and Gender.
Whenever the singular form is used in this Agreement it includes the plural when required by the context, and the masculine
gender shall include the feminine and neutral genders.


 


12.11 Counterparts. This Agreement may be
executed in counterparts, any or all of which may be signed by Manager on behalf of the Members as their attorney-in-fact.


 


12.12 Waiver of Action for
Partition. Each of the parties hereto irrevocably waives, during the term of the Company, any right that it may have to maintain
any action for partition for any property of the Company.


 


12.13 Binding on Assignees.
Each and all of the covenants, terms, provisions and agreements herein contained shall be binding upon and inure to the benefit
of the successors and assigns of the respective parties hereto, subject to the provisions of Section 10.2, which control the assignment
or other transfer of units.


 


 



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IN WITNESS WHEREOF, the undersigned have hereunto
set their hands as of the date first set forth above.


 


 





	COMPANY:	MEMBER:
	 	 
	2011-12 Opportunity Fund 6-1, LLC	Opportunity Fund VI, LLC
	By:  Bayou City Exploration, Inc., Manager	 
	 	By: _______________________________
	 	 
	By: ____________________________	 
		MEMBER:
	 	 
	 	BYCX I, LLC
	 	 
	 	By: _______________________________
	 	 
	 	 
	 	MEMBER:
	 	 
	 	Opportunity Fund VII, LLC
	 	 
	 	By: ______________________________




 


 


 






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Schedule
1.1


 


Definitions


 


Act means the Delaware Limited Liability
Company Law


 


Affiliate means: (a) any person directly
or indirectly controlling, controlled by or under common control with the Person; (b) any other Person owning or controlling ten
percent (10%) or more of the outstanding voting securities of the Person; (c) any officer, director or Member of the Person or
(d) if the other Person is an officer, director or Manager, any company for which the Person acts in any similar capacity.


 


Agreement means this Operating Agreement, as amended
from time to time.


 


Acquisition Expenses
means all expenses, including, but not limited to, legal fees and expenses, travel and communication expenses, costs of appraisals,
broker price opinions, tax checks, accounting fees and expenses, title insurance funded by the Company, commissions, and other
miscellaneous expenses, related to the evaluation, selection and acquisition of Note Investments, whether or not a Note Investment
is acquired.


 


Amortization Ratio
means the ratio applied to voluntary principal payments and pre- payments received by the Company for purposes of allocating
amortization of the Note Investment Cost. It shall be calculated as the ratio of the Note Investment Cost to the total unpaid principal
balance of the Mortgage Loan or Land Contract outstanding at the time of purchase. By way of example, if the Amortization Ratio
is 70%, then 70% of an applicable principal payment amortizes the Note Investment Cost and the remaining 30% is treated as an Investment
Gain. Involuntary principal pre-payments received shall be applied first to fees and expenses associated with the individual Mortgage
Loan or Land Contract, then to amortization of the Note Investment Cost to Members, and then, remaining proceeds, if any, shall
be shared as Investment Gains.


 


Basis means the
total cost to the Company for the acquisition of the Note Investment, including the purchase price for the Note Investment, the
Acquisition Expenses, and the Transaction Fee.


 


Capital Account means, for any Member, the Capital
Account maintained for the Member in accordance with the following provisions:


 


(a) The
Manager shall credit to each Member’s Capital Account: (i) on the Closing Date, the Member’s Capital Contribution,
(ii) the Member’s distributive share of Profits, (iii) any items in the nature of income or gain (from unexpected adjustments,
allocations or distributions) that are specially allocated to a Member, and (iv) the amount of any Company liabilities that are
assumed by the Member or that are secured by any Company property distributed to the Member.


 






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(b) The Manager shall debit from
each Member’s Capital Account: (i) the amount of cash and the fair market value of any Company property distributed to the
Member under any provision of this Agreement, (ii) the Member’s distributive share of Losses, (iii) any items in the nature
of expenses or losses that are specially allocated to a Member and (iv) the amount of any liabilities of the Member that are assumed
by the Company or that are secured by any property contributed by the Member to the Company.


 


If the Gross Asset Value of
a Company asset is adjusted as a result of a Write-down, the Manager shall concurrently adjust the Capital Accounts of all Members
in order to reflect the aggregate net adjustment that would have occurred if the Company had recognized Losses equal to the Write-down
Amount and the Losses were allocated under Article 7.


 


If any unit in the Company
is transferred in accordance with Section 10.2 of this Agreement, the transferee shall succeed to the Capital Account of the transferor
to the extent it relates to the transferred unit.


 


The foregoing provisions and
the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulation
Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with the Regulation. If the Manager determines
that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto, are computed in order
to comply with the then existing Treasury Regulation, the Manager may make the modification, provided that it is not likely to
have a material effect on the amounts distributable to any Member under Articles 7 and 12 of this Agreement upon the dissolution
of the Company. The Manager shall make any appropriate modification if unanticipated events might otherwise cause this Agreement
not to comply with Treasury Regulation Section 1.704-1(b) as provided for in Sections 7.7 and 15.4.


 


Capital Contribution means the total investment
and contribution to the capital of the Company made by a Member.


 


Cash for Distribution
means that portion of the Cash Flow available for pro-rata distribution to Members consisting of, to the extent received and available
for distribution, (a) un-amortized Note Investment Cost in accordance with the Amortization Ratio, (b) 90% of the actual interest
income received and (c) 90% of the Investment Gains received, subject to recovery of unrecovered losses of Note Investment Cost.
Only actual interest income received (versus scheduled) will be distributed to Members and the Loan Servicer.


 


Cash Flow means for any calendar quarter period
the cash funds received by the Company for that calendar quarter period.


 


Member means a Person who owns one or more units
of the member company.


 


Initial Member means BYCX Opportunity
Fund I, LLC, Opportunity Fund VI, LLC and Opportunity Fund VII, LLC


 






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Code means the Internal Revenue Code
of 1986, as amended from time to time and corresponding provisions of subsequent revenue laws.


 


Company means 2011-12 Opportunity Fund 6-1, LLC,
the Delaware limited liability company to which this Agreement pertains.


 


Expenses means
all expenses in connection with the operation of the Company’s business, including, but not limited to, all Acquisition Expenses,
but specifically excluding Manager’s office overhead.


 


Fiscal Year means, subject to the provisions of
Section 706 of the Code and Section


9.6.1, (i) the period commencing on the date of formation of
the Company and ending on December 31, 2012 (ii) any subsequent twelve (12) month period beginning on January 1 and ending on December
31 and (iii) the period commencing January 1 and ending on the date on which all Company assets are distributed to the Members
under Article 12.


 


Gross Asset Value  means, for any Company asset,
the following:


 


(a) The initial Gross Asset Value of any Company asset at the
time that it is contributed by a Member to the capital of the Company shall be an amount equal to the fair market value of the
Company asset (without regard to the provisions of Code Section 7701(g)), as determined by the contributing Member and the Manager;


 


(b) The Gross Asset Values of all Company
assets shall be adjusted, as determined by the distributed Member and the Manager, to equal their respective fair market values
upon the distribution to a Member by the Company of more than a de minimis amount of Company assets (other than money), unless
all Members simultaneously receive distributions of undivided units in the distributed Company assets in proportion to their respective
Capital Accounts;


 


(c) The Gross Asset Values of
all Company assets shall be adjusted to equal their respective fair market values (as determined by the Manager, in its reasonable
discretion) upon the termination of the Company for Federal income tax purposes under Code Section 708(b)(1)(B); and


 


(d) The Gross Asset Value of a Company asset shall be adjusted
in the case of a Write-down of the Company asset in accordance with the provisions of this Agreement.


 


HSLLC as used in this agreement means Home Servicing,
LLC.


 


Investment Gains shall
be equal to the amount by which a principal prepayment, after considering the Amortization Ratio exceeds the Company’s un-amortized
Note Investment Cost on the Mortgage Loans and Land Contracts (after payment of Fund expenses and fees, except office expenses,
which will be paid by the Manager).


 






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Investment Manager means the Fund’s Investment
Manager is Bayou City Exploration, Inc., a Nevada corporation (which we refer to as “Manager” or the Investment Manager”),
organized on November 30, 1994. Bayou City’s executive offices are at 625 Adams Street, Suite 710, Bowling Green, Kentucky
42101.


 


Units means, as the context
requires, ownership of equity in the Company that are (a) issued to Members upon their admission to the Company or (b)transferred
to those who become substituted Members under Section 12.2 hereof.


  


Land Contracts
as used in this Agreement are contracts between a buyer and the Company of a property, wherein the Company holds the title or deed
to the property until all agreed upon payments have been made in full.


 


Delaware Statutes means the Delaware laws with
respect to limited liability companies including the Act, as amended from time to time, unless indicated to the contrary by the
context.


 


Manager means Bayou City Exploration, Inc., a
Nevada Corporation, in that capacity or any Person replacing Bayou City Exploration, Inc. under this Agreement.


 


Member means a Member or the Initial Member(s).


 


Membership Unit(s)
means the entire ownership interest of a Member Company and its members in the Company at any particular time, including the right
of the Member Company and its members to any and all benefits to which a Member may be entitled as provided in this Agreement,
together with the obligations of the Member Company and its members to comply with all of the terms and provisions of this Agreement.


 


Mortgage means the lien(s) created on the Real
Property of borrowers securing their respective obligations to the Company to repay Note Investments, whether in the form of a
deed of trust, mortgage or otherwise.


 


Mortgage Notes means investments of the Member
Companies held by the Company that are notes, debentures, bonds and other evidences of indebtedness or obligations that are negotiable
or non-negotiable and secured or collateralized by Mortgages.


 


Note Investment(s) means the Mortgage Notes and
Land Contracts or an interest in a Mortgage Note or Land Contract that are held by the Company.


 


Note Investment Cost means the purchase price
paid by the Member for the Note Investment, not including Acquisition Costs and the Transaction Fee.


 


Offering means the offer and sale of units of
the Member Companies made under their Memorandums.


 






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Participation Percentage means the percentage
that the amount of a Member Company’s Capital Account apportioned among the members as compared to the aggregate amount of
all such Capital Accounts.


 


Person means any natural person, partnership,
corporation, unincorporated association or other legal entity.


 


Profits and Losses mean, for each Fiscal Year
or any other period, an amount equal to the Company’s taxable income or loss for the Fiscal Year or other given period, determined
in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately
under Code Section 703(a) (1) shall be included in taxable income or loss), with the following adjustments (without duplication):


 


(a) Any income of the Company
that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses under this section shall
be added to the taxable income or loss;


 


(b) Any expenditures of the Company
described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code expenditures under Treasury Regulation
Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses under this section, shall be
subtracted from the taxable income or loss. If any Company asset has a Gross Asset Value which differs from its adjusted cost basis,
gain or loss resulting from the disposition of the Company asset shall be computed using the Gross Asset Value (rather than adjusted
cost basis) of the Company asset. Notwithstanding any other provision of this Section, any items in the nature of income, gain,
expenses or losses, which are specially allocated under Section 7.5.1, 7.5.2 and 7.6, shall not be taken into account in computing
Profits or Losses.


 


Real Property means and includes: (a) land and
any buildings, structures, and improvements, and (b) all fixtures, whether in the form of equipment or other personal property,
that is located on or used as part of land.


 


Servicing Fee
means a monthly Servicing Fee to HSLLC in an amount equal to (a) the greater of $30 per month per Mortgage Note and Land Contract
or one-twelfth of 1% of the sum of the unpaid principal balance for all performing Note Investments during the relevant calendar
month plus all cash on hand, plus (b) for each non-performing Note Investment, if any, $175.00 per month.


 


Super Majority
means any group of Members who together hold over 80% of the total outstanding units of the Company as of a particular date (or
if no date is specified, the first day of the then current calendar month).


 


Treasury Regulations means, except where the context
indicates otherwise, the permanent, temporary, proposed, or proposed and temporary regulations of the U.S. Department of the Treasury
under the Code, as the regulations may be lawfully changed from time to time.


 






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Unit(s) means a Membership Unit.


 


Write-down means
a determination by the Manager for a particular Note Investment or other Company investment (which determination has been verified
by the Company’s accountants as being in conformity with generally accepted accounting principles) that the fair market value
of the investment at the time the determination is made is less than the amount actually paid or allocated to the purchase of the
investment, which determination shall be made by the Company and its accountants within thirty (30) days of the end of each calendar
quarter and any Write-down shall be effective on the last day of the relevant calendar quarter during the term of this Agreement.


 


Write-down Amount
means, for any Note Investment or other Company investment, the amount by which, at the time that a Write-down is determined for
the Note Investment, the amount actually paid or allocated to the purchase of the investment exceeds its fair market value.


 


 


 


 


 


 


 


 


 






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