# OPERATING AGREEMENT OF
# HIGH FLIGHT NETWORK OPERATING COMPANY GROUP (SERIES) LLC
# A SERIES OF TURNKEY NETWORK SYSTEMS LLC

**Effective Date: [EFFECTIVE DATE]**

## ARTICLE 1 - FORMATION AND FOUNDATIONAL PROVISIONS

### Section 1.1 - Series Formation and Structure

1. **Series Establishment**: This Operating Agreement (the "Agreement") is made and entered into effective as of [EFFECTIVE DATE] (the "Effective Date"), by and among High Flight Network Operating Company Group (series) LLC (the "Series"), a series of Turnkey Network Systems LLC (the "Parent LLC"), and the persons who are or who become members of the Series.

2. **Authority**: This Series is established pursuant to:
   * The Texas Business Organizations Code § 101.601 et seq.
   * The Amended and Restated Operating Agreement of Turnkey Network Systems LLC (the "Parent Agreement")
   * The filing of the Certificate of Series with the Texas Secretary of State

3. **Parent LLC Relationship**: The Series acknowledges that:
   * It is a separate series of the Parent LLC with its own rights, powers, duties, assets, liabilities, and business purpose
   * It is subject to the mandatory operational requirements contained in Article 3 of the Parent Agreement
   * It maintains independence and isolation of its assets and liabilities as provided in Section 4.2 of the Parent Agreement
   * It must comply with the classification of membership interests as provided in Article 5 of the Parent Agreement

4. **Series Authority**: Notwithstanding its status as a series of the Parent LLC, the Series:
   * Maintains autonomous decision-making authority over its operations, decisions, policies, and affairs through its Board of Directors
   * Has the right to conduct its business, operations, and affairs as specifically set forth in this Agreement
   * Is vested with all powers and authority necessary to implement the FairShares Model and other governance provisions specified herein

### Section 1.2 - Business Purpose and Operating Jurisdiction

1. **Primary Business Purpose**: The Series exists to plan, build, deploy, and operate internet service provider points of presence, with a specific focus on:
   * Network infrastructure development and deployment
   * Internet service provider operations
   * Technical support and maintenance services
   * Network expansion and enhancement
   * Other related telecommunications services

2. **Nationwide Operations**: The Series shall conduct business operations throughout all 50 states of the United States, while maintaining its legal formation and structure as a Texas series LLC.

3. **Business Model**: The Series shall operate under the FairShares Model, which:
   * Recognizes and balances the interests of four stakeholder categories: Founders, Labor, Users, and Investors
   * Implements equitable profit-sharing among these stakeholder categories
   * Provides for stakeholder representation in governance
   * Operates with sociocratic governance principles to ensure stakeholder voice and collaborative decision-making

4. **Subsidiary Series**: The Series may establish subsidiary series to:
   * Manage specific network deployment projects
   * Operate in distinct geographic markets
   * Provide specialized telecommunications services
   * Implement other business initiatives consistent with the Series' primary purpose

### Section 1.3 - Securities Law Notice

THE MEMBERSHIP INTERESTS IN THE SERIES OFFERED HEREUNDER HAVE NOT BEEN REGISTERED WITH OR APPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, THE TEXAS STATE SECURITIES BOARD, OR ANY OTHER STATE SECURITIES REGULATORY AUTHORITY. THE INTERESTS ARE BEING OFFERED IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION REQUIREMENTS OF FEDERAL AND STATE LAW.

THE INTERESTS ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

MEMBERSHIP INTERESTS ARE HIGH-RISK, ILLIQUID INVESTMENTS SUITABLE ONLY FOR PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. MEMBERSHIP INTERESTS MAY ONLY BE OFFERED TO AND ACQUIRED BY PERSONS WHO MEET THE INVESTOR SUITABILITY REQUIREMENTS ESTABLISHED BY THE SERIES AND SET FORTH IN ARTICLE 5 OF THIS AGREEMENT.

### Section 1.4 - Definitions and Interpretation

1. **Defined Terms**: For purposes of this Agreement, the following terms shall have the meanings specified below. Any term not defined in this Section shall have the meaning provided elsewhere in this Agreement, the Parent Agreement, or, if not defined in either agreement, the meaning provided in the Texas Business Organizations Code.

   a. **Board** or **Board of Directors**: The governing body of the Series which provides overall governance and strategic direction.

   b. **Class A Membership Interest**: A membership interest with full voting and economic rights, as defined in Section 5.2 of the Parent Agreement.

   c. **Class B Membership Interest**: A membership interest with economic rights only, as defined in Section 5.3 of the Parent Agreement.

   d. **Class C Membership Interest**: A membership interest with limited rights resulting from involuntary transfer, as defined in Section 5.4 of the Parent Agreement.

   e. **Electronic Records**: Digital documentation maintained in electronic format through the Known Element Enterprises systems, as required by Section 3.2 of the Parent Agreement.

   f. **FairShares Model**: The stakeholder governance and profit-sharing model implemented by the Series that recognizes four stakeholder groups: Founders, Labor, Users, and Investors.

   g. **Founder Member**: A Member who is recognized as a founder of the Series and who holds Membership Interests in the Founder stakeholder category.

   h. **HFNFC**: High Flight Network Finance Company (series) LLC, a series of the Parent LLC that provides financing for network buildouts.

   i. **HFNFC Coordination Committee**: A permanent committee of the Board established to coordinate with HFNFC regarding network buildout financing.

   j. **Investor Member**: A Member who has contributed capital to the Series and holds Membership Interests in the Investor stakeholder category.

   k. **KNEL**: Known Element Enterprises (series) LLC, the designated provider of all IT services for the Parent LLC and its series.

   l. **Labor Member**: A Member who contributes labor to the Series and holds Membership Interests in the Labor stakeholder category.

   m. **Member**: A person or entity who holds a Membership Interest in the Series and who has been admitted to the Series in accordance with this Agreement.

   n. **Membership Interest**: A Member's rights in the Series, including economic rights, voting rights (if any), and rights to information.

   o. **Parent Agreement**: The Amended and Restated Operating Agreement of Turnkey Network Systems LLC.

   p. **Parent LLC**: Turnkey Network Systems LLC, a Texas series limited liability company.

   q. **Profit Interest**: An interest in the future profits of the Series that does not include any capital interest or obligation to contribute capital.

   r. **Series**: High Flight Network Operating Company Group (series) LLC, a series of the Parent LLC established pursuant to the Texas Business Organizations Code § 101.601 et seq.

   s. **Sociocratic Governance**: A governance system based on consent decision-making, circle organization, and double-linking, as implemented by the Series.

   t. **Stakeholder Category**: One of the four categories established under the FairShares Model: Founder, Labor, User, or Investor.

   u. **TCTC**: The Campus Trading Company (series) LLC, the designated provider of all transaction and treasury services for the Parent LLC and its series.

   v. **User Member**: A Member who uses the Series' services and holds Membership Interests in the User stakeholder category.

2. **Interpretation**: In this Agreement, unless the context clearly requires otherwise:
   * References to "Articles," "Sections," "Subsections," or "Schedules" are to Articles, Sections, Subsections, or Schedules of this Agreement.
   * The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation."
   * The words "herein," "hereof," "hereunder," and similar terms shall refer to this Agreement as a whole and not to any specific section.
   * Words in the singular shall include the plural and vice versa, and words of one gender shall include the other gender as well as neuter.
   * Headings and captions are for convenience only and shall not affect the interpretation of this Agreement.
   * References to any law, statute, or regulation shall include all amendments, modifications, or replacements of the same in effect at the relevant time.
   * References to any agreement, document, or instrument mean such agreement, document, or instrument as amended, supplemented, or modified from time to time in accordance with its terms.
   * In the case of any conflict between the provisions of this Agreement and the provisions of the Parent Agreement, the provisions of the Parent Agreement shall control.

## ARTICLE 2 - BOARD OF DIRECTORS AND GOVERNANCE

### Section 2.1 - Board of Directors

1. **Ultimate Governing Authority**: The Board of Directors shall have ultimate governing authority over all Series operations, decisions, policies, and affairs. The Board's authority shall include, but not be limited to:
   * Setting strategic direction and priorities
   * Approving annual budgets and major expenditures
   * Establishing and overseeing committees
   * Appointing and removing officers
   * Overseeing the admission and removal of Members
   * Approving the establishment of subsidiary series
   * Making distribution decisions
   * Adopting and amending policies and procedures
   * Any other matters related to the governance and operation of the Series

2. **Board Composition**:
   * The Board shall consist of representatives from each of the four stakeholder categories, with representation proportional to the stakeholder categories' profit allocation percentages.
   * Each stakeholder category shall elect its own representatives to the Board.
   * The initial Board composition shall be: [INITIAL BOARD COMPOSITION].
   * Board members shall serve terms of [TERM LENGTH] years, with staggered terms to ensure continuity.

3. **Board Decisions**:
   * The Board shall make decisions by consent in accordance with sociocratic principles as detailed in Section 2.3.
   * Each Board member shall have one vote on matters requiring formal voting.
   * A quorum for Board meetings shall consist of at least one representative from each stakeholder category and a majority of the total Board members.
   * Written records of all Board decisions shall be maintained in the Electronic Records system provided by KNEL.

4. **Board Meetings**:
   * The Board shall meet at least quarterly, with additional meetings as needed.
   * Meetings may be held in person, by video conference, or by other means allowing all participants to communicate simultaneously.
   * Notice of regular meetings shall be provided at least 14 days in advance.
   * Emergency meetings may be called with 48 hours' notice.
   * Any Board member may place items on the meeting agenda.
   * Minutes of all Board meetings shall be recorded and maintained in the Electronic Records system.

### Section 2.2 - Stakeholder Categories and Representation

1. **Stakeholder Categories**: In accordance with the FairShares Model, the Series recognizes four stakeholder categories:
   
   * **Founder Members**: Individuals who were instrumental in establishing the Series, developing its concept, and initiating its operations.
   
   * **Labor Members**: Individuals who contribute labor to the Series, including employees, contractors, and other workers who provide services to the Series.
   
   * **User Members**: Individuals and entities who use the Series' services, including customers, clients, and beneficiaries of the internet service provider points of presence.
   
   * **Investor Members**: Individuals and entities who provide financial capital to the Series.

2. **Profit Allocation Between Categories**:
   * Total profits of the Series shall be allocated between the four stakeholder categories according to the following percentages:
     * Founder Members: [PERCENTAGE]%
     * Labor Members: [PERCENTAGE]%
     * User Members: [PERCENTAGE]%
     * Investor Members: [PERCENTAGE]%
   
   * These allocation percentages may be adjusted only by consent of all four stakeholder categories, with such consent determined through each category's internal governance processes.

3. **Equal Distribution Within Categories**:
   * Within each stakeholder category, all Members shall receive equal profit interests regardless of the size or nature of their contribution.
   * For clarity, this means that:
     * Each Founder Member receives an equal share of the Founder category allocation
     * Each Labor Member receives an equal share of the Labor category allocation
     * Each User Member receives an equal share of the User category allocation
     * Each Investor Member receives an equal share of the Investor category allocation
   
   * The equal distribution principle does not prevent the establishment of eligibility criteria or qualification thresholds for membership in each category.

4. **Board Representation**:
   * Each stakeholder category shall have representation on the Board proportional to its profit allocation percentage.
   * The number of Board seats allocated to each category shall be determined by multiplying the total number of Board seats by the category's profit allocation percentage, rounded to the nearest whole number, with a minimum of one representative per category.
   * Each stakeholder category shall determine its own process for selecting its Board representatives, provided that the process is democratic and allows for participation by all category members.

### Section 2.3 - Sociocratic Governance Principles

1. **Circle Organization**:
   * The Series' governance shall be organized into interconnected circles, each with a defined domain of authority and responsibility.
   * The Board of Directors shall function as the General Circle.
   * Each stakeholder category shall constitute a Primary Circle.
   * Additional circles may be established for specific functions, departments, or projects.

2. **Double-Linking**:
   * Each circle shall be linked to its parent circle by at least two members:
     * An Operational Leader appointed by the parent circle
     * A Circle Representative elected by the circle members
   * These links shall participate in the decision-making of both circles.
   * Double-linking ensures bidirectional flow of information and authority.

3. **Consent Decision-Making**:
   * Circle decisions shall be made by consent rather than majority vote.
   * Consent exists when no circle member presents a reasoned, paramount objection.
   * Objections must be based on risks to the circle's ability to fulfill its aim.
   * Consent does not require agreement or preference, only the absence of paramount objections.
   * The consent process shall follow these steps:
     * Present proposal
     * Clarifying questions
     * Quick reactions
     * Consent round (objections or no objections)
     * Integration of objections if present
     * New consent round on modified proposal

4. **Sociocratic Elections**:
   * Circle roles shall be filled through a consent-based election process.
   * The election process shall include:
     * Discussion of the role and its requirements
     * Nomination round where each member nominates their candidate with reasons
     * Change round where members may change their nominations based on reasons heard
     * Proposal by the facilitator based on the strongest nomination
     * Consent round on the proposal
   * If objections arise, they are discussed and integrated, potentially resulting in a modified proposal.

### Section 2.4 - Committees of the Board

1. **Standing Committees**: The Board shall establish and maintain the following standing committees:

   a. **Executive Committee**:
      * Composition: At least one representative from each stakeholder category
      * Purpose: Handle urgent matters between Board meetings and oversee implementation of Board decisions
      * Authority: Limited to actions expressly delegated by the full Board
      * Meetings: As needed, with minutes reported to the full Board

   b. **HFNFC Coordination Committee**:
      * Composition: At least three Board members from different stakeholder categories
      * Purpose: Coordinate with High Flight Network Finance Company regarding network buildout financing
      * Duties:
        * Hold regular meetings with HFNFC leadership
        * Coordinate the financing application process
        * Monitor the relationship and resolve disputes
        * Report to the full Board quarterly
        * Develop standardized processes and documentation for financing requests
      * Authority: Make recommendations to the full Board regarding financing arrangements
      * Meetings: At least monthly, and more frequently as needed

   c. **Membership Committee**:
      * Composition: At least one representative from each stakeholder category
      * Purpose: Oversee membership application process and Member relations
      * Authority: Make recommendations to the Board regarding membership matters
      * Meetings: At least quarterly, and as needed to review applications

2. **Subsidiary Series Oversight Committees**:
   
   * For each subsidiary series established by the Series, the Board shall establish a dedicated oversight committee with:
     * At least three Board members from different stakeholder categories
     * Specific expertise relevant to the subsidiary's operations
     * Clear reporting requirements to the full Board
   
   * Each Subsidiary Series Oversight Committee shall:
     * Monitor the operations, performance, and compliance of the subsidiary series
     * Provide guidance and support to the subsidiary series leadership
     * Meet at least quarterly with subsidiary series leadership
     * Review financial and operational reports
     * Make recommendations to the full Board regarding the subsidiary series
     * Report to the full Board at least quarterly

3. **Ad Hoc Committees**:
   
   * The Board may establish additional committees as needed for specific purposes.
   
   * Each ad hoc committee shall:
     * Have a clear charter defining its purpose, authority, and duration
     * Include representatives from multiple stakeholder categories
     * Report regularly to the full Board
     * Be disbanded upon completion of its assigned purpose

4. **Committee Operations**:
   
   * All committees shall:
     * Operate using sociocratic principles
     * Maintain minutes of all meetings
     * Provide regular reports to the Board
     * Have clearly defined decision-making authority
     * Coordinate with other committees as appropriate

## ARTICLE 3 - MEMBERSHIP AND STAKEHOLDER CATEGORIES

### Section 3.1 - Membership Classes

1. **Three-Class System**: In accordance with Article 5 of the Parent Agreement, all membership interests in the Series shall be classified as one of the following:
   
   * **Class A Membership Interests**: Membership interests with full voting and economic rights.
   
   * **Class B Membership Interests**: Membership interests with economic rights only and no voting rights.
   
   * **Class C Membership Interests**: Membership interests with severely limited rights resulting from involuntary transfers.

2. **Default Classification**:
   
   * All Founder Members, Labor Members, User Members, and Investor Members shall hold Class A Membership Interests unless:
     * They specifically request and are approved to hold Class B interests; or
     * Their interests are converted to Class C interests due to involuntary transfer as provided in Section 5.5 of the Parent Agreement.
   
   * The classification of membership interests is separate from and in addition to the stakeholder category designations.

3. **Voting Rights**:
   
   * Only holders of Class A Membership Interests shall have voting rights.
   
   * Voting rights shall be exercised within each Member's stakeholder category for:
     * Selecting Board representatives for the stakeholder category
     * Determining the stakeholder category's positions on major decisions
     * Other matters specific to the stakeholder category

4. **Economic Rights**:
   
   * All Members, regardless of class, shall have economic rights in accordance with:
     * Their stakeholder category's allocation percentage
     * The equal distribution principle within each stakeholder category
     * The limitations applicable to their membership class

5. **Conversion of Membership Interests**:
   
   * Membership interests shall be subject to the automatic conversion provisions of Section 5.5 of the Parent Agreement.
   
   * Any Class A or Class B interest that is involuntarily transferred shall automatically convert to a Class C interest.
   
   * The Series shall document all conversions in the electronic records system maintained by KNEL.

### Section 3.2 - Founder Members

1. **Qualification**:
   
   * Founder Members must have been instrumental in establishing the Series, developing its concept, and initiating its operations.
   
   * The initial Founder Members shall be: [LIST OF INITIAL FOUNDER MEMBERS].
   
   * Additional Founder Members may be admitted only by unanimous consent of existing Founder Members and approval by the Board.

2. **Rights and Responsibilities**:
   
   * Founder Members shall collectively be entitled to [PERCENTAGE]% of Series profits.
   
   * Each Founder Member shall receive an equal share of the Founder Member profit allocation.
   
   * Founder Members shall select representatives to the Board in proportion to their stakeholder category's profit allocation percentage.
   
   * Founder Members have a responsibility to:
     * Provide strategic guidance to the Series
     * Maintain and develop the Series' vision and mission
     * Support the Series' growth and development
     * Participate in major strategic decisions

3. **Founder Circle**:
   
   * All Founder Members shall constitute the Founder Circle within the sociocratic governance structure.
   
   * The Founder Circle shall:
     * Select Founder representatives to the Board
     * Develop and maintain the Series' vision and mission
     * Propose strategic initiatives
     * Address matters specific to Founder Members

### Section 3.3 - Labor Members

1. **Qualification**:
   
   * Labor Members must contribute labor to the Series, including as employees, contractors, or other workers who provide services to the Series.
   
   * Minimum labor contribution requirements for Labor Member status shall be established by the Board and may include:
     * Minimum hours of service
     * Minimum duration of relationship
     * Specific skills or qualifications
     * Commitment to ongoing involvement
   
   * Labor Member status shall be reviewed annually to confirm continued qualification.

2. **Rights and Responsibilities**:
   
   * Labor Members shall collectively be entitled to [PERCENTAGE]% of Series profits.
   
   * Each Labor Member shall receive an equal share of the Labor Member profit allocation.
   
   * Labor Members shall select representatives to the Board in proportion to their stakeholder category's profit allocation percentage.
   
   * Labor Members have a responsibility to:
     * Perform their work with skill and diligence
     * Contribute to the Series' operations and success
     * Participate in decisions affecting their work
     * Support the Series' mission and values

3. **Labor Circle**:
   
   * All Labor Members shall constitute the Labor Circle within the sociocratic governance structure.
   
   * The Labor Circle shall:
     * Select Labor representatives to the Board
     * Address matters related to working conditions and labor policies
     * Develop proposals related to labor practices
     * Coordinate labor resources and skills development

4. **Labor Member Admission**:
   
   * New Labor Members may be admitted through a process established by the Labor Circle and approved by the Board.
   
   * The admission process shall include:
     * Verification of minimum qualification requirements
     * Orientation to the Series and the FairShares Model
     * Consent of existing Labor Members
     * Approval by the Membership Committee
     * Formal documentation in the electronic records system

### Section 3.4 - User Members

1. **Qualification**:
   
   * User Members must be users of the Series' services, including customers, clients, and beneficiaries of the internet service provider points of presence.
   
   * Minimum usage requirements for User Member status shall be established by the Board and may include:
     * Minimum level of service utilization
     * Minimum duration of customer relationship
     * Commitment to ongoing service use
     * Geographic location within service areas
   
   * User Member status shall be reviewed annually to confirm continued qualification.

2. **Rights and Responsibilities**:
   
   * User Members shall collectively be entitled to [PERCENTAGE]% of Series profits.
   
   * Each User Member shall receive an equal share of the User Member profit allocation.
   
   * User Members shall select representatives to the Board in proportion to their stakeholder category's profit allocation percentage.
   
   * User Members have a responsibility to:
     * Provide feedback on services
     * Participate in service development discussions
     * Support the Series through continued use of services
     * Promote the Series' services when appropriate

3. **User Circle**:
   
   * All User Members shall constitute the User Circle within the sociocratic governance structure.
   
   * The User Circle shall:
     * Select User representatives to the Board
     * Address matters related to service quality and user experience
     * Develop proposals for service improvements
     * Provide organized feedback on Series services

4. **User Member Admission**:
   
   * New User Members may be admitted through a process established by the User Circle and approved by the Board.
   
   * The admission process shall include:
     * Verification of minimum qualification requirements
     * Orientation to the Series and the FairShares Model
     * Consent of the User Circle
     * Approval by the Membership Committee
     * Formal documentation in the electronic records system

### Section 3.5 - Investor Members

1. **Qualification**:
   
   * Investor Members must provide financial capital to the Series.
   
   * Minimum investment requirements for Investor Member status shall be established by the Board and may include:
     * Minimum investment amount
     * Investment timing or stage
     * Investment structure or terms
     * Commitment to the Series' mission and vision
   
   * All Investor Members must qualify as accredited investors under SEC Rule 501(a).

2. **Rights and Responsibilities**:
   
   * Investor Members shall collectively be entitled to [PERCENTAGE]% of Series profits.
   
   * Each Investor Member shall receive an equal share of the Investor Member profit allocation, regardless of investment size.
   
   * Investor Members shall select representatives to the Board in proportion to their stakeholder category's profit allocation percentage.
   
   * Investor Members have a responsibility to:
     * Support the Series' financial health
     * Provide financial expertise when appropriate
     * Respect the Series' mission and the FairShares Model
     * Participate in financial planning and capital allocation discussions

3. **Investor Circle**:
   
   * All Investor Members shall constitute the Investor Circle within the sociocratic governance structure.
   
   * The Investor Circle shall:
     * Select Investor representatives to the Board
     * Address matters related to capital allocation and financial performance
     * Develop proposals related to capital structure and investment
     * Monitor financial health and sustainability

4. **Investor Member Admission**:
   
   * New Investor Members may be admitted through a process established by the Board in coordination with Redwood Springs Capital Partners Group LLC, the exclusive capital raising entity for all series of the Parent LLC.
   
   * The admission process shall include:
     * Verification of accredited investor status
     * Minimum investment requirements
     * Due diligence and disclosure
     * Consent of the Investor Circle
     * Approval by the Membership Committee
     * Formal documentation in the electronic records system

### Section 3.6 - Membership Records and Documentation

1. **Electronic Membership Registry**:
   
   * In accordance with Section 3.2 of the Parent Agreement, the Series shall maintain an electronic membership registry through the IT services provided by KNEL.
   
   * The registry shall record:
     * Member name and contact information
     * Membership class (A, B, or C)
     * Stakeholder category (Founder, Labor, User, or Investor)
     * Date of admission
     * Current status
     * Investment or contribution details
     * Distribution history
     * Any special terms or conditions
   
   * The registry shall be the official record of membership and shall be conclusive for all purposes related to membership status, voting rights, and economic rights.

2. **Membership Certificates**:
   
   * Electronic certificates evidencing membership interests shall be issued in accordance with Section 5.7 of the Parent Agreement.
   
   * Certificates shall clearly indicate:
     * Member name
     * Membership class (A, B, or C)
     * Stakeholder category (Founder, Labor, User, or Investor)
     * Date of issuance
     * Any transfer restrictions
     * Required securities law legends
   
   * Certificates shall be accessible to Members through the electronic records system maintained by KNEL.

3. **Member Information Rights**:
   
   * All Members shall have access to:
     * The Series' financial statements
     * Their own membership records
     * Meeting minutes of their stakeholder category circle
     * Board decisions affecting their stakeholder category
     * Other information as required by law
   
   * Class A Members shall have additional access to:
     * Board meeting minutes
     * Series policies and procedures
     * Strategic planning documents
     * Other governance information
   
   * Information access shall be provided through the electronic records system maintained by KNEL.

## ARTICLE 4 - RELATIONSHIP WITH PARENT LLC AND AFFILIATED ENTITIES

### Section 4.1 - Mandatory Operational Requirements

1. **IT Services**: In accordance with Section 3.1 of the Parent Agreement:
   
   * The Series shall exclusively utilize Known Element Enterprises (KNEL) for all IT services, including but not limited to:
     * Network infrastructure
     * Software systems
     * Data storage and management
     * Security services
     * Technical support
     * Infrastructure management
   
   * The Series shall comply with all KNEL service level agreements and policies.
   
   * The Series may request exceptions to the mandatory use requirement only through the innovation exception process described in Section 3.1.4 of the Parent Agreement.

2. **Transaction and Treasury Services**: In accordance with Section 3.1 of the Parent Agreement:
   
   * The Series shall exclusively utilize The Campus Trading Company (TCTC) for all transaction and treasury services, including but not limited to:
     * Payment processing
     * Treasury management
     * Financial settlements
     * Banking relationships
     * Cash management
     * Financial controls
   
   * The Series shall comply with all TCTC service level agreements and policies.
   
   * The Series may request exceptions to the mandatory use requirement only through the innovation exception process described in Section 3.1.4 of the Parent Agreement.

3. **Electronic Records**: In accordance with Section 3.2 of the Parent Agreement:
   
   * All Series records shall be maintained exclusively in electronic format through the systems provided by KNEL.
   
   * Electronic records shall include:
     * Corporate records
     * Financial documentation
     * Member information
     * Contracts and agreements
     * Operational records
     * Legal and compliance records
   
   * The Series shall comply with all electronic record system requirements established in the Parent Agreement.

4. **Capital Raising**: In accordance with Section 3.3 of the Parent Agreement:
   
   * The Series shall exclusively utilize Redwood Springs Capital Partners Group LLC for:
     * All capital raising activities
     * Any external investment into the Series
     * Any debt or equity financing activities
     * Any capital restructuring
     * Any activities involving external capital
   
   * The Series shall comply with all capital raising requirements established in the Parent Agreement.

### Section 4.2 - Relationship with High Flight Network Finance Company (HFNFC)

1. **Exclusive Financing Relationship**:
   
   * The Series shall ONLY use High Flight Network Finance Company (HFNFC) for all network buildout financing.
   
   * All financing for planning, building, deploying, and operating internet service provider points of presence shall be arranged through HFNFC.
   
   * This exclusive financing relationship shall include:
     * Capital equipment financing
     * Infrastructure deployment funding
     * Working capital for network operations
     * Expansion and upgrade financing
     * Other financing needs related to network buildouts

2. **Division of Authority**:
   
   * The Series' Board maintains operational authority over:
     * Network buildout planning and design
     * Vendor and contractor selection
     * Technical specifications and standards
     * Project management and implementation
     * Network operations and maintenance
     * Service deployment and delivery
   
   * HFNFC maintains financing authority over:
     * Financing structure and terms
     * Capital allocation decisions
     * Funding approvals and disbursements
     * Financial covenants and requirements
     * Return on investment expectations
     * Financing timelines and milestones

3. **HFNFC Coordination Committee**:
   
   * The HFNFC Coordination Committee of the Board shall:
     * Conduct regular meetings with HFNFC leadership at least monthly
     * Coordinate the financing application process for network buildouts
     * Monitor the relationship between the Series and HFNFC
     * Address and resolve any disputes or coordination issues
     * Report to the full Board quarterly on the relationship and financing activities
     * Develop standardized processes and documentation for financing requests
   
   * The HFNFC Coordination Committee shall include representatives from multiple stakeholder categories to ensure balanced perspective.
   
   * The Committee shall develop and maintain a financing request protocol that standardizes the application process, documentation requirements, and approval timeline.

4. **Financing Request Process**:
   
   * All network buildout financing requests shall:
     * Be prepared according to HFNFC's requirements and templates
     * Include detailed project specifications, timelines, and budgets
     * Contain clear business cases and return on investment projections
     * Specify performance metrics and success criteria
     * Be reviewed and approved by the Series' Board before submission
     * Be submitted through the HFNFC Coordination Committee
   
   * The Series shall maintain a rolling three-year network buildout plan that is updated quarterly and shared with HFNFC to facilitate planning and capital allocation.

5. **Dispute Resolution**:
   
   * Any disputes between the Series and HFNFC shall be addressed through:
     * Initial discussion between the HFNFC Coordination Committee and HFNFC leadership
     * If unresolved, escalation to the Series' Board and HFNFC Board
     * If still unresolved, mediation as provided in the dispute resolution procedures of the Parent Agreement
   
   * The Series and HFNFC shall establish a joint protocol for expedited dispute resolution for time-sensitive issues affecting network deployments.

### Section 4.3 - Multi-State Operations

1. **Foreign Qualification**:
   
   * The Series shall register and obtain foreign qualification as required in each state where it conducts business, which may include:
     * Filing as a foreign entity in each applicable state
     * Maintaining registered agents in each state
     * Complying with all state-specific registration requirements
     * Renewing registrations as required
     * Paying all required fees and taxes
   
   * The Board shall establish a compliance protocol for tracking and maintaining good standing in all jurisdictions where the Series operates.

2. **Jurisdictional Risk Management**:
   
   * The Series acknowledges that Texas series LLC statutes and the associated liability protections may not be recognized in all states where it conducts business.
   
   * To mitigate jurisdictional risks, the Series shall:
     * Establish state-specific subsidiary entities where necessary or prudent
     * Implement additional liability protection measures, including appropriate insurance coverage
     * Structure contracts to specify Texas law as governing law where possible
     * Include clear notice of series status in all contracts and communications
     * Maintain strict operational separation as specified in the Parent Agreement
   
   * The Board shall regularly review and assess jurisdictional risks in consultation with qualified legal counsel.

3. **State-Specific Compliance**:
   
   * The Series shall implement systems to ensure compliance with:
     * State-specific telecommunications regulations
     * State tax requirements
     * State licensing and permitting requirements
     * State consumer protection laws
     * Other state-specific legal and regulatory requirements
   
   * The Board shall establish a compliance monitoring system that tracks requirements across all operating jurisdictions.

4. **Operational Structure for Multi-State Activities**:
   
   * The Series may establish:
     * Regional management structures
     * State-specific operational teams
     * Geographic market divisions
     * Subsidiary entities in specific states where necessary for legal or tax purposes
   
   * All operational structures shall maintain consistent governance through the Board while adapting to local requirements.

### Section 4.4 - Series Independence and Isolation

1. **Legal and Economic Isolation**: In accordance with Section 4.2 of the Parent Agreement:
   
   * The Series is absolutely and irrevocably isolated from all other series of the Parent LLC, such that:
     * The assets, liabilities, obligations, and debts of the Series are completely separate and distinct from all other series
     * No series shall have any claim, right, interest, obligation, duty, responsibility, or liability whatsoever in any other series
     * The Series operates as if it were a completely separate legal entity
   
   * This isolation is established pursuant to and in accordance with Texas Business Organizations Code § 101.601 et seq.

2. **Operational Separation Requirements**:
   
   * The Series shall maintain complete operational separation, including:
     * Independent electronic books and records (provided via KNEL/TCTC systems as required)
     * Entirely separate bank accounts established through TCTC
     * Absolute separation of all assets and liabilities
     * Independent contracts and business relationships
     * Separate tax identification number and filings
     * Distinct operational processes and procedures
   
   * All contracts and communications shall clearly identify the Series as a separate series of the Parent LLC.

3. **Notice Requirements**:
   
   * The Series shall include the following notice in all contracts and significant business communications:
      
      "NOTICE OF LIMITED LIABILITY: High Flight Network Operating Company Group (series) LLC is a series of Turnkey Network Systems LLC, a Texas series limited liability company. Under Texas law, the debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to this series are enforceable against the assets of this series only, and not against the assets of Turnkey Network Systems LLC generally or any other series thereof. Similarly, none of the debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to Turnkey Network Systems LLC generally or any other series thereof shall be enforceable against the assets of this series."

## ARTICLE 5 - PROFIT INTERESTS AND DISTRIBUTIONS

### Section 5.1 - Profit Interest Structure

1. **Profit Interest Basis**:
   
   * All economic interests in the Series shall be structured as profit interests rather than capital interests.
   
   * No Member shall have a capital account or capital interest in the Series.
   
   * Members shall be entitled to future profits of the Series in accordance with:
     * Their stakeholder category allocation percentage
     * The equal distribution principle within each stakeholder category
     * Their membership class (A, B, or C)

2. **Profit Interest Documentation**:
   
   * All profit interests shall be documented through:
     * Electronic membership certificates issued in accordance with Section 5.7 of the Parent Agreement
     * Detailed records in the electronic membership registry maintained by KNEL
     * Profit interest award agreements specifying any applicable vesting or other conditions

3. **Profit Interest Allocation Between Stakeholder Categories**:
   
   * Series profits shall be allocated according to the following percentages:
     * Founder Members: [PERCENTAGE]%
     * Labor Members: [PERCENTAGE]%
     * User Members: [PERCENTAGE]%
     * Investor Members: [PERCENTAGE]%
   
   * These allocation percentages may be adjusted only by consent of all four stakeholder categories, with each category making its decision according to its own governance processes.

4. **Equal Distribution Within Categories**:
   
   * Within each stakeholder category, profits shall be distributed equally among all Members in that category.
   
   * For clarity, this means:
     * Each Founder Member receives an equal 1/n share of the Founder category allocation (where n is the number of Founder Members)
     * Each Labor Member receives an equal 1/n share of the Labor category allocation (where n is the number of Labor Members)
     * Each User Member receives an equal 1/n share of the User category allocation (where n is the number of User Members)
     * Each Investor Member receives an equal 1/n share of the Investor category allocation (where n is the number of Investor Members)
   
   * This equal distribution principle applies regardless of:
     * The size or nature of a Member's contribution
     * The duration of a Member's association with the Series
     * Any other differentiating factors among Members within a category

### Section 5.2 - Vesting of Profit Interests

1. **Vesting Schedules**:
   
   * Profit interests issued to Members may be subject to vesting schedules as determined by:
     * For Founder Members: The initial Founder Members
     * For Labor Members: The Board with input from the Labor Circle
     * For User Members: The Board with input from the User Circle
     * For Investor Members: The Board with input from the Investor Circle
   
   * Vesting schedules, if applicable, shall be clearly documented in profit interest award agreements.

2. **Section 83(b) Elections**:
   
   * Members receiving profit interests subject to vesting shall be advised of their right to make an election under Section 83(b) of the Internal Revenue Code.
   
   * The Series shall provide:
     * Information about the potential tax implications of Section 83(b) elections
     * Sample election forms and filing instructions
     * Reminders of the 30-day filing deadline
     * Confirmation of receipt of filed elections
   
   * Members shall be encouraged to consult with their own tax advisors regarding Section 83(b) elections.

3. **Forfeiture of Unvested Interests**:
   
   * Unvested profit interests shall be subject to forfeiture upon:
     * Termination of a Member's relationship with the Series
     * Failure to meet specified vesting conditions
     * Other circumstances specified in the profit interest award agreement
   
   * Forfeited profit interests shall:
     * Be cancelled
     * Not be redistributed to other Members
     * Result in the remaining Members in the same stakeholder category receiving proportionally larger distributions (due to fewer members sharing the category's allocation)
   
   * The forfeiture of unvested profit interests shall be documented in the electronic records system.

### Section 5.3 - Distribution Decisions and Procedures

1. **Distribution Decisions**:
   
   * The decision to make distributions shall be made by the Board after consideration of:
     * The Series' financial performance
     * Cash flow requirements
     * Working capital needs
     * Reserves for future operations, investments, and contingencies
     * Strategic objectives and growth plans
     * Recommendations from stakeholder circles
   
   * The Board may establish a distribution policy setting guidelines for the frequency and amount of distributions.

2. **Distribution Procedures**:
   
   * All distributions shall be processed through TCTC in accordance with Section 3.1 of the Parent Agreement.
   
   * Distributions shall be made in the following sequence:
     * First, to the stakeholder categories according to their allocation percentages
     * Second, within each stakeholder category, equally among all Members in that category
   
   * Distributions to Members shall be made by electronic funds transfer to accounts designated by the Members.

3. **Distribution Limitations**:
   
   * No distributions shall be made if, after giving effect to the distribution:
     * The Series would not be able to pay its debts as they become due
     * The Series' total assets would be less than its total liabilities
     * The distribution would violate any financing covenants or agreements
   
   * The Board shall certify that any distribution complies with these limitations.

4. **Tax Distributions**:
   
   * The Series may make special tax distributions to Members to cover tax liabilities resulting from the Series' operations.
   
   * Tax distributions, if made, shall:
     * Be based on the highest combined federal, state, and local tax rates applicable to any Member
     * Be considered advances against future regular distributions
     * Follow the same allocation percentages and equal distribution principle as regular distributions
   
   * Tax distributions shall be made at such times as to enable Members to make required estimated tax payments.

### Section 5.4 - Profit Interest Transfer Restrictions

1. **Transfer Restrictions**:
   
   * All profit interests shall be subject to the transfer restrictions contained in Section 5.6 of the Parent Agreement.
   
   * No Member may sell, assign, transfer, pledge, hypothecate, or otherwise dispose of or encumber any profit interest without:
     * Prior written consent of the Board
     * Compliance with all securities laws
     * Compliance with the procedures specified in this Agreement and the Parent Agreement
   
   * Any attempted transfer in violation of these restrictions shall be void and of no effect.

2. **Permitted Transfers**:
   
   * The Board may, in its discretion, approve transfers that:
     * Are to entities controlled by the Member
     * Are for estate planning purposes
     * Are to family members in accordance with the Series' policies
     * Would not adversely affect the Series' operations or governance
   
   * All permitted transfers must comply with:
     * Securities law requirements
     * The documentation requirements of Section 5.7 of the Parent Agreement
     * The classification requirements of Article 5 of the Parent Agreement

3. **Automatic Conversion Upon Involuntary Transfer**:
   
   * In accordance with Section 5.5 of the Parent Agreement, any profit interest that is subject to involuntary transfer shall automatically convert to a Class C Membership Interest.
   
   * Involuntary transfers include those resulting from:
     * Court judgments
     * Bankruptcy proceedings
     * Contested divorce proceedings
     * Death (unless otherwise provided for)
     * Any other non-voluntary mechanism
   
   * The Series shall document all such conversions in the electronic records system.

## ARTICLE 6 - SERIES OPERATIONS

### Section 6.1 - Business Operations

1. **Business Focus**:
   
   * The Series shall focus on planning, building, deploying, and operating internet service provider points of presence, including:
     * Network infrastructure development
     * Hardware and equipment procurement and installation
     * Software systems implementation
     * Technical support and maintenance
     * Customer service operations
     * Connectivity services delivery
   
   * The Series may engage in related business activities that support or enhance its primary focus.

2. **Operational Planning**:
   
   * The Series shall maintain:
     * A strategic plan covering at least three years
     * An annual operating plan and budget
     * A rolling network deployment plan
     * Capital expenditure projections
   
   * These plans shall be reviewed and updated regularly by the Board with input from all stakeholder categories.

3. **Project Management**:
   
   * Network buildout projects shall be managed using:
     * Standardized project management methodologies
     * Clear documentation requirements
     * Regular progress reporting
     * Quality control procedures
     * Performance metrics monitoring
   
   * Project management systems shall be implemented through the IT services provided by KNEL.

4. **Service Delivery Standards**:
   
   * The Series shall establish and maintain service delivery standards that:
     * Define quality metrics for network services
     * Establish performance benchmarks
     * Specify uptime and reliability targets
     * Set customer response time goals
     * Include regular service review processes
   
   * These standards shall be developed with input from all stakeholder categories and approved by the Board.

### Section 6.2 - Subsidiary Series

1. **Establishment of Subsidiary Series**:
   
   * The Series may establish subsidiary series for specific purposes, such as:
     * Geographic market expansion
     * Specialized service offerings
     * Major infrastructure projects
     * Strategic initiatives
   
   * Each subsidiary series shall be established through:
     * Board approval
     * Filing of required notices with the Texas Secretary of State
     * Adoption of a subsidiary series operating agreement
     * Compliance with all requirements of the Parent Agreement

2. **Subsidiary Series Governance**:
   
   * Each subsidiary series shall:
     * Have its own governance structure as defined in its operating agreement
     * Be subject to oversight by a dedicated Board committee as specified in Section 2.4
     * Implement the FairShares Model unless specifically exempted by the Board
     * Report regularly to the Series' Board
   
   * The Series' Board shall retain ultimate authority over all subsidiary series.

3. **Subsidiary Series Operations**:
   
   * Each subsidiary series shall:
     * Maintain separate books and records through KNEL
     * Have separate bank accounts through TCTC
     * Comply with all mandatory operational requirements of the Parent Agreement
     * Operate within parameters established by the Series' Board
     * Maintain its own membership structure and records

4. **Inter-Series Relationships**:
   
   * Relationships between the Series and its subsidiary series shall be:
     * Formally documented
     * At arm's length
     * Based on fair market value for any services or resources
     * Structured to maintain series isolation
     * Transparent to all Members

### Section 6.3 - Financial Management

1. **Financial Controls**:
   
   * The Series shall implement comprehensive financial controls, including:
     * Separation of duties for financial transactions
     * Multiple approval levels for expenditures
     * Regular reconciliation of accounts
     * Internal audit procedures
     * Expense approval policies
   
   * All financial controls shall be implemented through TCTC systems.

2. **Budget Process**:
   
   * The Series shall follow an annual budget process that includes:
     * Input from all stakeholder categories
     * Detailed revenue and expense projections
     * Capital expenditure planning
     * Cash flow forecasting
     * Comparison to strategic objectives
   
   * The annual budget shall be approved by the Board.

3. **Financial Reporting**:
   
   * The Series shall provide:
     * Monthly financial statements to the Board
     * Quarterly financial reports to all Members
     * Annual audited financial statements
     * Project-specific financial reporting
     * Performance metrics tracking
   
   * All financial reporting shall be managed through TCTC and KNEL systems.

4. **Tax Matters**:
   
   * The Series shall:
     * Maintain separate tax accounting
     * File required tax returns and reports
     * Issue Schedule K-1s or other required tax forms to Members
     * Provide tax information to Members in a timely manner
     * Engage qualified tax professionals as needed
   
   * The Series shall designate a Tax Matters Representative to handle tax matters on behalf of the Series.

### Section 6.4 - Network Buildout Process

1. **Network Planning Phase**:
   
   * The network planning process shall include:
     * Market analysis and demand assessment
     * Technical feasibility studies
     * Preliminary design specifications
     * Cost estimations
     * Regulatory and compliance review
   
   * Planning outputs shall include detailed documentation suitable for financing applications to HFNFC.

2. **Financing Application and Approval**:
   
   * All network buildout projects shall require financing approval from HFNFC through:
     * Submission of standardized financing application packages
     * Review and approval by the HFNFC Coordination Committee
     * Formal financing approval from HFNFC
     * Documentation of financing terms and conditions
     * Implementation of financing agreement

3. **Procurement and Implementation**:
   
   * Upon financing approval, the Series shall:
     * Initiate procurement processes for equipment and services
     * Finalize technical designs
     * Secure necessary permits and authorizations
     * Engage contractors and service providers
     * Implement project management protocols
   
   * All procurement shall comply with policies established by the Board.

4. **Deployment and Activation**:
   
   * Network deployment shall include:
     * Equipment installation and configuration
     * System integration and testing
     * Quality assurance verification
     * Documentation of as-built specifications
     * Training of operational personnel
   
   * Network activation shall include:
     * Systematic testing of all components
     * Performance verification against specifications
     * Customer onboarding processes
     * Transition to operational status
     * Post-implementation review

5. **Operations and Maintenance**:
   
   * Ongoing operations shall include:
     * 24/7 monitoring and support
     * Preventative maintenance procedures
     * Performance optimization
     * Security management
     * Customer support services
   
   * The Series shall establish operational metrics and reporting systems to track network performance and service quality.

### Section 6.5 - Classified Facilities and Operations

1. **Classified Balloon Launch Facilities**:
   
   * The Series may establish and operate classified balloon launch facilities that:
     * Support aerial network infrastructure deployment
     * Comply with all applicable federal, state, and local regulations
     * Maintain appropriate security protocols and clearances
     * Operate under specialized governance procedures
   
   * All classified balloon launch facilities shall:
     * Be physically secured with appropriate access controls
     * Employ personnel with necessary security clearances
     * Implement secure communications and data handling protocols
     * Maintain compliance with airspace regulations and restrictions
     * Follow specialized emergency response procedures
     * Operate under compartmentalized information policies
     * Maintain secure supply chains for critical components
   
   * The Board shall establish a Classified Operations Oversight Committee that:
     * Includes members with appropriate security clearances
     * Conducts regular security audits and compliance reviews
     * Approves operational protocols for classified facilities
     * Reports on general status to the full Board while maintaining appropriate information compartmentalization

2. **Classified Network Operation Centers (NOCs)**:
   
   * The Series may establish and operate classified Network Operation Centers that:
     * Monitor and manage secure network infrastructure
     * Implement specialized security protocols
     * Support sensitive customer requirements
     * Handle classified data and communications
   
   * All classified NOCs shall:
     * Be physically secured with multi-layered access controls
     * Be staffed by personnel with appropriate security clearances
     * Implement secure systems for network monitoring and management
     * Maintain air-gapped operations where required by security protocols
     * Implement specialized incident response procedures
     * Undergo regular security assessments and penetration testing
     * Maintain backup and disaster recovery capabilities that meet or exceed government standards
   
   * Classified NOC operations shall:
     * Be segregated from standard network operations
     * Implement specialized change management procedures
     * Follow strict data handling and destruction protocols
     * Maintain detailed access and activity logs
     * Conduct regular security drills and tabletop exercises

3. **Security Clearance Requirements**:
   
   * The Series shall establish a security clearance management program that:
     * Facilitates appropriate clearance levels for personnel
     * Maintains compliance with all clearance requirements
     * Implements continuous monitoring and periodic reinvestigations
     * Provides secure facilities for handling classified information
     * Ensures proper indoctrination and training for cleared personnel
   
   * The Board shall approve policies regarding:
     * Clearance sponsorship criteria
     * Interim access protocols
     * Clearance reciprocity with government agencies and contractors
     * Security violation reporting and mitigation
     * Counterintelligence awareness programs

4. **Compliance with Government Regulations**:
   
   * All classified operations shall comply with:
     * Relevant National Industrial Security Program (NISP) requirements
     * Applicable Intelligence Community Directives
     * Department of Defense security requirements
     * Federal Aviation Administration regulations for aerial operations
     * Specific requirements from government customers or partners
     * Export control regulations
     * Specialized reporting requirements
   
   * The Series shall maintain:
     * A Facility Security Officer (FSO) with appropriate credentials
     * Current facility clearances as required
     * Documentation of all security inspections and reviews
     * Secure procedures for classified contracting
     * Specialized accounting procedures for classified programs

5. **Governance of Classified Operations**:
   
   * The governance of classified operations shall balance:
     * The need for security and compartmentalization
     * The FairShares Model principles
     * Oversight and accountability requirements
     * Operational effectiveness
   
   * The Board shall:
     * Establish a specialized governance framework for classified operations
     * Ensure appropriate oversight while respecting need-to-know principles
     * Approve secure funding mechanisms for classified operations
     * Review performance metrics that can be shared at the appropriate classification level
     * Ensure compliance with all security requirements
   
   * The Series shall implement specialized reporting procedures that:
     * Provide appropriate oversight
     * Maintain information security
     * Document decision-making
     * Ensure accountability

### Section 6.6 - Federal Government Contracting and Accounting

1. **Federal Acquisition Regulation (FAR) Compliance**:
   
   * The Series shall establish comprehensive systems and procedures to ensure compliance with:
     * Federal Acquisition Regulation (FAR) requirements
     * Agency-specific supplements to the FAR (DFARS, GSAR, etc.)
     * Executive Orders applicable to federal contractors
     * Small business subcontracting requirements
     * Flow-down clauses to subcontractors and vendors
   
   * The Series shall maintain:
     * A FAR compliance officer or designated responsible individual
     * Current copies of all applicable regulations
     * Documentation of compliance measures
     * Training programs for personnel involved in government contracting
     * Systems for monitoring regulatory changes and updates

2. **Cost Accounting Standards (CAS) Compliance**:
   
   * For contracts subject to Cost Accounting Standards, the Series shall:
     * Implement compliant cost accounting systems
     * Develop and maintain a CAS Disclosure Statement when required
     * Establish consistent practices for allocating direct and indirect costs
     * Implement appropriate timekeeping systems for labor charging
     * Maintain documentation of cost accounting practices
     * Conduct regular internal reviews of CAS compliance
     * Implement proper segregation of unallowable costs
   
   * The Series shall establish accounting policies addressing:
     * Consistent cost allocation methodologies
     * Treatment of direct vs. indirect costs
     * Unallowable cost identification and segregation
     * Consistent application of accounting periods
     * Proper capital asset accounting
     * Consistent treatment of costs across all contracts

3. **Government Contract Administration**:
   
   * The Series shall establish specialized contract administration procedures for government contracts, including:
     * Proposal development and submission protocols
     * Contract negotiation procedures
     * Contract performance monitoring
     * Deliverable tracking and quality assurance
     * Compliance with reporting requirements
     * Management of contract modifications
     * Closeout procedures for completed contracts
     * Subcontractor management and oversight
   
   * For contract performance, the Series shall maintain:
     * Systems to track contract deliverables and milestones
     * Procedures for government-required reporting
     * Quality control systems that meet government requirements
     * Documentation of all significant decisions and communications
     * Systems to ensure compliance with contract terms and conditions

4. **Federal Audit Readiness**:
   
   * The Series shall maintain audit readiness for:
     * Defense Contract Audit Agency (DCAA) audits
     * Inspector General (IG) audits
     * Government Accountability Office (GAO) reviews
     * Agency-specific compliance reviews
     * Contract-specific audits
   
   * Audit readiness measures shall include:
     * Proper documentation of all transactions
     * Regular internal reviews and self-audits
     * Maintenance of supporting documentation
     * Training for personnel on audit requirements
     * Established protocols for responding to audit requests
     * Documentation of corrective actions for any identified issues

5. **Specialized Federal Accounting Requirements**:
   
   * The Series shall implement specialized accounting procedures for:
     * Segregation of costs by contract and funding type
     * Tracking funding by appropriation
     * Monitoring contract funding limitations
     * Preventing Anti-Deficiency Act violations
     * Managing government-furnished property
     * Tracking cost-sharing requirements when applicable
     * Maintaining documentation for the period required by federal regulations
   
   * The Series shall implement systems to ensure:
     * Proper billing in accordance with contract terms
     * Accurate incurred cost submissions when required
     * Compliance with Limitation of Cost/Limitation of Funds clauses
     * Proper accounting for advance payments and performance-based payments
     * Accurate calculation of fees and incentives

6. **Ethics and Compliance Program for Government Contracting**:
   
   * The Series shall establish a comprehensive ethics and compliance program addressing:
     * Procurement integrity
     * Organizational conflicts of interest
     * Personal conflicts of interest
     * Gifts and gratuities restrictions
     * Hiring of former government employees
     * Mandatory disclosure requirements
     * Whistleblower protections
     * Lobbying restrictions and reporting
   
   * The program shall include:
     * Regular training for all personnel involved in government contracts
     * Clear reporting mechanisms for potential violations
     * Investigation procedures for reported issues
     * Documentation of all compliance activities
     * Annual certification of compliance
     * Regular program assessment and updates

7. **Socioeconomic Program Compliance**:
   
   * The Series shall implement systems to comply with federal socioeconomic requirements, including:
     * Small business subcontracting plans and goals
     * Small disadvantaged business utilization
     * Women-owned small business participation
     * Service-disabled veteran-owned small business utilization
     * HUBZone business participation
     * Labor surplus area concerns
     * Historically Black College and University involvement
   
   * The Series shall maintain:
     * Documentation of good faith efforts to meet goals
     * Systems for identifying qualified diverse suppliers
     * Required reporting on socioeconomic program achievements
     * Mentor-protégé program participation when applicable

8. **Federal Contract Revenue Recognition**:
   
   * The Series shall establish accounting policies for government contract revenue recognition that:
     * Comply with Generally Accepted Accounting Principles (GAAP)
     * Address fixed-price, cost-reimbursement, and time-and-materials contracts
     * Include proper treatment of contract modifications
     * Address award and incentive fees
     * Include proper treatment of contract financing payments
     * Address milestone and performance-based payments
   
   * Revenue recognition policies shall be:
     * Consistently applied
     * Properly documented
     * Regularly reviewed for compliance with accounting standards
     * Approved by the Board's Finance Committee

9. **Contract Data Security and Cybersecurity Requirements**:
   
   * The Series shall implement systems to comply with:
     * Cybersecurity Maturity Model Certification (CMMC) requirements
     * NIST SP 800-171 requirements for controlled unclassified information
     * Contract-specific security requirements
     * Cloud computing security requirements (FedRAMP)
     * Data sovereignty requirements
     * Incident reporting requirements
   
   * Security compliance measures shall include:
     * Regular security assessments
     * System security plans
     * Supply chain risk management
     * Security training for personnel
     * Documentation of compliance measures
     * Continuous monitoring systems

## ARTICLE 7 - AMENDMENTS AND MISCELLANEOUS PROVISIONS

### Section 7.1 - Amendment Process

1. **Amendment Authority**: This Agreement may be amended only by:
   
   * Proposal by:
     * The Board
     * Any stakeholder category circle with approval from at least 75% of its members
     * At least 25% of all Members, with representation from each stakeholder category
   
   * Review by all stakeholder category circles, with each circle providing feedback through its sociocratic process
   
   * Consent of the Board following consideration of all stakeholder feedback
   
   * Final approval by at least 75% of all Class A Members, with at least 60% approval from each stakeholder category

2. **Amendment Limitations**: No amendment may:
   
   * Conflict with the Parent Agreement
   
   * Alter the FairShares Model's fundamental principles, including:
     * The four stakeholder categories
     * The equal distribution principle within categories
     * Proportional board representation
   
   * Eliminate the Board's ultimate governing authority
   
   * Modify the relationship with HFNFC for network buildout financing
   
   * Override the mandatory operational requirements of the Parent Agreement

3. **Amendment Documentation**: All amendments shall be:
   
   * Documented in writing
   
   * Maintained in the electronic records system
   
   * Distributed to all Members
   
   * Filed with appropriate governmental authorities if required

### Section 7.2 - Dispute Resolution

1. **Internal Dispute Resolution**:
   
   * Disputes within the Series shall first be addressed through:
     * Direct communication between the affected parties
     * Facilitated discussion using sociocratic methods
     * Mediation by a neutral party selected by consent of the disputing parties
   
   * If not resolved through these methods, disputes shall be referred to:
     * The appropriate stakeholder circle(s) for matters specific to one stakeholder category
     * The Board for matters affecting multiple stakeholder categories or the Series as a whole

2. **External Dispute Resolution**:
   
   * Disputes with external parties shall be managed according to:
     * The dispute resolution provisions in the relevant contract, if applicable
     * The dispute resolution procedures in Schedule H of the Parent Agreement
   
   * The Series shall attempt to resolve all disputes through negotiation and mediation before resorting to arbitration or litigation.

3. **Disputes with HFNFC**:
   
   * Disputes specifically related to network buildout financing shall be addressed through:
     * Initial resolution attempts by the HFNFC Coordination Committee
     * If unresolved, escalation to the Board and HFNFC leadership
     * If still unresolved, mediation as provided in the Parent Agreement

### Section 7.3 - Indemnification

1. **Indemnification Coverage**:
   
   * The Series shall indemnify to the fullest extent permitted by law:
     * Board members
     * Officers
     * Committee members
     * Other authorized representatives
   
   * Indemnification shall cover:
     * Legal expenses
     * Judgments
     * Settlements
     * Other costs
   
   * Indemnification shall apply to actions taken in good faith and in the best interest of the Series.

2. **Advancement of Expenses**:
   
   * The Series shall advance legal expenses upon receipt of:
     * A written undertaking to repay if indemnification is ultimately not appropriate
     * A written affirmation of good faith belief that the standard for indemnification has been met
     * Documentation of the expenses incurred
   
   * The Board shall review advancement requests and may deny advancement only for specified reasons.

3. **Insurance**:
   
   * The Series shall maintain appropriate insurance coverage for:
     * Directors and officers liability
     * General liability
     * Property and casualty
     * Cyber liability
     * Other risks as determined by the Board

### Section 7.4 - Miscellaneous Provisions

1. **Governing Law**: This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without giving effect to any choice of law principles.

2. **Integration**: This Agreement, together with the Parent Agreement, constitutes the entire agreement among the parties with respect to the subject matter hereof.

3. **Severability**: If any provision of this Agreement is held to be invalid or unenforceable, such provision shall be struck and the remaining provisions shall be enforced.

4. **No Third-Party Beneficiaries**: This Agreement is made solely for the benefit of the parties hereto and their permitted successors and assigns, and no other person or entity shall have or acquire any right by virtue of this Agreement.

5. **Confidentiality**: Members shall maintain the confidentiality of the Series' confidential information and shall not disclose such information to third parties without authorization.

6. **Force Majeure**: No party shall be liable for failure to perform due to events beyond its reasonable control, including acts of God, war, terrorism, civil unrest, government action, pandemic, or natural disaster.

7. **Electronic Communications**: All notices, consents, and other communications may be delivered electronically through the systems provided by KNEL.

8. **Waiver**: No waiver of any breach of this Agreement shall be deemed a waiver of any subsequent breach.

9. **Interpretation**: The headings in this Agreement are for convenience only and shall not affect its interpretation.

10. **Counterparts**: This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

## ARTICLE 8 - EXECUTION

IN WITNESS WHEREOF, this Operating Agreement has been executed effective as of the Effective Date.

Pursuant to the electronic recordkeeping requirements contained in Section 3.2 of the Parent Agreement, this Agreement shall be executed solely through the Known Element Enterprises (KNEL) Electronic Signature System and recorded in the electronic records system. Physical signatures shall neither be required nor accepted.

Electronic signatures executed through the KNEL Electronic Signature System shall have the same legal effect, validity, and enforceability as a manually executed signature to the fullest extent permitted by applicable law.

Each signatory represents and warrants that:

1. They have the authority to execute this Agreement on behalf of the entity they represent;

2. They have reviewed this Agreement in its entirety;

3. They understand and agree to all terms and conditions contained herein; and

4. Their electronic signature constitutes their free, voluntary, and binding act.

Upon execution, this Agreement shall be automatically recorded and maintained within the electronic records system as the authoritative copy. Each signatory shall receive electronic confirmation of execution and access to the fully executed Agreement through the KNEL system.

[ELECTRONIC SIGNATURE BLOCKS FOR EACH REQUIRED SIGNATORY]