PARTNERSHIP & EQUITY FRAMEWORK

1. Purpose & Scope

This framework governs the Membership Interest granted to Kiowa Scott ("Kiowa") in any subsidiary LLC of SnS Network Solutions Holdings LLC ("Holdings") that Kiowa originates, sources, or manages for launch. It is applied fresh, per venture — each venture gets its own independent grant, vesting clock, and invested-capital figure. Performance on one venture has no effect on any other.

Kiowa is not a Member of Holdings itself. Samuel S. James remains Holdings' controlling owner. This framework applies only at the subsidiary level.

2. Kiowa's Role (Per Venture)

• Sourcing and scouting the business opportunity
• Entity formation — Articles of Organization, EIN application, INBiz filings
• Ongoing legal compliance — permits, renewals, filings, registered-agent duties
• Management oversight — financial review, vendor coordination, ensuring profitability
• Handling or coordinating any legal issues that arise in operations

3. The Grant — Split Structure

Total potential equity per venture: 15% Membership Interest, split into two buckets:

4. Service Grant — Vesting Schedule

Measured from the Opening Date:

4.1 "Actively Performing" Defined

At each quarterly milestone, Kiowa must be, at minimum:

• Handling or coordinating legal filings, permits, renewals, and regulatory compliance
• Providing regular management oversight (financial reviews, vendor/operator coordination, staffing decisions)
• Responsive and available for Company business decisions within reasonable timeframes
• Not in material breach of the NDA or operating agreement

4.2 Acceleration

If cumulative net profit reaches 2× Sam's invested capital at any point before month 12, all remaining unvested service tranches vest immediately — Kiowa jumps to the full 15%. This rewards exceptional performance without punishing normal first-year economics.

4.3 Forfeiture / Separation

If at any quarterly milestone Kiowa is not actively performing (she resigned, became unresponsive, or was removed for cause), that tranche and all future tranches do not vest. She keeps the 5% formation grant + any service tranches that already vested. Unvested tranches revert to Holdings.

No cure period. No re-earning forfeited tranches. Final and permanent.

5. Capital Contributions & Buy-Up Option

The default arrangement is that Kiowa contributes $0 cash — her equity is earned through services. However, Kiowa may elect to invest her own capital into a venture under the following terms:

5.1 Buy-Up Mechanics

• Additional equity available: up to 10% additional Membership Interest beyond the 15% service/formation grant (maximum total: 25%)
• Price: at the same valuation as Sam's invested capital (i.e., $1 of Kiowa's money buys the same % as $1 of Sam's money)
• Timing: capital must be contributed before or on the Opening Date — this is a launch investment, not a mid-stream buy-in at a discount
• Vesting: capital-contributed equity vests immediately (she paid cash, so no service condition — same as Sam's investment)
• Cap: Holdings must retain at least 51% of any subsidiary to maintain control. Kiowa's total (service + capital) cannot exceed 49%.

5.2 How the Math Works

If Sam invests $50,000 for Holdings' share, that $50,000 buys the "remaining" percentage after Kiowa's service grant (85% under the default). Kiowa can buy additional points at the same rate:

The resulting cap table would be:

6. Per-Venture Independence

Each venture Kiowa brings or manages gets its own:

• Grant (fresh 15% service + optional capital buy-up)
• Opening Date and vesting clock
• Invested-capital figure and acceleration threshold
• Operating agreement

Underperformance on one venture has no bearing on her interest in any other. Overperformance on one does not accelerate another.

7. Distributions

• The 5% formation grant earns distributions from the Formation Date forward.
• Service tranches earn distributions only once vested — unvested tranches do not participate in distributions.
• Capital-contributed equity earns distributions immediately (same as Sam's).
• Distributions are pro rata to each Member's vested Membership Interest.

8. Tax Treatment

• The formation + service grant (15%) is intended as a profits interest under Rev. Proc. 93-27 / 2001-43 — no taxable income to Kiowa on grant.
• The capital buy-up is a straightforward capital contribution — not a profits interest. Kiowa's tax basis equals her cash contributed.
• Section 83(b) election: Kiowa should file a protective 83(b) within 30 days of each grant date. This is a hard IRS deadline with no extensions — the single highest-stakes item in this arrangement.
• Each two-member subsidiary files its own Form 1065 partnership return and issues K-1s to both Members.

9. Confidentiality

Kiowa's access to Sam's personal information (SSN, financial accounts, IRS correspondence) during formation work is governed by a separate Non-Disclosure Agreement (see nda-formation-partner.md). The NDA applies regardless of which ventures she vests into and survives termination of any individual venture relationship.

10. Definitions

11. Worked Examples

12. Amendments

This framework may be amended only by written agreement signed by both Sam and Kiowa. Each subsidiary's operating agreement incorporates this framework's terms for that specific venture — amendments to this framework do not retroactively change terms already locked into a signed subsidiary operating agreement.

13. Governing Law

This Agreement is governed by the laws of the State of Indiana. Each subsidiary operating agreement is also governed by Indiana law unless otherwise specified therein.