+
+
+
+
+
+
+ Not legal advice. This is a working draft for LegalShield / attorney review.
+ Items in [brackets] need confirmation before signing. Neither party should
+ rely on this document until reviewed by an Indiana-licensed attorney and CPA.
+
+
+
+
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:
+
+
+ | Bucket | Amount | Condition |
|---|
+
+ | Formation Grant |
+ 5% |
+ Vests immediately on the Formation Date (date Articles of Organization are
+ filed). Payment for sourcing the venture and completing entity formation. No
+ clawback. |
+
+
+ | Service Grant |
+ 10% |
+ Vests in 4 equal quarterly tranches (2.5% each) from the Opening Date,
+ conditional on active service (see §4). |
+
+
+
+
+ Formation Date = day the subsidiary's Articles of Organization are filed with
+ the Indiana Secretary of State.
+ Opening Date = day the venture begins revenue-generating operations (e.g., first
+ paying customer). The vesting clock starts here, not the Formation Date.
+
+
+
+
4. Service Grant — Vesting Schedule
+
Measured from the Opening Date:
+
+
+ | Milestone | Vests | Cumulative Total | Condition |
|---|
+ | Formation Date | 5.0% | 5.0% | Immediate — formation work complete |
+ | 3 months | 2.5% | 7.5% | Actively performing duties |
+ | 6 months | 2.5% | 10.0% | Actively performing duties |
+ | 9 months | 2.5% | 12.5% | Actively performing duties |
+ | 12 months | 2.5% | 15.0% | Actively performing duties |
+
+
+
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.
+
+
+ | Scenario | Kiowa Keeps |
|---|
+ | Quits before Opening Date (formation work done) | 5% |
+ | Quits at month 2 (before first service tranche) | 5% |
+ | Active through month 3, quits at month 5 | 7.5% |
+ | Active through month 9 | 12.5% |
+ | Active through month 12 | 15% (fully vested) |
+ | Business hits 2× at month 7, Kiowa active | 15% (accelerated) |
+
+
+
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:
+
+ Rate per point = Sam's invested capital ÷ Sam's percentage
+ Example: $50,000 ÷ 85% = $588.24 per 1% of Membership Interest
+ Kiowa wants 10% more → contributes $5,882.35 at or before Opening Date
+
+
The resulting cap table would be:
+
+ | Member | Interest | Capital | How Earned |
|---|
+ | Holdings (Sam) | 75% | $50,000 | Cash investment |
+ | Kiowa (service) | 15% | $0 | Formation + management (vesting) |
+ | Kiowa (capital) | 10% | $5,882 | Cash investment (immediate vest) |
+ | Total | 100% | $55,882 | |
+
+
+
+
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.
+
+
+ CPA review required before any grant: confirm profits-interest qualification,
+ 83(b) timing, and tiered-partnership filing mechanics between the subsidiary and Holdings.
+
+
+
+
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
+
+ | Term | Meaning |
|---|
+ | "Holdings" | SnS Network Solutions Holdings LLC |
+ | "Sam" | Samuel S. James, authorized representative of Holdings |
+ | "Kiowa" | Kiowa Scott |
+ | "Formation Date" | Date Articles of Organization filed with IN Secretary of State |
+ | "Opening Date" | Date the venture begins revenue-generating operations |
+ | "Sam's invested capital" | Cumulative cash Holdings contributes to that subsidiary |
+ | "Cumulative net profit" | Venture's net profit from Opening Date forward |
+ | "Actively performing" | Meeting the duties defined in §4.1 |
+
+
+
+
11. Worked Examples
+
+
+
Example A — Food Truck (Service Only, No Capital Buy-Up)
+
Setup: Sam invests $60,000 in Foodtruck1 LLC (truck + build-out + working capital).
+ Kiowa does formation work and manages the business.
+
+ | Event | Kiowa's Vested % | Holdings' % |
|---|
+ | Formation Date (Articles filed) | 5% | 95% |
+ | Opening Date (first customer served) | 5% (clock starts) | 95% |
+ | Month 3 — Kiowa active, truck doing $8K/mo revenue | 7.5% | 92.5% |
+ | Month 6 — Kiowa active, truck profitable | 10% | 90% |
+ | Month 9 — Kiowa active | 12.5% | 87.5% |
+ | Month 12 — Kiowa active, cumulative profit $45K (below 2× $60K) | 15% | 85% |
+
+
Result: Kiowa fully vests at 15% through service alone. The 2× test wasn't hit,
+ so no acceleration — but she wasn't penalized either. She earned it by showing up every quarter.
+
Distributions: From month 6 onward (when truck starts netting ~$4K/mo profit),
+ Kiowa gets 10% × $4,000 = $400/mo in distributions (growing as her vested % increases).
+
+
+
+
Example B — Food Truck (Kiowa Invests Her Own Money)
+
Setup: Same $60,000 truck. But Kiowa believes in this one and wants more skin in
+ the game. She contributes $7,059 of her own cash at launch.
+
Math: Sam's rate = $60,000 ÷ 85% = $705.88 per 1%. Kiowa's $7,059 buys 10% additional.
+
+ | Member | Interest | Capital In | Type |
|---|
+ | Holdings | 75% | $60,000 | Cash |
+ | Kiowa (service) | 15% | $0 | Vesting per §4 |
+ | Kiowa (capital) | 10% | $7,059 | Immediate (cash) |
+ | Total | 100% | $67,059 | |
+
+
Day 1 (Opening Date): Kiowa already holds 5% (formation, vested) + 10% (capital,
+ vested) = 15% vested immediately, earning distributions from day one. Her service
+ tranches continue vesting quarterly toward a max of 25% total.
+
Month 6: Kiowa active → she's now at 5% + 5% (two service tranches) + 10% (capital)
+ = 20% vested.
+
Month 12: Fully vested → 25% total. Holdings holds 75%.
+
Distributions at month 12: If the truck nets $6K/mo, Kiowa gets 25% × $6,000 =
+ $1,500/mo. Plus she gets 25% of any year-end profit distribution.
+
Why Kiowa might do this: her $7,059 investment is earning distributions from day
+ one (no vesting wait), and she's betting that 25% of a profitable food truck is worth far
+ more than $7K within a year or two. If the truck does $72K/yr net profit, her 25% = $18K/yr
+ return on a $7K investment. That's a 257% annual return.
+
+
+
+
Example C — Second Venture (Kiowa Scouts a Laundromat)
+
Setup: Kiowa finds a laundromat opportunity. Sam invests $120,000. Kiowa invests
+ $14,118 (buys another 10%). Completely separate from Foodtruck1.
+
+ | Member | Interest | Capital |
|---|
+ | Holdings | 75% | $120,000 |
+ | Kiowa (service) | 15% | $0 |
+ | Kiowa (capital) | 10% | $14,118 |
+
+
Month 5: The laundromat crushes it — cumulative net profit hits $240,000 (2× Sam's
+ $120K). Kiowa's service tranches accelerate → she immediately jumps to 25% fully
+ vested. No waiting for months 6, 9, 12.
+
Meanwhile, Foodtruck1 is still on its own clock, unaffected. If it's struggling,
+ Kiowa's laundromat success doesn't help or hurt her food truck equity.
+
+
+
+
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.
+
+
+
+
Execution
+
The undersigned acknowledge and agree to this Partnership & Equity Framework as of
+ the Effective Date first written above.
+
+
HOLDINGS — Samuel S. James
+
+
Signature
+
Printed name: Samuel S. James
+
Title: Managing Member, SnS Network Solutions Holdings LLC
+
+
Date
+
+
PARTNER — Kiowa Scott
+
+
Signature
+
Printed name: Kiowa Scott
+
+
Date
+
+
+
+
+
+
+
+
AMENDED AND RESTATED OPERATING AGREEMENT
+
SnS Network Solutions Holdings LLC
+
+
+
+
+
+
1. Formation and Purpose
+
This Amended and Restated Operating Agreement (the "Agreement") is entered into by the
+ undersigned Members, Samuel S. James, Annie Deondria Chatman, and
+ Richard E. Williams (each a "Member" and collectively the "Members"), to govern
+ the operations of SnS Network Solutions Holdings LLC, a limited liability
+ company organized under the Indiana Business Flexibility Act (Indiana Code § 23-18).
+ This Agreement amends and restates the Company's original single-member operating
+ agreement in full, admitting Annie Deondria Chatman and Richard E. Williams as Members
+ effective as of the date above.
+
The Company is formed to act as a holding company. Its primary purpose is to own,
+ manage, and oversee its subsidiary entities and other business interests. The Company
+ is not intended to engage in operating or client-facing business, and the Members shall
+ conduct the Company's affairs so as to avoid incurring operating liabilities directly.
+ This statement of intent does not by itself eliminate or limit any liability the Company
+ may actually incur under law; nothing in this Agreement should be relied upon as a
+ guarantee against liability.
+
+
2. Registered Office and Registered Agent
+
+ - Principal office: 759 Boxwood Drive, South Bend, IN 46641
+ - Registered agent: Samuel S. James (a Member), serving as his own registered agent.
+ - Registered office address: same as the principal office above — 759 Boxwood Drive, South Bend, IN 46641
+
+
Samuel S. James, as the Member serving in this role, may change the principal office
+ or registered agent at any time, consistent with Indiana filing requirements. Serving as
+ one's own registered agent requires being reliably available at the registered office
+ during business hours to accept service of process; if that stops being practical
+ (e.g., due to travel, relocation, or incapacity), the Members shall promptly appoint a
+ commercial registered agent service and update the designation on file with the Indiana
+ Secretary of State.
+
+
3. Members and Ownership
+
The Company has three Members, holding the following Membership Interests:
+
+
+ | Member |
+ Membership Interest |
+
+
+ | Samuel S. James | 97% |
+
+
+ | Annie Deondria Chatman | 1% |
+
+
+ | Richard E. Williams | 2% |
+
+
+
Each Member is admitted with full membership rights — voting, management
+ participation, and economic rights (allocations and distributions) — in proportion to
+ their Membership Interest, except as otherwise stated in this Agreement. Allocations of
+ profit and loss for tax purposes are made in proportion to each Member's Membership
+ Interest, unless the Members otherwise agree in writing and as permitted by applicable
+ economic-substance and tax requirements.
+
Confirm capital account and tax-allocation mechanics for the new Membership
+ Interests, including whether any special allocations or a formal capital contribution is
+ being made by Annie or Richard in exchange for their interest.
+
+
4. Management
+
The Company shall be Member-managed. Each Member has voting rights in
+ proportion to their Membership Interest as set out in §3. Except as otherwise stated in
+ this Agreement, actions and decisions of the Company require the approval of Members
+ holding a majority of the Membership Interests. Because Samuel S. James holds
+ 97% of the Membership Interests, he retains sole authority to approve or reject any
+ Company decision, including, without limitation:
+
+ - Forming, acquiring, financing, and managing subsidiary entities;
+ - Opening and controlling bank and financial accounts;
+ - Entering into contracts and holding the Company's brand, intellectual property, and other assets;
+ - Admitting new members (which would require amending this Agreement — see §12).
+
+
Samuel S. James is designated the Company's day-to-day managing Member, with
+ authority to conduct ordinary business on the Company's behalf without a separate vote
+ of the other Members, subject to the majority-approval requirement above for major
+ decisions (e.g., admitting members, encumbering or selling material assets, or
+ dissolving the Company).
+
Confirm whether "major decisions" should be enumerated more specifically, and
+ whether Annie and Richard should have any consent rights notwithstanding their minority
+ interest (e.g., on related-party transactions or amendments affecting their own
+ interest).
+
+
5. Subsidiary Management
+
The Company is authorized to form, acquire, and hold interests in subsidiary limited
+ liability companies and other entities. The Company shall act as the sole member
+ (or controlling owner) of such subsidiaries so that the parent–subsidiary relationship
+ is clearly maintained.
+
To preserve limited-liability protection for the Company, the Members, and each
+ subsidiary, the managing Member shall:
+
+ - Keep the Company's assets, accounts, and records separate from those of every
+ subsidiary and from any Member's personal affairs (no commingling of funds);
+ - Document ownership of each subsidiary (the Company as sole member) in that
+ subsidiary's own operating agreement;
+ - Observe ordinary formalities for the Company and each subsidiary.
+
+
+
6. Capital Contributions and Distributions
+
+ - Capital contributions: Members may contribute capital to the Company as
+ needed and as agreed among the Members. Contributions are recorded in the Company's
+ books against each Member's capital account.
+ - Distributions: Distributions of available cash or profits are made to the
+ Members pro rata in proportion to their Membership Interests, at the times
+ and in the amounts the managing Member determines under §4, subject to the
+ Company's financial obligations and applicable law (the Company may not make a
+ distribution that would render it unable to pay its debts as they come due).
+
+
+
7. Bank Accounts, Books, and Records
+
+ - The Company shall maintain its own bank account(s), separate from any Member's
+ personal accounts and from every subsidiary's accounts.
+ - The Company shall keep accurate books and records of its finances, ownership
+ interests in subsidiaries, and material decisions.
+ - Records shall be maintained at the principal office and retained as required by
+ Indiana law.
+
+
+
8. Tax Treatment
+
With the admission of Annie Deondria Chatman and Richard E. Williams as Members, the
+ Company is no longer a single-member LLC. By default, a multi-member LLC is treated as
+ a partnership for U.S. federal income tax purposes; each Member reports their
+ proportionate share of income and expense (per §3) on their individual return via a
+ Schedule K-1. The Members may elect a different classification (for example, taxation
+ as a corporation) by filing the appropriate IRS election. The best classification for
+ the Company depends on the overall tax strategy across the Company and its
+ subsidiaries, not this entity in isolation.
+
Confirm tax treatment and any elections given the Company's new multi-member
+ status; confirm whether Annie's and Richard's interests are capital interests or
+ profits interests, since the tax treatment of granting an equity interest for services
+ differs from a purchased/contributed interest; confirm whether a new EIN or a
+ partnership representative designation (BBA audit regime) is required; a partnership
+ tax return (Form 1065) will likely now be required in addition to/instead of prior
+ disregarded-entity reporting.
+
+ - EIN: 42-4099038 (IRS Notice CP575G, issued July 27, 2026)
+ - Fiscal year: Calendar year (January 1 – December 31)
+
+
+
9. Liability and Indemnification
+
To the fullest extent permitted by Indiana law:
+
+ - No Member shall be personally liable for the debts, obligations, or
+ liabilities of the Company solely by reason of being a member; and
+ - The Company shall indemnify and hold harmless each Member (and any authorized
+ manager or agent) against claims, losses, and expenses arising from the good-faith
+ management of the Company within the scope of the authority granted under this
+ Agreement, except for acts of fraud, willful misconduct, bad faith, or acts taken
+ outside that authority (ultra vires acts).
+
+
Confirm this indemnification scope and its exceptions are consistent with Indiana
+ law and the Members' intended risk allocation; scope may need further tightening.
+
+
10. Succession on Death or Incapacity
+
+ In this section, "the Member" refers specifically to Samuel S. James, whose death or
+ incapacity triggers the succession provisions below — not to Annie or Richard in their
+ capacity as Members under §3. Decide: this section does not yet address what happens to
+ Annie's or Richard's own 1%/2% Membership Interest if one of them dies or becomes
+ incapacitated (e.g., does it pass to their estate, get bought out by the Company, or
+ pass to the other successor?). Revisit this with counsel before finalizing.
+
Base order of succession (applies to incapacity — see Death below for a modified
+ order that applies on death). Successors are considered in this order, skipping any
+ successor who is unavailable, unwilling, or (for Ethan and Micah, per the age condition
+ below) not yet eligible:
+
+ - Annie Deondria Chatman
+ - Richard E. Williams
+ - Ethan Nathaniel James (the Member's son) — eligible only upon reaching age 40
+ - Micah Daniel James (the Member's son) — eligible only upon reaching age 40
+
+
Incapacity. Upon the Member's incapacity, the first eligible successor in the
+ base order above shall act as successor manager of the Company — with full
+ authority to manage bank accounts, subsidiaries, and Company affairs — until the Member is
+ no longer incapacitated. Annie and Richard rank ahead of Ethan and Micah for this purpose
+ regardless of the sons' age. This provision alone may not be sufficient for banks or third
+ parties to recognize that authority; it should be backed by a Durable Power of
+ Attorney naming the same successor(s) in the same order. Draft/execute a Durable
+ Power of Attorney consistent with this section.
+
Death. Upon the Member's death, the base order above is modified: any of Ethan or
+ Micah who has already reached age 40 at the time of the Member's death ranks
+ ahead of Annie and Richard, in their original relative order (Ethan ahead of Micah).
+ Annie and Richard follow immediately after any such eligible son(s). A son who has
+ not yet reached age 40 at the time of the Member's death is unaffected by this
+ reordering and remains subject to the trust provision below.
+
+ Example: both sons 40+ at death → order is Ethan, Micah, Annie, Richard. Only Micah is
+ 40+ → order is Micah, Annie, Richard, then Ethan (in trust until 40). Neither son is 40+ →
+ order remains Annie, Richard, then each son upon reaching 40 (held in trust until then).
+
The first eligible successor under this death order is admitted as a member with the
+ same rights the Member held. Because Ethan and Micah are not eligible until age 40, if
+ either is in line but under 40 at the time of the Member's death, their interest shall
+ be held in trust for their benefit until they reach age 40, administered by a trustee
+ named in the Member's estate plan (rather than held directly under this Agreement). This
+ requires a trust structure in the Member's will/estate plan — coordinate this section, the
+ successor order, and the trustee designation with an estate planning attorney.
+
The Company shall not dissolve solely because of the Member's death or
+ incapacity, and shall continue under the successor(s) determined above.
+
+
11. Transfer of Membership Interest
+
+ - Economic vs. management rights. A Member may assign, pledge, or transfer
+ the economic rights (right to distributions/profits) in all or part of their
+ membership interest at that Member's discretion, without that alone making the
+ transferee a member.
+ - Admission as a member. A transferee is admitted as a member — with voting and
+ management rights, not just economic rights — only upon amendment of this Agreement
+ under §12.
+ - Security interests. A Member may pledge or grant a security interest in
+ their membership interest (e.g., to a lender) without that action alone transferring
+ management rights; the secured party's rights are limited to the economic interest
+ unless and until admitted as a member per above.
+ - Transfer among the current Members. Any transfer of Membership Interest
+ among Samuel S. James, Annie Deondria Chatman, and Richard E. Williams themselves
+ does not require a new admission under §12, but shall be recorded in the Company's
+ books and, if it changes any Member's ownership percentage, reflected in an
+ amendment updating §3.
+
+
Confirm transfer/security-interest mechanics with an Indiana attorney and CPA, and
+ consider whether a right of first refusal or other transfer restriction should apply to
+ Annie's and Richard's interests before any transfer is attempted.
+
+
12. Amendments
+
This Agreement may be amended only by a written instrument signed by all
+ Members. Amendments are effective on the date stated in the amendment.
+
Confirm whether unanimous consent (as stated) or a majority-in-interest vote
+ should govern future amendments, including amendments that would change a Member's own
+ percentage interest.
+
+
13. Dissolution
+
The Company shall continue in perpetuity unless dissolved by:
+
+ - The written election of Members holding a majority of the Membership Interests (per §4); or
+ - Operation of Indiana law.
+
+
Upon dissolution, the Company's assets shall be applied first to creditors (including any
+ Member, if owed), then distributed to the Members pro rata in proportion to their
+ Membership Interests, after which Articles of Dissolution shall be filed with the
+ Indiana Secretary of State.
+
+
14. Governing Law and Severability
+
This Agreement is governed by and construed in accordance with the laws of the State of
+ Indiana. If any provision is held invalid or unenforceable, the remaining provisions
+ remain in full force and effect.
+
+
15. Definitions
+
+ - "Company"
- SnS Network Solutions Holdings LLC.
+ - "Member"
- each of Samuel S. James, Annie Deondria Chatman, and Richard E. Williams, and any successor or additional member admitted under this Agreement.
+ - "Membership Interest"
- a Member's ownership, economic, and (unless limited) management rights in the Company, expressed as a percentage per §3.
+ - "Subsidiary"
- any entity in which the Company holds a controlling or sole-member interest.
+
+
+
+
Execution
+
The undersigned, being all of the Members of SnS Network Solutions Holdings LLC,
+ adopt and agree to this Amended and Restated Operating Agreement as of the Effective
+ Date first written above.
+
+
MEMBER — 97% Membership Interest
+
+
+
Signature
+
+
Printed name: Samuel S. James
+
+
+
Date
+
+
MEMBER — 1% Membership Interest
+
+
+
Signature
+
+
Printed name: Annie Deondria Chatman
+
+
+
Date
+
+
MEMBER — 2% Membership Interest
+
+
+
Signature
+
+
Printed name: Richard E. Williams
+
+
+
Date
+
+
+
+
+
+
+
+
+
+ Not legal advice. This is a working draft for LegalShield / attorney review.
+ Items in [brackets] need confirmation before signing. Neither party should
+ rely on this document until reviewed by an Indiana-licensed attorney and CPA.
+
+
+
+
1. Purpose & Scope
+
This framework governs the Membership Interest granted to Kiowa Scott
+ ("Kiowa") in SnS Hospitality Group LLC (the "Group"), a subsidiary of SnS
+ Network Solutions Holdings LLC ("Holdings"). Kiowa's 15% interest is at the
+ Group level — she participates in ALL mobile/trailer-based ventures operated
+ under the Group (coffee trailers, food trucks, and any future mobile venture).
+
Kiowa is not a Member of Holdings itself. Samuel S. James remains Holdings'
+ sole owner. This framework applies only to SnS Hospitality Group LLC.
+
Territory: NW Indiana and Southern Michigan.
+
+
+
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:
+
+
+ | Bucket | Amount | Condition |
|---|
+
+ | Formation Grant |
+ 5% |
+ Vests immediately on the Formation Date (date Articles of Organization are
+ filed). Payment for sourcing the venture and completing entity formation. No
+ clawback. |
+
+
+ | Service Grant |
+ 10% |
+ Vests in 4 equal quarterly tranches (2.5% each) from the Opening Date,
+ conditional on active service (see §4). |
+
+
+
+
+ Formation Date = day the subsidiary's Articles of Organization are filed with
+ the Indiana Secretary of State.
+ Opening Date = day the venture begins revenue-generating operations (e.g., first
+ paying customer). The vesting clock starts here, not the Formation Date.
+
+
+
+
4. Service Grant — Vesting Schedule
+
Measured from the Opening Date (first coffee trailer serves its first paying customer):
+
+
+ | Milestone | Vests | Cumulative Total | Condition |
|---|
+ | Formation Date (Group LLC filed) | 5.0% | 5.0% | Immediate — formation work complete |
+ | 3 months | 2.5% | 7.5% | Actively performing duties |
+ | 6 months | 2.5% | 10.0% | Actively performing duties |
+ | 9 months | 2.5% | 12.5% | Actively performing duties |
+ | 12 months | 2.5% | 15.0% | Actively performing duties |
+
+
+
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 During Vesting (Months 1-12)
+
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.
+
+
+ | Scenario (During Vesting Year) | Kiowa Keeps |
|---|
+ | Quits before Opening Date (formation work done) | 5% |
+ | Quits at month 2 (before first service tranche) | 5% |
+ | Active through month 3, quits at month 5 | 7.5% |
+ | Active through month 9 | 12.5% |
+ | Active through month 12 | 15% (fully vested) |
+ | Business hits 2× at month 7, Kiowa active | 15% (accelerated) |
+
+
+
4.4 After Full Vesting (Month 12+) — Permanent Ownership
+
Once Kiowa is fully vested at 15%, the equity is hers permanently. She owns
+ it free and clear regardless of future involvement.
+
If she stops working after full vesting:
+
+ - She loses management authority — can no longer make operational decisions,
+ sign leases, hire/fire, or represent the Group to vendors or landlords
+ - She retains economic rights — continues receiving 15% of distributions
+ as a passive member for as long as the Group exists
+ - Holdings assumes full management control (or designates a replacement manager)
+
+
Her incentive to keep working: distributions only exist if the trailers are
+ profitable, and profitability requires active management. 15% of nothing is nothing.
+
+
+
5. 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.
+ - Once fully vested, Kiowa receives 15% of the Group's combined net profit
+ across all ventures (coffee trailers, food trucks, and any future mobile business).
+ - Distributions are pro rata to each Member's vested Membership Interest.
+
+
+
+
6. Group-Level Ownership
+
Kiowa's 15% Membership Interest is in SnS Hospitality Group LLC as a whole,
+ not in any individual venture. She participates economically in every venture the Group
+ operates — coffee trailers, food trucks, and any future mobile business added to the
+ Group.
+
Her distributions are 15% of the Group's combined net profit across all
+ ventures. A strong-performing coffee trailer can offset a slower food truck month —
+ diversification benefits her.
+
+
+
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.
+ - Once fully vested, Kiowa receives 15% of the Group's combined net profit
+ across all ventures.
+ - Distributions are pro rata to each Member's vested Membership Interest.
+ - After vesting, if Kiowa becomes a passive member (stops working), she continues
+ to receive distributions — 15% of whatever profit the Group generates.
+
+
+
+
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.
+
+
+ CPA review required before any grant: confirm profits-interest qualification,
+ 83(b) timing, and tiered-partnership filing mechanics between the subsidiary and Holdings.
+
+
+
+
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
+
+ | Term | Meaning |
|---|
+ | "Holdings" | SnS Network Solutions Holdings LLC |
+ | "Sam" | Samuel S. James, authorized representative of Holdings |
+ | "Kiowa" | Kiowa Scott |
+ | "Formation Date" | Date Articles of Organization filed with IN Secretary of State |
+ | "Opening Date" | Date the venture begins revenue-generating operations |
+ | "Sam's invested capital" | Cumulative cash Holdings contributes to that subsidiary |
+ | "Cumulative net profit" | Venture's net profit from Opening Date forward |
+ | "Actively performing" | Meeting the duties defined in §4.1 |
+
+
+
+
9. Worked Examples
+
+
+
Example A — Year 1: 2 Coffee Trailers (Slightly Above Average)
+
Setup: Sam invests $50K for Trailer #1 (Month 1), then $35K for Trailer #2
+ (Month 4, funded from Trailer #1 profits). Both doing 120 customers/day at $8 avg.
+
+ | Metric | Trailer #1 (12 months) | Trailer #2 (9 months) | Combined |
|---|
+ | Revenue | $299,520 | $224,640 | $524,160 |
+ | Costs (supply + fixed) | -$116,496 | -$87,372 | -$203,868 |
+ | Net profit | $183,024 | $137,268 | $320,292 |
+
+
Kiowa's Year 1:
+
+ - Months 1-3: earning on 5% (formation) → ~$4,000
+ - Months 4-6: earning on 7.5-10% (tranches vesting) → ~$8,000
+ - Months 7-12: earning on 12.5-15% → ~$28,000
+ - Total Year 1 pre-tax: ~$40,000
+ - After tax (~35%): ~$26,000
+
+
Sam's Year 1 after tax: ~$180,000
+
+
+
+
Example B — Year 2: Scale to 10 Trailers
+
Setup: 10 trailers running by month 20, all at average (100 customers/day, $8).
+ Year 2 full-year profit with all 10 running:
+
+ | Metric | Per Trailer | 10 Trailers |
|---|
+ | Annual revenue | $249,600 | $2,496,000 |
+ | Annual costs | -$109,008 | -$1,090,080 |
+ | Net profit | $140,592 | $1,405,920 |
+
+
Distributions (full year, all 10 running):
+
+ | Member | Share | Pre-tax | After tax | Monthly |
|---|
+ | Holdings (Sam) — 85% | $1,195,032 | $776,771 | $64,731/mo |
+ | Kiowa — 15% | $210,888 | $137,077 | $11,423/mo |
+
+
Kiowa clears $137K after tax with 10 trailers at average performance. Goal met.
+
+
+
+
Example C — Kiowa Stops Working (Year 3+, Fully Vested)
+
Scenario: At month 14 (fully vested since month 12), Kiowa decides to step back.
+ 10 trailers running, $1.4M annual profit.
+
+ - Kiowa loses: management authority, signing power, hiring/firing, lease negotiations
+ - Kiowa keeps: 15% of distributions permanently = $137K+/yr after tax (passive)
+ - Holdings hires a replacement operations manager (salaried — comes out of expenses before profit)
+ - Net profit drops slightly (manager salary), but Kiowa still gets 15% of whatever remains
+
+
Key: Kiowa has every incentive to stay — if she leaves, whoever replaces her may
+ not manage as well, profits could drop, and her passive 15% shrinks. But she can never
+ be forced to work, and she can never lose the equity.
+
+
+
+
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.
+
+
+
+
Execution
+
The undersigned acknowledge and agree to this Partnership & Equity Framework as of
+ the Effective Date first written above.
+
+
HOLDINGS — Samuel S. James
+
+
Signature
+
Printed name: Samuel S. James
+
Title: Managing Member, SnS Network Solutions Holdings LLC
+
+
Date
+
+
PARTNER — Kiowa Scott
+
+
Signature
+
Printed name: Kiowa Scott
+
+
Date
+
+
+