PARTNERSHIP & EQUITY FRAMEWORK

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:

4. Service Grant — Vesting Schedule

Measured from the Opening Date (first coffee trailer serves its first paying customer):

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.

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.

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

9. 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.