4831152b25
- Add SnS Technology Group LLC (planned) - Add SnS Hospitality Group LLC (Kiowa Scott 15%, coffee trailers 2-year plan) - Add SnS Properties LLC (planned) - Move 04-foodtruck1 to sns-hospitality-group/indian-food-truck-legacy - Add Kiowa partnership agreement HTML (Option C split-grant, group-level) - Add NDA, equity framework, legal services docs - Add coffee trailers business plan (10 locations, NW IN + S. Michigan) - Add corporate structure HTML (visual org chart) - Add Holdings legal docs (certificate, EIN, operating agreement HTML)
454 lines
20 KiB
HTML
454 lines
20 KiB
HTML
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</head>
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<body>
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<div class="doc">
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<div class="header">
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<h1>PARTNERSHIP & EQUITY FRAMEWORK</h1>
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<div class="subtitle">SnS Network Solutions Holdings LLC — Kiowa Scott</div>
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</div>
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<div class="meta">
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<div><b>Holding entity:</b> SnS Network Solutions Holdings LLC</div>
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<div><b>Managing Member:</b> Samuel S. James (97%)</div>
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<div><b>Partner:</b> Kiowa Scott</div>
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<div><b>State:</b> Indiana</div>
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<div><b>Effective:</b> ________________</div>
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</div>
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<div class="note">
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<b>Not legal advice.</b> This is a working draft for LegalShield / attorney review.
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Items in <em>[brackets]</em> need confirmation before signing. Neither party should
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rely on this document until reviewed by an Indiana-licensed attorney and CPA.
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</div>
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<!-- ═══════════════════════════════════════════════ -->
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<h2>1. Purpose & Scope</h2>
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<p>This framework governs the Membership Interest granted to <b>Kiowa Scott</b>
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("Kiowa") in <b>SnS Hospitality Group LLC</b> (the "Group"), a subsidiary of SnS
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Network Solutions Holdings LLC ("Holdings"). Kiowa's 15% interest is at the
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<b>Group level</b> — she participates in ALL mobile/trailer-based ventures operated
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under the Group (coffee trailers, food trucks, and any future mobile venture).</p>
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<p>Kiowa is <b>not</b> a Member of Holdings itself. Samuel S. James remains Holdings'
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sole owner. This framework applies only to SnS Hospitality Group LLC.</p>
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<p><b>Territory:</b> NW Indiana and Southern Michigan.</p>
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<!-- ═══════════════════════════════════════════════ -->
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<h2>2. Kiowa's Role (Per Venture)</h2>
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<ul>
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<li>Sourcing and scouting the business opportunity</li>
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<li>Entity formation — Articles of Organization, EIN application, INBiz filings</li>
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<li>Ongoing legal compliance — permits, renewals, filings, registered-agent duties</li>
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<li>Management oversight — financial review, vendor coordination, ensuring profitability</li>
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<li>Handling or coordinating any legal issues that arise in operations</li>
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</ul>
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<!-- ═══════════════════════════════════════════════ -->
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<h2>3. The Grant — Split Structure</h2>
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<p>Total potential equity per venture: <b>15% Membership Interest</b>, split into two buckets:</p>
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<table>
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<tr><th>Bucket</th><th>Amount</th><th>Condition</th></tr>
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<tr>
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<td><b>Formation Grant</b></td>
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<td>5%</td>
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<td>Vests immediately on the <b>Formation Date</b> (date Articles of Organization are
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filed). Payment for sourcing the venture and completing entity formation. <b>No
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clawback.</b></td>
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</tr>
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<tr>
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<td><b>Service Grant</b></td>
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<td>10%</td>
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<td>Vests in 4 equal quarterly tranches (2.5% each) from the <b>Opening Date</b>,
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conditional on active service (see §4).</td>
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</tr>
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</table>
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<div class="highlight">
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<b>Formation Date</b> = day the subsidiary's Articles of Organization are filed with
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the Indiana Secretary of State.<br>
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<b>Opening Date</b> = day the venture begins revenue-generating operations (e.g., first
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paying customer). The vesting clock starts here, not the Formation Date.
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</div>
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<!-- ═══════════════════════════════════════════════ -->
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<h2>4. Service Grant — Vesting Schedule</h2>
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<p>Measured from the <b>Opening Date</b> (first coffee trailer serves its first paying customer):</p>
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<table>
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<tr><th>Milestone</th><th>Vests</th><th>Cumulative Total</th><th>Condition</th></tr>
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<tr><td>Formation Date (Group LLC filed)</td><td>5.0%</td><td>5.0%</td><td>Immediate — formation work complete</td></tr>
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<tr><td>3 months</td><td>2.5%</td><td>7.5%</td><td>Actively performing duties</td></tr>
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<tr><td>6 months</td><td>2.5%</td><td>10.0%</td><td>Actively performing duties</td></tr>
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<tr><td>9 months</td><td>2.5%</td><td>12.5%</td><td>Actively performing duties</td></tr>
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<tr><td>12 months</td><td>2.5%</td><td>15.0%</td><td>Actively performing duties</td></tr>
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</table>
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<h3>4.1 "Actively Performing" Defined</h3>
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<p>At each quarterly milestone, Kiowa must be, at minimum:</p>
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<ul>
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<li>Handling or coordinating legal filings, permits, renewals, and regulatory compliance</li>
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<li>Providing regular management oversight (financial reviews, vendor/operator
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coordination, staffing decisions)</li>
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<li>Responsive and available for Company business decisions within reasonable timeframes</li>
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<li>Not in material breach of the NDA or operating agreement</li>
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</ul>
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<h3>4.2 Acceleration</h3>
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<p>If cumulative net profit reaches <b>2× Sam's invested capital</b> at any point before
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month 12, all remaining unvested service tranches vest immediately — Kiowa jumps to the
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full 15%. This rewards exceptional performance without punishing normal first-year economics.</p>
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<h3>4.3 During Vesting (Months 1-12)</h3>
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<p>If at any quarterly milestone Kiowa is <b>not</b> actively performing (she resigned,
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became unresponsive, or was removed for cause), that tranche and all future tranches
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<b>do not vest</b>. She keeps the 5% formation grant + any service tranches that already
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vested. Unvested tranches revert to Holdings.</p>
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<table>
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<tr><th>Scenario (During Vesting Year)</th><th>Kiowa Keeps</th></tr>
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<tr><td>Quits before Opening Date (formation work done)</td><td>5%</td></tr>
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<tr><td>Quits at month 2 (before first service tranche)</td><td>5%</td></tr>
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<tr><td>Active through month 3, quits at month 5</td><td>7.5%</td></tr>
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<tr><td>Active through month 9</td><td>12.5%</td></tr>
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<tr><td>Active through month 12</td><td>15% (fully vested)</td></tr>
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<tr><td>Business hits 2× at month 7, Kiowa active</td><td>15% (accelerated)</td></tr>
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</table>
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<h3>4.4 After Full Vesting (Month 12+) — Permanent Ownership</h3>
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<p>Once Kiowa is fully vested at 15%, <b>the equity is hers permanently</b>. She owns
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it free and clear regardless of future involvement.</p>
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<p><b>If she stops working after full vesting:</b></p>
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<ul>
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<li>She <b>loses management authority</b> — can no longer make operational decisions,
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sign leases, hire/fire, or represent the Group to vendors or landlords</li>
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<li>She <b>retains economic rights</b> — continues receiving 15% of distributions
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as a passive member for as long as the Group exists</li>
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<li>Holdings assumes full management control (or designates a replacement manager)</li>
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</ul>
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<p>Her incentive to keep working: distributions only exist if the trailers are
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profitable, and profitability requires active management. 15% of nothing is nothing.</p>
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<!-- ═══════════════════════════════════════════════ -->
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<h2>5. Distributions</h2>
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<ul>
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<li>The <b>5% formation grant</b> earns distributions from the Formation Date forward.</li>
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<li><b>Service tranches</b> earn distributions only once vested — unvested tranches
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do not participate in distributions.</li>
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<li>Once fully vested, Kiowa receives <b>15% of the Group's combined net profit</b>
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across all ventures (coffee trailers, food trucks, and any future mobile business).</li>
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<li>Distributions are pro rata to each Member's vested Membership Interest.</li>
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</ul>
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<!-- ═══════════════════════════════════════════════ -->
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<h2>6. Group-Level Ownership</h2>
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<p>Kiowa's 15% Membership Interest is in <b>SnS Hospitality Group LLC as a whole</b>,
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not in any individual venture. She participates economically in every venture the Group
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operates — coffee trailers, food trucks, and any future mobile business added to the
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Group.</p>
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<p>Her distributions are 15% of the Group's <b>combined net profit</b> across all
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ventures. A strong-performing coffee trailer can offset a slower food truck month —
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diversification benefits her.</p>
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<!-- ═══════════════════════════════════════════════ -->
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<h2>7. Distributions</h2>
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<ul>
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<li>The <b>5% formation grant</b> earns distributions from the Formation Date forward.</li>
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<li><b>Service tranches</b> earn distributions only once vested — unvested tranches
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do not participate in distributions.</li>
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<li>Once fully vested, Kiowa receives <b>15% of the Group's combined net profit</b>
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across all ventures.</li>
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<li>Distributions are pro rata to each Member's vested Membership Interest.</li>
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<li>After vesting, if Kiowa becomes a passive member (stops working), she continues
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to receive distributions — 15% of whatever profit the Group generates.</li>
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</ul>
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<!-- ═══════════════════════════════════════════════ -->
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<h2>8. Tax Treatment</h2>
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<ul>
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<li>The <b>formation + service grant</b> (15%) is intended as a <b>profits interest</b>
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under Rev. Proc. 93-27 / 2001-43 — no taxable income to Kiowa on grant.</li>
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<li>The <b>capital buy-up</b> is a straightforward capital contribution — not a profits
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interest. Kiowa's tax basis equals her cash contributed.</li>
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<li><b>Section 83(b) election:</b> Kiowa should file a protective 83(b) within 30 days
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of each grant date. This is a <b>hard IRS deadline with no extensions</b> — the
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single highest-stakes item in this arrangement.</li>
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<li>Each two-member subsidiary files its own Form 1065 partnership return and issues
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K-1s to both Members.</li>
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</ul>
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<div class="note">
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<b>CPA review required</b> before any grant: confirm profits-interest qualification,
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83(b) timing, and tiered-partnership filing mechanics between the subsidiary and Holdings.
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</div>
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<!-- ═══════════════════════════════════════════════ -->
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<h2>9. Confidentiality</h2>
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<p>Kiowa's access to Sam's personal information (SSN, financial accounts, IRS
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correspondence) during formation work is governed by a separate <b>Non-Disclosure
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Agreement</b> (see <code>nda-formation-partner.md</code>). The NDA applies regardless
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of which ventures she vests into and survives termination of any individual venture
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relationship.</p>
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<!-- ═══════════════════════════════════════════════ -->
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<h2>10. Definitions</h2>
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<table>
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<tr><th>Term</th><th>Meaning</th></tr>
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<tr><td>"Holdings"</td><td>SnS Network Solutions Holdings LLC</td></tr>
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<tr><td>"Sam"</td><td>Samuel S. James, authorized representative of Holdings</td></tr>
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<tr><td>"Kiowa"</td><td>Kiowa Scott</td></tr>
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<tr><td>"Formation Date"</td><td>Date Articles of Organization filed with IN Secretary of State</td></tr>
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<tr><td>"Opening Date"</td><td>Date the venture begins revenue-generating operations</td></tr>
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<tr><td>"Sam's invested capital"</td><td>Cumulative cash Holdings contributes to that subsidiary</td></tr>
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<tr><td>"Cumulative net profit"</td><td>Venture's net profit from Opening Date forward</td></tr>
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<tr><td>"Actively performing"</td><td>Meeting the duties defined in §4.1</td></tr>
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</table>
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<!-- ═══════════════════════════════════════════════ -->
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<h2>9. Worked Examples</h2>
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<div class="example-box">
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<h3>Example A — Year 1: 2 Coffee Trailers (Slightly Above Average)</h3>
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<p><b>Setup:</b> Sam invests $50K for Trailer #1 (Month 1), then $35K for Trailer #2
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(Month 4, funded from Trailer #1 profits). Both doing 120 customers/day at $8 avg.</p>
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<table>
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<tr><th>Metric</th><th>Trailer #1 (12 months)</th><th>Trailer #2 (9 months)</th><th>Combined</th></tr>
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<tr><td>Revenue</td><td>$299,520</td><td>$224,640</td><td>$524,160</td></tr>
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<tr><td>Costs (supply + fixed)</td><td>-$116,496</td><td>-$87,372</td><td>-$203,868</td></tr>
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<tr><td><b>Net profit</b></td><td><b>$183,024</b></td><td><b>$137,268</b></td><td><b>$320,292</b></td></tr>
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</table>
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<p><b>Kiowa's Year 1:</b></p>
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<ul>
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<li>Months 1-3: earning on 5% (formation) → ~$4,000</li>
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<li>Months 4-6: earning on 7.5-10% (tranches vesting) → ~$8,000</li>
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<li>Months 7-12: earning on 12.5-15% → ~$28,000</li>
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<li><b>Total Year 1 pre-tax: ~$40,000</b></li>
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<li><b>After tax (~35%): ~$26,000</b></li>
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</ul>
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<p><b>Sam's Year 1 after tax: ~$180,000</b></p>
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</div>
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<div class="example-box">
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<h3>Example B — Year 2: Scale to 10 Trailers</h3>
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<p><b>Setup:</b> 10 trailers running by month 20, all at average (100 customers/day, $8).
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Year 2 full-year profit with all 10 running:</p>
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<table>
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<tr><th>Metric</th><th>Per Trailer</th><th>10 Trailers</th></tr>
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<tr><td>Annual revenue</td><td>$249,600</td><td>$2,496,000</td></tr>
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<tr><td>Annual costs</td><td>-$109,008</td><td>-$1,090,080</td></tr>
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<tr><td><b>Net profit</b></td><td><b>$140,592</b></td><td><b>$1,405,920</b></td></tr>
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</table>
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<p><b>Distributions (full year, all 10 running):</b></p>
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<table>
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<tr><th>Member</th><th>Share</th><th>Pre-tax</th><th>After tax</th><th>Monthly</th></tr>
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<tr><td>Holdings (Sam) — 85%</td><td>$1,195,032</td><td>$776,771</td><td>$64,731/mo</td></tr>
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<tr><td>Kiowa — 15%</td><td>$210,888</td><td><b>$137,077</b></td><td><b>$11,423/mo</b></td></tr>
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</table>
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<p>Kiowa clears <b>$137K after tax</b> with 10 trailers at average performance. Goal met.</p>
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</div>
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<div class="example-box">
|
||
<h3>Example C — Kiowa Stops Working (Year 3+, Fully Vested)</h3>
|
||
<p><b>Scenario:</b> At month 14 (fully vested since month 12), Kiowa decides to step back.
|
||
10 trailers running, $1.4M annual profit.</p>
|
||
<ul>
|
||
<li>Kiowa <b>loses</b>: management authority, signing power, hiring/firing, lease negotiations</li>
|
||
<li>Kiowa <b>keeps</b>: 15% of distributions permanently = $137K+/yr after tax (passive)</li>
|
||
<li>Holdings hires a replacement operations manager (salaried — comes out of expenses before profit)</li>
|
||
<li>Net profit drops slightly (manager salary), but Kiowa still gets 15% of whatever remains</li>
|
||
</ul>
|
||
<p><b>Key:</b> 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.</p>
|
||
</div>
|
||
|
||
<!-- ═══════════════════════════════════════════════ -->
|
||
<h2>12. Amendments</h2>
|
||
<p>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.</p>
|
||
|
||
<!-- ═══════════════════════════════════════════════ -->
|
||
<h2>13. Governing Law</h2>
|
||
<p>This Agreement is governed by the laws of the <b>State of Indiana</b>. Each subsidiary
|
||
operating agreement is also governed by Indiana law unless otherwise specified therein.</p>
|
||
|
||
<!-- ═══════════════════════════════════════════════ -->
|
||
<div class="sig-block">
|
||
<h2 style="margin-top:0">Execution</h2>
|
||
<p>The undersigned acknowledge and agree to this Partnership & Equity Framework as of
|
||
the Effective Date first written above.</p>
|
||
|
||
<p style="margin-top:28px;font-weight:700;color:var(--navy)">HOLDINGS — Samuel S. James</p>
|
||
<div class="sig-line"></div>
|
||
<div class="sig-label">Signature</div>
|
||
<p><b>Printed name:</b> Samuel S. James</p>
|
||
<p><b>Title:</b> Managing Member, SnS Network Solutions Holdings LLC</p>
|
||
<div class="sig-line" style="width:35%"></div>
|
||
<div class="sig-label">Date</div>
|
||
|
||
<p style="margin-top:28px;font-weight:700;color:var(--navy)">PARTNER — Kiowa Scott</p>
|
||
<div class="sig-line"></div>
|
||
<div class="sig-label">Signature</div>
|
||
<p><b>Printed name:</b> Kiowa Scott</p>
|
||
<div class="sig-line" style="width:35%"></div>
|
||
<div class="sig-label">Date</div>
|
||
</div>
|
||
|
||
</div>
|
||
|
||
<footer>
|
||
Draft — Review with an Indiana-licensed attorney and CPA before signing.<br>
|
||
SnS Network Solutions Holdings LLC • 759 Boxwood Drive, South Bend, IN 46641
|
||
</footer>
|
||
|
||
</body>
|
||
</html>
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