sns-network-solutions/businesses/sns-hospitality-group/indian-food-truck/docs/operating-agreement.md

Operating Agreement for Foodtruck1 LLC

Draft / template — not legal advice. This is a working draft for a two-member Indiana LLC that is a subsidiary of SnS Network Solutions Holdings LLC. Unlike the other subsidiaries, this one is not wholly owned by Holdings — it has a second Member holding a performance-vesting interest. Have an Indiana-licensed attorney and a CPA review and finalize this before either party signs. Items in [brackets] need your specific information; items marked [TODO — attorney/CPA review] should be confirmed with counsel.

Entity: [Foodtruck1 LLC — confirm final legal name once filed] (the "Company") Parent: SnS Network Solutions Holdings LLC (the "Parent Company"), 85% Member Second Member: Kiowa Scott ("Kiowa"), 15% Member (vesting) State of formation: Indiana Effective date: [Effective Date — the date this Agreement is adopted]

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1. Formation and Purpose

This Operating Agreement (the "Agreement") is entered into by the Members, SnS Network Solutions Holdings LLC (the "Parent Company") and Kiowa Scott ("Kiowa"), to govern the operations of Foodtruck1 LLC, a limited liability company organized under the Indiana Business Flexibility Act (Indiana Code § 23-18).

The Company is an operating subsidiary formed to operate a mobile food truck business. Unlike the Parent Company, the Company does conduct client-facing work and carries the operating liability associated with that work (food service, a commercial vehicle, and — depending on the staffing model chosen — employees), which is why it is held in a separate LLC, walling that liability off from the Parent Company and from every sibling subsidiary.

2. Registered Office and Registered Agent

• Principal office: [Principal business address]
• Registered agent: [Registered agent name]
• Registered office address: [Indiana street address of the registered agent]

3. Members and Ownership

Member	Membership Interest	Capital Contributed
SnS Network Solutions Holdings LLC	85%	[$ amount — Sam's invested capital in this venture]
Kiowa	15% (subject to vesting — see §5)	$0

Kiowa is admitted as a full Member — with voting and economic rights — as of the Effective Date, granted in exchange for her services (business formation/paperwork work and originating this venture), not for a cash contribution. Her 15% interest is subject to the vesting and forfeiture terms in §5, which control over any inconsistent provision elsewhere in this Agreement.

Allocations of profit and loss for tax purposes are made in proportion to each Member's Membership Interest, subject to §5 and §8. [TODO — CPA review: confirm capital account mechanics for a $0-contribution, services-for-equity Member, and how allocations should work while her interest is partly unvested — see §5 and §8.]

4. Management

The Company shall be Member-managed. Because the Parent Company holds a Membership Interest majority (85%), the Parent Company — acting through its authorized representative, Samuel S. James — retains sole authority to approve or reject major Company decisions, including:

• Entering into contracts, leases, and vendor/supplier agreements;
• Opening and controlling the Company's bank and financial accounts;
• Procuring insurance and equipment;
• Hiring and directing employees, or engaging an independent operator, per the staffing model chosen (see §10);
• Admitting any new member (which requires amending this Agreement — see §12).

Day-to-day management (routes, customers, daily operations) is delegated to [TODO: designate — Kiowa, a hired operator under a lease/license arrangement, or a hired manager under a direct-hire staffing model; pending the staffing-model decision referenced in ../requirements.md], who reports to Samuel S. James as the Parent Company's authorized representative.

5. Vesting and Forfeiture of Kiowa's Membership Interest

This section is the controlling reference for Kiowa's equity — consistent with, and incorporating, the terms of ../../00-sns-holding/docs/kiowa-equity-framework.md.

5.1 Vesting schedule. Measured from the Company's Opening Date (the date the Company begins revenue-generating operations — [TODO: record actual date once known] — not the date this Agreement is signed or the date Articles of Organization are filed):

Milestone (from Opening Date)	Vests	Condition
3 months	3.75% (cumulative 3.75%)	Time-based, unconditional
6 months	3.75% (cumulative 7.50%)	Time-based, unconditional
9 months	3.75% (cumulative 11.25%)	Time-based, unconditional
12 months	final 3.75% (cumulative 15.00%)	Conditional — only vests if cumulative net profit has reached 2x the Parent Company's invested capital (per §3) by month 12

5.2 Acceleration. If the Company's cumulative net profit reaches 2x the Parent Company's invested capital at any point before the 12-month mark, Kiowa's interest immediately and fully vests to 15%, regardless of which quarterly milestone has or has not yet passed.

5.3 Forfeiture and repurchase. If cumulative net profit has not reached 2x the Parent Company's invested capital by the 12-month mark, the final 3.75% tranche does not vest. The Parent Company has the option (exercisable within [TODO — e.g., 90 days] of the 12-month mark) to repurchase that unvested tranche from Kiowa for [$1.00 — nominal consideration, given no cash was paid in]. Upon exercise, Kiowa's Membership Interest permanently reduces to whatever had vested through month 9 (up to 11.25%), and the repurchased tranche is transferred to the Parent Company. There is no cure period and no later opportunity to re-earn the forfeited tranche for this venture.

5.4 Distributions during the vesting period. Until any tranche is forfeited under §5.3, Kiowa receives distributions on her full 15% Membership Interest as if fully vested (consistent with profits-interest tax treatment — see §8). Forfeiture under §5.3 applies only prospectively: distributions already paid to Kiowa before the forfeiture date are not clawed back. [TODO — CPA review: confirm this "full distributions during vesting, forfeiture only prospective" approach is consistent with, or needs a formal forfeiture-allocation provision for, profits-interest safe-harbor tax treatment.]

5.5 Independence from other ventures. This vesting arrangement applies only to Kiowa's interest in this Company. It has no effect on, and is not affected by, any equity Kiowa may be granted in any other subsidiary she originates.

6. Bank Accounts, Books, and Records

• The Company shall maintain its own bank account(s), separate from the Parent Company's and from every sibling subsidiary's accounts.
• The Company shall keep accurate books and records of its finances, contracts, and material decisions — including records sufficient to verify the vesting milestones in §5 (cumulative net profit, by quarter, from the Opening Date) — retained at the principal office as required by Indiana law.

7. Capital Contributions and Additional Distributions

• Capital contributions: The Parent Company may contribute additional capital to the Company as needed; contributions are recorded in the Company's books against its capital account. Kiowa is not required or expected to make cash contributions.
• Distributions: Subject to §5.4, distributions of available profits are made pro rata to the Members' respective Membership Interests, at the times and amounts the Parent Company 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).

8. Tax Treatment

With two Members, the Company is, by default, treated as a partnership for U.S. federal income tax purposes; each Member reports their share of income and expense via a Schedule K-1. Because the Parent Company is itself a multi-member LLC taxed as a partnership, this creates a tiered partnership structure requiring coordination between the Company's and the Parent Company's returns. [TODO — CPA/attorney review: (1) confirm Kiowa's interest is structured and documented as a profits interest under Rev. Proc. 93-27/2001-43, not a capital interest, to avoid immediate taxable income to her on grant; (2) confirm whether Kiowa should file a protective Section 83(b) election within 30 days of the Effective Date given the forfeiture condition in §5.3 — this is a hard IRS deadline; (3) confirm tiered-partnership filing mechanics between this Company and the Parent Company; (4) a Form 1065 will be required for this Company.]

• EIN: [Company EIN — obtain from the IRS once Articles of Organization are filed]
• Fiscal year: [Fiscal year — typically the calendar year]

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 authority granted under this Agreement, except for acts of fraud, willful misconduct, bad faith, or acts taken outside that authority. [TODO — attorney review: confirm indemnification scope, especially given the Company's operating (not passive-holding) risk profile.]

10. Insurance, Licensing, and Staffing

Given the Company's mobile food-service operations, the following are required before operations begin (see ../requirements.md for current cost estimates and status):

• Workers' Compensation — mandatory under Indiana law from employee #1, if the direct-hire staffing model is used.
• General Liability — required for the mobile food vendor permit.
• Commercial Auto — required for the truck; a personal auto policy will not cover commercial use.
• Mobile food vendor / health department permit — required from South Bend / St. Joseph County before operating.

Staffing model: Direct W-2 hire — 1 full-time cook/manager ($24/hr) and 2 part-time crew members ($12/hr, 25 hrs/wk each). Total loaded monthly labor: approximately $7,800.

11. Minimum Operating Requirements & Financial Targets

The Company shall operate a minimum of 288 days per calendar year (6 days per week, 48 weeks), accounting for up to 4 weeks of planned downtime due to weather, maintenance, holidays, or unforeseen events.

11.1 Investment & Loan Repayment

• Total initial investment: $50,000 (contributed by the Parent Company)
• Repayment target: Full repayment of invested capital within 24 months of the Opening Date
• Required pre-tax annual profit (to meet repayment after taxes): $38,462/yr (~$3,205/mo at the Parent Company's 75% share, grossed up for ~35% combined federal, state, and self-employment taxes)

11.2 Monthly Financial Obligations

The Company's fixed monthly costs, payable regardless of revenue:

Item	Monthly Cost
Labor (loaded — cook + 2 PT crew + employer taxes)	$7,800
Truck payment (48mo @ ~8%)	$854
Workers' Compensation insurance	$150
General Liability insurance	$42
Commercial Auto insurance	$170
Commissary kitchen rental	$400
Fuel	$500
Software (payroll + ERP)	$100
LegalShield (legal services)	$60
Phone/POS	$100
Miscellaneous/repairs buffer	$490
Total fixed monthly	$10,666

During downtime weeks, fixed costs continue. Labor reduces to cook-only retention (~$1,085/wk loaded) to avoid losing a key employee; part-time crew is zeroed.

11.3 Revenue Targets

Assuming 30% food cost and 288 operating days per year:

Metric	Target
Breakeven revenue (annual)	$182,640 ($15,220/mo)
Revenue to meet 2-year payback	$232,641/yr ($808/operating day)
Minimum daily revenue target	$808/day
At $14/plate	58 customers/day
At $15/plate	54 customers/day
At $12/plate	68 customers/day

11.4 Reporting

The Company shall maintain monthly records sufficient to track:

• Total operating days vs. the 288-day minimum
• Daily revenue and customer count
• Cumulative net profit vs. the invested capital repayment schedule
• Food cost percentage (target: ≤30% of revenue)

These records support the vesting milestones in §5 and are available to both Members upon request.

12. 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.
• Repurchase right. The Parent Company's repurchase right over Kiowa's unvested tranche under §5.3 is not a general transfer restriction — it applies only in the specific forfeiture circumstance described there. [TODO — attorney review: consider whether a right of first refusal should apply to either Member's Membership Interest before any transfer to a third party is attempted.]

13. Amendments

This Agreement may be amended only by a written instrument signed by all Members. [TODO — attorney review: given the Parent Company holds a voting majority (85%), consider whether any amendment that would change Kiowa's Membership Interest, the §5 vesting/forfeiture terms, or her distribution rights should specifically require Kiowa's consent, even though general amendments could otherwise be read to need only majority approval.]

14. Dissolution

The Company shall continue in perpetuity unless dissolved by:

• The written election of Members holding a majority of the Membership Interests; or
• Operation of Indiana law.

Upon dissolution, the Company's assets shall be applied first to creditors, then distributed to the Members pro rata in proportion to their (then-vested) 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" — Foodtruck1 LLC.
• "Parent Company" — SnS Network Solutions Holdings LLC.
• "Kiowa" — Kiowa Scott, the Company's second Member.
• "Membership Interest" — a Member's ownership, economic, and (unless limited) management rights in the Company, expressed as a percentage per §3, subject to §5.
• "Opening Date" — the date the Company begins revenue-generating operations, as defined in §5.1.

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Execution

The undersigned, being all of the Members of Foodtruck1 LLC, adopt and agree to this Operating Agreement as of the Effective Date first written above.

MEMBER — 85% Membership Interest

By: ______________________________________

Name: Samuel S. James

Title: Authorized Representative / Sole Member of SnS Network Solutions Holdings LLC

Date: ______________________________________

MEMBER — 15% Membership Interest (vesting per §5)

Signature: ______________________________________

Printed name: Kiowa Scott

Date: ______________________________________

Prepared as a working draft. Review with an Indiana-licensed attorney and a CPA before either party signs.