OPERATING AGREEMENT OF BEETHOVENX DAO LLC
LIMITED LIABILITY COMPANY AGREEMENT (MEMBER MANAGED)
This Operating Agreement (the “Agreement”) of BeethovenX DAO LLC, a non-profit limited liability company (the “Company”) incorporated as per the laws of Republic of the Marshall Islands pursuant to the Limited Liability Company Act of 1996 of the Republic of the Marshall Islands (as amended from time to time, the “Act”), the Non-Profit Entities Act of 2020 and the Non-Profit Entities (Amendment) Act of 2021 of the Republic of the Marshall Islands (collectively the “Non-Profit Act”), and the Decentralized Autonomous Organization Act of 2022 of the Republic of the Marshall Islands (the “DAO Act”), by and among the Company and the persons adopting this Agreement (individually “Member” and collectively “Members”), causing the filing of the certificate of formation of the Company (the “Certificate of Formation”), with the Republic of the Marshall Islands Registrar of Corporations, and effective as of 1 March 2023 (the “Effective Date”).
NOW, THEREFORE, for and in consideration of mutual covenants contained and intending to be legally bound hereby, the parties agree as follows:
CERTAIN DEFINITIONS
A. “Address” means a public key address.
B. “Authorized Representative” is defined in Section V.2.
C. “Blockchain” means a distributed ledger that can record transactions between two parties in a mutually verifiable and permanent manner.
D. “Digital Ledger” means a blockchain that is publicly accessible and its ledger of transactions is transparent.
E. “Governance Framework” refers to the proposals reflected at beets.eth that were submitted to the vote of the BeethovenX community, have been approved by the BeethovenX community and remain effective as of the Effective Date.
F. “Governance Resolution” means a Proposal that achieves a Quorum of Token Holder votes via the Voting Mechanism, has a technically and practically feasible specification and execution plan that are consistent with applicable law and this Agreement, satisfies the requirements of the Governance Framework and specifically BIP-29, and satisfies any applicable vote threshold of approval set forth herein, in the Governance Framework, or in any Governance Resolution.
G. “Network” means the Fantom Opera mainnet blockchain bearing chain id 250 as of the Effective Date and its consensus mechanism.
H. “Proposal” means a matter or matters complying with the Governance Framework that is memorialized and submitted via the Voting Mechanism to a vote of the Token Holders in an attempt to adopt a Governance Resolution.
I. “Quorum” means 4,000,000 Token Holder votes.
J. “Smart Contract” means the smart contract located on the Network at address 0x973670ce19594F857A7cD85EE834c7a74a941684.
K. “Token” means the ERC-721 token reflected in and by the Smart Contract.
L. “Token Holder” means an Address holding the Token.
M. “Voting Mechanism” means the Token-Holder-approved mechanism through which Proposals are submitted to the Token Holders to vote thereon in accordance with the weighting method as calculated by the Smart Contract. The approved Voting Mechanism is Snapshot and the multiplier strategy set forth here.
ARTICLE I
ORGANIZATION
I.1 Organization. The Token Holders, by adoption of this Agreement, hereby agree that as a community-managed decentralized autonomous organization, they shall organize the Company as a Marshall Islands non-profit limited liability company pursuant to the provisions of the Act, the Non-Profit Act, the DAO Act, and in accordance with the terms and conditions of this Agreement.
I.2 Name. The name of the Company is the BeethovenX DAO LLC unless otherwise modified by a vote of the Token Holders in the manner provided herein. The business of the Company may be conducted under that name or, upon compliance with all applicable laws, any other name that they deem appropriate or advisable. The Company shall file or cause to by filed any fictitious name certificates and similar filings, and any amendments thereto, that the Token Holders deem appropriate or advisable and that is consistent with the terms and conditions of this Agreement..
I.3 Registered Office; Registered Authorized Representative. The registered office of the Company in the Marshall Islands shall be the initial registered office designated in the Certificate of Formation or such other office (which need not be a place of business of the Company) as the Token Holders may designate from time to time in the manner provided herein and by law. The registered agent of the Company in the Marshall Islands shall be the initial registered agent designated in the Certificate of Formation or such other person as the Token Holders may designate from time to time in the manner provided herein and by law.
I.4 Principal Office. The Principal Office of the Company shall be at the principal office designated in the Certificate of Formation or at such other location as the Token Holders may designate from time to time, which need not be in the Marshall Islands.
I.5 Additional Documents. The Company shall cause to be executed, filed, recorded, published, or amended in the name of the Company any documents or transactions as the Token Holders, consistent with applicable law and the terms and conditions of this Agreement, and otherwise in their sole and absolute discretion, determine to be necessary or advisable (a) in connection with the conversation or the formation, operation, dissolution, winding up, or termination of the Company pursuant to applicable law, or (b) to otherwise give effect to the terms of this Agreement. The terms and provisions of each document described in the preceding sentence shall be established and amended from time to time as necessary to cause such terms and provisions to be consistent with applicable law and the terms and conditions of this Agreement.
I.6 Term. The Company commenced on the Effective Date and shall continue perpetually in existence until dissolved pursuant to this Agreement.
ARTICLE II
PURPOSES AND POWERS
II.1 Nonprofit Character. The Company shall at all times be a non-profit entity within the meaning of the Non-Profit Act and shall conduct its affairs at all times in compliance with the Non-Profit Act, the Act. and the DAO Act, unless modified in accordance with applicable law and the terms set forth herein..
II.2.1 Purposes of the Company. The Company is organized exclusively for charitable, educational, and social purposes to promote and provide access to the BeethovenX technology and protocol. Specifically, the Company shall: facilitate, support, promote, educate, represent, and advance the open-source and decentralized development and adoption of BeethovenX blockchain-related technology and software including Governance Resolutions, code, automated transactions, and other items, software, and materials; and any private use, agreement, or relationship, which shall strive to be in furtherance of said purposes and in accordance with its non-profit character. The Company’s decentralized purpose is rooted in transparency, consensus-building, independence, and censorship resistance.
II.2.2 Authority of the Company. The Company shall have and exercise all of the powers conferred by law on nonprofit limited liability companies.
II.3. No Private Inurement. No part of the Company’s assets, income or earnings shall inure to the benefit of, or be distributable to, any Member, Token Holder, officer, or employee, except that
(a) reasonable compensation may be paid for services rendered to or for the Company affecting one or more of its objects and purposes; or
(b) for reimbursement of expenses incurred on behalf of the Company, and
(c) may confer benefits upon or make contributions to Members, Token Holders, non-Members, or non-Token-Holders in conformity with the Company’s purposes except when
(i) the Company is then insolvent or would thereby be made insolvent or rendered unable to carry on its purposes, or
(ii) the fair value of the assets of the Company remaining after conferring the benefits or contribution would be insufficient to meet its liabilities. No Member, officer or employee of the Company, or any private individual, shall be entitled to share in the distribution of any of the Company’s assets on dissolution of the Company.
II.4. Limitation of Company Activities. No part of the activities of the Company shall include:
(a) carrying on propaganda;
(b) attempting in any manner to influence legislation, except that Members, Token Holders, and Authorized Representatives may testify or make other appropriate communications where formally requested to do so by a legislative body or a committee or a member thereof in matters concerning legislation relating to the public purposes of the Company or public appropriations to programs and activities of the Company; or
(c) participating or intervening in (including the publication or distribution of statements), or contributing to, any political campaign on behalf of any candidate for public office.
ARTICLE III
MEMBERS
III.1 Member Eligibility. Membership shall be limited to Token Holders. The voting power of each Token and each Token Holder shall be calculated by the weighting method as determined by the Smart Contract. If a Governance Resolution changes the Network, the Voting Strategy, the address of the Smart Contract or modifies the Smart Contract’s method of calculating any Token’s voting weight, this Agreement shall be amended in accordance with the specification and execution plan prescribed therein.
III.2 Initial Members. The initial Members have signed this Agreement below or are reflected in the Smart Contract as of the Effective Date.
III.3 Adoption of this Agreement and Any Amendments. Each Token Holder shall automatically be deemed to have acknowledged and consented to the terms and conditions of this Agreement and any future amendment that may be adopted in the manner set forth herein.
III.4 Classes of Membership and Token Holders. The Company shall have one class of Members and Token Holders, and Members and Token Holders of this single class shall have voting rights on all Proposals calculated by the weighting method as determined by the Smart Contract.
III.5 Company Assets. No Member or Token Holder has any interest or right to any specific asset or property of the Company.
III.6. Rightful Interest. A Member and Token Holder is representing themself to be the rightful owner of their Token in relation to holding it in their Address, or engaging with the Voting Mechanism, Proposals, Governance Resolutions, this Agreement, or the Company.
III.7. Withdrawal. A Member withdraws from the Company and is no longer a member when the Member ceases to be a Token Holder.
ARTICLE IV
RIGHTS AND DUTIES
IV.1 Voting Rights; Governance Resolutions. All Members or Token Holders shall be entitled to vote on any Proposal, with voting power allocated amongst the Tokens and the Token Holders in accordance with the weighting method as determined by the Smart Contract. Unless otherwise set forth herein, the Governance Framework, or a Governance Resolution, once a Proposal obtains a Quorum, the threshold approval of votes required to adopt a Governance Resolution is a simple majority of the Token Holders’ votes. Except as otherwise provided in this Agreement, including by delegation of rights pursuant to Article V, the management and operations of the Company shall be decided by Governance Resolution, which, subject to any applicable limitation pursuant to applicable law, this Agreement (including as set forth within the definition of Governance Resolution), or statutory or regulatory requirements of the Republic of the Marshall Islands, shall be observed, implemented, carried out, and executed by automated transaction or by Authorized Representatives in a commercially reasonable manner, and where applicable and when necessary for entering into agreements or arrangements on behalf of the Company.
IV.2 Liability of Members. Subject to section 3 of this Article, no Member, Token Holder, or Authorized Representative shall be liable as such for the liabilities of the Company, whether such liability arises in tort, contract, or otherwise. The failure of the Company to observe any formalities or requirements relating to the exercise of its powers or management of its business or affairs under the Agreement or the Act shall not be grounds for imposing personal liability on the Members, Token Holders, or the Authorized Representatives for liabilities of the Company.
IV.3 Obligations. It shall be the duty of each Member, Token Holder, and Authorized Representative to act consistent with the provisions of this Agreement and with all policies, rules and decisions of the Company properly adopted in accordance with the provisions of this Agreement.
IV.4 Scope of Obligations. Except as otherwise expressly provided herein, nothing contained in this Agreement will be deemed to constitute any Member, Token Holder, or Authorized Representative, in their capacity as a Member, Token Holder, or Authorized Representative, as an agent or legal representative of any other Member, Token Holder, or Authorized Representative, or to create any fiduciary relationship or other duty or relationship between Members, Token Holders, or Authorized Representatives for any purpose whatsoever, apart from obligations between them as may be created by the terms and conditions of this Agreement. Except as otherwise expressly provided herein, a Member, Token Holder, or Authorized Representative has no authority to act for, or to assume any obligation or responsibility on behalf of, any other Member, Token Holder or Authorized Representative, or the Company. Unless otherwise set forth herein, no Member, Token Holder, or Authorized Representative owes any duty of loyalty to the Company or any other Member, Token Holder, or Authorized Representative. Nothing set forth herein shall prevent any Member, Token Holder, or Authorized Representative from engaging in other activities, ventures, or businesses, regardless of whether those activities, ventures, or businesses are similar to the purpose and activities of the Company.
ARTICLE V
MANAGEMENT
V.1 Management of the Company. The decisions concerning the management and operation of the Company, including its daily operations, shall be consistent with the terms and conditions of this Agreement.
V.2 Delegation of Operation & Management Powers. The Members may, by Governance Resolution, delegate the rights and powers to operate and manage the Company to one or more other persons (the “Authorized Representatives”) or by automated transaction. An Authorized Representative need not be a Member or a Token Holder. In carrying out their duties hereunder, no Authorized Representative shall be liable to the Company or any other Member, Token Holder, or Authorized Representative for any action taken in good faith and reasonably believed by the Authorized Representative to be in the best interest of the Company or in reliance on the provisions of this Agreement, the books and records of the Company, an automated transaction, the advice of the Company's professional advisors or consultants, or for good faith errors in judgment. Except as otherwise provided in any agreement to which an Authorized Representative is a party with the Company, each Authorized Representative shall devote so much time and attention to the Company as the Authorized Representative deems appropriate and reasonable in their good faith judgment under the circumstances prevailing from time to time.
V.3 Authority to Bind Company. The power and ability to bind the Company is reserved for Authorized Representatives as authorized by one or more of the manners set forth herein.
V.4 Governance Framework. The Governance Framework shall continue and any Authorized Representative authorized to conduct any activity thereunder may continue to tend to such activity on and after the Effective Date until such time that any of the matters encompassed within the Governance Framework may be subject to a superseding Governance Resolution in accordance with the requirements of this Agreement.
V.5 Compensation of Authorized Representatives. Each Authorized Representative shall be reimbursed for all reasonable expenses incurred in managing the Company and shall be entitled to a compensation amount to be determined from time to time by Governance Resolution or otherwise in accordance with the terms and conditions of this Agreement.
V.6 Removal or Modification of Authorized Representative Status or Powers. Any Authorized Representative or elements of such person’s powers may be revoked or modified in the manner approved by an applicable Governance Resolution, the Governance Framework, or otherwise as provided herein.
V.7 Resignation of Authorized Representatives. An Authorized Representative may resign at any time and for any reason. Such resignation shall be without consequence to the Authorized Representative’s status as a Member, Token Holder, or any other Authorized Representative position that such person may maintain.
V.8 Election of New Authorized Representatives. Subject to the terms and conditions of this Agreement, from time to time, the Token Holders or Authorized Representatives may elect new, additional, or replacement Authorized Representatives in the manner provided in an applicable Governance Resolution or by way of a new Governance Resolution.
ARTICLE VI
ACCOUNTING AND RECORDS
The following records shall be maintained in the Network, in the Smart Contract, or via the Voting Mechanism, or otherwise by the Company in which case they will be made reasonably available by an Authorized Representative as required by Governance Resolution or within a reasonably practical period of time upon a request of a Token Holder adopted through Governance Resolution:
VI.1 A current list of name and last known address of each Token Holder if required to be requested by the Company from the Token Holder under the Act and applicable law and provided by the Token Holder upon the request of the Company, or (ii) Digital Ledger identifier of each Token Holder, former Token Holder and other holder of a Membership Interest;
VI.2 A copy of the Certificate of Formation and all amendments thereto;
VI.3 A copy of this Agreement including all amendments thereto;
VI.4 Accounting records and financial statements of the Company;
VI.5 Minutes of all meetings or records of all actions taken at a meeting or without a meeting, including Governance Resolutions and the Governance Framework.
ARTICLE VII
CONTRIBUTIONS AND CAPITAL ACCOUNTS
VII.1 Contributions. Members shall be admitted into the Company without making a contribution or being obligated to make a contribution to the Company.
ARTICLE VIII
TRANSFERS OF MEMBERSHIP INTERESTS AND ADMISSION OF ADDITIONAL MEMBERS
Membership Interests may be transferred and new Members may be admitted, without the consent or approval of any other person or Member so long as any transferring or newly-admitted Member complies with the terms and conditions of this Agreement and applicable law. Any new Member may join by acquiring a Token as described in Article III and shall be deemed to have acknowledged and consented to the terms and conditions of this Agreement.
ARTICLE IX
DISSOLUTION
The Company shall be dissolved and its affairs wound up by a Governance Resolution with the approval of at least 66.67% of the voting Token Holders in accordance with Part V of the Non-Profit Entities Act.
ARTICLE X
AMENDMENT
The Agreement may, subject to applicable thresholds of approval by the Token Holders that vote on a Proposal and consistent with the Voting Mechanism, be amended or modified from time to time by Governance Resolution.
ARTICLE XI
MISCELLANEOUS PROVISIONS
XI.1 Entire Agreement and Interpretation. This Agreement represents the entire agreement among all the Members and between the Members and the Company. In the event this Agreement conflicts with the Smart Contact or Voting Mechanism, the Smart Contract or Voting Mechanism shall govern.
XI.2 Governing Law. This Agreement is governed by and shall be construed in accordance with the laws of the Republic of the Marshall Islands without regard to the conflicts of law principles thereof.
XI.3 Separability of Provisions. Each provision of this Agreement shall be considered separable, and if for any reason any provision or provisions herein are determined to be invalid, unenforceable or illegal under any existing or future law, such invalidity, unenforceability or illegality shall not impair the operation of or affect those portions of this Agreement that are valid, enforceable and legal.
XI.4 Indemnification. The Company shall indemnify, defend, and hold harmless any person who was or is a party defendant or is threatened to be made a party defendant, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of the Company) by reason of the fact that they are or were a Member, Token Holder, or Authorized Representative, against expenses (including attorney’s fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding if the Members determine that such person acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interest of the Company, and with respect to any criminal action proceeding, have no reasonable cause to believe their conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of “nolo Contendere” or its equivalent, shall not in itself create a presumption that the person did or did not act in good faith and in a manner which they reasonably believed to be in the best interest of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that their conduct was lawful.
Subject to such standards and restrictions, if any, as are set forth in this Agreement, a company shall have the power to, indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever.
XI.5 Arbitration. Disputes between Members, Token Holders, Authorized Representatives, and/or the Company relating to or arising from this Agreement, including the formation of this agreement to arbitrate, shall be first submitted to mediation. The terms and procedure for mediation shall be arranged by the parties to the dispute. If good-faith mediation of a dispute proves impossible or if an agreed-upon mediation outcome cannot be obtained by the parties, the dispute may be submitted to arbitration in accordance with the UKJT Digital Dispute Resolution Rules in effect at the time, and which as of February 2023, are available here (the “UKJT Rules”); provided, however, that the Company and its Authorized Representatives, including but not limited to any multisig signers, shall not be under any obligation to provide any any digital signature, cryptographic key, password or other digital access or control mechanism available to it or any of them unless authorized by a Governance Resolution. The law applicable to the UKJT Rules shall be the law of the Republic of the Marshall Islands and any proceeding conducted under the UKJT Rules shall be virtual unless the interested parties agree otherwise. The Members, Token Holders, and Authorized Representatives hereby acknowledge that they are waiving their right to have such a dispute be decided by a court of law or a jury, and it will be instead decided by an arbitrator or otherwise in accordance with the UKJT Rules. All parties shall initially share the cost of arbitration, but the prevailing party or parties may be awarded attorney fees, costs and other expenses of arbitration as determined by the arbitrator(s). All arbitration decisions shall be final, binding and conclusive on all the parties to arbitration, and legal judgment may be entered based upon such decision in accordance with applicable law in any court having jurisdiction to do so.
IN WITNESS WHEREOF, the parties hereto have adopted this Agreement as the Effective Date by signing below by way of Governance Resolution and in accordance with Section III.3.