BIP 39 - BeethovenX DAO Non-Profit Member-Managed LLC - Operating Agreement Proposal

This proposal follows the DAO’s adoption of BIP-37:A Non-Profit Limited Liability Company for the BeethovenX DAO. I am now seeking the DAO’s approval to adopt this operating agreement, which will serve as the governing framework for the BeethovenX DAO non-profit limited liability company that we are in the process of forming under the laws of the Republic of the Marshall Islands (“RMI”). This operating agreement and the DAO’s adoption of it are required steps to form the LLC under the laws of the RMI.

An operating agreement is a governing document that provides for how the member-managed non-profit LLC functions, sets out the rules for how the community will govern and operate it, the purposes of the LLC, its governance mechanisms, how it and its rules will be amended and modified in the future, and the LLC’s administrative functions and requirements.

The LLC will be managed by the Token Holders, meaning it will be an arm of the BeethovenX DAO but will have no direct governance over the BeethovenX DAO or its treasury assets without a Governance Resolution adopted by the Token Holders (“Token Holder” is a defined term in the operating agreement).

I full version of the Operating Agreements can be found here: https://docs.google.com/document/d/1to7eQVd8gsuH4kAT8zlZEoQXv2DSAqU_cxIM-WXL5ww/edit

Motivation Any LLC requires rules to operate. An operating agreement sets forth those rules. I am proposing that the BeethovenX DAO adopt the above-linked operating agreement as a required next step to move forward with the formation of the BeethovenX DAO non-profit LLC under the laws of the RMI.

The draft operating agreement, in its definitions section, sets forth a number of defined terms that are applicable to how the BeethovenX DAO LLC will function as a non-profit managed by the Token Holders.

Article I involves the organization of the LLC and pertains largely to administrative matters, such as its name, registered agent and office, principal office, additional documents that may be required, and its perpetual term.

Article II sets forth the LLC’s non-profit purposes and powers, which are consistent with everything discussed as part of the proposal and governance process for BIP-37.

Article III pertains to the Members, which are identified as the Token Holders (who must hold a “Token,” which is defined as Reliquary NFTs), incorporates the governance resolutions already adopted by the DAO and which remain effective, including the governance framework and prior BIPs that passed and are still effective (called “Governance Resolutions”), and provides that the Reliquary smart contract (called the “Smart Contract”) will be incorporated through BeethovenX’s Reliquary weighted Snapshot strategy (the “Voting Mechanism”) as the method for voting on and adopting Proposals (“Proposals” is also a defined term). A Token Holder’s votes, available through the Voting Mechanism, are calculated by the Reliquary smart contract’s weighting and maturity method.

Article IV pertains to a Member’s rights and duties and similarly incorporates the quorum threshold that was previously adopted along with the balance of the governance framework and other Governance Resolutions that remain in effect at present.

Article V pertains to the management of the LLC through its authorized representatives (which include, amongst others, Music Directors, Guide Tones, and core contributors).

Article VI pertains to accounting and the maintenance of certain records through the Reliquary Smart Contract, Snapshot (the Voting Mechanism), hard copy documents, and certain other records as specified.

Article VII provides that members do not need to make capital contributions, which is true. To become a member, one becomes a Token Holder, which will involve acquiring a Reliquary NFT from another address or holder, minting it from the UI, or interacting directly with the smart contract.

Article VIII pertains to transfers of membership interests by Token Holders and the admission of additional members as explained above. Any address with a Reliquary NFT will be considered a member because the address is a Token Holder. Once an address no longer has a Reliquary NFT (because it was transferred, burned, etc.), the person, organization, or entity controlling the address will no longer be a member.

Article IX pertains to the dissolution of the LLC in the manner consistent with the RMI Non-Profit Act.

Article X pertains to how to amend the LLC operating agreement, which will be by a simple majority vote once a quorum has been established, unless a higher threshold vote applies and, in that case, the higher threshold will govern.

Article XI pertains to miscellaneous matters, including the LLC’s indemnification of authorized representatives and the resolution of disputes by arbitration or otherwise under the UK Jurisdiction Taskforce’s (“UKJT”) unique dispute resolution rules, published in April of 2021, for digital asset disputes and blockchain issues. The UKJT’s Rules are available here. The adoption of these rules for resolving disputes is particularly helpful because otherwise it would be almost impossible to ascertain how or where intra-member and other related disputes would be resolved.The UKJT Rules are also developed for and uniquely suited for blockchain disputes - the purpose of the Rules is to “facilitate the rapid and cost-effective resolution of . . . disputes, particularly those involving novel digital technology such as cryptoassets, cryptocurrency, smart contracts, distributed ledger technology, and fintech applications.”

Risks The risks are essentially the same as those that were set forth in the Proposal for BIP-37 and the issues discussed and evaluated by the community as part of the process leading to the approval of that Governance Resolution.

Impacts There is no anticipated negative impact for the team, contractors, treasury, tokenomics, Music Directors, the Guide Tones, or other committee recognised by the DAO. After incorporation, our contributors and Ludwigs will enjoy the benefits of limited liability established by the laws of the Marshall Islands. It will be possible for any contributor providing services to the DAO to receive compensation from the DAO LLC, subject of course to DAO governance, RMI law, and the operating agreement.

By rolling out the formation of the non-profit LLC and the adoption of the operating agreement in conjunction with Reliquary, the community is streamlining this process as much as reasonably possible. And the operating agreement was drafted in a manner through which it should enable the LLC to operate in the same manner that the DAO has historically operated and consistent with its Governance Resolutions that are in effect today.

Matt | Alfalfa or Spanky? will receive $5,000 USDC and $5,000 of Beets, calculated at its three-month average price from the date this proposal may pass, from the Fantom treasury for his governance consulting efforts in assisting with this formation and governance process, and for assisting with the preparation of the operating agreement and assisting in completing the formation of the BeethovenX non-profit LLC. Matt’s services have been provided not as an attorney to the DAO or to anyone else, there is no attorney-client relationship. Rather, Matt has acted merely as a contributor to the BeethovenX DAO providing governance consulting services. Matt is not anyone’s lawyer here.

The balance of the funding for this Proposal was already approved by BIP-37.

Conclusion This is the next logical and required step to implement BIP-37 and Reliquary.

Specification Submit the operating agreement to MIDAO for submission to the RMI Registrar and proceed with any remaining items required to form the BeethovenX DAO non-profit LLC under RMI law.

Implement Reliquary to the Smart Contract as identified in the operating agreement and implement the Snapshot weighted strategy identified as the Voting Mechanism in the operating agreement.

Include the following acknowledgement when minting a Reliquary NFT from the UI and include an upgradeable description in the NFT smart contract that incorporates and points to a current version of the operating agreement and Governance Resolutions.

BeethovenX DAO Reliquary NFT Terms Protocol & Entity Participation. Unless otherwise indicated, the defined and capitalized terms used below incorporate the same meaning as the terms used in the BeethovenX DAO LLC operating agreement (the “Agreement”), available here:______________________. The NFT is referred to as the “Token” in the Agreement. By using this NFT to participate in the governance and operations of the BeethovenX, the holder of this NFT agrees to be subject to the terms of the Agreement, including as a Member of its entity structure. BeethovenX formed a nonprofit LLC under the laws of the Republic of the Marshall Islands on ____________. Participation in the governance and operations of BeethovenX includes, but is not limited to, utilizing the NFT to: (1) vote on Proposals to become Governance Resolutions, (2) attend events and otherwise communicate with the BeethovenX community, and (3) interact with the BeethovenX protocol. Except as otherwise provided in the Agreement, a Token Holder’s membership interest or rights thereunder in relation to this NFT are freely transferable to another person through its conveyance. Except as otherwise provided in the Agreement, a Member shall be deemed to have resigned from the BeethovenX DAO LLC upon the disposal or transfer of this NFT.

Authorize the treasury to send $5,000 USDC and $5,000 of Beets, calculated at its three-month average price from the date this proposal may pass, to Matt | Alfalfa or Spanky?

Execution Plan Identical to the Specification.