ByLaws

DRAFT - Working document: 12 May 2024

Mission.

The mission of the Foundation is to foster, develop, authorize and/or govern the activities of XR One and its broader ecosystem. This includes but is not limited to:

(a) Enabling the development of technical improvements and feature development to maintain and increase XR One capabilities to provide solutions with best-in-class user experience.

(b) Fostering ecosystem growth through strategic grants to align with partner projects including, but not limited to, infrastructure providers, application developers, artists, creators, brand partnerships, creative studios, and strategic growth partners.

(c) Organizing educational initiatives and both participating in and hosting events to increase awareness of and promote Arbitrum technology and ecosystem.

(d) Allocation of The XR Foundation's Play2Impact treasury to grow the available pool of capital for the long term to support (a), (b) and (c) above.

Defined Terms

(a) “Administrator” means the administrator of the DAO, which has certain powers and duties as further described in these Bylaws.

(b) “Applicable Law” means the legal and regulatory requirements and obligations applicable to the Foundation, including U.S. federal, U.S. state, and non-U.S. laws, as well as the relevant regulatory schemes, including Cayman Islands law.

(c) “Bylaws” means these governing bylaws of the Foundation, as may be amended from time to time in accordance with the Foundation Documents.

(d) “Constitution” means the Constitution of the Foundation, as may be amended from time to time in accordance with the Foundation Documents.

(e) “DAO” means, collectively, the on-chain decentralized community of individuals or entities that own a Token.

(f) “Foundation” means the XR Foundation, a Cayman Islands foundation company.

(g) “Foundation Articles” means the Memorandum of Association and Articles of Association of the Foundation, as may be amended from time to time.

(h) “Foundation Director(s)” means the director(s) of the Foundation, who have certain powers and duties pursuant to Cayman Islands law and as further described in the Foundation Articles.

(i) “Foundation Documents” mean these Bylaws, Constitution and Foundation Articles.

(j) “Foundation Representative(s)” means the Foundation Directors, Foundation Supervisor and the Administrator.

(k) “Foundation Supervisor” means the supervisor of the Foundation, which has certain powers and duties pursuant to Cayman Islands law and as further described in the Foundation Articles.

(l) “XIP” means an XR Improvement Proposal, which is a proposal put forth by a Tokenholder to a vote of the Tokenholders in accordance with the XIP Process.

(m) “XIP Process” means the rules and procedures of submitting and voting on XIPs as described in the Constitution.

(n) “Council” means the council established in accordance with the Foundation Documents to represent the Tokenholders.

(o) "Council Member(s)" means the person or entity elected by the Tokenholders to, among other things, facilitate the implementation of XIPs or other matters as the Tokenholders may direct from time to time.

(p) “Council Vote” means a vote of the Council Members in accordance with the Constitution.

(q) “Token” means the governing token of the DAO, known as XR, represented on the XR One blockchain.

(r) “Tokenholder” means any holder of the Token.

(s) “Tokenholder Vote” means a vote of the Tokenholders passed pursuant to a successful XIP in accordance with the XIP Process.

Voting Matters

During the first 12 months post the token generation event, the council have the authority to engage in the following activities after which the token-holders will assume the ability to engage in voting on these matters:

(a) appoint or remove Council Members subject to Section 4(c) below

(b) remove individuals or organisations from the role of Foundation Director (provided that the Foundation may not, at any time, be left with no directors);

(c) elect individuals or organisations into the role of Foundation Supervisor and the remuneration of such newly appointed individuals or organisations;

(d) remove individuals or organisations from the role of Foundation Supervisor (provided that the Foundation may not, at any time, be left with no supervisor);

(e) provide consent to any proposed changes to the Foundation's Articles which remove or otherwise alter the rights of the Token holders under the Foundation's Articles;

(f) approve grants that further the purpose of the foundation;

(g) wind-up the Foundation;

(h) approve changes to the parameters of the protocol; and

(i) any other vote that is lawful and consistent with the purpose of the foundation.

Governing Principals

The Foundation Representatives will strive to act in accordance with the following governing principles:

(a) Act in the best interest of XR One

(b) Act in the best interest of Tokenholders and $XR token holders

(c) The Foundation strives to create a safe and welcoming environment for all would-be community members, regardless of age, gender, ethnicity, religion, disability, sexual orientation, education, national origin, or any other differentiating factors. The Foundation is committed to maintaining an environment in which all individuals are treated with respect and dignity. The Foundation expects that all relationships among Foundation Representatives, the Foundation and Token holders will be free of unlawful bias, prejudice and harassment. Foundation Representatives are strictly forbidden from engaging in any type of discrimination or sexual harassment.

(d) Critique Ideas, Not People. In evaluating XIPs and other issues, Foundation Representatives should focus on the substance of such discussions without criticizing individuals or engaging in personal attacks.

As part of their service to the Foundation, as applicable, each Foundation Representative will:

• Adhere to these Bylaws and other applicable Foundation Documents.

• Attend meetings and unofficial events hosted by the Foundation and Tokenholders. Foundation Representatives may choose the frequency with which they perform these activities at their own discretion, bearing in mind that if they fail to adequately represent the Foundation, as applicable, due to infrequency of participation, they may be removed from their position in accordance with the Foundation Documents.

• Ensure that they are adequately informed on XIPs.

• Announce as soon as possible if they will be unable, even temporarily, to fulfil their duties, for example, due to vacation, illness, or personal emergencies.

• Understand Applicable Law, obey and act in accordance with Applicable Law and act ethically at all times. Foundation Representatives should ask their own legal counsel for advice when they are uncertain about Applicable Law. For the avoidance of doubt and notwithstanding anything in the contrary here, no Foundation Representative may take actions, directly or indirectly, that violate Cayman Islands law or any other Applicable Law.

• Maintain and monitor relevant websites, forums, or other governance mediums and communications of the Foundation.

• As appropriate, elect, nominate, promote, hire, or contract with individuals or organizations into important administrative, governance, engineering, legal, or other roles established to serve the Foundation.

• No Foundation Representative should speak on behalf of the Foundation unless explicitly authorized by the Foundation. This provision does not in any way restrict a Foundation Representative from publicly discussing their personal opinion about an XIP or other matter affecting the Foundation, provided that such communication is clearly presented as a personal opinion in light of the circumstances or context.

Service Providers of the Foundation

(a) Foundation Director

(i) Appointment of Foundation Directors

Foundation Directors shall be appointed in accordance with the Foundation Articles and these Bylaws.

(ii) Removal of Foundation Directors

Foundation Directors shall be removed in accordance with the Foundation Articles and these Bylaws.

(iii) Role of Foundation Directors

The role of the Foundation Directors is as set forth in the Foundation Articles.

(iv) Compensation of Foundation Directors

Foundation Director compensation shall be determined in accordance with the Foundation Articles.

The Directors must be: (i) at least eighteen (18) years of age; (ii) with no disqualifying attributes under Cayman Islands law, (iii) with no personal financial insolvency for the past ten (10) years, (iv) with no convictions or guilty pleas for mishandling or embezzlement of funds of any organization, and (v) have not been involuntarily removed, with cause, or forced to resign from any directorship, or similar executive or high-level position, within any organization. The Foundation Supervisor(s) must have no disqualifying attributes under Cayman Islands law.

The Director(s) of the Foundation shall observe, implement, carry out, act upon, and execute any and all approved XIPs, provided that any Director(s) may veto an XIPs or place any limitations on its observation and implementation as a Director(s) of the Foundation in their discretion deem necessary or appropriate to ensure compliance with:

• any fiduciary duties to the Foundation;

• statutory requirements of the Acts or regulations of any jurisdiction;

• the Foundation Articles; and

• to prevent any harm (including reputational harm) to the Foundation and, where applicable and necessary, for entering into or complying with any agreements or arrangements on behalf of the Foundation.

The Director(s) of the Foundation are authorised to take any actions reasonably necessary on behalf of the Foundation to give effect to an approved XIP including passing any director resolutions to memorialise such approved XIP.

(b) Supervisor

(i) Appointment of supervisors

Supervisors shall be appointed in accordance with the Foundation Articles.

(ii) Removal of supervisors

Supervisors shall be removed as set forth in the Foundation Articles.

(iii) Role of supervisors

The role of the supervisor is set forth in the Foundation Articles.

(iv) Compensation of supervisors

Supervisor compensation shall be determined by the Council pursuant to a Council Vote or as set forth in Section 2(c) above.

(c) Council

(i) Appointment of Council Members

The Council are advisors to the Foundation Directors and shall be initially appointed by the Foundation Directors for a term of 12 months by the director's resolution in accordance with the Foundation Articles. Thereafter, at all times the Council shall be comprised of at least three (3) Council Members who are appointed in the following manner:

• One (1) member shall be the Administrator (or an affiliate, employee or service provider thereof). The individual appointed as the member of the Council shall then be serving as Administrator (or an affiliate, employee or service provider thereof) and shall be elected as a Council Member by the Token holders by Token holder Vote at regular twelve (12) month intervals unless otherwise replaced or removed prior to the end of their current term in accordance with these Bylaws and the other Foundation Documents;

• Other members shall be appointed by Tokenholders by Tokenholder Vote at regular twelve (12) month intervals unless otherwise replaced or removed prior to the end of their current term in accordance with these Bylaws and the other Foundation Documents.

(ii) Removal of Council Members

A Council Member may only be removed: (a) by the Foundation Directors in connection with their violation of these Bylaws or their failure to fulfil their duties to the Foundation (in each case as determined by the Foundation Directors), including those described in the Foundation Documents; (b) pursuant to a Council Vote. In respect to (b), a Breaching Member may be removed as a Council Member (i) pursuant to a vote of all other Council Members. If removed by the Foundation Directors, such removal of a Breaching Member shall be conditioned by a thirty (30) day notice, during which notice period the Breaching Member may consult with the Foundation Supervisor.

If removed pursuant to a Council Vote:

• An action to remove a Council Member for violation of these Bylaws may be presented as a Proposal by a non-breaching Council Member (a “Removal Proposal”) at a Regular Meeting.

• A Removal Proposal will pass in accordance with the voting procedures set forth in the Constitution.

• If the Removal Proposal passes, the Council may choose to replace the Breaching Member with a new, interim Council Member to serve until the end of the term of the replaced Council Member’s term. An action to add a new Council Member must be presented at a Regular Meeting (a “Replacement Proposal”).

• A Replacement Proposal will pass in accordance with the voting procedures set forth in the Constitution.

(iii) Role of the Council

The Council shall operate pursuant to the rules in the Foundation Documents as may be amended in accordance with their terms going forward. The Council serves to represent the Tokenholders and assist with the implementation of XIPs and activity on the Network with guidance from the Administrator and as directed by the Foundation Directors, in accordance with the Foundation Documents. The Council Members do not owe any fiduciary duties to the Foundation or the Tokenholders.

The Council Members shall be signatories on the following:

i) The XR Foundation multi-sigs:

(1) eth:0x658C25FB9251AF7100b6f3Ae245662077C4E92aA

(2) eth:0x3ee7549fC3b492932dd736B592a54bF58Fcb0258

(3) arb1:0xd12869Bbb0559bc9c08443FC981C1a03c1F21338

(iv) Compensation of Council Members

Council Member compensation shall be initially determined by the Foundation Directors by director’s resolution for twelve (12) months. Thereafter, Council Member compensation shall be determined by Tokenholders pursuant to XIPs and in accordance with the XIP Process.

(d) Administrator

(i) Appointment of Administrator

The Administrator is a service provider of the Foundation and shall be initially appointed by the Foundation Directors and thereafter by the Tokenholders by Tokenholder Vote and shall serve for a period of twelve (12) months from the date appointed (the “Administrator Term”). The Administrator Term shall be automatically extended until such time as the Administrator is terminated or replaced pursuant to a XIP and in accordance with the XIP Process.

(ii) Removal of Administrators

An Administrator may be removed by the Foundation Directors.

(iii) Role of the Administrators

The Administrators are persons or entities elected by the Tokenholders and thereafter engaged by the Foundation to manage the XIP process or other matters as determined by Tokenholders from time to time. All actions of the Administrator, as the Foundation’s service provider, remain subject to the review and veto by the Foundation Directors.

The Administrators shall implement any such proposals as promptly as possible following the determination of approval unless otherwise indicated by the Token holders.

(v) Compensation of Administrators

Administrator compensation shall be initially determined by the Foundation Directors by the director’s resolution in accordance with the Foundation Articles. Thereafter, Administrator compensation shall be determined by Tokenholders pursuant to XIPs and in accordance with the XIP Process.

Amendments to the Bylaws

These Bylaws may be amended in accordance with the procedure set out in the Foundation Articles.

Dispute Resolution

To the extent there is ever a conflict between decisions made by the Foundation Directors and any other Foundation Representative, the Foundation Directors’ decision will prevail, unless a different outcome is required under Cayman Islands law.

To the extent there is ever a conflict between decisions made by any other Foundation Representative, and the Tokenholders, the Council's decision will prevail unless a different outcome is required under Cayman Islands law.

To the extent there is ever a conflict between decisions made by the Foundation Directors and the Tokenholders, the Foundation Director's decision will prevail unless a different outcome is required under Cayman Islands law.

Should a controversy, dispute or claim arise out of or in relation to these Bylaws ("Dispute"), the Foundation, the Foundation Directors and/or the Foundation Supervisor (as appropriate) must give thirty (30) days' notice of such Dispute to the relevant party/ies (the "Notice of Dispute"). Should the Dispute not be resolved at the expiration of thirty (30) days after service of the Notice of Dispute, the relevant party may commence arbitration proceedings in accordance with this clause 6. In any dispute involving the actions of the Foundation Directors, the Foundation Supervisor may commence arbitration proceedings against the Directors in accordance with clause 6.

Should the Dispute remain at the expiration of thirty (30) days after service of the Notice of Dispute, the Dispute shall be settled by arbitration administered by the International Centre for Dispute Resolution in accordance with its International Arbitration Rules (the "Rules"). The arbitration shall be seated in George Town, Grand Cayman, Cayman Islands and governed by the law of the Cayman Islands. The language of the arbitration shall be English. The arbitration shall be determined by a sole arbitrator to be appointed in accordance with the Rules. Any award or decision made by the arbitrator shall be in writing and shall be final and binding on the parties without any right of appeal, and judgment upon any award thus obtained may be entered in or enforced by any court having jurisdiction thereof. No action at law or in equity based upon any claim arising out of or related to these Bylaws shall be instituted in any court of any jurisdiction.

7. Controlling Authority

These Bylaws are subject to the provisions set forth in other sources of authority binding on the Foundation. In the event of any conflict between these Bylaws and such authority enumerated herein, such authority shall supersede these Bylaws and be controlled in the following order: (i) Cayman Islands law, and (ii) The Foundation Articles.