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<p><font face="Times New Roman, Times, serif">Thanks Brian, for
posting this to the TC list while I have been busy reading the
flood of responses to this decision on the ICANN lists. This has
been a storm that has been raging in the ICANN-ISOC world since
November. As I posted a few weeks ago, there was massive
opposition to this proposed privatization of what is sometimes
seen as the last vestige of the "public interest" internet dream
of 20 (maybe more) years ago. <br>
</font></p>
<p><font face="Times New Roman, Times, serif">ICANN finally had to
move when the Attorney General of California came out saying
this proposed sale was not in keeping with the regulations
around non-profit corporations. PIR is incorporated in
California. </font><font face="Times New Roman, Times, serif"><font
face="Times New Roman, Times, serif">But this AG decision was
informed by the public opposition coming from the end-user
community</font> (which At Large is tasked to speak for) and
the public interest prevailed in the end. But the role of U.S.
government body in this dispute will have repercussions of its
own -- so let"s enjoy the moment -- before the inevitable
appeals and lawsuits take hold.</font></p>
<p><font face="Times New Roman, Times, serif">On behalf of TC and as
the North American representative to the ICANN At Large Advisory
Committee, I have been very active on this file from the
beginning, standing with others who were encouraging the ICANN
board to take a strong position on maintaining PIR's non-profit
status. All this time, the outcome has been uncertain and it was
essential to keep up the pressure as deadlines kept being pushed
forward. The support of this group in agreeing to keep some
active representation at ICANN has made a difference and still
matters. <br>
</font></p>
<p><font face="Times New Roman, Times, serif">Marita</font><br>
</p>
<div class="moz-cite-prefix">On 5/1/2020 9:54 AM, Brian Beaton
wrote:<br>
</div>
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<p class="MsoNormal">FYI .. <a
href="https://www.icann.org/news/blog/icann-board-withholds-consent-for-a-change-of-control-of-the-public-interest-registry-pir"
moz-do-not-send="true">https://www.icann.org/news/blog/icann-board-withholds-consent-for-a-change-of-control-of-the-public-interest-registry-pir</a><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<div
style="mso-element:para-border-div;border:none;border-bottom:solid
#CFCFCF 1.0pt;padding:0cm 0cm 0cm 0cm;background:white">
<p class="MsoNormal"
style="margin-bottom:7.5pt;background:white;border:none;padding:0cm"><b><span
style="font-size:24.0pt;font-family:Helvetica;color:#333333">ICANN Board
Withholds Consent for a Change of Control of the Public
Interest Registry (PIR)<o:p></o:p></span></b></p>
</div>
<p class="MsoNormal"
style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;background:white"><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">Today,
the ICANN Board made the decision to reject the proposed
change of control and entity conversion request that Public
Interest Registry (PIR) submitted to ICANN.<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;background:white"><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">After
completing extensive due diligence, the ICANN Board finds
that withholding consent of the transfer of PIR from the
Internet Society (ISOC) to Ethos Capital is reasonable, and
the right thing to do.<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;background:white"><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">ICANN's
role is to ensure the stable and secure operation of the
Internet's unique identifier systems. We are dedicated to
making the right decision, knowing that whatever we decide
will be well received by some, and not by others. It is our
responsibility to weigh all factors from an ICANN Bylaws and
policies perspective, including considering the global
public interest. We have done this diligently, ensuring as
much transparency as possible and welcoming input from
stakeholders throughout.<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;background:white"><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">On
13 November 2019, PIR <a
href="https://thenew.org/the-internet-society-public-interest-registry-a-new-era-of-opportunity/"
moz-do-not-send="true"><span
style="color:#0098D5;text-decoration:none">announced</span></a> that ISOC,
its parent organization, had reached an agreement with Ethos
Capital, under which Ethos Capital would acquire PIR and all
of its assets from ISOC. Under the agreement, PIR would also
be converted from a Pennsylvania not-for-profit corporation
to a for-profit Pennsylvania limited liability
company. ISOC created and agreed to the transaction details
that are under review.<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;background:white"><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">On
14 November 2019, PIR formally <a
href="https://www.icann.org/en/system/files/correspondence/cimbolic-to-icann-14nov19-en.pdf"
moz-do-not-send="true"><span
style="color:#0098D5;text-decoration:none">submitted</span></a> to ICANN a
"Notice of Indirect Change of Control and Entity Conversion"
in advance of closing the proposed transaction between Ethos
Capital and ISOC. Since 2003, PIR has operated the .ORG
generic top-level domain (gTLD) as a not-for-profit
organization, as well as six other gTLDs. Per the gTLD <a
href="https://newgtlds.icann.org/sites/default/files/agreements/agreement-approved-31jul17-en.html#article7.5"
moz-do-not-send="true"><span
style="color:#0098D5;text-decoration:none">Registry
Agreements</span></a>, ICANN must either approve or
withhold consent of a proposed change of control, the
deadline for which is 4 May 2020.<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;background:white"><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">ICANN's
role has been to evaluate the reasonableness of PIR's
request for indirect change of control and entity
conversion. In doing so, ICANN evaluated an extensive amount
and variety of information related to the proposed
transaction, including details of the transaction structure,
financing, and other funding sources of Ethos Capital, the
parties involved, the role of the Pennsylvania authorities,
information related to financial resources and operational
and technical capability, how the new for-profit PIR under
the control of Ethos Capital would be responsive to the
needs of the non-commercial community, what input the .ORG
community had provided to PIR or ISOC on the proposed
transaction, and how that community input would be reflected
in the operations of PIR following its conversion.<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;background:white"><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">Throughout
this process, the ICANN Board has worked thoughtfully and
thoroughly to determine if it is reasonable under PIR's
Registry Agreements for ICANN to either approve or withhold
consent to the proposed change of control. Before making our
determination, the Board, among other things:<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:0cm;margin-right:0cm;margin-bottom:11.25pt;margin-left:51.0pt;text-indent:-18.0pt;mso-list:l1
level1 lfo1;background:white"><!--[if !supportLists]--><span
style="font-size:10.0pt;font-family:Symbol;color:#333333"><span
style="mso-list:Ignore">·<span style="font:7.0pt
"Times New Roman""> </span></span></span><!--[endif]--><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">Conducted
thorough due diligence<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:0cm;margin-right:0cm;margin-bottom:11.25pt;margin-left:51.0pt;text-indent:-18.0pt;mso-list:l1
level1 lfo1;background:white"><!--[if !supportLists]--><span
style="font-size:10.0pt;font-family:Symbol;color:#333333"><span
style="mso-list:Ignore">·<span style="font:7.0pt
"Times New Roman""> </span></span></span><!--[endif]--><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">Received
and reviewed hundreds of pages of documentation and
responses provided by PIR, ISOC and Ethos Capital
following ICANN issuing three requests for more information<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:0cm;margin-right:0cm;margin-bottom:11.25pt;margin-left:51.0pt;text-indent:-18.0pt;mso-list:l1
level1 lfo1;background:white"><!--[if !supportLists]--><span
style="font-size:10.0pt;font-family:Symbol;color:#333333"><span
style="mso-list:Ignore">·<span style="font:7.0pt
"Times New Roman""> </span></span></span><!--[endif]--><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">Was
briefed extensively by ICANN org<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:0cm;margin-right:0cm;margin-bottom:11.25pt;margin-left:51.0pt;text-indent:-18.0pt;mso-list:l1
level1 lfo1;background:white"><!--[if !supportLists]--><span
style="font-size:10.0pt;font-family:Symbol;color:#333333"><span
style="mso-list:Ignore">·<span style="font:7.0pt
"Times New Roman""> </span></span></span><!--[endif]--><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">Received
and considered more than 30 letters from stakeholders<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:0cm;margin-right:0cm;margin-bottom:11.25pt;margin-left:51.0pt;text-indent:-18.0pt;mso-list:l1
level1 lfo1;background:white"><!--[if !supportLists]--><span
style="font-size:10.0pt;font-family:Symbol;color:#333333"><span
style="mso-list:Ignore">·<span style="font:7.0pt
"Times New Roman""> </span></span></span><!--[endif]--><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">Considered
input from an ICANN67 public forum, views of the community
and others who weighed in after we received PIR's Public
Interest Commitments<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:0cm;margin-right:0cm;margin-bottom:11.25pt;margin-left:51.0pt;text-indent:-18.0pt;mso-list:l1
level1 lfo1;background:white"><!--[if !supportLists]--><span
style="font-size:10.0pt;font-family:Symbol;color:#333333"><span
style="mso-list:Ignore">·<span style="font:7.0pt
"Times New Roman""> </span></span></span><!--[endif]--><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">Considered
the opinions expressed in the California Attorney General's
Office letter sent to ICANN on 15 April 2020<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;background:white"><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">The
Board was presented with a unique and complex situation –
impacting one of the largest registries with more than 10.5
million domain names registered. After completing its
evaluation, the ICANN Board finds that the public interest
is better served in withholding consent as a result of
various factors that create unacceptable uncertainty over
the future of the third largest gTLD registry. Factors that
were considered in determining reasonableness include, but
are not limited to:<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:0cm;margin-right:0cm;margin-bottom:11.25pt;margin-left:51.0pt;text-indent:-18.0pt;mso-list:l0
level1 lfo2;background:white"><!--[if !supportLists]--><span
style="font-size:10.0pt;font-family:Symbol;color:#333333"><span
style="mso-list:Ignore">·<span style="font:7.0pt
"Times New Roman""> </span></span></span><!--[endif]--><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">A
change from the fundamental public interest nature of PIR to
an entity that is bound to serve the interests of its
corporate stakeholders, and which has no meaningful plan to
protect or serve the .ORG community.<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:0cm;margin-right:0cm;margin-bottom:11.25pt;margin-left:51.0pt;text-indent:-18.0pt;mso-list:l0
level1 lfo2;background:white"><!--[if !supportLists]--><span
style="font-size:10.0pt;font-family:Symbol;color:#333333"><span
style="mso-list:Ignore">·<span style="font:7.0pt
"Times New Roman""> </span></span></span><!--[endif]--><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">ICANN is
being asked to agree to contract with a wholly different
form of entity; instead of maintaining its contract with the
mission-based, not-for-profit that has responsibly operated
the .ORG registry for nearly 20 years, with the protections
for its own community embedded in its mission and status as
a not-for-profit entity.<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:0cm;margin-right:0cm;margin-bottom:11.25pt;margin-left:51.0pt;text-indent:-18.0pt;mso-list:l0
level1 lfo2;background:white"><!--[if !supportLists]--><span
style="font-size:10.0pt;font-family:Symbol;color:#333333"><span
style="mso-list:Ignore">·<span style="font:7.0pt
"Times New Roman""> </span></span></span><!--[endif]--><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">The
US$360 million debt instrument forces PIR to service that
debt and provide returns to its shareholders, which raises
further question about how the .ORG registrants will be
protected or will benefit from this conversion. This is a
fundamental change in financial position from a
not-for-profit entity.<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:0cm;margin-right:0cm;margin-bottom:11.25pt;margin-left:51.0pt;text-indent:-18.0pt;mso-list:l0
level1 lfo2;background:white"><!--[if !supportLists]--><span
style="font-size:10.0pt;font-family:Symbol;color:#333333"><span
style="mso-list:Ignore">·<span style="font:7.0pt
"Times New Roman""> </span></span></span><!--[endif]--><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">There
are additional uncertainties, such as an untested
Stewardship Council that might not be properly independent,
or why PIR needs to change its corporate form to pursue new
business initiatives.<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:0cm;margin-right:0cm;margin-bottom:11.25pt;margin-left:51.0pt;text-indent:-18.0pt;mso-list:l0
level1 lfo2;background:white"><!--[if !supportLists]--><span
style="font-size:10.0pt;font-family:Symbol;color:#333333"><span
style="mso-list:Ignore">·<span style="font:7.0pt
"Times New Roman""> </span></span></span><!--[endif]--><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">The
transaction as proposed relies on ICANN as a backstop for
enforcement of disputes between the .ORG community and the
registry operator in an untested manner.<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;background:white"><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">The
entire Board stands by this decision. After thorough due
diligence and robust discussion, we concluded that this is
the right decision to take. While recognizing the
disappointment for some, we call upon all involved to find a
healthy way forward, with a keen eye to provide the best
possible support to the .ORG community.<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;background:white"><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">The
Board would like to thank the global community and
stakeholders for their engagement.<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;background:white"><span
style="font-size:12.0pt;font-family:Helvetica;color:#333333">The
resolution and rationale document, which expands upon this
decision is available, <a
href="https://www.icann.org/resources/board-material/resolutions-2020-04-30-en"
moz-do-not-send="true"><span
style="color:#0098D5;text-decoration:none">here</span></a>.<o:p></o:p></span></p>
<p class="MsoNormal"
style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><b><span
style="font-size:18.0pt;font-family:Helvetica">Comments<o:p></o:p></span></b></p>
<p class="MsoNormal" style="margin-left:36.0pt">Bill Maggs <b>22:18 UTC
on 30 April 2020</b><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:36.0pt">How will
governance change to close up the holes big enough to drive a
truck through that this sorry affair exposed?<o:p></o:p></p>
<p class="MsoNormal" style="margin-left:36.0pt">William
Stewart <b>05:48 UTC on 01 May 2020</b><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:36.0pt">Very well done.
Congratulations on listening and doing the right thing. This
was fundamentally important, for many reasons. Great thanks.<o:p></o:p></p>
<p class="MsoNormal" style="margin-left:36.0pt">David
Mussington <b>06:16 UTC on 01 May 2020</b><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:36.0pt">I have to say I
found the entire proposal to transfer the .org registry to a
for profit company mystifying. I am glad that the board was
able to intervene. A sterling example of wise board oversight
and governance.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<div style="border:none;border-top:solid #B5C4DF
1.0pt;padding:3.0pt 0cm 0cm 0cm">
<p class="MsoNormal"><b><span
style="font-size:12.0pt;color:black">From: </span></b><span
style="font-size:12.0pt;color:black"><a class="moz-txt-link-rfc2396E" href="mailto:advisors-bounces@tc.ca"><advisors-bounces@tc.ca></a>
on behalf of Marita Moll <a class="moz-txt-link-rfc2396E" href="mailto:mmoll@ca.inter.net"><mmoll@ca.inter.net></a><br>
<b>Date: </b>Saturday, February 1, 2020 at 12:56 PM<br>
<b>To: </b>TC Advisors <a class="moz-txt-link-rfc2396E" href="mailto:advisors@tc.ca"><advisors@tc.ca></a><br>
<b>Subject: </b>[Advisors] Fwd: [IP] Sale of .org domain
registry delayed by California attorney general<o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal"><o:p> </o:p></p>
</div>
<p><span style="font-family:"Times New Roman",serif">Hello
advisors. In what some in the community have described as a
stunning development, the Attorney General of the State of
California has sent a strong letter to ICANN (which is a
non-profit incorporated under California law) asking for
some very detailed information. The concerns of the
non-profit community have clearly been heard</span><o:p></o:p></p>
<div>
<p class="MsoNormal">Begin forwarded message:<br>
<br>
<o:p></o:p></p>
<blockquote style="margin-top:5.0pt;margin-bottom:5.0pt">
<div>
<div>
<p class="MsoNormal"><o:p> </o:p></p>
</div>
<blockquote style="margin-top:5.0pt;margin-bottom:5.0pt">
<div>
<p class="MsoNormal"> <a
href="https://mashable.com/article/california-attorney-general-dot-org-sale/"
moz-do-not-send="true"><span
style="font-size:12.0pt;font-family:"AvenirNextLTPro-Regular",serif">https://mashable.com/article/california-attorney-general-dot-org-sale/</span></a><o:p></o:p></p>
</div>
</blockquote>
<blockquote style="margin-top:5.0pt;margin-bottom:5.0pt">
<div>
<p class="MsoNormal" style="margin-bottom:12.0pt"><br>
<span
style="font-size:12.0pt;font-family:"AvenirNextLTPro-Regular",serif;color:black">The
.org domain takeover has been delayed, at least
for now.<br>
<br>
California Attorney General Xavier Becerra sent a
letter to the Internet Corporation for Assigned
Names and Numbers (ICANN) demanding more
information about the private equity takeover of
the .org domain registry. The attorney general is
seeking answers to 35 questions concerning the
sale as well as documents sent between ICANN,
private equity firm Ethos Capital, and Public
Interest Registry (PIR), which manages the .org
domain.<br>
<br>
Ethos Capital disclosed last year that it was
acquiring PIR from its non-profit parent
organization, the Internet Society, for $1.135
billion.<br>
<br>
ICANN, the non-profit organization that oversees
domain names, disclosed the letter on its website
along with its own correspondence with PIR,
informing it of the development. Previously, ICANN
had until Feb. 17 to approve or deny the sale.
According to ICANN, as a result of the California
AG’s letter, it’s seeking to delay this deadline
until April 20.<br>
<br>
ICANN says it's "fully cooperating" with the
request. In its letter to PIR, ICANN gives a heads
up that it will be providing the attorney general
"confidential material" to comply with the AG's
demands. As ICANN's letter states, it has terms in
its contract with PIR which forbid the
organization from disclosing information that the
registry deems confidential unless required by
law. ICANN clearly views the AG's letter as
applicable.<br>
<br>
It’s a stunning development that certainly
vindicates the concerns of non-profits, internet
activists, and domain name holders.<br>
<br>
Many of the attorney general’s questions revolve
around the removal of the long-standing price caps
in ICANN’s most recent contract renewal with PIR.
The price caps on .org domains allowed the
registry raise registration prices no more than 10
percent each year. Without those price caps, the
registry could raise pricing for registration and
renewals as much as it would like. In addition, it
could also add new pricing structures, such as
deeming certain domains as "premium" and charging
whatever it would like for those domains.<br>
<br>
Not long after ICANN’s price cap removal gave the
registry complete control of .org domain pricing,
Ethos Capital announced its acquisition of the
registry. Many critics of the sale were concerned
with the timing of these developments. Non-profit
organizations, which previously galvanized to try
and stop the price cap removal in the first place,
worried that the private equity firm would raise
.org prices in order to quickly recoup its
investment.<br>
<br>
ICANN previously said that the organization was
“powerless” to do anything about the sale of the
.org registry. However, ICANN’s tune quickly
changed as news spread of the private equity
takeover. An ICANN board member told internet
activists, who recently protested outside of
ICANN’s LA offices, that the organization was
taking the sale “very seriously.”<br>
<br>
There are currently more than 11.5 million
registered .org domain names. Registrants pay a
yearly fee to renew their domain registrations.
PIR currently generates around $100 million a year
selling .org domain names to registrars, such as
Namecheap and Godaddy, for just under $10 per
year.<br>
<br>
The AG’s office oversees nonprofits and charitable
organizations in the state of California. Becerra
has cracked down on nonprofits that break the law.<br>
<br>
Whether the acquisition is stopped remains to be
seen. It all depends on what the California
attorney general finds in his investigation. </span><o:p></o:p></p>
</div>
</blockquote>
<div style="border:none;border-top:solid #DDDDDD
1.0pt;padding:5.0pt 0cm 0cm
0cm;margin-top:7.5pt;border-color:rgba(0,0,0,.15)"
id="topicbox-footer">
<p class="MsoNormal"> Marita<a
href="https://ip.topicbox.com/groups/ip/T73be9e206be9d63c-Me24d47c16080dd2e9e3a00bd"
moz-do-not-send="true">Permalink</a> <o:p></o:p></p>
</div>
</div>
</blockquote>
</div>
<p class="MsoNormal">_______________________________________________
Advisors mailing list <a class="moz-txt-link-abbreviated" href="mailto:Advisors@tc.ca">Advisors@tc.ca</a>
<a class="moz-txt-link-freetext" href="http://victoria.tc.ca/mailman/listinfo/advisors">http://victoria.tc.ca/mailman/listinfo/advisors</a> <o:p></o:p></p>
</div>
<br>
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<pre class="moz-quote-pre" wrap="">_______________________________________________
Advisors mailing list
<a class="moz-txt-link-abbreviated" href="mailto:Advisors@tc.ca">Advisors@tc.ca</a>
<a class="moz-txt-link-freetext" href="http://victoria.tc.ca/mailman/listinfo/advisors">http://victoria.tc.ca/mailman/listinfo/advisors</a>
</pre>
</blockquote>
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