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<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">Dear CCWG Accountability,
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">Please let us know if you would like independent counsel and in particular the Adler firm to weigh in on these legal issues. Holly<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><b><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">HOLLY J. GREGORY</span></b><span style="font-size:9.0pt;font-family:"Arial","sans-serif";color:#1F497D"><br>
Partner and Co-Chair, Global Corporate Governance & Executive Compensation Practice<br>
<br>
<b>SIDLEY AUSTIN LLP<br>
</b>+1 212 839 5853<br>
<a href="mailto:holly.gregory@sidley.com" title="Click to send email to Gregory, Holly">holly.gregory@sidley.com</a><o:p></o:p></span></p>
</div>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D"> </span><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><o:p></o:p></span></p>
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<p class="MsoNormal" style="margin-left:.5in"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif""> accountability-cross-community-bounces@icann.org [mailto:accountability-cross-community-bounces@icann.org]
<b>On Behalf Of </b>Samantha Eisner<br>
<b>Sent:</b> Sunday, June 26, 2016 9:42 AM<br>
<b>To:</b> Accountability Cross Community<br>
<b>Subject:</b> [CCWG-ACCT] Responses on Draft Articles of Incorporation<o:p></o:p></span></p>
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<p class="MsoNormal" style="margin-left:.5in"><o:p> </o:p></p>
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<p class="MsoNormal" style="margin-left:.5in"><span style="color:black">Dear CCWG Members and participants:<o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
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<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black">During last week’s CCWG call, a few questions were raised on the Articles of Incorporation that are currently out for public comment, and written responses were requested to supplement
the answers I provided on the call.<o:p></o:p></span></p>
</div>
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<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
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<p class="MsoNormal" style="margin-left:.5in"><span style="color:black">Below please find some input.<o:p></o:p></span></p>
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<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
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<p class="MsoNormal" style="margin-left:.5in"><span style="color:black">Best regards, <o:p></o:p></span></p>
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<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
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<p class="MsoNormal" style="margin-left:.5in"><span style="color:black">Sam<o:p></o:p></span></p>
</div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
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<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
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<p class="MsoNormal" style="margin-left:.5in"><b><span style="color:black">Article 1 - Future v. further laws</span></b><span style="color:black"><o:p></o:p></span></p>
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<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
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<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black;background:white">Any reference in these Articles to the Code shall include the corresponding provisions of any
</span><a name="_cp_text_2_14"><s><span style="color:red;background:white">further</span></s></a><a name="_cp_text_1_15"></a><u><span style="color:blue;background:white">future</span></u><span style="color:black;background:white">
</span><span style="color:black;background:white">United States tax code.</span><span style="color:black"><o:p></o:p></span></p>
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<p class="MsoNormal" style="margin-left:.5in"><span style="color:black;background:white"><br>
<br>
</span><span style="color:black"><o:p></o:p></span></p>
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<div>
<p class="MsoNormal" style="margin-left:.5in"><b><span style="color:black;background:white">Response:</span></b><span style="color:black;background:white"> ICANN agrees with the modification to the word “future” as explained by Adler. This is a clarification
that makes it clearer that the Articles will be considered in alignment with future changes to the Code.</span><span style="color:black"><o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
</div>
<div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
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<div>
<p class="MsoNormal" style="margin-left:.5in"><b><span style="color:black">Article 2 - May v. Shall on global public interest</span></b><span style="color:black"><o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black">Questions were raised about the phrase “may be determined” as it is used in this Article<o:p></o:p></span></p>
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<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black;background:white">, the Corporation shall, except as limited by
<u>Article </u></span><a name="_cp_text_2_16"><s><span style="color:red;background:white">5</span></s></a><a name="_cp_text_1_17"></a><u><span style="color:blue;background:white">4</span></u><span style="color:black;background:white">
</span><span style="color:black;background:white">hereof, pursue the charitable and public purposes of lessening the burdens of government and promoting the global public interest in the operational stability of the Internet</span><a name="_cp_text_2_18"><s><span style="color:red;background:white">
by (i) coordinating the assignment of Internet technical parameters as needed to maintain universal connectivity on the Internet; (ii) performing and overseeing functions related to the coordination of the Internet Protocol ("IP") address space; (iii) performing
and overseeing functions related to the coordination of the Internet domain name system ("DNS"), including the development of policies for determining the circumstances under which new top-level domains are added to the DNS root system; (iv) overseeing operation
of the authoritative Internet DNS root server system; and (v) engaging in any other related lawful activity in furtherance of items (i) through (iv).</span></s></a><a name="_cp_text_1_19"></a><u><span style="color:blue;background:white">, as such global public
interest </span></u><u><span style="color:blue;background:yellow">may be determined
</span></u><u><span style="color:blue;background:white">from time to time by the multistakeholder community through an inclusive bottom-up multistakeholder community process, by carrying out the mission set forth in the bylaws of the Corporation (“<b>Bylaws</b>”).</span></u><span style="color:black">
<o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black">Concerns were raised regarding the permissive use of the term “may” as opposed to the term “shall”, which would make this a requirement. As discussed on the CCWG call, this phrase is not
used here to describe either a permissive consideration or mandatory requirement, but is instead drafted to convey that the global public interest that is determined by the multistakeholder community may change from time to time as needed. <o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><b><span style="color:black">Response:
</span></b><span style="color:black">Given that the language that is currently in the draft Restated articles may cause confusion, if the CCWG-Accountability wished to note this issue in a public comment, ICANN would support changing language to “as such global
public interest <b><i><u>is</u></i></b> determined from time to time”.<o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><b><span style="color:black">Article 3 – Applicable local law </span></b><span style="color:black"><o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
</div>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black">The CCWG-Accountability asked for further inputs on the modification of the language now at Article 3: <o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
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<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black;background:white">The Corporation shall operate
</span><a name="_cp_text_1_22"><u><span style="color:blue;background:white">in a manner consistent with these Articles and its Bylaws</span></u></a><span style="color:black;background:white">
</span><span style="color:black;background:white">for the benefit of the Internet community as a whole, carrying out its activities in conformity with relevant principles of international law and
</span><a name="_cp_text_2_23"><s><span style="color:red;background:white">applicable
</span></s></a><span style="color:black;background:white">international conventions and
</span><a name="_cp_text_1_24"><u><span style="color:blue;background:white">applicable</span></u></a><span style="color:black;background:white">local law and</span><a name="_cp_text_2_25"><s><span style="color:red;background:white">, to the extent appropriate
and consistent with these Articles and its Bylaws,</span></s></a><span style="color:black;background:white"> through open and transparent processes that enable competition and open entry in Internet-related markets. To this effect, the Corporation shall cooperate
as appropriate with relevant international organizations.</span><span style="color:black"><o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
<div>
<div>
<p class="MsoCommentText" style="margin-left:.5in"><b><span style="color:black">Response:
</span></b><span style="color:black">As discussed with the CCWG, the movement of the term “applicable” to modify “local law” seems to be a more precise statement. To the extent that any international conventions are applicable to ICANN, they become so by virtue
of applicable local law. As ICANN is not an IGO, it is not a party to nor are international conventions directly applicable to ICANN.<o:p></o:p></span></p>
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</div>
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<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
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<p class="MsoNormal" style="margin-left:.5in"><b><span style="color:black">Article 2 – Organized v. incorporated; Insert that ICANN is headquartered in California</span></b><span style="color:black"><o:p></o:p></span></p>
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<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black">Brett Schaefer suggested "</span><span style="color:#333333;background:white">replacing “organized” with “incorporated” in the second sentence and adding an additional sentence affirming
the current location of the headquarters of ICANN."</span><span style="color:black"><o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
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<div>
<p class="MsoNormal" style="margin-left:.5in"><b><span style="color:black">Response: </span></b><span style="color:black">There is no legal difference between the term “organized” or “incorporated” in this instance. They both would demonstrate that ICANN
is created pursuant to California law, and using either term, ICANN is bound to file its Articles of Incorporation in California and maintain an address and an agent for service of process in California. Though they mean the same thing, ICANN has – since
1998 – used the term “organized” within its Articles. The term “organized” is the more appropriate term to use for organizations of ICANN’s type, and is even the recommended term provided by the California Secretary of State in model forms for Nonprofit Public
Benefit organizations like ICANN (See form ARTS-PB-501(c)(3): "It is organized under the Nonprofit Public Benefit Corporation Law”. Available at Bpd.cdn.sos.ca.gov/corp/pdf/articles/arts-pb.pdf). For those unfamiliar, the California Secretary of State is
responsible for the filings and maintaining business records for California organizations. Adherence to the model usage of the language is recommended, and there does not seem to be a compelling justification to change from the historical and accepted usage.
Further, there was nothing in the CCWG’s WS1 report that would dictate this change.<o:p></o:p></span></p>
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<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
</div>
<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black">Inserting a statement in the Articles of Incorporation that ICANN is headquartered in California is not supported by the WS1 report. There was substantial conversation within the CCWG
during its deliberations that ICANN’s principal place of business should not be identified as a fundamental Bylaw, and only as a standard Bylaw. Therefore, not only is this an item that is not dictated by the WS1 report, but taking on this suggestion would
appear to be contrary to the WS1 report. <o:p></o:p></span></p>
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<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
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<p class="MsoNormal" style="margin-left:.5in"><b><span style="color:black">“old” Article 5 – Disqualified Persons</span></b><span style="color:black"><o:p></o:p></span></p>
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<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
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<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black">There was a request to consider if the prohibition that used to be at Article 5 be reinstated into the Bylaws: </span><span style="color:red;background:white">In no event shall the Corporation
be controlled directly or indirectly by one or more "disqualified persons" (as defined in § 4946 of the Code) other than foundation managers and other than one or more organizations described in paragraph (1) or (2) of § 509 (a) of the Code.</span><span style="color:black"><o:p></o:p></span></p>
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<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black"><o:p> </o:p></span></p>
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<div>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:black">There was a justification provided to the CCWG from Adler, noting that Adler recommended the removal of this section on the following basis: <o:p></o:p></span></p>
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<p style="margin:0in;margin-bottom:.0001pt">"There is no legal requirement under California corporate law or related to ICANN’s tax-exempt status that ICANN’s Articles include this prohibition, although it may be a matter of ICANN internal policy. However,
we recommend deleting this prohibition now, since it is unclear why control by only disqualified persons versus a subset of 501(c)(3) nonprofits is addressed. Moreover, we are not aware that ICANN has any disqualified persons under IRC Section 4946 other than
its foundation managers (directors, officers, and senior executive staff). (If this subsection is retained, the reference to the IRC section defining “disqualified persons” should be corrected. IRC Section 4946 applies to private foundations; the applicable
definition for a public charity like ICANN is Section 4958.)"<o:p></o:p></p>
<p style="margin:0in;margin-bottom:.0001pt"><o:p> </o:p></p>
<p style="margin:0in;margin-bottom:.0001pt"><b>Response: </b> ICANN does not have an objection in principle to the reinstatement of this provision subject to ICANN confirming what the appropriate code references would be and whether any further edits would
be necessary to bring this section in line with the code section that is now applicable to ICANN as a public charity. ICANN did not originate this edit. If the CCWG believes that it is important for this provision to be reinstated, please document that in
a public comment. <o:p></o:p></p>
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<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:10.5pt;font-family:"Calibri","sans-serif";color:black"><o:p> </o:p></span></p>
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