1206008 Informal Interpretation

Michael Verne

  – Agree.





Wednesday, June 27, 2012 4:54 PM


Verne, B. Michael




802.51 --Sales In or Into the US


Furtherto our discussion on June 27th, 2012, as noted, I represent theseller and (redacted) represents the purchaser in atransaction involving the acquisition of voting securities of a foreign issuer("Target"). Target has operations around the world, including theUnited States. Its revenue is primarily generated by subscriptions to an onlineservice (the "Service") that aggregates information, analytics,reports etc. in a particular industry sector. The sales generated from US-basedcustomers (plus additional revenue generated from US-based customers fromTarget's other offerings) is not in excess of $68.2 million. However, if onelooks at all sales worldwide generated from the Service, the revenue would bein excess of $68.2 million.

Allcontracts for the Service are written out of non-US offices. All IP relating tothe Service is held by non-US entities of the Target. All invoicing for theService is done from non-US offices. The customer contracts relating to theService entered into by non-US customers are governed by non-US law andenforceable in non-US courts (and this is in fact true for many of thecontracts with US customers as well). The development and maintenance of theService is a joint effort by employees located around the world (including, butnot limited to, the US). However, the Service is hosted on servers that arebased in the US. Customers access the Service purely on the internet, i.e.,they do not interact with any US-based employees in using the Service.

Notwithstandingthe presence of the host servers in the US, you advised that given the factspresented, sales "in or into the United States" for purposes of 16C.F.R. Section 802.51 would be limited to the sales to customers located in theUnited States.

Pleaseconfirm, correct or clarify your view at your earliest opportunity. As always,we are grateful for your input.

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