Deemed Exports - Best Practices

1. Deemed Exports - Best Practices Dennis Farrell Global Export Compliance Manager Analog Devices, Inc. E-Mail: dennis.farrell@analog.com

2. Analog Devices, Inc. – Corporate Profile • Worldwide HQ: Norwood, MA • Other Manufacturing & Engineering U.S. Sites – Wilmington, MA, Greensboro, NC, San Jose, CA, Nashua, NH • Global Presence in approximately 23 Countries • Number of Employees: Approx. 9,000 (Worldwide) • FY 2010 Revenue: $US 2.8 Billion (+ 40% from FY09) • Primary Products: Digital Signal Processors, High Speed Digital  Analog and Analog  Digital Converters, Accelerometers, Gyroscopes and other MEMS devices • Commerce Control List: Categories 3, 5 and 7 • Jurisdiction: U.S. EAR = 99%; ITAR = 1%

3. Top Five Corporate Compliance Challenges in 2010 for Technology Companies Source: Corporate Compliance Insights, Henry Keizer, March 11, 2010 Compliance Challenge No. 3: Import/Export Regulations • Non-compliance with import/export laws can bring severe penalties to technology companies and also slow the movement of products across borders, ultimately raising costs and narrowing margins. • Experience has demonstrated that longstanding import/export rules are quite dynamic and sensitive to external political and economic events.  It’s been our observation, of late, that audit activity by customs authorities worldwide has increased since the start of the economic crisis, as governments attempt to increase revenue from trade enforcement and penalties. • Technology companies, whose products are often duty free, have been particularly hard hit. In some countries, including the United States, the penalties for non-compliance with U.S. import laws and regulations are actually higher on duty-free products Penalties and Seizures • In the last few years, U.S. technology companies have faced multimillion-dollar penalties and seizures in Brazil and India related to valuation of imports. In one instance, the assessed penalties were in excess of $10 million. • Tax compliance related to Transfer Pricing also overlaps with import rules (see Compliance Challenge No. 5). • In addition, in the United States, the government is placing a greater emphasis on export regulation pertaining to the disclosure of controlled technology to foreign nationals domestically and abroad. Technology companies need to establish robust internal controls to comply with this rule.

4. Deemed Export Situations • Hiring • New Permanent Employees (Technical or non-Technical) • Determine Citizenship PRIOR to job offer, if possible .. or • Put “contingent on receipt of approved export license, if required” language in all offer letters • Employees Transferring to a New Position • Re-Hiring Former Employees • Hiring Contract Workers, Interns and Other Contingent/Temporary Labor • Visits • By Employees • By Customers and Prospects • Other Third Party Individuals (Vendors, etc.) • In U.S. Based or non-U.S. Based Facilities (Deemed Re-Exports) • Plant and Facility Tours • Company Events where the Public is not Invited (Technical Conferences, Seminars, etc.)

5. Questionnaire for Technology Transfers

6. HR Internal Website Questionnaire for Technology Transfers – Information for Human Resources • If a candidate’s answer to Question #1 on the Questionnaire for Technology Transfers form is “No,” please send e-mail to ADI Export Compliance (ExportComplianceDepartment@analog.com) and provide the following information: • Interviewee’s Resume • Hiring Manager’s name and contact information • Job Position Title • Job Description • Copy of this completed Questionnaire for Technology Transfers Form • The above information will be assessed against the employment opportunity the candidate is pursuing to determine what export licensing requirements apply and to allow ADI to proactively address the situation and make the export compliance portion of the hiring and/or inter-company transfer process as seamless as possible.

7. Data Required for Deemed Export Apps • There is a LOTof personal information required • Your HR group may be “nervous” or “horrified” • It is perfectly legal to ask for this information • You are NOT discriminating against individuals for employment reasons • There are export compliance/National Security laws in place to cover this activity • U.S. National Security laws supersede employment and/or privacy laws • May be more complicated outside the U.S. (e.g. EU)

8. Sample Data Form

9. Chronological Process – License Application • Determine Citizenship (Caution: Commerce and State Differ) • EAR = Country of Last Citizenship or Permanent Residency • ITAR = Country of Birth • License Determination Made • Gather Data (personal and business case) • Complete License Application on SNAP-R to include: • Cover letter CLEARLY stating business case (simple -- no elaborate tech language) • Clean, clear .pdf documents of passport, visa, other docs • Technology Control Plan (TCP) • Datasheets for products which correspond with tech data • Ask for the moon – you just might get it !!

10. Basic TCP Elements • Can be Specific or General • Scope • Purpose • Corporate Profile • Physical Access Controls • System/IT Access Controls • Employee and Manager Responsibilities

11. Have Business Units Feed the Data to Export

12. Chronological Process – Post License Approval • Inform Licensee and his/her Manager of Approval • Meet with Licensee and his/her Manager (live or by phone) • Review all pertinent license conditions • Explain conditions in understandable terms • Ensure conditions are understood and accepted • Have parties sign a document agreeing to above • Do this to provide protection for the company • Keep original or scanned copy in Export files • Copies for HR, Licensee and Manager • Manager is Responsible for notifying Export of any changes (e.g., transfers, change in job duties, etc.)

13. Other Items of Interest • Consider Having Technology Agreements Signed even in non-licensing situations • Technology Transfer Agreement • Employee states “I do not require access to export controlled technology …” • “As long as I am employed by XYZ Company, I will not access export controlled …” • Manager also signs • Mitigates responsibility on company – employee and manager are most culpable • Willful personal violation = possible jail time !! • Put as many documents/forms on-line as possible • Hiring Manager Deemed Export Questionnaire • Questionnaire for Technology Transfers • Technology Control Agreement (TCA) • Technology Transfer Agreement (TTA) • Deemed Export Application Checklist • Deemed Export License Application Data Sheet (Business Case) • All Employees on the Corporate-Wide Network vs. Firewalls

14. Other Items of Interest (cont.) • Establish written procedures with HR Dept • How/when nationality/citizenship data is obtained • How/when license determination is made • USCIS I-129 Form Certification • Keep records of all I-129 correspondence • Opportunities for Automation • Verdasys, Inc. --- Digital Guardian software • Export Classification of Technology • Country of Citizenship from HR System • For further details, go to this web site: • http://www.verdasys.com/data_loss_prevention.php • Guidance and FAQ on BIS Web Site • http://www.bis.doc.gov/deemedexports/ • Some information is dated/old

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