The World Leader in High Performance Signal Processing Solutions

Deemed Exports - Best Practices

Dennis FarrellGlobal Export Compliance Manager

Analog Devices, Inc.E-Mail: dennis.farrell@analog.com

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%

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.

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.)

Questionnaire for Technology Transfers

Rev. 12/10

Analog Devices, Inc. (“ADI”) works with technologies that are subject to the U.S. export control regulations. When Analog employs citizens from countries other than the United States, authorization in the form of an export license may be required from the U.S. Department of Commerce’s Bureau of Industry and Security and/or the U.S. Department of State’s Directorate of Defense Trade Controls prior to the start of the employee in a position utilizing or having access to export controlled technology. In order to determine if an export license is required, ADI must obtain the following information:

1. Are you a citizen or national of the United States; or a person lawfully admitted for permanent residence (“Green Card” Holder) in the United States; or a person lawfully admitted for permanent residence as a refugee or who has been granted asylum (protected person under 8 U.S.C. 1324b(a)(3))?

Note: H1B or Student Visa Holders should answer “No” to this question.

Yes

No

2. If the answer to #1 is “No”, and, as you may be offered a position that utilizes or enables access to export controlled technology, please identify your citizenship below:

Country of Birth:

Country(ies) of Citizenship (if other than country of birth): (1)

(2)

----------------------------------------------------------------------------------------------------------------------------------------------- Please Note: When applicable, any offer of employment or transfer for a position utilizing or having access to export controlled technology is contingent upon ADI receiving licensing approval from the U.S. Department of Commerce, Bureau of Industry and Security and/or the U.S. Department of State’s Directorate of Defense Trade Controls.

Please indicate your acceptance of these conditions and your intent to cooperate with any required export licensing efforts made on your behalf.

Print Full Legal Name Signature Date

Please list any additional names candidate is know by (including nicknames):

----------------------------------------------------------------------------------------------------------------------------------------------- For internal Human Resources use only: If the answer to Question #1 above is “No,” please go to http://signals.corpnt.analog.com/C18/Staffing%20Online/Document%20Library/Questionnaire%20for%20Technology%20Transfers_Info%20for%20HR.doc for further instructions.

-------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

Data Required for Deemed Export AppsThere is a LOT of 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)

Sample Data Form

Chronological Process – License Application

Determine Citizenship (Caution: Commerce and State Differ)EAR = Country of Last Citizenship or Permanent ResidencyITAR = 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 docsTechnology Control Plan (TCP) Datasheets for products which correspond with tech dataAsk for the moon – you just might get it !!

Basic TCP Elements

Can be Specific or General

Scope

Purpose

Corporate Profile

Physical Access Controls

System/IT Access Controls

Employee and Manager Responsibilities

Have Business Units Feed the Data to Export

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 conditionsExplain conditions in understandable termsEnsure conditions are understood and acceptedHave parties sign a document agreeing to aboveDo this to provide protection for the companyKeep original or scanned copy in Export filesCopies for HR, Licensee and ManagerManager is Responsible for notifying Export of any changes

(e.g., transfers, change in job duties, etc.)

Other Items of Interest

Consider Having Technology Agreements Signed even in non-licensing situationsTechnology 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

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

THANK YOU FOR YOUR ATTENTION