Export Control Services

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Export Control Services

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Foreword

PricewaterhouseCoopers’ (PwC) Export Control Services (ECS) is pleased to have the opportunity to provide you with our Statement of Qualifications, which sets forth a description of who we are and the services we deliver to our clients.

Because of our years of experience assisting our clients on domestic and global export control issues, we understand the enormous compliance pressures that our multinational clients currently face in today’s security and financially sensitive business environment.

The table of contents for our Statement of Qualifications is provided below: How mature is your export compliance system? Page 1 How we can help you address your export compliance needs Page 3 Representative export control clientele Page 6 Putting the right team together for you Page 8

Meet the ECS team Page 9

We are committed to working with our clients to help address their Export Management System (EMS) needs. If you would like to discuss the export control services described in our Statement of Qualifications or other compliance topics, do not hesitate to contact Joe Santosuosso at (408) 318-3914 or [email protected].

Regards,

Glenn Brady - Partner Joseph Santosuosso – Director Export Control Services Export Control Services

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U.S. exporters are expected to fully understand their control obligations and implement well-documented, transparent compliance procedures—a daunting burden for any company doing business in a global

environment.

How mature is your export

management system?

Know your export compliance obligations

The U.S. government regulates the export of commodities, software,

technologies, and services that have commercial, defense, terrorism, and/or proliferation applications. U.S. export controls apply to the shipment of tangible items, as well as intangible transfers of technical data.

U.S. export control laws and regulations – such as the Export Administration Regulations (EAR) and International Traffic in Arms Regulations (ITAR) – contain rapidly changing, complex requirements.

Some questions that a well developed export management system should address:

• Is your company’s export management system staffed strategically? • Are the responsible parties with export compliance responsibilities clearly

identified and do they receive sufficient training?

• Is there sufficient oversight for your company’s export control activities by your Trade Compliance Department and/or Legal Department?

• Is your company’s process for making export jurisdiction and classification determinations sufficiently robust?

• Are your company’s export control processes well documented?

• Does your company have a mechanism for documenting the investigation and resolution of potential export control violations?

• Does your company’s export management system address other export regulatory requirements, such as embargoed and sanctioned country requirements administered by the Office of Foreign Assets Control (OFAC), antiboycott regulations, or foreign export requirements for U.S. reexports (e.g., EU controls for certain dual use commodities).

• Do your company’s export control processes undergo periodic internal audits (e.g., are your export licensing activities being monitored? is export data being reported accurately in Automated Export Systems (AES)?)? • How would your company’s export management system fare under a U.S.

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More than just the cost of doing business

Exporters are facing increasingly aggressive enforcement of export controls by U.S. government agencies. Failure to comply with U.S. export controls can result in severe civil and criminal penalties (which can be assessed against both the corporation and/or chargeable individuals). In addition to significant monetary fines and prison sentences, export control penalties may include the denial of export privileges. Such a denial (even a temporary one) may have a lasting impact on a company’s financial health.

Since the Department of Commerce and the State Department publish lists of export violators, exporters also risk bad publicity and other potential negative repercussions under the Sarbanes-Oxley Act for export violations.

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How we can help you address your export

compliance needs

Multinational business requirements in today’s geopolitical environment of heightened national security present a number of immediate core challenges from an export compliance perspective.

In order to help you meet these and other export control challenges, PwC ECS offers a variety of export control solutions.

We specialize in services such as conducting classification reviews of

information security (encryption) products (including the navigation of complex notification and reporting requirements); we also specialize in conducting export control assessments of University research activities (e.g., by addressing deemed export issues and the applicability of Fundamental Research, Publicly Available / Public Domain, or Educational Information exclusions).

Project-Based Services

These types of services tend to be delivered via discrete projects.

• Risk Assessments—Understanding the scope, type, and levels of risk that may exist in a company’s export management system. Risk assessments (which may be transactional and/or procedural) include prioritized findings and recommendations presented in matrix form or an in-depth report. • Consent Agreement Assessments—Providing consent agreement

implementation support, including conducting in-depth assessments of companies in accordance with compliance measures set forth by the State Department. We coordinate our activities with each company’s appointed Special Compliance Officer. ECS also has experience assisting Special Compliance Officers with the responsibilities set forth by the Directorate of Defense Trade Controls (DDTC).

• Compliance Infrastructure—Conducting an analysis of a company’s

organizational structure, available resources, and compliance requirements in order to help design a functional compliance environment that is

responsive to a company’s business needs.

• Internal Reviews—Designing and/or conducting periodic internal reviews for a company’s export compliance areas.

• Development of Export Compliance Manuals, Technology Control Plans, Desktop Procedures, and Template Forms—Helping companies document export control processes and procedures on a variety of export compliance areas, including the preparation of supplementary forms.

• Training—Conducting export control training sessions customized for a company’s departments or business units, based on applicable compliance obligations in order to help the company focus on relevant training.

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• IT Systems Solutions—Helping a company address deemed export issues for technical data subject to EAR and/or ITAR requirements by assessing whether controlled technology is properly secured within the company’s IT platforms and systems, and making recommendations based on the risk of technology transfers to unauthorized persons. Additionally, our ECS team delivers forensic technology solutions and investigations.

• Merger/Acquisition/Divestiture Analysis—Conducting due diligence investigations of prospective target companies to identify potential export liabilities and helping to integrate the export activities of acquired businesses into the acquiring company’s export compliance program.

• Voluntary Disclosures and Responses to U.S. Government Inquiries— Supporting companies in the preparation of voluntary disclosures and responses to U.S. Government inquiries (e.g., requests for information). We often work directly with our clients’ corporate counsel under attorney-client privilege.

Operational Services

ECS is also accustomed to providing ongoing compliance support for our clients. These services include the following:

• Customer/Order Screening—Assisting companies with using IT tools to screen export transaction parties against U.S. Government restricted party lists to help reduce the risk of conducting government-prohibited export transactions.

• Export Jurisdiction and Classification Determinations—Working with a company’s technical personnel to gather the necessary information to perform an export jurisdiction determination and classifying the items under the appropriate set of export regulations. We also have extensive

experience with the preparation of Commodity Jurisdiction (CJ) requests to the DDTC and Classification Requests (CCATS) to the Bureau of Industry and Security (BIS).

• Export License Application Preparation—Assisting companies with the preparation of information required for filing export licenses and related agreements under the ITAR and EAR, including the provision of strategic advice on government agency interaction.

• Export Shipment Reviews and Related Documentation Preparation— Conducting export control reviews of a company’s export shipments, including end-user/use screening, classification, and license requirement determination. .

• OFAC / Antiboycott Transaction Reviews—Reviewing transactions to assess compliance with applicable OFAC regulations on embargos / sanctions or antiboycott requirements.

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Representative export control clientele

This section sets forth a representative list of industries for which we have provided or are currently providing export control services.

Aerospace/Avionics/Defense

We have helped major Fortune 50 Aerospace and Defense companies navigate through complex governmental restrictions regulating the export of aerospace equipment, military technology transfers, and defense equipment. We have conducted in-depth assessments for companies subject to DDTC consent agreements, classified parts and technologies, and assisted in the preparation of license applications to secure government authorizations needed for complex research and development projects.

Industrial Products

Playing a strategic role in the development of export controls under the EAR and the ITAR for coatings and sealants, chemicals, glass and fiber glass, optical, and silicas products has been a major component to our relationship with an industrial products client. In addition to conducting assessments on key business units, we have assisted our client with training personnel with export compliance responsibilities (in the U.S. and China), working with the client to develop corporate level export control procedures, perform export jurisdiction and classifications for over 28,000 items, prepare commodity jurisdiction requests, provide export license application support, and support other export control related operational activities.

Technology

We have supported technology companies with product classification for the hardware and software products manufactured by recently acquired

companies, including the identification and management of applicable U.S. Government filing and reporting requirements. We have assisted in the preparation of Technology Control Plans, as well as extensive desktop procedures on the processes related to encryption classification and

government filing for the U.S., Israel, and Hong Kong. Other activities include providing operational support for U.S. reexports.

Electronics and Semiconductor Sectors

The high-tech sector is an increasingly critical focus of global export controls, and we have been keeping abreast of the latest developments. We have assisted companies in determining their export obligations in the development of offshore facilities and the related need for technical data transfers. We have helped companies develop internal compliance plans, provided support for a Special Comprehensive License audit conducted by the U.S. Government, and provided ongoing operational support (including assisting clients in the preparation of export license applications, development of Export Compliance Manuals, and managing the development of IT solutions to promote continuing compliance with dynamic regulatory demands).

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Universities

We have developed solutions that meet universities’ evolving export

compliance needs, not only in terms of preserving the Fundamental Research, Publicly Available/Public Domain, and Educational Information Exclusions, but also in the navigation of deemed export issues and other compliance areas outside of sponsored research programs.

Energy and Security

The delivery of energy products and services often requires commercial relationships with some of the world’s most scrutinized locales, such as the Middle East, former Soviet Republics, and Africa. We have helped these companies to establish screening programs so that products will be sent to the designated end users, and not sold to customers on the U.S. Government’s prohibitive lists. In addition, we have assisted companies in developing a Technology Control Plan to manage the export of technical data.

Healthcare

We have experience in the growing healthcare field, including the classification of, and export controls over, diagnostic equipment and healthcare technologies, such as X-ray and nuclear / PET. We have also assisted clients in the biotech and pharmaceutical industries.

Telecommunications

Effective export compliance requires an ability to classify products and determine licensing requirements. We have in-depth experience in classifying telecommunication products and in assisting businesses in meeting their licensing requirements for the export of products and technology. Our experience with the business requirements of this industry allows us to help clients develop efficient and cost-saving compliance processes.

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We utilize various levels of staff expertise and experience to review, document, map, and recommend control improvements in the export compliance

processes and provide strategic analysis

Putting together the right team for you

Our ECS team consists of trained consultants with government, industry, and legal backgrounds with extensive export control experience to cover the panoply of areas necessary to provide outstanding export compliance support and planning services.

We are well poised to provide expertise to clients for their governmental and industry development. Our ECS team anticipates and monitors trends in the constantly shifting sphere of regulations in order to provide high quality solutions that focus on the specialized needs of each individual client. Moreover, we are strategically located worldwide to provide export control services in one or more corporate locations. The diversity of knowledge and methodological expertise of the ECS team is unique to this area of the profession.

Geographically diverse—U.S., EU, and Asia resources

We have successfully integrated our offshore export professionals in both Asia and the EU to help provide seamless issue resolution for U.S. export and reexport matters, as well as foreign import requirements.

For example, we have provided U.S. subsidiaries based in the U.K. extensive industry-wide services on all aspects of their export operations and

compliance as governed by the EU’s dual use export legislation, the U.K.-specific Export Control Act and its Statutory Instruments, as well as all pertinent U.S. export control regulations under the EAR and ITAR.

ECS is further supported by an extensive customs and trade advisory service in Asia Pacific. Teams of dedicated specialists are located in China, Hong Kong, Indonesia, Japan, Malaysia, Philippines, Singapore, and Thailand. ECS works closely with the PwC’s Worldtrade Management Services (WMS) Asia practice that consists of specialists from a variety of backgrounds, including customs and trade specialists who have served in senior government positions, industry specialists who are recognized specialists in their fields, and practitioners who are familiar with Asian trading culture and practice.

Leveraged service model

We have in-depth experience working with various industries, ranging from aerospace and defense to pharmaceuticals, and we are able to provide these industries with the full spectrum of our services. Our ECS practice includes specializations specifically developed to address certain aspects of export control. Staff members rotate through all specializations, but largely focus on only several areas of expertise. For example, we have specialists for

classification, licensing, process improvement, and transactional review services. This specialization determines who we assign to particular projects.

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Our ECS team consists of trained consultants with government, industry, and legal backgrounds with extensive experience in the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR).

Meet the ECS team

ECS Team—U.S.

Joseph Santosuosso—Joseph Santosuosso is a Director in PwC’s Export Control Services practice in San Jose, CA. Mr. Santosuosso has extensive experience working with U.S. export regulations, including licensing through the Department of Commerce and the Department of State, OFAC-related matters, deemed exports, Special Comprehensive License management, Anti-Boycott regulations, technology transfer issues, and other Supply

Chain/Logistics matters. He has created export management programs, including policies and procedures, for various industry groups including High Tech, Aerospace & Defense, and Industrial Products. Mr. Santosuosso has also conducted compliance assessments and due diligence reviews for mergers and acquisitions for several multinational companies. Additionally, he has worked closely with IT service providers for solutions as a complement to export control programs. Prior to joining PwC, he was Trade Counsel for a logistics/trade management company in Boston where he focused on the creation of import and export management systems and compliance assessments for a wide arrange of industries. He also participated as an instructor for a trade certificate program at Bryant University in Smithfield, RI, and wrote for the Journal of Commerce. Mr. Santosuosso is a member of the Massachusetts and New York Bars.

Stephanie Reuer—Stephanie Reuer is a Director in PwC’s Export Control Services practice in Washington, DC. Ms. Reuer brings to the practice over twenty years' direct, "in-the-trenches" industry experience leading international trade compliance programs charged with implementing the requirements of the ITAR and the EAR. She advises clients on a wide variety of compliance and licensing issues impacting the aerospace and high technology sectors. Her areas of expertise include the establishment and deployment of effective international trade compliance programs and organizations, conducting compliance assessments and investigations, conducting due diligence for mergers and acquisitions and assisting companies with enforcement and disclosure matters. She also assists clients in the creation of licensing strategies to facilitate both the compliance and schedule requirements for critical business opportunities. Prior to joining PwC, Ms. Reuer led the

Corporate International Trade Compliance Office for a leading Janes 100 A&D manufacturer. She has also managed export compliance efforts at a Fortune 50 aerospace/diversified industries corporation and a major U.S. satellite services provider. Ms. Reuer is also a nationally sought-after speaker/trainer on ITAR compliance topics.

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Frank T. Bray—Frank Bray is a Director in PwC’s Export Control Services practice in McLean, VA. Mr. Bray has over twenty-five years experience as a consultant to industry and within the U.S. Government (Defense Threat Reduction Agency (DTRA), Defense Technology Security Administration (DTSA), etc.) in the field of technology security policy, export controls and compliance. He joined the Firm in September 2008 from BearingPoint where he was a Senior Business Advisor and member of the company's Defense Advisory Board. Mr. Bray has a strong background in global trade

management with special emphasis on technology security policy impacting the aerospace industry, dual use and munitions export controls, international export control regimes, foreign military sales, de-militarization, regulatory compliance and industrial base issues, including the national security implications of foreign investment in the United States. Prior to joining the Firm, Mr. Bray served as a Special Compliance Officer for a large Aerospace & Defense company under a consent agreement issued by the Directorate of Defense Trade Controls (DDTC).

Philip Charnas—Philip Charnas is a Director in PwC’s Export Control Services practice in Washington, D.C., where he assists companies with issues related to export control and licensing requirements. His technical background includes customs and international trade consulting, including export control related regulations and issues. He has experience with performing commodity jurisdiction determinations, export classifications, and licensing activities in accordance with requirements sent forth in the EAR and the ITAR. Mr. Charnas has assisted clients in developing Export Management Systems in both corporate and university settings and has significant experience working with deemed export issues, OFAC regulations, and other logistics issues. He also specializes in international trade disputes, including anti-dumping and countervailing duty cases, safeguard investigations, customs valuation disputes and injury investigations under various international trade agreements. Mr. Charnas is part of a team retained by the European Commission to provide anti-dumping and countervailing duty training to its analysts.

Annie Wu—Annie Wu is a Manager in PwC’s Export Control Services practice in San Jose, CA. Ms. Wu assists clients by conducting export control

assessments on matters regulated under the EAR and the ITAR. She has been actively involved in conducting consent agreement assessments for clients in the Aerospace & Defense industry, and has extensive experience in providing daily operational support for clients in the semiconductor, high technology and industrial manufacturing industries. Her responsibilities have included drafting Export Compliance Manuals and other Export Management System desktop procedures, making commodity jurisdiction and export classification determinations, preparing export license applications, reviewing licensable transactions, and managing IT projects designed to address and improve export control compliance. She utilizes her technical knowledge of ERP systems such as SAP, TradeSphere and Oracle to provide experienced export control support. Prior to joining PwC in 2003, Ms. Wu completed a two year clerkship at the U.S. Court of International Trade (USCIT) in New York. Ms. Wu received her law degree from Washington University, where she was

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the Articles Editor of the Washington University Law Quarterly. Ms. Wu received her undergraduate degree in English from Stanford University.

Kira Hallemeier—Kira Hallemeier is a Senior Associate in PwC’s Export Control Services practice in San Francisco, CA. Ms. Hallemeier has worked extensively with export control issues addressed in the EAR and the ITAR. She has experience in conducting corporate EAR/ITAR transactional assessments and assisting clients with export control process assessments and improvements. Her work includes encryption assessments and

classification, export management restructuring, deemed export reviews, license determinations, and export screening and classification. Ms. Hallemeier also has experience in validating ITAR license and agreement provisos and limitations, and she has assisted clients with technology transfer processes and technology control plans as related to merger & acquisitions and offshoring activity. Prior to joining PwC, Ms. Hallemeier worked with a Fortune 500 software company in administering export compliance. Ms. Hallemeier earned her Masters degree in International Trade Policy at the Monterey Institute of International Studies and her BA at the University of California, Berkeley.

ECS Lead Partner

Glenn Brady—Glenn Brady is a partner at PwC. In addition to his 7 years in industry serving in an operations controllership capacity for two separate multi-national businesses, he also has over 17 years of professional services experience serving clients across multiple industry sectors. Mr. Brady is a key partner in our aerospace and defense (A&D) advisory practice focusing on governance, compliance, enterprise risk management, internal control framework design and testing, and performance improvement, including A&D program management effectiveness and supply chain risk management. Mr. Brady’s clients include Alliant TechSystems, Inc., The Boeing Company, Bombardier, Goodrich Corporation, Northrop Grumman, Rockwell Collins, Sikorsky Aircraft Company, and Vought Aircraft Industry, Inc. He was a contributing author of the COSO Enterprise Risk Management framework (Committee of Sponsoring Organizations of the Treadway Commission (COSO)), and is a frequent speaker on A&D industry matters. Mr. Brady is a Certified Public Accountant and resides in St. Louis, Missouri.

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ECS Offshore Partners—EU

Anna Blake—Anna Blake is a Senior Manager with PwC’s Worldtrade Management Services practice in Dublin, Ireland. Ms. Blake leads our EU export controls practice, working closely with our clients’ EU-based

subsidiaries for purposes of U.S., EU and national export control compliance. Ms. Blake also services as our lead liaison to the U.K. and other EU national export control authorities. She also works closely with our forensics team in the U.S. for purposes of compliance with deemed export, offshore technology transfer, and ITAR-related issues. Ms. Blake is our lead EU export control trainer, designing, implementing and providing on-site export control training modules to our European clients. She also advises clients on their exports relating to their operational management systems, international controls, license requirements, and assessments.

ECS Offshore Partners—Asia

John Robinson—John Robinson is the Managing Partner in Asia of PwC’s Worldtrade Management Services practice. Based in Shanghai, Mr. Robinson is also the leader of PwC’s WMS practice in Greater China. John joined PwC’s China firm from Europe (PwC U.K.) where he had been a partner since 1988. He was formerly head of the U.K.’s WMS practice and "theatre” leader of the regional WMS network in Europe, Middle East and Africa. He is a leading expert on Customs Valuation and its implication for transfer pricing and also has extensive knowledge and experience in dealing with tariff classification and export/import procedures in general. Throughout his time with PwC, he has been heavily involved in advising companies on the export and Customs dimension of globalization strategies and on internal risk management controls and procedures associated with cross-border trade. He has personally led and managed the successful execution of a large number of risk and compliance reviews/assessments for major multinational companies. Before joining PwC, John served in the U.K.’s Customs Service for a total of 13 years. In his time with Customs, he worked in Customs’ HQ (Valuation Division) as an Executive Officer in a general Customs and Excise Station. He was the Senior Officer in charge of a regional Customs Task Force, as well as the Senior Executive Officer responsible for “large trader” Control and Systems auditing.

Munehiko Nagai—Munehiko Nagai is a Director of PwC’s Worldtrade

Management Services practice in Tokyo, Japan. He has extensive experience in all aspects of import and export activities. Since joining PwC, he has

assisted numerous clients to secure breakthroughs in what have been viewed as insurmountable issues with Japan Customs. Prior to joining PwC, he spent more than 20 years with Japan Customs during which he has held both operational and senior executive positions. He represented Japan Customs in numerous international forums in Europe, the U.S, and Asia, presenting Japan specific and international customs and trade issues.

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Graham Turner—Graham Turner is a Senior Manager with PwC’s Worldtrade Management Services practice in Singapore. Mr. Turner has been responsible for the development of PwC’s IT enabled Export Controls Module which addresses the requirements of Singapore’s own Strategic Goods Control legislation, and he has been heavily involved in performing export compliance, customs compliance, and “opportunity reviews” for major multinational

companies. He also has extensive experience advising clients within the region on all aspects of customs implications arising from the cross-border movement of goods. Prior to joining PricewaterhouseCoopers, Mr. Turner was a member of KPMG’s European Customs Practice and was a U.K. Customs officer for three years, specializing in the control of large multinational companies and in the valuation of imported goods.

Additional ECS Partners

David Burg—David Burg is a Principal in PricewaterhouseCoopers’ Advisory Services Technology Practice, specializing in Forensic Technology Solutions and Investigations. Mr. Burg leads our forensic accounting and computer investigations, providing analysis on technology access and IT platforms, and screening corporate email environments. He helps design and implement IT solutions for restricting access to controlled and classified technology and data, and advises companies on developing user-friendly access controls as part of an EAR and ITAR-driven export control infrastructure.

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Export Control Services