ZeptoMetrix Corporation

Export Compliance Program Design and Implementation

 Business Review and Capability Assessments (Internal vs. External)  Mandated Requirements for Exporting Companies  Manual Design and Integration with Current Quality System, (ISO 13485 / QSR cGMP)  Define Employee Roles and Responsibilities  Employee Training and Review  Monitoring and Continual Improvement

ZeptoMetrix Corporation Business Review

 ZMC is a fully integrated biotechnology company that services diagnostic and pharmaceutical companies worldwide  Company manufactures raw materials and diagnostic kit components used by scientists to develop testing kits and also products to maintain their quality control  Company ships biological materials, inactivated organisms, test kits and other related diagnostic products

United States Export Compliance Requirements

 Appropriate Export Commodity Jurisdiction  Dept . of Commerce (BIS) v. Dept. of Defense (DTC)  Overlapping and intersecting export controls  Primary: Export Administrative Regulations (EAR), Dept. of Treasury (OFAC); Foreign Trade Regulations (FTR), Dept. of Defense through ITAR  Know your product/service---see where it fits in the export regulatory scheme 

There is no substitute for reading and cross-referencing those regulations applicable to your product and industry to understand your export responsibilities

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Manual Design

 Design Manual with focus on integration into Current Quality System  Manual should be written for hands on use, not as a show piece for auditors  Operations & Legal were the key drivers of the compliance development process.

 Staff from various affected departments were consulted as needed  Delegate revision responsibilities; maintained one working draft  Research and determine which US regulations are appropriate to your business  Identify key positions within the company that will play a role in Export Compliance (organizational chart)  Develop process maps to include Export Compliance into current company activities

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Export Compliance Manual Sections

Export Management System Summary  Policy Statement; Scope of EAR 2.

Administrative Elements  Responsibilities; Record Keeping; Training 3.

Order Processing System   Flowcharts for New Customer Set-up, Order Process, & Export Compliance Officer Decision Tree Narrative indicates where to screen, “hold” an order, and instructions for resolving a “hold” 4.

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Export Licensing Requirements  Product Commodity Classification Process Export Licensing Requirements  Restricted End-Uses and End-Users Export Clearance Appendices 1 – 19

ZMC Export Compliance Requirements

 Dept of Commerce: BIS, subject to EAR (15 CFR 730 et seq)  ZMC products are intended for commercial use, some capable of military application: “Dual-Use”  “General Prohibitions” of EAR are applied to all ZMC Product Orders:     Restricted End-Users, End-Uses, Embargoed Countries Red Flags and Anti-boycott Provisions Identify those ZMC Products on the CCL that require export licenses Special attention paid to those regulations dealing with Chemical and Biological Weapons

Organization Chart

Order Process Flowchart

New Customer Set-up Flowchart

Employee Roles and Responsibilities

 Operations  Lead Export Compliance planning and design meetings  Process map new export requirements into current operations and optimize current system where appropriate  Legal  Conduct research and generate draft Export Compliance Manual applicable to ZMC business focus  Work with Operations to streamline processes : minimize workflow interruption while staying export compliant  Assists in implementing and updating export compliance program

Employee Roles and Responsibilities

 Regulatory/Quality Assurance  Design new /modify existing standard operating procedures to integrate export compliance requirements  Implementation and training of new procedures  Monitoring and continual improvement  Act as on-site Export Compliance Officer  Scientists  Assess new ZMC Products against Commerce Control List (CCL) for ECCN  Update MRP /database system with code for each new product with ECCN; inform Export Compliance Officer  Prepare technical description of ZMC Products with ECCN for BIS license application

Employee Roles and Responsibilities

 Sales  New Customer Approval and set-up in billing system  Screen initial ZMC product inquires for “Red Flags” and Anti-boycott compliance  Process Orders: screen for restricted users/uses and whether product requires BIS export license due to ECCN designation  Marketing  Update of company literature and website with Export Disclaimers

Employee Roles and Responsibilities

 Distributors  Define processes for ZMC products with ECCN  Letter of commitment for following US Export Regulations  Shipping / Receiving  Screen each order against restricted uses/users, Red Flags and embargo lists –e.g. “Shipping Solutions” software  Apply for BIS licenses when required  Appropriate labeling and packaging  Maintain shipping records in accordance with applicable government regulations

Employee Training and Review

 Identify Departments that require training (org chart)  Set up initial training sessions  Document compliance with written tests and keep on file with other employee training records  Troubleshoot system with various go, no-go situations  Monitor for continual improvement

Monitoring and Continual Improvement

 Conduct annual training meeting for updates to export compliance  Export Compliance Officer and Legal are enrolled with BIS for regulatory updates via email  Annual Audits by Export Compliance Officer  New Customer Records, Outbound Shipment Records, Employee Training Records  Review/amend where necessary standard operating procedures that include export compliance components

Challenges

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Complexity of Export Compliance: Resources

 (1) BIS website: “Compliance Guideline: How to Develop an Effective Management and Compliance Program and Manual” http://www.bis.doc.gov/complianceandenforcement/emcp_ guidelines.pdf

; see training modules, seminars, contacts  (2) EAR and related export regulations on-line  (3) Professional Organizations: e.g. Tradewin, Association of Corporate Counsel, Law Libraries: white papers, forms, seminars, consulting  (4) Massachusetts Export Center: consult and assistance

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Challenges

Streamlining Export Compliance  Understand export requirements well enough so that you can integrate compliance measures without strangling business efforts  Examples:  (1) Sell ZMC Products with ECCN directly, not through distributors— limit liability and processing time for license  (2) Only code/document those Products with ECCN—not all ZMC Products  (3) Export Screening Software; expedite Export Compliance Officer review of positive screenings  (4) Company policy: do not bother with applying for license where have verified positive screening for a restricted end-user, end-use, embargoed country  (5)Standardize forms: e.g. Product Commodity Classification, Customer Profile, Distributor Letters  New Export Compliance Regime Anticipated

ZeptoMetrix Corporation

Contact Information

878 Main Street Buffalo, NY 14202 (800) 274-5487 (716) 882-0920 (716) 882-0959 (FAX) Elise S. Nulton [email protected]

25 Kenwood Circle Suite 6 Franklin, MA 02038 (866) 520-0588 (508) 553-5800 (508) 520-1525 John Paul [email protected]

www.zeptometrix.com