15 th /16 th March 2006 – St. Louis

1. Emerson First International Trade Compliance Conference 15th/16th March 2006 – St. Louis Trade Compliance Certification and Peer Audits - Europe, Middle East & Africa

2. European Trade Compliance Team Renata Jungo Brüngger - General Counsel Europe Phil Shaw - Europe, Middle East & Africa - compliance John Andrews - Europe, Middle East & Africa – compliance Rob Atkinson - Middle East – Compliance/legal Jeffrey Jackson - Process Management Daniel – Europe, Middle East & Africa, Asia Pacific – Denied Parties

3. The Challenge for Emerson EMA Compliance !!!! • How to ensure Emerson divisions implement required regulatory compliance procedures covering multiple jurisdictions including US, EU and national requirements ? • How to maintain and manage the life cycle of compliance with the limited resources of the EMA compliance team ?

4. Territory

5. Territory Support Support Asia Africa Middle East

6. Trade Compliance - process to Self Certification

7. Trade Compliance - process to Self Certification Start-up report Country/ Division plan Initial notification Start-up meeting Country/Division completes Self Cert checklist Formal Audit Formal Audit report Use ECME20/22 Attain Self Certification Country/Division Implement plan Country/ Division plan

8. Start-up meeting Start - up Meeting • One day meeting • Senior Management attendance • Outline the Emerson compliance requirements • Question and Answer session to understand the divisions business. • Territory and Market Channels • Products – Application • Introduce the laws UN, US, EU, and national • Define Screening processes and tools • Introduce compliance Web site, checklist documents and tools. • Define Templates for completion by the Division and timescales.

9. Trade Compliance - process to Self Certification Start-up report Country/ Division plan Initial notification Start-up meeting Country/Division completes Self Cert checklist Formal Audit Formal Audit report Use ECME20/22 Attain Self Certification Country/Division Implement plan Country/ Division plan

10. Country/ Division plan Country/division plan • Assignment of Country/Division Compliance Manager, Gatekeepers and Compliance Users • Compliance of Geographical locations • Training requirements, and timeline • Identify Procedures for modification or creation. • Product Certification, US,EU and National • Submit time scale plan.

11. Trade Compliance - process to Self Certification Start-up report Country/ Division plan Initial notification Start-up meeting Country/Division completes Self Cert checklist Formal Audit Formal Audit report Use ECME20/22 Attain Self Certification Country/Division Implement plan Country/ Division plan

12. Country/Division completes Self Cert checklist Validation Audit Checklist Contents SECTION 1 - ORGANISATION SECTION 2 - PROCEDURES SECTION 3 – FORMAL RECORD KEEPIING SECTION 4 – TRAINING SECTION 5 – SALES / MANUFACTURING SECTION 6 – MANAGEMENT COMMITMENT

13. Country/Division completes Self Cert checklist Checklist - Question Example Section 1 Organisation Auditors Instru. Score Question No Guideline Are there written procedures to identify all trade compliance related personnel at this location? Y = 10 points N = 0 The document should be available and individuals should be aware. Verify existence and awareness of document. Interview as appropriate 1 10 COMMENTS: Document seen and part of QMS.

14. Country/Division completes Self Cert checklist Checklist - Question Example Section 1 Organisation Auditors Instru. Score Question No Guideline Have all employees who have taken on trade compliance responsibilities received training? Y = 10 points N = 0 The training records should be available and controlled.. Verify existence and accuracy. Interview as appropriate. 3 10 COMMENTS: Document seen and part of HR Records

15. Country/Division completes Self Cert checklist Checklist - Question Example Section 2 Procedures Question Guideline Auditors Instru. No. Score Is there a procedure in place for checking EU Dual-Use and Technology transfer for European designed products? Y = 10 points N = 0 points A procedure should be available. The EU Dual-Use and Technology regulations should also be checked for product restrictions. Verify existence and awareness of the procedure 7 0 COMMENTS: Document not available - action required

16. Country/Division completes Self Cert checklist Checklist - Question Example Section 6 Management Commitment Auditors Instru. Score Question No Guideline Is management commitment demonstrated by providing adequate resources? PJ = max.50 points min. = 0 points Adequate resources must be available to ensure that full trade compliance can be performed and maintained. Check scoring against sections 1-5. Verify management awareness & involvement and that adequate resources are available. . Interview as appropriate 1 40 COMMENTS: Auditing scheduled & records seen. Management review outstanding

17. Checklist - SCORE SUMMARY SCORE: POSSIBLE = ACTUAL =

18. Trade Compliance - process to Self Certification Start-up report Country/ Division plan Initial notification Start-up meeting Visit Country/Division completes Self Cert checklist Formal Audit Formal Audit report Use ECME20/22 Attain Self Certification Country/ Division Action plan Country/Division Implement plan

19. Self Certification • Signed by Senior Manager of Division • Valid for 12 months

20. Self Certification – vital musts • Trade Compliance plan towards Self Certification must have: • Clearly defined lines of responsibility for Trade Compliance • Detailed written procedures, which are being followed every day • Training must be in place for all involved • Required Screening procedures and proof of implementation is mandatory • Traceable and up to date record system • Trade Compliance responsibilities written into job descriptions

21. Common Issues found • Cases where the end user and end use is not known • Screening of all orders and shipments not being carried out • Access to Export Compliance Management Europe(ECME) tools by Divisions outside the Emerson firewall – costly implementation. • World-wide Divisions – sometimes not in alignment with compliance practices i.e. screening practices. • Divisions not willing to implement full compliance until clear Emerson policy is defined.

22. Common issues found • Terms and Conditions - There are numerous occasions where operations/divisions are trading: • Without including Emerson Terms and Conditions • Without referencing Emerson Terms and Conditions • Under Client Terms and Conditions • No Trade Compliance statements on quotations or order acknowledgements • Distributor & Representative/Agent agreements • Few in place • Those in existence, often years out of date • No records of agreement (exception)

23. Auditing Auditing is the ONLY way you can keep legal with respect to Trade Compliance. Senior US Government official

24. After Self Certification - How do we handle the Emerson compliance Monster ? How to maintain and manage the life cycle of compliance with the limited resources of the EMA compliance team

25. Emerson Process Management - Peer Audit Process • Two Process Management employees from one facility, audit another Process Management facility. Example: UK France Rosemount Valves • Peer Auditors(2 off) are selected from European Country Compliance Managers and Gatekeepers • Schedule and Mange the skill sets of individuals who perform the audits! • Peer Auditor’s are supplemented by Trade Compliance team.

26. Emerson Process ManagementTrade Compliance process – Peer Auditing Every two years Senior Audit Flash Audit Attain Self Certification Peer Audit Within one year Use ECME33/34 Audit report Application for re Self Cert Action plan Actions complete Self Cert renewed

27. Emerson Process ManagementTrade Compliance process - Post Self Certification Every two years Senior Audit Flash Audit Attain Self Certification Peer Audit Within one year Use ECME19/20 Use ECME33/34 Audit report Application for re Self Cert Action plan Actions complete Self Cert renewed

28. Re - Auditing - Emerson companies • Auditing process will start 12 months after Self certification ~ during FY07 • The Emerson companies are independent entities, therefore a system of Peer Auditors is not feasible • A consideration under evaluation is that auditing for these companies will be carried out by ‘external consultants’ These are typically semi-retired employees who are experienced in this field. • This audit solution would have a large financial benefit to Emerson as well as using Auditors familiar with the company.

29. Summary - Self Certification - Current situation Process Management Emerson Process Management started working towards Self Certification over 3 years ago. • To date 30 Process Management companies are Self Certified and have been audited each year as well as attended two senior audits • 11 Process Management companies in Europe (some ‘recent’ acquisitions) and 8 in the Middle East, are working towards initial Self Certification. This process should be completed Q3/4FY06 Process Management Emerson Process Management started working towards Self Certification over 3 years ago. • To date 30 Process Management companies are Self Certified and have been audited each year as well as attended two senior audits • 11 Process Management companies in Europe (some ‘recent’ acquisitions) and 8 in the Middle East, are working towards initial Self Certification. This process should be completed Q3/4FY06

30. Self Certification - Current situation Emerson companies The path to Self certification for Emerson companies started approximately 2 years ago, but was a phased introduction. • At present there are 2 companies (EES, Liebert Hiross) which are Self Certified. • 26 Emerson companies in Europe and 8 in the Middle East are working progressively towards initial Self Certification. This process should be completed Q4FY06 • The number of companies continues to increase with acquisitions

31. Summary of Divisions

32. Current status towards Trade Compliance

33. Current status towards Trade Compliance

34. Current status towards Trade Compliance

35. Current status towards Trade Compliance

36. Current status towards Trade Compliance

37. Current status towards Trade Compliance

38. Current status towards Trade Compliance

39. Current status - Trade Compliance

40. EMA Trade Compliance Group objectives • Main objective is to have all Emerson companies in Europe and the Middle East trade compliant (Self Certified) by Q4FY06 • Following self certification, ensure all Companies continue to be trade compliant by a systematic auditing process.

41. So we must manage how we do business!!!! Operations Sales US/UN Export Regulations Local Export Authorities

42. Questions