Databridge Pilot Overview

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Databridge Pilot Overview Presentation for
CTSCA
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ESS Overview

• ESS provides a secure, web-enabled electronic
  document network to replace paper-based trade
  and shipping documents
• Established in 2003 by two shipping executives
  from legal and operations areas
• BVI holding company with two subsidiaries (US and
  UK)
• Offices in Philadelphia London, with plan to
  open Asian office later this year
• 3 full-time employees (will increase to 6 in next
  few months) and 5 part-time
• Industry neutral company
• Raised seed funding from Angel investors - not
  seeking investment from pilot users
• Primary focus on the electronic negotiable bill
  of lading
• Obtained commitment from three oil majors to run
  a pilot and substantial interest from numerous
  other entities including traders, banks, ship
  agents and ship operators

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Problem of Paper Inefficiencies

• ESS approach is driven in large part by failures
  of past solutions
• Past solutions failed because
• Ahead of their time
• Lack of neutrality
• Fundamentally altered existing processes
• Several recent trends assist ESS
• Worldwide adoption of E-Signature Acts
• eUCP
• WCO Kyoto Convention (e-Customs)
• Adoption of best practices by ship operators
  (including acceptance of internet)
• A new solutions must be
• Simple, focused and adoptable product
• Easily and quickly adoptable solution
• Secure and legally valid

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Benefits of an Electronic B/L

• BANKS
• Automate L/C reconciliation
• Increase credit line turnover
• Reduce fraud risks
• Eliminate document management costs

• PARCEL TANKER OPERATORS
• Reduce document management costs
• Reduce freight collectables
• Facilitates B/L splitting and amending
• Reduce fraud risks
• Automate customs submissions

• CHARTERERS/CHEMICAL TRADERS
• Express B/L
• Reduced working capital cost
• Reduce document management costs
• Eliminate courier costs
• Reduce fraud risks

• RECEIVERS
• Option for onward trading
• Reduce document management costs
• Automate customs submission
• Reduce fraud risk

5
ESS Solution Bridge Data Gap Between Parties

• ESS Approach
• Solution tries to maintain the status quo as far
  as possible
• Three pronged solution
• IT
• Legal
• Insurance
• Limited original doc. range
• Web-based, standalone or integrated system
• Trade partners can join in just 4 business hours
• Offers significant savings to all parties in the
  trade chain
• Pay-as-you-go model
• 24/7/365 support

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Specification Overview

• System Overview
• Scalable Service Oriented Architecture built on
  Microsofts .NET framework
• Clustered Oracle and high performance
  post-relational object-oriented databases
• High visibility with Business Process Management
  and Business Activity Monitoring
• Multiple User Interfaces All major browsers and
  native application
• Rapid Integration with ERP systems
• XML/Web Services, EDI, or EAI middleware
• Standardized document data models such as UNeDOCS
  
• Adapters for non-compliant documents
• Federated Identity Management for rapid user
  ramp-up
• L/C Reconciliation Difference engine and natural
  language processing
• Strong User Authentication Two-factor
  authentication and Verisign digital certificates
• Minimum Accepted Encryption 128-bit SSL
  encryption. ISO standards compliant
• Hosting 99.98 minimum uptime. ESS data center
  located in Switzerland and/or Canada
• Audit Trail System automatically logs all data
  accesses and transactions
• Comprehensive Legal Backbone All transactions
  are legally and contractually binding

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Demo Scenario
Cargo - Voyage UK to US East Coast Shipowner
- Jigsaw Tankers Charterer ChemCo Buyer -
TradeChem
Chemical Co.
Parcel Operator
Trader
ChemCo
Jigsaw Tankers
TradeChem
I-User
N-User
N-User
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Demo Login www.essdocs.com Username
ctsca Password tank07
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Insurance Issues

• International Group
• In talks with IG for over 18 months
• Have resubmitted the legal framework to IG in
  order to obtain IG approval
• Under PTE users are covered for incremental
  electronic risks by a 50MM commercial cover (ESS
  is seeking to have this increased to at least
  100MM)
• E0 Insurance
• Applies when users fall within Safe Harbor Clause
• Under the safe harbor clause ESS accepts
  liability for all e-risk up to 100MM per bill of
  lading
• Can move outside safe harbor if have specific IT
  needs, but take on the additional liability
• Cover is placed in the London and NY markets

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Legal Framework

• Holman Fenwick Willan and Freehill, Hogan
  Mahar developed the Databridge Legal Framework
  such that it is enforceable in the US the UK
• Terms Conditions
• Deal with legal issues between ESS and Users
• Binds user to ESS and to each other
• Confirms that ESS-Documents have same effect as
  their paper equivalent
• New York litigation for claims related to
  validity of ESS-Document
• All other claims are adjudicates as per
  jurisdiction clause in contract of carriage
• International Treaties, such as Hague, apply as
  per normal to ESS-Bills
• Operating Policy Procedures
• Deal with day-to-day usage, such as
• Switching to Paper procedure
• Mistaken delivery procedure
• Safe Harbor Clause

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Chemical Pilot Details

• ESS is building a pilot in the chemical segment

• Minimum Participants
• 3 chemical companies
• 2 parcel tanker operators
• Pilot Trade Route
• Transatlantic trade, or other
• Cost/Advantages
• 5,000 fee in lieu of transaction fees
• Effectively custom-built solution through input
  into legal, IT and functional requirements
• Early adopter discount
• Pilot user only discount to upgrade to integrated
  version
• Priority registration of referred trade partners

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Limited Electronic Document Range

• ESS offers limited electronic document range
  during the pilots consisting of all necessary
  original for trade finance purposes

• Original Documentation
• Negotiable bills of lading
• Certificates of Origin
• Certificates of Quality and Quantity
• Cargo Manifests and Advanced Cargo Manifests
• Other original documents will be added based on
  the commercial needs of Databridge users
• Peripheral Documentation
• Users will be able to upload other peripheral
  documentation which can be sent with these
  originals

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Next Steps

• Assuming there is sufficient interest from
  members of the CTSCA, ESS proposes holding a
  one-day workshop focused exclusively on the
  petrochemical segment
• Identify steps necessary to obtain commitment to
  pilot(s)
• Discuss possible pilot routes
• Identify segment specific needs and problems
• Understand concerns beyond PI Club issues
• Location TBD
• Date end June/beginning of July

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3624 Market Street, Suite 300s Philadelphia, PA 19104United States Tel 1 (866) ESS-DOCS Fax [phone] Web www.essdocs.com Email info_at_essdocs.com 18 Mansell StreetLondon, E1 8AAUnited Kingdom Tel [phone]Fax [phone]