Alliance One Guide Line

Introduction

Statement of Integrity

Alliance One International, Inc. was created to meet the challenges of a 21st Century business environment and we are committed to meeting those challenges successfully on all fronts.  Foremost among them is our commitment to conduct our business with complete integrity.

 Our worldwide reputation for honest and reliable business conduct, built by so many people over so many years, will be tested and proven in each business transaction we make.  We are more global, dynamic and customer-driven than ever before.  But our quest for competitive excellence and customer satisfaction begins and ends with our commitment to lawful and ethical conduct and as a global company we must create and follow a set of global rules. 

Our Code of Business Conduct (“CBC”) is our guide to ethical and lawful conduct.  It clearly defines the Company's expectations for legal and ethical behavior on the part of every employee – an obligation that is, in fact, a condition of employment.  AOI directors, officers, employees and agents are expected to conduct the Company's business according to the highest standards of professional ethics, financial integrity and legality.

All of us have many demands on our time, but the information contained in the CBC will only be effective if you take the time and make the effort to read the materials and apply these standards of conduct in your business activities.  If any aspect of the CBC is unclear to you or if you have questions about a situation you are facing, your concerns can be discussed directly with your supervisor, human resource representative, or the Corporate Compliance Officer. You may also call Alliance One’s toll-free Guide Line from each of our locations worldwide.
 
 Any notion that compliance training and ethical business behavior do not contribute to our ‘bottom line’ success is wrong.  If AOI, through the performance of its directors, officers, employees and agents around the globe, were to fail to achieve or exceed the standards of conduct outlined in this guide, that failure could jeopardize the Company financially, harm individuals and destroy one of AOI's most valuable assets -- its reputation.  Maintaining this most valuable of corporate assets is a matter of the greatest importance to our continued success and a responsibility we all share.

Our future will undoubtedly bring an even more competitive environment and we must be ready to meet its challenges; but we must be prepared to do so without diminishing the standards of ethical conduct that are the cornerstone for the way we conduct our business.

Sincerely,                                                                               

Chairman, Chief Executive Officer and President                                                    

About Our Policy

At Alliance One International (AOI) one of our core values is our commitment to integrity.  How we do business and how we treat others will define the Company to the rest of the world.  It is important to our shareholders, to our customers and suppliers, to all our employees worldwide and to the communities where we live and work that AOI be known for the integrity of its people and its high standards of business conduct.

Ethical behavior may mean more than complying with the law -- but it starts with the law.  You have an affirmative obligation to acquire sufficient knowledge of the laws relating to your location and your particular responsibilities and duties in order to recognize conduct or situations that raise legal or ethical questions and when to seek legal advice.  It is management’s obligation to ensure and facilitate adherence to our high standard of ethical conduct by clearly articulating the requirements of the Code of Business Conduct (“CBC”) and by supporting its fair application to all personnel.

The purpose of the CBC is to summarize the policy of the Company generally and provide guidance for proper conduct in areas of particular concern.  It explains the Company’s basic expectations concerning your professional and personal behavior. The CBC does not describe every specific conduct that is unacceptable or illegal.  Because a particular course of conduct is not discussed this does not mean the act is acceptable and/or lawful.  The Company expects every director, officer, employee, and agent around the world to make a good faith effort to understand and comply with both the letter and the spirit of AOI policies and applicable laws.

It would be impossible to address every situation that you may encounter.  Ultimately, we must support each other in our commitment to doing business the right way and when we are uncertain about the correct course of action we should seek the advice of colleagues and counsel.  In some cases a situation may be so complex that additional guidance is needed.  The Board of Directors has appointed a Corporate Compliance Officer (“CCO”) to provide assistance.  If a situation arises that is not addressed in the CBC, it is each person’s responsibility to immediately contact his/her supervisor, the Alliance One Guide Line (see “Guide Line” in this manual) or the CCO.

Please keep the CBC in a convenient place so you can refer to it in the future.  Additional copies may be easily accessed from AOI’s website (www.aointl.com) or the AOI Intranet.

Which Law Applies
AOI conducts business in many countries around the world and our employees are citizens of many different countries.  Further, the Company’s primary business involves the movement of products in international trade.  As a result, our operations are subject to the laws of many countries, provinces, states and municipalities. 

Because AOI is incorporated in the United States, the laws of the United States often extend to our operations throughout the world as well as to the business activities of employees wherever they live or work.  Similarly, other countries may also apply their own laws outside of their borders to their own citizens and to corporations that are organized under their laws, such as AOI subsidiaries.

Obviously, the laws of different countries can vary widely, and in some instances a conflict may exist between the applicable laws of two or more countries.  When you encounter such a conflict, it is especially important to consult company legal counsel to understand how to resolve that conflict properly.

Alliance One International and You

After reading the CBC, you may have questions or encounter situations which you think are not adequately covered.  To make inquiries or seek explanations relating to applicable laws or concerns about business practices, you may elect to communicate with your immediate supervisor or directly with the CCO.  Any employee, officer, director, or agent is authorized and encouraged to communicate directly with the CCO without any necessity for intermediate inquiries to or permission from supervisory management.

                                                Henry C. Babb
                                                Corporate Compliance Officer
                                                Alliance One International, Inc.
                                                P. O. Box 2009
                                                Morrisville, NC 27560
                                                Telephone:  919-379-4312
                                                Email: hbabb@aointl.com

The Company wants you to know that as long as you are acting in good faith, you may raise any question or voice any concern about any legal or ethical issue without fear that you will be discredited or that you will jeopardize your job.  "Good faith" does not mean that you need to be right -- but it does mean that you should be telling the truth as you know it.  If you feel you are being encouraged or pressured to violate the law, or observe anything you think may be a violation, you should bring it promptly to the Company's attention.  It is a violation of the CBC for any director, officer, employee, or agent to retaliate against or take other adverse actions against those who report a violation of the CBC in good faith.  Directors, officers, employees, or agents who retaliate against others for reporting a problem will be subject to disciplinary action up to and including dismissal.

Guide Line

The Company has established the Alliance One Guide Line, a simple way for you, 24 hours a day, seven days a week, to ask questions, raise concerns or clarify issues covered in the Alliance One Code of Business Conduct, including questionable accounting, internal accounting controls, and auditing matters. 

You are encouraged to bring compliance issues to the attention of the Company and you may do so without providing your name.  There are no records or any devices that can identify or trace the number from which you are calling.  When you call the Guide Line, you will be connected with Global Compliance Services in Charlotte, NC, where one of its Communications Specialist will handle your call.

The Communications Specialist will greet you and ask how he or she can be of service.  After you identify the reason for your call, information will be gathered by the Communications Specialist to fully understand the purpose of the call.  You will be given a case number and an agreed-upon call back date.

A report will be prepared by Global Compliance Services and forwarded to the Alliance One Compliance Manager (a company employee).  The Compliance Manager will review the concern, contact you, if necessary, and initiate an appropriate investigation.  In cases where you have chosen anonymity, Global Compliance Services will be notified of the results of the investigation in order to respond to you by the agreed-upon follow-up date. 

You are encouraged to use the Guide Line in voicing your concerns and questions. Alliance One cannot achieve the high standards of business conduct addressed in the Code of Business Conduct without your support and assistance. 

The Guide Line phone number in the United States is 1-800-4670.  Dialing instructions for employees calling from outside the United States are posted on all bulletin boards in all Alliance One offices and factories and are available from local compliance managers or human resources representatives. 

Policies

Working for our Company

Personal Privacy
It is the Company’s policy to vigorously protect the privacy of its employees.  In that regard:

1. You are required to comply with all applicable privacy and data protection laws, regulations, and treaties.  For instance, in the United States privacy laws particularly address the protection of individual medical, financial, and consumer information, and information about children.  The European Union Privacy Directive contains strong protection for medical and health information, information revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, trade union membership, or information concerning the sex life of an individual.

2. Because the laws relating to privacy protection are detailed and complex, you must consult with Company counsel before establishing or revising any database or other system through which the Company collects, uses, or discloses to any person individual information or information about an individual’s finances, health or medical condition, racial or ethnic origin, political opinions, religious or philosophical beliefs, trade union membership, or sex life, or any other sensitive individual information.

3. As a general rule, to the extent the Company does have access to any individual information, it is Company policy to use that information only for limited, authorized purposes, and not to disclose that information except in accordance with law after consultation with Company counsel.
   
   
4. You must consult with Company counsel before developing any privacy policy, whether for use in connection with the Internet or otherwise, and maintain adequate procedures to comply with any policy adopted.

Conflicts of Interest
A conflict of interest occurs when an individual’s private interest interferes in any way – or even appears to interfere – with the interests of the Company as a whole.  A conflict situation can arise when a director, officer, employee, or agent takes actions or has interests that may make it difficult to perform his or her job objectively and effectively.  Conflicts of interest also arise when a director, officer, employee, agent or a member of his or her family, receives improper personal benefits as a result of his or her position with the Company.  The following topics relate to specific instances that you may encounter.

Securities Trading

1. Directors, officers, employees and agents who have access to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose except the conduct of AOI business.  All non-public information about the Company should be considered confidential information.

2. The laws of many countries, particularly the United States, prohibit you from buying or selling Company stock or other securities for personal profit using material information not available to the public --- but known to you because of your work at AOI.  Such ‘inside’ information could include knowledge about:

3. unreleased financial results, earnings, possible dividend increases/decreases, stock splits, stock dividends, or other financial information;

4. anticipated public or private offerings of securities;

5. changes or potential changes in management or control of AOI or any other company;
   
   
6. significant litigation, actual or threatened disputes, or government investigations;
   
   
7. proposed acquisitions and divestitures.
   

You should not trade in Company stock or other securities on the basis of such ‘inside information.  These prohibitions include transactions in the 401(k) Plan, such as elections to redirect future contributions or realign existing account balances that result in a sale or purchase (intentional or otherwise) of AOI stock.  Additionally, exercising a stock option is prohibited if it is based on non-public material information

If the ‘inside information’ involves another company (in a merger situation, for example), you may not trade in that company stock either.  The same rules against using ‘inside information’ apply when you give that information to someone else, such as a friend or relative, so that they can profit from it, even though you derive no profit yourself.  Anyone who violates these laws could be subject to refund of profits, additional large monetary penalties, and, in serious cases, even imprisonment.

Information will be considered ‘public’ on the third business day after such information is publicly announced by the appropriate Company officer.  AOI, its directors, officers, employees, and agents are all subject to criminal and civil liability for violating securities law.  Officers, employees, and agents who violate this policy are subject to disciplinary action, up to and including termination of employment.  Likewise, a director’s resignation may be sought.

Corporate Opportunities

Directors, officers, employees, and agents are prohibited from taking for themselves personally opportunities that are discovered through the use of corporate property, information or position without the consent of the Board of Directors.  No director, officer, employee, or agent may use corporate property, information, or position for improper personal gain, nor compete with the company directly or indirectly.  Directors, officers, employees, and agents owe a duty to the corporation to advance its legitimate interests when the opportunity to do so arises.

Acceptance / Providing Gifts to Customers and Suppliers
AOI does not want business obtained through the improper use of business courtesies.  You should be sensitive to this issue.  As a director, officer, employee, or agent, you should carry out your duties and responsibilities in a manner that is in the best interest of the Company.  That means you must not let any personal interests conflict with your ability to represent the Company's best interests.  Use your best judgment as to what courtesies are appropriate, but keep in mind the following principles.

You may give or accept gifts of small value as tokens of respect or friendship.  However, CASH IS NEVER APPROPRIATE.  Other non-acceptable items include:

• any loans, except contractual loans from financial institutions in the normal course of business;
  
  
• meals, beverages, entertainment, travel or lodging, or payment for such items, except where the provider is present, and the item is directly related to a business activity.

Not only must you be careful in accepting personal gifts; you must also be careful about providing personal gifts or benefits to those with whom you do business.

The Company expects you to cultivate strong customer relationships.  These require personal attention and service.  You should not entertain lavishly or give expensive gifts to suppliers, customers, or others with whom you do business, and they should not expect such treatment from you.  Gifts, favors and entertainment may be given if:

• consistent with accepted business practice;
• not expensive and could not be construed as a bribe or pay-off; and
• consistent with applicable legal and ethical standards.

Improper Payments to Government Officials
Dealing with government officials is not the same as dealing with private parties.  This is true whether the government is supplying information or services or is acting as a regulator.

It is inappropriate and usually illegal to give, offer or promise anything of value to a government official with the expectation, hope or intent that the official will use power or influence to give the Company an improper advantage.  Likewise, any business courtesies or entertainment which might be appropriate when you are dealing with private parties, such as paying for a meal, may be inappropriate when you are dealing with government officials.  Gifts and courtesies not appropriate for private parties are not appropriate for government officials either.  The following rules apply:

• You may not offer or provide a payment or anything else of value to a government official with the expectation, hope, or intent that the official will use power or influence to give the Company an improper advantage.
  
  
• You may not circumvent the rule against improper payments to government officials by using a third party to provide the payment or thing of value.
  
  
• Some limited payments or gifts to government officials may be necessary and appropriate. It is difficult to determine where to draw the line between appropriate and inappropriate payments or gifts, so you must consult with Company counsel and act only under procedures explicitly approved before acting.

See the section titled “Foreign Corrupt Practices Act (FCPA)” for more details.

Political Activity and Contributions
U.S. law prohibits Company funds or assets from being used in connection with federal elections. AOI's Chief Executive Officer is the only person authorized by the Board of Directors to use Company funds or assets in support of a candidate for public office in a local or state election in those states that permit corporate support. 

Political contributions by the Company to candidates for office outside of the United States are discouraged, even where legal or customary.

If you believe it is legal, customary, and appropriate for the Company to make a contribution or gift, or to provide anything else of value to a political party, political party official, or political candidate, you should submit your request for review by a senior officer and counsel for the Company.  The payment will be approved only if the payment has no association with any governmental or official action and is legal under all applicable laws.

Acting as an individual, you may participate in partisan political activities.  However, you must scrupulously avoid even the appearance of lending the prestige of the company in support of a particular candidate or issue.  Under no circumstances may you use Company letterhead for a political campaign without prior approval of the Chief Executive Officer. 

Acting as a representative of the Company, you may only participate in partisan political activities as specifically directed by the Chief Executive Officer. If you are authorized to participate in a political campaign on behalf of the company, you must be careful not to engage in activities which could be considered lobbying.  Lobbying is subject to various federal, state, and local laws and entail reporting requirements.  If you have questions concerning political activities, consult with AOI's CCO.

Outside Business Interests
From time to time you may have the opportunity to engage in business enterprises outside of the Company.  If so, you must abide by some strict guidelines. 

First and foremost, you may not serve as a director, officer, employee, or consultant of a significant competitor of the Company.  Nor may you have a financial interest in a competitor, unless that interest consists of less than 5% of the outstanding securities of a publicly-held corporation.  Also, if you become aware of any situation where a member of your immediate family may benefit, or appear to benefit, from a transaction with the Company, you must inform the CCO promptly.  Additionally, if you are thinking about acquiring an interest in any type of property that the Company might have an interest, you must inform the CCO.

Outside Employment
Outside employment not connected with the Company is permitted so long as it does not interfere or conflict with your duties and responsibilities to the Company. You are encouraged to become involved in charitable, professional, and civic organizations, but only if it does not interfere with your duties to AOI. 

It is a conflict of interest for a director, officer, employee, or agent to work simultaneously for a competitor, customer or supplier.  You are not allowed to work for a competitor as a consultant or board member.  The best policy is to avoid any direct or indirect business connection with our customers, suppliers or competitors, except to conduct business for AOI.

Use of Software
It may be tempting to copy software, but you should know that to do so is not only a violation of Company policy, it is also a violation of copyright laws and may place the Company in violation of its obligation to software publishers.  This policy applies to everyone regardless of country, location and/or local customs.

Confidentiality
Each of us has the responsibility to make sure that Company assets, including confidential information, are only used for Company business.  You should not use AOI facilities, materials, equipment, or employee services for any purpose not related to the business of the Company without proper approval. 

"Assets" include more than physical equipment and structures. Most of the information that you develop as part of your job is ‘proprietary’ --- that is, a valuable Company asset.  Such information could include sensitive strategic, financial, employment, and business plans, documents, or databases.  Any information concerning our customers, particularly any information covered by a confidentiality/non-disclosure agreement, is also considered ‘proprietary’ and should be regarded as confidential.  Please keep in mind that much of our confidential information is stored electronically.  You should protect electronic data just as carefully as you would protect any paper document. 

You should be careful not to share Company proprietary information with others, including fellow employees, unless they need to know it for a legitimate business reason.  Unauthorized disclosure could destroy its value, and give unfair advantage to others outside the Company.  Also remember that unintentional disclosure (for example, through indiscreet conversations over cellular telephones or in public places such as planes, elevators, restrooms or restaurants) can be just as damaging to AOI.

When you leave the Company, you must not take any confidential information from AOI and reveal it to a competitor, new employer, or any other outside person or organization.

Accuracy of Financial Reporting 
Each of us records or prepares information of some description in the course of carrying out our job responsibilities.  Some common examples are financial disclosures, accounting records, business plans, regulatory submissions and expense reports.  Many people, inside and outside the Company, rely on this information as truthful and accurate.  It is your responsibility to adhere to the Company policies and procedures and provide only information which is truthful, accurate, complete, objective, relevant, timely and understandable. 

AOI has implemented accounting procedures including internal accounting controls to protect Company assets and ensure the accuracy and reliability of both financial and non-financial information.  The following rules apply to everyone:

• No secret unrecorded funds or assets may be maintained for any reason.
  
• Do not fail to properly record and disclose any fund or asset of the Company.
• Do not record any false or artificial entry on any book or record of the Company.
• Do not take any action to improperly influence, coerce, manipulate, or mislead any independent public or certified accountant engaged in an audit of the Company’s financial statements.
• Do not make any payment on behalf of the Company with the understanding that the funds will or may be used for something other than the stated purpose
• Report (on an anonymous or confidential basis if you prefer) to the CCO or the Audit Committee any concerns you may have regarding accounting or auditing matters.

To assure the credibility of the information, it is subject to review by both inside and outside auditors, including government officials.  You must not deviate from the Company's procedures and approved practices for collecting and reporting accurate information.  Nor should you allow a supervisor or fellow employee to require you to do so.  Violations of truthful reporting may result in disciplinary action, including dismissal.

Communications to the Public
The Chief Executive Officer, or his designees, are authorized to speak on behalf of AOI and arrange for the release of AOI's financial results.  Any requests for information concerning the Company from analysts, shareholders or the media should be referred to the Director of Investor Relations.  Releasing corporate information through other channels is a violation of Company policy. 

Compensation and Benefits
The Company's payroll practices and benefit plans and policies are designed to comply with all applicable laws and regulations governing hours of work, payment of wages, the receipt of benefits, related record keeping obligations and notice requirements.  These requirements are complex and vary among the jurisdictions in the United States and other countries in which the Company engages in business.  Changes should not be effected in the Company's practices, plans and policies without consultation with AOI's Director of Human Resources.

Non-Discrimination / Equal Opportunity / Non-Harassment
The Company is committed to non-discrimination and equal employment opportunity.  All employees and applicants for employment shall be treated without discrimination or harassment based on race, color, religion, marital status, sexual preference or sexual orientation, national origin, age, veteran status, disability or citizenship in accordance with all applicable laws.  This policy applies to hiring, promotions, transfers, discipline, training, wage and salary administration, and all other aspects of employment. 

Because the United States government considers the Company to be a ‘federal contractor’ for certain purposes the Company will comply fully with Equal Opportunity clauses and Non-segregated Facilities provisions of government contracts.

Mistreatment of, or discrimination against, a fellow employee is not an acceptable way to do business.  We expect the same behavior from all visitors, such as existing and prospective customers and suppliers, to our facilities.

Sexual harassment is prohibited and will not be tolerated.  It includes any form of harassment of a sexual nature, whether physical or verbal, including conditioning promotions, raises, desirable job assignments or other favorable employment action upon sexual favors or submission to sexual advances; unwelcome physical contact; remarks of a sexual nature; and other actions or words that tend to create an intimidating, hostile, or offensive working environment.

Employees will comply fully with all applicable labor and employment statutes governing discrimination in the workplace.  Employees who engage in any form of prohibited discrimination or harassment will be disciplined appropriately.  Employees who believe they have been discriminated against should file a complaint with their human resource representative and should feel free to contact AOI's Director of Human Resources at any time.

Cooperation in the Investigation of Wrongdoing
It is the policy of the Company to cooperate in the investigation by government authorities of any criminal or fraudulent conduct and no director, officer, employee or agent of the Company may intentionally retaliate against any person for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any criminal offense.

Working in our Environment

Drug-Free Workplace
The Company is committed to ensuring that all employees refrain from engaging in unlawful drug activity in the workplace. To attain this goal, the Company has established a Drug Free Awareness Program.

The Company complies with the Drug-Free Workplace Act of 1988 (‘DFWA’), which requires that the Company maintain a drug-free workplace and establish programs to ensure that such requirement is met.  The DFWA specifically prohibits the unlawful manufacture, distribution, dispensation, possession or use of controlled substances in the workplace.  Adherence to the requirements of the DFWA is a condition for the Company to perform work in connection with certain federal government contracts. 

The Company will take appropriate disciplinary action, including dismissal, against any employee who violates this policy.  The Company may, in appropriate circumstances and at the Company's sole discretion, however, require such employee to complete a drug abuse assistance or rehabilitation program. 

Each employee has an affirmative duty to advise either their human resources representative or AOI’s Director of Human Resources within five days of learning of any drug statute criminal conviction --- their own or that of another --- arising out of conduct that occurred in the workplace.  Violation of this affirmative duty may constitute grounds for demotion or dismissal.

Health and Safety
The health and safety of employees is of paramount concern to the Company.  It is the Company's policy to provide a workplace that is in compliance with all applicable national and local laws and regulations enacted to protect the health and safety of its employees. 

Employees who violate these laws jeopardize not only their own health and safety, but also the health and safety of other employees.  For this reason, anyone who fails to comply with these laws will be subject to disciplinary action by the Company.

Environmental Regulations
It is AOI's policy to conduct its operations in accordance with all applicable national and local environmental laws and regulations in order to preserve and protect the environment.  Furthermore, the Company strives to take voluntary initiatives to improve the environmental performance of the Company.  You are expected to fully comply with all applicable laws and should contact the CCO, with any questions or concerns you may have regarding environmental compliance issues.

Working in the Marketplace

AOI conducts business all over the world.  Sometimes actions taken in one country can create legal exposure for the Company under the laws of another country, particularly under U.S. laws.  Anti-competition and trade regulation laws are complex and cannot be fully explained in this guide.  Personnel who are likely to encounter anti-competition and trade regulation issues in the course of discharging their business responsibilities are directed to copies of the Anti-competition and Trade Regulation Compliance Manual.  All personnel should have at least a basic understanding of these issues. 

Anti-Boycott

A boycott occurs when one person, group, or country refuses to do business with certain other people or countries.  U.S. anti-boycott laws prohibit U.S. companies and their global subsidiaries from cooperating with any international boycott, unless it has been approved by the U.S. government (for example, economic sanctions imposed by the UN).  U.S. companies and their worldwide subsidiaries must report to the U.S. Government any requests they receive to engage in a boycott.

Foreign Corrupt Practices Act (FCPA)

A U.S. law, the FCPA, makes it illegal for a U.S. company or any of its worldwide subsidiaries, affiliates, or agents to pay money or make some other form of bribe to any government official in any country in order to obtain or maintain business.  This is true whether the payment is made directly by an employee or through someone not employed by the Company.  The FCPA also makes it illegal to create situations where there is deliberate ignorance of illegal payments.  For example, giving money to a third party or intermediary and instructing them not to tell you where the money will go is a violation of the FCPA.  Any employee who makes, or arranges for, such a payment will be dismissed immediately.

In some countries, government employees request small payments (‘grease payments’) to expedite or facilitate action.  The FCPA allows you to make such payments if the payment is:

• Small (relative to the circumstances of the country at issue);
  
  
• To obtain ‘routine governmental action’ (does not include discretionary decisions to award business) and the Company has otherwise met all requirements for the government action;
  
  
• Consistent with local law, regulation, and practice, and there is no alternative; and
  
  
• For expenditures (for example, lodging or travel) related to either product demonstration/promotion or execution or performance of a contract with the government.

Under the FCPA, the Company must keep accurate financial books and records on all transactions, including permissible grease payments.  It also means that you should never establish any kind of ‘slush fund,’ or any other pool of monies not shown on the Company's books.

Federal Criminal Laws on Fraud
If you intentionally deceive or defraud another person or business in a transaction, you're probably violating the laws of most, if not all, of the jurisdictions in which AOI does business.  For example, misrepresentations regarding tobacco quality, content or value made in offers or invoices to customers, reports to governments or documents for shipping or banking, may give rise to liability for mail or wire fraud, racketeering or other crimes.  Likewise, discussions about such misrepresentations through the use of the telephone, facsimile, electronic mail or postal mail may constitute fraud. 

The United States federal criminal laws on fraud are far-reaching, and individuals are subject to severe fines and imprisonment for violating these laws.  AOI never condones any such conduct and it expects its employees to comply fully with applicable laws. 

Money Laundering
Money laundering occurs when persons try to make the proceeds of crime appear legitimate by filtering them through non-criminal ventures.  Laws in many countries prohibit acceptance or use of the proceeds of criminal activities.

• You must comply with all applicable money laundering laws and laws that require reporting of cash and other suspicious transactions.
  
  
• You must use due diligence to obtain enough information about customers, suppliers, and others with whom you have business relationships to be satisfied that their money comes from legitimate business activities.
  
  
• You must comply with all rules concerning acceptable forms of payment.  It is contrary to Company policy to accept cash payment of any invoice.  It is also against Company policy, except under extraordinary circumstances with the advice of Company counsel, to accept payments in cash equivalents such as money orders or travelers checks, or to accept checks from unknown third parties.  If a cash or similar transaction is unavoidable, you must obtain authorization from an appropriate officer of the Company and take care to comply with the detailed and complex reporting obligations associated with such transactions, including obligations imposed by the United States Internal Revenue Service.
  
  
• You must to the extent possible be sure all customers, suppliers, and others with whom you have a business relationship are willing to comply in full with all record keeping duties and are willing to accurately report all aspects of a transaction.
  
  
  • You must display particular vigilance when a transaction bears one or more hallmarks of a laundered transaction, such as:
    Cash or unusual payments;
  • Early repayment of credit;
  • Orders or purchases or other activities inconsistent with the nature of your customer’s business
  • Unusual payment patterns, unnecessarily complex deal structures or unusually favorable payment terms;
  • Transactions from or to locations known as tax havens or associated with money laundering; and,
  • Requests to transfer money to an unknown party or unrecognized account.

Antitrust and Fair Competition
Throughout the world, AOI's business activities must comply with antitrust and fair competition laws of various countries.  The laws are intended to promote competition.  They prohibit agreements or collective actions among competitors which have the effect of restraining trade or reducing competition.  The following agreements or collective actions are illegal:

• setting or controlling the prices paid to suppliers or charged to customers, among competitors;
  
  
• allocating products, territories, or markets;
  
  
• boycotting certain suppliers or customers; or
  
  
• limiting the production or sale of products.

Most antitrust and fair competition laws also prohibit the use of a dominant market position to drive a competitor out of business, independent of natural market forces.  Antitrust and fair competition laws differ around the world.  If you are concerned that a business activity in which you are requested to participate may involve an antitrust issue, you should consult the Corporate Compliance Officer for guidance.

Trade Sanctions
Occasionally, governments implement trade and/or travel restrictions on imports from or exports to foreign countries.  U.S. laws may limit or prevent global subsidiaries of the Company from engaging in certain transactions that would result in direct or indirect shipments of goods or the facilitation of credit to such embargoed countries.  It is the Company's policy to comply with all laws which are enacted to restrict trade with certain countries.

Shipping Laws / Customs
You must comply with all shipping rules and regulations, such as laws regarding appropriate shipping documentation.  The activities described below require increased vigilance:

• The United States and certain other countries have laws requiring the marking of goods to indicate the country of origin to the ultimate purchaser.  You must be aware of and comply with these and all other laws regarding the proper labeling of products.
  
  
• The Company is entitled to “drawbacks” of import and other duties paid when goods are processed and subsequently exported under conditions specified by law and regulation.  You should ensure that drawback claims do not contain false statements.
  
  
• You must not pay or participate in illegal rebates or kickbacks.
  
  
• You must not prepare or facilitate the preparation of invoices for sales by the Company which do not accurately reflect the price of goods sold.
  
  
• Negative or blacklist certifications in connection with export transactions or letters of credit.
  
  
• Inaccurate or misleading documentation requested by trading partners.
  
  
• Exchanges of value not reflected in invoices and other official documentation.
  
  
• Dealings with new trade partners.

Other Anti-competition Issues
You must consider, with the advice of Company counsel, potential anticompetitive effects of the following:

• Proposed mergers, acquisitions, and other business combinations.
  
  
• Accepting a position, or allowing another employee or officer of the Company to accept a position, on another Company’s board of directors.
  
  
• Providing any selective discounts to certain customers that may be considered discriminatory pricing.
  
  
• Requiring customers to purchase bundled goods and services.
  
  
• Exclusive licensing and other technology agreements that restrict the freedom of the licensee or licensor.
  
  
• Distribution or other cooperative arrangements with competitors.

Conclusion

Our Policy in Brief
As you can see from the volume of information addressed in the Code of Business Conduct, common sense and good intentions alone cannot ensure ethical and legal compliance.  The management of the Company acknowledges and understands this reality. 

AOI counts on you to uphold the Company’s standards.  The following briefly describes how to act responsibly in the work environment:

• Know and live the standards.  By knowing, understanding, and following applicable laws and Company policies, as well as our core values, each of us can serve as a role model.
  
  
• Know the law and ask tough questions.  You are expected to be familiar with the laws that apply to your specific job function and level of responsibility.  If you are not sure whether a law or Company policy applies, or whether it exists at all, ask.
  
  
• Don’t make assumptions.  Do not assume that management already knows or doesn’t care about an issue or situation. Also, do not assume that no action will be taken.  AOI management is dedicated to ensuring that the standards of legal and ethical behavior are upheld.  We want you to tell us if something is wrong.
  
  
• Don’t ignore violations. We all need to take the law and Company policies seriously. If you think someone may be violating a law or policy, please take steps to address the situation. 
  
  
• Don’t be pressured.  You are never expected to violate a law or policy, nor should you ever feel encouraged or pressured to do so – even if the violation will improve the bottom line or help to meet a performance goal.