MANIFATTURE SIGARO TOSCANO S.p.A.

ORGANIZATION, MANAGEMENT, AND

CONTROL MODEL

LGS. DECREE 231/2001

GENERAL PART Edition No. 1 – 21 October 2009

Edition No. 2 – 24 October 2012

Edition No. 3 – 30 October 2015

Index

Definitions……………………………………………………………………. 2

Introduction ........................................................................................................ 6

1. Legsislative Decree of 08 June 2001, No. 231 ............................................... 7

1.1 Overview ...................................................................................................... 7

1.2 The crimes and administrative offenses relevant for the purposes of the

legislation ……………………………………………………………………..8

1.3 The system of sanctions established by the Decree ................................... 18

1.4 The organization, management and control model as exemption from

liability .............................................................................................................. 19

2. The MST S.p.A organization, management and control model ................... 21

2.1 Structure of the Model ................................................................................ 21

2.2 Aims and objectives pursued by adoption of the Modelo .......................... 21

2.3 Beneficiaries of the Model ......................................................................... 22

2.4 Construction of the Model .......................................................................... 23

2.5 Map of Areas at Risk .................................................................................. 23

2.6 Approval of the model and its modifications and additions ...................... 25

2.7 Relations with SECI ................................................................................... 25

3. The Supervisory Body .................................................................................. 27

3.1 General Principles ...................................................................................... 27

3.2 Requirements of the Supervisory Board .................................................... 27

3.3 Causes of ineligibility, revocation, suspension and forfeiture ................... 28

3.4 Tasks of the Supervisory Board ................................................................. 30

3.5 Reporting Activities of the Supervisory Board .......................................... 31

3.6 Disclosure requirements with regard to the Supervisory Board ................ 32

3.7 Relations with the supervisory bodies of the Sister & Parent Companies.34

4. Dissemination of the Model and training activities ..................................... 35

4.1 General Provisions ..................................................................................... 35

4.2 Initial communication................................................................................. 35

4.3 Training staff, agents, and brokers ............................................................. 35

4.4 Disclosure to “Third-Party Beneficiaries” ................................................. 36

5. Penalty System ............................................................................................. 37

5.1 General Profiles .......................................................................................... 37

5.2 Sanctions against non-executive staff ........................................................ 37

5.3 Sanctions against executives ...................................................................... 39

5.4 Sanctions against Directors and Auditors .................................................. 39

5.5 Sanctions against non-employees ............................................................... 40

Definitions

Sensitive activities: business activities which may potentially result in

opportunities, conditions, or tools for the commission of crimes.

Code of Ethics: The Code of Ethics of the Maccaferri Group.

Collaborators: those who have a relationship with the Company yet operate

without any degree of subordination, commercial representation, and other

forms of affiliation based on professional performance of a non-subordinate

nature, whether ongoing or occasional, as well as those representing the

Company in relation to Third Parties by virtue of specific mandates or powers

of attorney.

Board of Directors (also B.o.D.): the Board of Directors of Manifatture

Sigaro Toscano S.p.A.

Decree or Lgs. Decree 231/2001: Legislative Decree of 08 June 2001, No.

231, on the "Regulation of the administrative liability of legal entities,

companies, and associations, including those without legal status, pursuant to

Art. 11 of the Law of 29 September 2000, No. 300", in accordance with the

content in force from time to time.

Beneficiaries: those to whom the provisions of the Model apply.

Employees: people under the direction or supervision of individuals acting as

representatives, directors, or management of the Company1, ie all individuals

maintaining an employment relationship of any kind with the Company, as

well as workers with quasi-subordinate employment contracts2.

Providers: those providing goods or services to the Company.

Model: this Model of organization, management, and control adopted in

accordance with Articles 6 and 7 of Lgs. Decree 231/2001.

Supervisory Body (also S.B.): Organization equipped with autonomous

powers of initiative and control, with the task of monitoring the adequacy,

1 Art. 5.1, Sections a) and b) of the Legislative Decree of 08 June 2001, No. 231.

2 Labour relations for coordinated and continuous collaboration, as well as project-specific

contracts, are cases excluded from the application of Art. 61, as amended, of Lgs. Decree

276/2003.

operation, and compliance of the Model, as well as ensuring that updates are

made thereto.

Whereas

Manifatture Sigaro Toscano S.p.A. (hereinafter MST, or the Company) is

involved in the production, import, export, and sale of tobacco products, and

in particular focuses on the product category encompassing cigars, cigarettes,

and pipe tobacco.

The Company has two production facilities, one located in Lucca (LU), and

the other in Cava de' Tirreni (SA). The Collection Centre is located in Foiano

della Chiana (AR), while the business and commercial headquarters is found

in Rome.

MST has a 100% shareholding in MST Holdings LLC, which in turn holds

80% of PARODI HOLDINGS LLC, based in Pennsylvania (USA); it also

conducts business with a foreign manufacturer located in Santo Domingo

(Dominican Republic), by virtue of a Processing Agreement for Third Parties.

The Company is a subsidiary of Italiana Tabacchi S.r.l., which is in turn a

subsidiary of Esercizi Commerciali Industriali S.p.A. (hereinafter SECI).

The Company is subject to the direction and coordination of SECI, a Holding

company which owns the shares of the Maccaferri Group.

In its capacity as the parent company, SECI centralizes certain duties in the

service of its subsidiary/associated companies, providing management services

of various types.

MST has a top-down organizational structure of the traditional type, which

consists of the following: Board of Directors, Chief Executive Officer,

General Manager, Statutory Auditors, and Independent Auditors (voluntary

audits).

It also consists of an Internal Committee, acting collectively, which is

responsible for determining the accreditation of new clients and other

activities related to the sale of the Company's products.

1. Legislative Decree of 08 June 2001, No. 231

1.1 Overview

Lgs. Decree of 08 June 2001, No. 231 (hereinafter the "Decree" or Lgs.

Decree) 231/2001) introduced into our legal system the administrative liability

of legal entities, companies, and associations, including those without legal

status (also referred to as "Entities") in the event of the commission or

attempted commission of certain crimes or administrative offences in the

interest or benefit of said Entities by:

o individuals acting as representatives, directors, or management of the

Entity or of one of its Organizational Units equipped with financial and

functional autonomy, as well as by individuals in charge, even if de facto,

of the management or control thereof (so-called "Senior Executives");

o individuals "Subordinate" to the direction or supervision of the persons

referred to above.

The Regulation does not apply to the State, local authorities, other non-

economic public bodies, or entities which preform functions of constitutional

importance.

The Decree was intended to adapt domestic legislation regarding the liability

of legal entities to be more in line with certain international conventions to

which Italy has adhered for a long time3.

Such liability, although defined by the legislator as "administrative," presents

aspects of criminal liability since it has been established as part of the criminal

process, and therefore pertains to the commission of crimes and provides for

the application of sanctions borrowed from the penal system.

The Company's liability, pursuant to the Decree, is in addition to the

(criminal) liability of the perpetrator of the offence, and not a replacement

3 Brussels Convention of 26 July 1995 on the protection of the financial interests of the

European Community, the Convention also signed in Brussels on 26 May 1997 on the fight

against corruption involving officials of the European Communities or the Member States, and

the OECD Convention of 17 December 1997 on combating the bribery of foreign public

officials in international business transactions.

thereof: both the individual as well as the legal entity shall be subject to

criminal proceedings.

1.2 The crimes and administrative offences relevant to the Regulations

Entities shall have administrative liability in the event of the commission (or

attempted commission) of the crimes and offences specified below.

A) CRIMES AGAINST THE PUBLIC ADMINISTRATION AND ITS ASSETS

(Articles 24 and 25 of the Decree)

- Embezzlement against the State or other public body (Art. 316-bis of the

Criminal Code);

- Misappropriation of funds from the State, another public body, or the

European Community (Art. 316-ter of the Criminal Code);

- Fraud against the State or other public body (Art. 640-bis, Paragraph 2,

Section 1, of the Criminal Code);

- Aggravated fraud to obtain public funds (Art. 640-bis, of the Criminal

Code);

- Computer fraud against the State or other public body (Art. 640-ter of the

Criminal Code);

- Corruption in the exercise of ones duties (Art. 318 of the Criminal Code);

- Incitement to corruption or bribery (Art. 322 of the Criminal Code);

- Undue induction to give or promise benefits (Art. 319-quater of the

Criminal Code);

- Extortion (Art. 317 C.P.);

- Bribery for an act contrary to official duties (Art. 319, 319-bis, and 321 of

the Criminal Code);

- Corruption or bribery in judicial proceedings (Art. 319-ter and Art. 321 of

the Criminal Code);

- Bribery of a public servant (Art. 320 of the Criminal Code);

- Embezzlement, extortion, bribery and incitement to bribery of members of

the International Criminal Court or the institutions of the European

Community and officers of the European Community and of foreign states

(Art. 322-bis of the Criminal Code).

B) IT-RELATED CRIMES (Art. 24-bis of the Decree)

- Forgery of a public or private computer document (Art. 491-bis of the

Criminal Code);

- Unauthorized access to a computer or telecommunications system (615-ter

of the Criminal Code);

- Illegal possession and circulation of access codes to computer or telematic

systems (615-quater of the Criminal Code);

- Distribution of equipment, devices, or programs aimed at damaging or

interrupting a computer, or telematic system (615-quinquies of the

Criminal Code);

- Interception, prevention, or interruption of computer or telematic

communications (Art. 617-quater of the Criminal Code);

- Installation of equipment designed to intercept, prevent or interrupt

computer or electronic communications (Art. 617-quinquies of the

Criminal Code);

- Damage to information, data, and programs (Art. 635-bis of the Criminal

Code);

- Damage to information, data and programs used by the State or by another

public body or of public utility (Art. 635-ter of the Criminal Code);

- Damage to computer or telecommunications systems (Art. 635-quater of

the Criminal Code);

- Damage to computer or telecommunications systems of public utility (Art.

635-quinquies of the Criminal Code);

- Computer fraud by the subject providing electronic signature certification

services (Art. 640-quinquies of the Criminal Code).

C) ORGANIZED CRIME (Art. 24-ter of the Decree)

- Criminal association (Art. 416 of the Criminal Code);

- Criminal association aimed at reducing people to slavery or maintaining

them in such circumstances, trafficking in persons, the purchase and sale of

slaves and offences relating to violations of provisions on illegal

immigration in Art. 12 Lgs. Decree 289/1998 (Art. 416, Paragraph 6, of the

Criminal Code);

- Mafia-type criminal association (Art. 416-bis of the Criminal Code);

- Political-mafia electoral exchange (Art. 416-ter of the Criminal Code);

- Kidnapping for the purpose of robbery/extortion (Art. 630 of the Criminal

Code);

- Criminal association for the purposes of trafficking in drugs (Art. 74 of

D.P.R. 309/1990);

- Offences of illegal manufacture, introduction into the State, offering for

sale, transfer, possession and carrying in a public place or place open to the

public of weapons of war or parts thereof, explosives, illegal weapons and

more common firearms (Art. 407, Paragraph 2, Letter a), Section 5 of the

Code of Criminal Procedures).

D) CRIMES OF COUNTERFEITING MONEY, PUBLIC CREDIT CARDS AND

REVENUE STAMPS, AS WELL AS CRIMES RELATING TO DISTINCTIVE SIGNS

(Art. 25-bis of the Decree)

- Forgery of money and the spending and introduction into the State of

counterfeit money with accomplices (Art. 453 of the Criminal Code);

- Alteration of money (Art. 454 of the Criminal Code);

- Spending and introduction into the State of counterfeit money, without

accomplices (Art. 455 of the Criminal Code);

- Spending counterfeit money received in good faith (Art. 457 of the

Criminal Code);

- Forgery of revenue stamps, introduction into the State, purchase,

possession, or circulation of counterfeit revenue stamps (Art. 459 of the

Criminal Code);

- Counterfeiting of watermarked paper used for the manufacture of public

credit cards or revenue stamps (Art. 460 of the Criminal Code);

- Manufacture or possession of watermarks or instruments intended for the

counterfeiting of currency, tax stamps or watermarked paper (Art. 461 of

the Criminal Code);

- Use of counterfeit or altered revenue stamps (Art. 464 of the Criminal

Code);

- Counterfeiting, alteration or use of distinctive features or marks of

intellectual works or industrial products (Art. 473 of the Criminal Code);

- Introduction into the State and marketing of products with false features or

marks (Art. 474 of the Criminal Code)

E) CRIMES OF DISRUPTION TO THE FREEDOM OF INDUSTRY AND

COMMERCE (Art. 25-bis.1 of the Decree)

- Infringement on the freedom of industry or commerce (Art. 513 of the

Criminal Code);

- Fraudulent commerce or trading (Art. 515 of the Criminal Code);

- Sale of non-genuine foodstuffs as genuine (Art. 516 of the Criminal Code);

- Sale of industrial products with false or misleading indications (Art. 517 of

the Criminal Code);

- Manufacture and sale of goods made by usurping industrial property rights

(Art. 517-ter of the Criminal Code);

- Counterfeiting of geographical indications and designations of origin for

agricultural and food products (Art. 517-quater of the Criminal Code);

- Illegal competition with threats or violence (Art. 513-bis of the Criminal

Code);

- Fraud against national industries (Art. 514 of the Criminal Code).

F) Corporate crimes (Art. 25-ter of the Decree)

- False corporate communications (Art. 2621 of the Criminal Code);

- Minor events (Art. 2621-bis of the Criminal Code);

- False corporate reporting of listed companies (Art. 2622 of the Criminal

Code);

- Preventing checks or controls (Art. 2625 of the Criminal Code);

- Unlawful return of capital (Art. 2626 Criminal Code);

- Illegal distribution of profits and reserves (Art. 2627 of the Criminal

Code);

- Illegal transactions involving shares or stocks of the parent company (Art.

2628 of the Criminal Code);

- Operations to the detriment of creditors (Art. 2629 of the Criminal Code);

- Failure to disclose a conflict of interest (Art. 2629-bis of the Criminal

Code);

- Fictitious capital formation (Art. 2632 of the Criminal Code);

- Improper distribution of company assets by liquidators (Art. 2633 of the

Criminal Code);

- Private corruption (Art. 2635 of the Criminal Code);

- Unlawful influence on Shareholder Assemblies (Art. 2636 of the Criminal

Code);

- Stock manipulation (Art. 2637 Criminal Code);

- Obstructing public supervisory authorities from performing their duties

(Art. 2638 of the Criminal Code).

G) CRIMES FOR THE PURPOSES OF TERRORISM OR THE SUBVERSION OF

DEMOCRATIC ORDER (Art. 25-quater of the Decree)

These are offences under the Criminal Code and special laws with terrorist or

subversive purposes, as well as crimes committed in violation of the

provisions of Articles 2 of the International Convention for the Suppression of

the Financing of Terrorism signed in New York on 9 December 1999.

H) THE ILLICIT PRACTICE OF FEMALE GENITAL MUTILATION (Art. 25-

quater.1 of the Decree)

This addresses the crime provided for in Art. 583-bis of the Criminal Code.

I) CRIMES AGAINST INDIVIDUALS (Art. 25-quinquies of the Decree)

- Reducing people to or maintaining in slavery or servitude (Art. 600 of the

Criminal Code);

- Child prostitution (Art. 600-bis of the Criminal Code);

- Child pornography (Art. 600-ter of the Criminal Code);

- Possession of pornographic material (Art. 600-quater of the Criminal

Code);

- Virtual pornography (Art. 600-quater of the Criminal Code);

- Tourism initiatives aimed at exploiting child prostitution (Art. 600-

quinquies of the Criminal Code);

- Trafficking in persons (Art. 601 of the Criminal Code);

- Buying and selling of slaves (Art. 602 of the Criminal Code);

- Solicitation of minors (art. 609-undecies of the Criminal Code);

L) MARKET ABUSE

CRIMES (Art. 25-sexies of the Decree)

- Abuse of privileged information (Art. 184 TUF);

- Market manipulation (Art. 185 TUF).

ADMINISTRATIVE CRIMES ((Art. 187-quinquies TUF)

- Abuse of privileged information (Art. 187-bis TUF);

- Market manipulation (Art. 187-ter TUF).

M) TRANSNATIONAL CRIMES (Art. 10 – Law of 16 March 2006, No. 146)

- Criminal association (Art. 416 of the Criminal Code);

- Mafia-type criminal association (Art. 416-bis of the Criminal Code);

- Association aimed at illicit trafficking in narcotic drugs and psychotropic

substances (Art. 74 of D.P.R. 09 October 1990 No. 309);

- Criminal conspiracy for the smuggling of foreign tobacco (Art. 291-quater

D.P.R. of 23 January 1973 No 43);

- Crime of inducing others to not provide statements or to provide false

statements to judicial authorities (Art. 377-bis of the Criminal Code);

- Abetting (Art. 378 of the Criminal Code);

- Provisions against illegal immigration (Art. 12, Paragraphs 3, 3-bis, 3-ter,

and 5 of Lgs. Decree 25 July 1998 No. 286);

N) CRIMES OF MANSLAUGHTER AND SERIOUS BODILY HARM COMMITTED

IN VIOLATION OF REGULATIONS ON HEALTH AND SAFETY IN THE

WORKPLACE (Art. 25-septies of the Decree)

- Manslaughter (Art. 589 of the Criminal Code);

- Serious or very serious injuries caused through negligence (Art. 590 of the

Criminal Code); committed in violation of the laws protecting workplace

health and safety.

O) CRIMES OF RECEIVING, LAUNDERING, OR USING MONEY, GOODS, OR

BENEFITS OF ILLICIT ORIGIN, AS WELL AS SELF-LAUNDERING (Art. 25-octies

of the Decree)

- Receiving illicit funds (Art. 648 of the Criminal Code);

- Laundering (Art. 648-bis of the Criminal Code);

- Use of money, goods or benefits of unlawful origin (art. 648-ter of the

Criminal Code).

- Self-laundering (Art. 648-ter 1 of the Criminal Code).

P) OFFENCES RELATED TO COPYRIGHT INFRINGEMENT (Art. 25-novies of

the Decree)

- Criminal protection of economic and moral use rights (Art. 171, paragraph

1, Section a) and paragraph 3-bis, Law no. 633/1941);

- Criminal protection of software and databases (Art. 171-bis, paragraph 1,

Law no. 633/1941);

- Criminal protection of audiovisual works (Art. 171-ter, Law no.

633/1941);

- Criminal liability for media (Art. 171-septies, Law no. 633/1941);

- Criminal liability for audiovisual transmissions with conditional access

(Art. 171-octies, Law no. 633/1941).

Q) CRIME OF INDUCING OTHERS TO NOT PROVIDE STATEMENTS OR TO

PROVIDE FALSE STATEMENTS TO JUDICIAL AUTHORITIES (Art. 25-decies of

the Decree)

This addresses the crimes provided for in Art. 377-bis of the Criminal Code.

R) CRIMES AGAINST THE ENVIRONMENT (Art. 25-undecies of the Decree)

These are offences against the Criminal Code and Special Laws. In

particular, with regard to the commission of the crimes provided for in the

Criminal Code:

- Polluting the environment (Art. 452-bis of the Criminal Code);

- Environmental disasters (Art. 452-quater of the Criminal Code);

- Crimes of negligence against the environment (Art. 452-quinquies of the

Criminal Code);

- - Trafficking and abandonment of highly radioactive materials (Art. 452-

sexies of the Criminal Code);

- Aggravating circumstances (Art. 452-octies of the Criminal Code);

- Killing, destruction, taking, or possession of specimens of protected wild

fauna and flora species (Art. 727-bis of the Criminal Code);

- Damaging habitats (Art. 733-bis of the Criminal Code);

With references to the offences addressed in Lgs. Decree 152/2006

Environmental Regulations":

- Waste management unauthorized activities (art. 256, paragraph 1, sections

a] and b], 3, 5, and 6);

- Clearance or reclamation sites (Art. 257, paragraphs 1 and 2);

- Violation of the obligations of disclosing and maintaining the proper

records and forms (Art. 258, paragraph 4 section 2);

- Illicit trafficking of waste (Art. 259, paragraph 1);

- Organized activities for the illegal trafficking of waste (Art. 260,

paragraphs 1 and 2);

- The waste traceability computer control system (Art. 260-bis, paragraphs

6, 7, sections 2 and 3, and 8, sections 1 and 2);

- Offences related to emissions (Art. 279, paragraph 5);

- Criminal penalties regarding the discharge of industrial waste water (Art.

137, paragraphs 2, 3, 5, 11, and 13).

Legislative Decree of 03 April 2006, No. 152 (the Consolidated

Environmental Law 'TUF') examines the crime of "Illegal waste combustion"

(Art. 256-bis), and establishes criminal penalties for:

- anyone who sets fire to waste dumped or deposited in an uncontrolled

manner;

- those who dump or deposit waste, or who incorporate it as part of cross-

border traffic for the purposes of the subsequent illicit burning thereof.

The Regulation, although not specifically mentioned by Art. 25-undecies of

Lgs. Decree 231/2001, establishes the liability of the owner (natural person) of

the company or of the person responsible for the activity organized by a lack

of supervision, providing for the application of the prohibitory sanctions

referred to in Art. 9, Paragraph 2 of the Decree.

In relation to the commission of the offences referred to in Law 150/1992,

"Regulations on crimes pertaining to the application - in Italy - of the

Convention on International Trade of animal and plant species in danger of

extinction, as well as regulations on the sale and possession of live specimens

of mammals and reptiles posing a hazard to public health and safety":

- Importing, exporting or reimporting, selling, keeping for the purposes of

selling, transporting, etc. in violation of the provisions of Regulation (CE)

No. 338/97 of the Council of 09 December 1996, as subsequently

modified, or specimens of the species listed in Annex A of the

Regulations, as amended (Art. 1, paragraphs 1 and 2);

- Importing, exporting, or reimporting of specimens, under any customs

regime, without the appropriate Certificates or Licenses (etc.) in violation

of the provisions of Regulation (CE) No. 338/97 of the Council of 09

December 1996, as subsequently modified, for specimens of the species

listed in Annexes B and C of the aforementioned Regulation, as amended,

unless constituting a more serious offence (Art. 2, paragraphs 1 and 2);

- Possession of live specimens of mammals and reptiles from reproduction

in captivity, which pose a risk for public health and safety, except as

provided for in Law 157/1992 (Art. 6, paragraph 4);

- Falsification or alteration of certificates, licenses, import notifications,

declarations, disclosure of information for the purposes of acquiring a

license or certificate, or use of false or altered certificates or licenses

(offences addressed in the Criminal Code under Art. 3-bis, paragraph 1).

In relation to the commission of the crimes referred to in Art. 3, paragraph 6 of

Law 549/1993 "Measures to protect the stratospheric ozone and the

environment".

In relation to the commission of offences under Lgs. Decree 202/2007

Implementation of Directive 2005/35/CE Directive 2005/35/CE regarding the

pollution caused by ships and the resulting penalties":

- Culpable pollution (Art. 9, paragraphs 1 and 2);

- Negligent pollution (Art. 8, paragraphs 1 a 2);

S) CRIME OF EMPLOYING THIRD-COUNTRY NATIONALS WITHOUT LEGAL

RESIDENCE (Art. 25-duodecies of the Decree)

This pertains to the crimes governed by Art. 22, paragraph 12-bis of Lgs.

Decree 25 July 1998, No. 286:

- Fixed and indefinite gainful employment (Art. 22, paragraph 12-bis of

Lgs. Decree 25 July 1998, No. 286)

The crimes and administrative offences mentioned above can result in

administrative liability of the Entity in question with headquarters in Italian

territory, even if committed abroad.4.

4 Art. 4 of Lgs. Decree 231/2001, under the heading "Crimes committed abroad", states that:

1.3 The system of sanctions established by the Decree

The sanctions provided for in the Decree against such institutions include: i)

pecuniary sanctions or fines, ii) prohibitory sanctions, iii) confiscation of the

earnings or profits from the offence, and iv) publication of the sentence.

The pecuniary sanctions are applied whenever the liability of the legal entity

is established and are determined by the Criminal Court through a system

based on "shares" or "quotas". The Criminal Court, as part of the minimum

and maximum quotas indicated by the Legislator for each offence, as well as

the value to be attributed thereto, establishes the amount of the financial

penalties to be imposed on the Institution.

The prohibitory sanctions may be applied for any kind of offence and for the cases

of greatest severity. This is meant to prohibit the exercise of business activities;

the suspension and revocation of authorizations, licences, or functional

concessions related to the commission of the crime; banning future contracting

with the Public Administration (with the exception of obtaining the provision

of a public service); excluding from benefits, loans, grants, or subsidies and

the potential revocation of any such benefits which have been already granted,

as well as prohibiting the advertising of their goods and services.

The prohibitory sanctions do not apply (or are revoked, if already applied as a

precautionary measure) if the institution, prior to the opening statement of the

First Instance Trial, has:

"1. In cases and under the conditions set forth in articles 7, 8, 9, and 10 of the Criminal Code,

institutions headquartered within the territory of the State are also liable for offences

committed abroad, provided that the State in which they are committed does not take action

against them.

2. In cases where the law establishes that the guilty party be punished at the request of the

Minister of Justice, proceedings are taken against the institution only if the request is made

against the latter."

- indemnified for or repaired the damages it has caused;

- eliminated the damaging or dangerous consequences of the crime (or, at

least, has taken action in this regard);

- provided the Judicial Authority, for the purposes of confiscation, the

profits obtained from the offence;

- eliminated the organizational deficiencies which resulted in the crime,

adopting new organizational models suitable for preventing the

commission of new offences.

Confiscation consists of acquiring the earnings or profits from the crime by the State

or the acquisition of sums of money, goods, or other benefits equivalent to the

earnings or profits from said crime. However, this does not apply to the part of the

earnings from the crime which could be returned to the Injured Party. The

confiscation is always arranged with the sentence.

The publication of the sentence may be imposed when prohibitory sanctions are

applied against the institution. The sentence is published through postings in the

municipality where the institution is headquartered, as well as through a publication

on the website of the Ministry of Justice.

1.4 The model of organization, management, and control as exemption

from liability

The Decree establishes that the company is not liable for sanctions if it can

demonstrate that it has adopted and effectively implemented suitable

organizational, management, and control models to prevent the commission of

the crimes which have occurred, notwithstanding the personal liability of those

who have committed said crimes.

The Legislator, therefore, has assigned an exempting value to the

organizational, management, and control models of the Company which are

appropriate for risk prevention and which are adopted and effectively

implemented. The Decree also specifies the requirements which must be met

by such models.

In particular, these include:

- identifying the activities whereby the crimes provided for under the

Decree may be committed;

- providing specific protocol aimed at planning the formation and

implementation of the institution's decisions in relation to the crimes to

be prevented;

- identifying methods to manage financial resources in order to prevent the

commission of such crimes;

- establish information obligations for the Body in charge of overseeing

the operation and compliance of the models;

- introducing a disciplinary system to apply sanctions for failure to comply

with any of the measures indicated in the Model.

If the crime is committed by individuals acting as representatives, directors, or

management of the Entity or of one of its Organizational Units equipped with

financial and functional autonomy, as well as by individuals in charge, even if

de facto, of the management or control thereof, the Entity is not liable if it

proves that:

- the Governing Body adopted and effectively implemented, before the

offence was committed, a model capable of preventing offences of the

type that occurred;

- The task of monitoring the operation and compliance of the Model and

ensuring that it is updated has been entrusted upon a Body with

autonomous powers of initiative and control;

- the individuals have committed the offence by fraudulently evading the

Model;

- there was no omission or insufficient supervision by the Supervisory

Body with regard to the Model.

In the event, however, that the offence is committed by persons subject to the

direction or supervision of one of the aforementioned individuals, the legal

person is liable if the commission of the offence was made possible by a

failure to comply with the direction and supervision requirements. Such failure

to comply, in any case, is excluded from consideration if the Entity, prior to

the commission of the crime, has adopted and effectively implemented a

suitable model to prevent the type of crimes that has occurred.

2. MST S.p.A. Organization, Management, and Control Model

2.1 Structure of the Model

This Model has been adopted, upon the first resolution of the Board of

Directors, on 21 October 2009 and subsequently updated on 24 October 2012

and on 30 October 2015, in the third edition which is still currently in force.

The Model consists of a General Part and Special Parts, aimed at ensuring

against the risky activities specified herein.

In particular, these include:

- Special Part A: Crimes against the Public Administration and its assets,

bribery between private entities, and the crime of leading individuals to

not provide statements or to provide false statements to Judicial

Authorities;

- Special Part B: IT crimes, illegal processing of data, and offences

involving breach of copyright;

- Special Part C: corporate offences and self-laundering;

- Special Part D: Crimes of manslaughter and serious bodily harm

committed in violation of regulations on health and safety in the

workplace;

- Special Part E: Organized crime, crimes against industry and

commerce, and crimes of receiving, laundering and using money, goods

or assets of illicit origin, as well as transnational crimes;

- Special Part F: Environmental crimes;

- Special Part G: Crime of employing third-country nationals without

legal residence.

2.2 Objectives and purposes pursued with the adoption and updating of

the Model

With the adoption of the organizational, management, and control model, and

with subsequent updates thereto, the Company aims:

- to inform all of those working for and on behalf of the Company, with

particular reference to those operating in so-called 'sensitive areas', about

what could occur in the event of violation of the provisions contained in

the Model, the commission of offences which may be punishable by

criminal sanctions against them, and the "administrative" sanctions that

may be applied against the Company;

- to inform such persons that unlawful behaviour is strongly condemned

by the Company, insofar as such conduct is contrary to the provisions of

the Law, the Company's culture, and the ethical principles taken as

guidelines for the Company's activities;

- to allow the Company to promptly take action to prevent or oppose the

commission of crimes, or to at least significantly reduce the damage

caused thereby;

- to improve corporate governance and the image of the Company.

The arrangement of this Model was inspired by the Guidelines issued by

Confindustria with regard to such matters, as updated in March 2014.

2.3 Beneficiaries of the Model

The principles and provisions of this document should be respected by:

- the members of the Board of Directors, the Board of Auditors, and the

Statutory Auditor of Accounts, if appointed;

- Employees;

- Consultants, Collaborators, Suppliers, agents/brokers, and commercial

partners to the extent that they may be involved in activities that could

result in the commission of one or more crimes addressed in the Decree

and who are not equipped with a proper model for the specifically

referenced Part;

- those acting under the direction or supervision of Senior Management

within the context of their assigned duties and functions, both within

Italy and abroad.

Such individuals are hereinafter referred to as "Subjects".

2.4 Construction of the Model

The work activity implemented to prepare the Model was focused on:

- identifying the sectors/activities/sensitive areas, with reference to the

offences specified in Lgs. Decree 231/2001, by analysing the corporate

documents made available by the Company (for example: Articles of

Incorporation, Certificate of Incorporation, Minutes of corporate

bodies, etc.);

- analytically examining sensitive areas, with forecasts of the ways and

instruments whereby it would be possible for the Company, its

Administrative Bodies, or employees to commit such offences in

relation to the Decree, as well as, in general, those persons indicated in

Art. 5 of said Decree (including through meetings and discussions with

stakeholders);

- identifying the internal rules and existing protocols - whether

formalized or not - with regard to just those areas which have been

identified to be at risk for crime;

- defining the standards of conduct and control for the activities which,

according to the Company, have been deemed appropriate to regulate;

- regulating methods to manage financial resources in order to prevent

the commission of such crimes;

- identifying those responsible for ensuring the effective application of

this Model (hereinafter, the "Supervisory Body" or S.B.) with the

simultaneous preparation of the related regulations and reporting

system to and from the Supervisory Body itself;

- adopting the Code of Ethics of the Maccaferri Industrial Group, as it

was last updated on 28 September 2015;

- anticipating a suitable disciplinary system to punish against non-

compliance with the measures established in the Model as well as

violations of the Code of Ethics.

2.5 Map of activities at risk

In compliance with the provisions of the Decree and with the procedures

outlined in the previous paragraph, the Company's risky activities have been

identified, taking into account MST's current operations and the existing

organizational structure.

The main corporate activities and processes which could result in the

occurrence or circumstances for the commission of the offences established

under the Decree are as follows:

- Management of relations with the Supervisory Authority (GdF, AAMS,

Customs etc.);

- Management of administrative compliance and related inspection

activities;

- Dispute management and relations with judicial authorities;

- Marketing of products (processed, semi-worked, duty-free raw tobacco, and

foreign production);

- Management of relations with foreign Third Parties;

- Management agents, distributors, and brokers;

- Management of the purchase of goods and services (including

consultations);

- Management of gifts, donations, and sponsorships;

- Staff recruitment and incentive systems;

- Management of expense accounts;

- Management of financial flows;

- Management of intercompany relations;

- Bookkeeping, preparation of financial statements and declarations for

tax purposes, corporate asset management;

- Management of shareholder meetings;

- IT security management;

- Management of the prevention and protection system;

- Management of quality processes;

- Management of activities with an environmental impact.

With regard to the offences listed below:

- Crimes of counterfeiting money, public credit cards and revenue stamps,

as well as crimes relating to distinctive signs;

- Crimes of terrorism or subversion of the democratic order;

- Crime pertaining to the mutilation of female genital organs;

- Crimes against individuals or their personhood;

- Crimes and administrative offences of market abuse;

These are thoroughly addressed by the provisions of the Code of Ethics and by

the measures established under the Company's Organization, Management,

and Control Model.

2.6 Approval of the Model, its modifications, and additions

The Organization, Management, and Control Model is issued by the

Governing Body.

Changes and additions made to this Model and to the Code of Ethics adopted

by the Company are carried out by the MST Board of Directors, with the

disclosure of information from the Company's Supervisory Body.

The Company's Board of Administration makes decisions regarding the

implementation of the Model by evaluating and approving the actions

necessary for the implementation of the elements constituting said Model.

Control over the adequacy and implementation of the Model is the

responsibility of the Supervisory Body.

2.7 Relations with SECI

SECI, acting as the Holding Company, provides the Company with services

that may entail risky activities and operations referred to in the Special Parts

of this Model. Such relations are governed by specific intercompany contracts.

In particular, SECI (directly or indirectly through internal resources and/or

trusted consultants) provides management assistance in the areas of: Human

Resources Department ii. IT Department iii. Legal and Corporate Department

iv. Administrative Department v. Treasury Management

The provision of services:

o shall be performed in accordance with the provisions of the Code of

Ethics and of the Model adopted by SECI;

o should be governed by a specific written contract reported to the SECI's

Supervisory Body.

The intra-group contract for the provision of services includes:

o the Company's obligation to certify the veracity and completeness of the

documents and information reported to SECI in order to carry out the

requested services;

o the power of SECI's Supervisory Board to request information from the

Company's Supervisory Board, in order to correctly perform its duties

with regard to the services requested by SECI;

o the power of the Company's Supervisory Board to request information

from SECI's Supervisory Board, or - after reporting to the latter - from

other SECI divisions, in order to correctly conduct its supervisory

functions.

If the Company asks SECI to respect new or different rules from those

established in this Model, SECI shall adhere to said new rules only after

having requested and obtained a favourable opinion from the Supervisory

Body regarding the suitability of such rules in preventing crimes and

administrative offences as relevant to the Decree.

3. The Supervisory Body

3.1 General principles

A condition necessary for exemption from administrative liability is the

establishment of a Supervisory Body equipped with autonomous powers of

initiative and control aimed at ensuring the effective and efficient

implementation of the Model.

3.2 Requirements of the Supervisory Body

In addition to the autonomy of powers, the Guidelines of the Trade

Associations and the rulings of the Judicial Authority in this regard have also

specified the necessity of the requirements of professionalism and continuity

of action, as better specified below.

Autonomy and Independence: The Body must remain removed from any

form of interference and pressure from Top Executives and may not, in any

way, be involved in the exercise of operational activities and managerial

decisions. The S.B. should not find itself in a situation of conflict of interest

and the Body should not be assigned operational tasks, in whole or in part,

which undermine its autonomy.

The autonomy and independence requirement must be understood as the

absence of family or hierarchical ties with the Company's Top Executives or

with holders of executive powers within the Company.

The Supervisory Body must report to the highest corporate figure and should

be able to speak with said person on equal terms, being in a "staff" position

with the Board of Directors.

Professionalism: or possession of the set of tools and techniques necessary or

the actual and effective execution of the assigned activities. The

professionalism and authority of the Body are connected to its professional

experiences. In this regard, the Company deems it particularly important to

carefully examine the CVs and previous experience of potential candidates,

focusing on those profiles with specific professional experience in the area(s)

in question.

Continuity of action: in the context of small to medium-sized enterprises

implies the presence of a structure dedicated exclusively to the

supervisory/updating activities of the Model which does not entail any

operational tasks.

Integrity: in relation to the anticipation of reasons for ineligibility, revocation,

and suspension when appointing members of the Supervisory Board, the

Company's Board of Directors has expressly stated the following grounds for

ineligibility of said members of the S.B.

MST, in accordance with the regulatory requirements established by this

Decree, has proceeded with the selection of a Corporate Body.

In the case of a Corporate Supervisory Body, one component may be an

employee of the Company or of the Maccaferri Group.

3.3 Causes of ineligibility, revocation, suspension and forfeiture

The Company's Board of Directors has expressly stated the following grounds

of ineligibility for S.B. members.

They may not be appointed:

- If they have been convicted and sentenced, even if not definitively, or

have received a sanction requested by the Parties (a so-called plea

bargain), even if such sentences have been conditionally suspended,

subject to the effects of rehabilitation:

1. imprisonment for a period not less than one year for one of the crimes

listed by Royal Decree 16 March 1942, No. 267;

2. detainment for a period not less than one year for one of the crimes

provided for under the regulations governing banking, financial, and

insurance activities and by the regulations on markets, securities, and the

instruments of payment;

3. imprisonment for a period no less than one year for a crime against the

Public Administration, against public faith, against any assets, the public

economy, or tax offences;

4. for any non-culpable crime with a penalty of imprisonment no less than

two years;

5. for one of the offences set forth under Title XI of Book V of the Civil

Code, as reformulated by Legislative Decree 11 April 2002, No. 61;

6. For an offence which results or has resulted in the imposition of a

penalty leading to interdiction, even if temporarily, from public offices,

or the temporary disqualification from the managerial or executive

positions of legal entities and companies;

7. for one or more offences among those specifically established by the

Decree, even if they entail penalties less than those indicated above;

- those against whom one of the preventive measures set forth in Art. 10,

paragraph 3, of Law 31 May 1965 No. 575, as amended by Art. 3 of Law

19 March 1990, No. 55, as amended, has been definitively applied;

- those who have received any of the additional administrative sanctions

established by Art. 187-quater of Lgs. Decree 24 February 1998, No. 58.

The members of the Supervisory Board must self-certify by means of a

declaration in lieu of an affidavit that they are not subject to any of the

aforementioned conditions, thereby specifically undertaking to communicate

any changes to the content of such declarations.

The revocation of the members of this Body must be approved by the MST

Board of Directors and may only be arranged for reasons pertaining to serious

failures or shortcomings with regard to the assumed functions and duties,

including breaches of the confidentiality obligations set out below, in addition

to the grounds for revocation reported below.

The members of the Supervisory Board shall also be disqualified from Office

if any of the following apply after their appointment:

- if they are convicted by a final ruling or plea bargain for one of the

offences described in numbers 1, 2, 3, 4, 5, 6, and 7 of the ineligibility

conditions set forth previously;

- if they violate the confidentiality obligations strictly related to the

performance of their duties.

The members of the Supervisory Board shall also be suspended from the

exercise of their duties in the event of:

- if they are convicted by a non-final ruling for one of the offences

described in numbers 1 through 7 of the previously indicated ineligibility

conditions;

- application of a personal precautionary measure;

- provisional application of one of the preventive measures set forth in Art.

10, paragraph 3, of Law 31 May 1965 No. 575, as replaced by Art. 3 of

Law 19 March 1990, No. 55, as subsequently amended.

The Supervisory Body shall remain in office for three years and may be re-

elected. The respective remuneration shall be determined by the Board of

Directors upon appointing the S.B. for the entire duration of its operations.

3.4 Responsibilities of the Supervisory Body

The responsibilities of the Supervisory Body in terms of compliance with the

Model, assessment of the adequacy and effectiveness of the implementation of

said document, as well as the updating requirements of the Model are to be

carried by virtue of the allocation of spending powers, which include the use

of an appropriate annual budget to carry out its duties.

The Company's Board of Directors deems that the Supervisory Board may

autonomously employ resources exceeding its spending powers, provided such

action is necessary to address exceptional or urgent situations. In these cases,

the Board should promptly notify the Company's Board of Directors.

The Supervisory Body, in order to perform the tasks with which it has been

entrusted, shall make use of all business functions and shall perform the

following activities:

- supervision of the effectiveness of the Model, ensuring, in particular, its

consistency between the Model and the specific rules adopted for the

areas at risk;

- periodic verification that the Model is respected by all the individual

units/corporate areas at risk, in order to ensure that the defined rules and

prepared principals are followed as closely as possible and are

specifically intended to prevent the risk of commission of the highlighted

offences;

- supervision to ensure that the Code of Ethics and all of its provisions are

respected by all Parties in any way involved with the Company;

- reporting to the Board of Directors any updates or adjustments to the

Model in accordance with the evolution of the Law and jurisprudence, as

well as following any changes made to the Company's organization;

- supervision over the correct operation of the monitoring activities for

each risk area, quickly reporting any anomalies or malfunctions of the

Model, upon comparison and analysis of the areas/functions concerned;

- verification of the proper dissemination of the Model to the

Beneficiaries;

- evaluating and proposing the imposition of disciplinary sanctions,

subject to the necessary coordination with the heads of the relevant

departments/business area.

The Supervisory Body shall convene, except in urgent situations and special

cases, on at least a quarterly basis.

3.5 Reporting Activities of the Supervisory Body

In order to guarantee its full autonomy and independence in carrying out its

functions, the Supervisory Board reports directly to the MST Board of

Directors and reports on the implementation of the Model and the emergence

of any critical situations through two lines of reporting: the first, on an

ongoing basis, and the second, every six months (31 July and 31 January of

each year), through a written report which should promptly indicate the

activities performed each six months, both in terms of the controls carried out

and the results obtained therefrom in order to proceed with any updates which

may be necessary to implement on the Model.

The Supervisory Board must also prepare a plan each year regarding the

activities anticipated for the following year, in which it shall identify the

activities to be performed and the areas which shall be subject to supervision,

in addition to the timing and priority of such interventions. The Supervisory

Body may also perform controls not provided for in the intervention plan (so-

called "spot checks") in the context of sensitive corporate activities or when

such action is deemed necessary for the performance of its duties.

The Supervisory Board may request to be heard by the Board of Directors or,

in general, from the Administrative Body whenever it deems it appropriate to

speak with said Body; likewise, the Supervisory Body is recognized as having

the right to request explanations and information from the Board of Directors.

On the other hand, the Supervisory Body may be convened at any time by the

Board of Directors to report on particular events or situations relating to the

operation and compliance of the Model.

The aforementioned meetings must be duly recorded and a copy of the

respective Minutes should be maintained by the Supervisory Body (as well as

by any other organizations occasionally involved), as set forth in the following

paragraph.

3.6 Disclosure requirements with regard to the Supervisory Body

All Beneficiaries of this Model are bound to a disclosure requirement with

respect to the Supervisory Body which must be followed for all:

i) reports;

ii) information.

The Supervisory Body ensures strict confidentiality with regard to any news,

information, and reports, subject to the withdrawal of their mandate and the

disciplinary measures defined below, subject to the requirements relating to

the conduct of investigations if it is necessary to rely on the support of external

consultants outside of the S.B. or other corporate structures.

All information and reports set out in this Model shall be kept by the

Supervisory Body in special computer and paper archives, in accordance with

the provisions contained in Lgs. Decree 30 June 2003, No. 196 (Privacy): the

documents of the Supervisory Body should be kept in Company offices and

contained in separate locked cabinets, accessible to just its members and solely

for purposes related to the execution of its duties indicated previously, under

penalty of immediate disqualification.

i) Reports

All Beneficiaries are required to promptly report to the Supervisory Board any

exceptions, violations, or suspected breaches with regard to the conduct

required by the Company's Code of Ethics, as well as the standards of conduct

and the executive procedures for carrying out the activities identified as "at

risk" and which are governed by the Model.

Reports may be issued by physical mail to the following address:

The Supervisory Body of MST S.p.A.

Largo G. Toniolo, 6

00196 - ROME

Email address:

odvmst@toscanoitalia.it

The Supervisory Body evaluates all reports received and undertakes the

resulting initiatives at its own reasonable discretion and responsibility within

the scope of its powers, listening to both the author of said report and the party

responsible for the alleged violation. Any subsequent decision shall be

substantiated and any consequent measures shall be implemented in

accordance with the provisions set forth in the chapter on the Sanction System.

The Supervisory Body shall act to protect the authors of such reports from any

form of retaliation, discrimination, penalization, or any other consequences

arising therefrom, assuring the confidentiality of their identity,

notwithstanding any statutory obligations and the protection of the rights of

MST or of persons accused wrongly or in bad faith.

ii) Information

The Beneficiaries of this Model, and in particular the Parties in charge of the

areas under the scope thereof, are also required to convey the following

information, among other things, to the Supervisory Body:

- measures and/or information from police bodies or any other authority

indicating the performance of investigations, including those against

unknown persons, for the types of offences covered by the Decree, with

regard to the Company;

- visits, inspections, and investigations undertaken by the competent

authorities (regional and local entities) and, upon their conclusion, any

conclusions, findings, or penalties applied;

- requests for legal assistance proposed by stakeholders within the

Company, in the case of legal proceedings for any of the offences

covered by the Decree;

- reports prepared by the company structures as part of their control

activities, resulting in critical elements or situations with respect to the

provisions of the Decree;

- periodically, news regarding the actual implementation of the Model in

all of the areas/business functions at risk;

- periodically, news related to the effective implementation of the Code of

Ethics at all company levels;

- information on the evolution of the activities of the areas at risk;

- the system of delegations and proxies adopted by the Company.

In the case of information and/or news, even if unofficial, relating to the

commission of the offences under the Decree or regarding possible violations

of the Model and of the Code of Ethics, each party must contact their

supervisor/manager who in turn reports directly to the S.B.

Information flows must be received by the Body using the procedures and

addresses indicated previously and/or later reported to the Supervisory Body.

3.7 Relations with the Supervisory Bodies of the Sister Companies and

Parent Company

The MST Body shall meet at least once a year with the Supervisory Bodies of

the sister companies and of the Parent Company, in order to perform the

appropriate exchange of information and coordination of the respective

supervisory and control activities.

Such cooperation aims to achieve a comprehensive vision of the Group's

operations and of the respective risks in order to promote, where possible, a

common preventive program and unified corrective actions, notwithstanding

the complete autonomy of the work of each Supervisory Body.

The MST Supervisory Body also undertakes to forward its annual report to the

Supervisory Body of the SECI parent company.

4. Dissemination of the Model and training activities

4.1 General Provisions

The Company intends to ensure proper and complete knowledge of the Model,

the contents of the Decree, and the obligations arriving therefrom among those

working for the Company.

Training sessions shall be organized by the Company, in light of the criteria of

obligatoriness and reiteration, as well as for potential diversification.

Such training and information is managed by the Chief Executive Officer,

assisted by the S.B., in close coordination with the Heads of the

areas/functions involved in the application of the Model.

4.2 Initial Communication

This Model is communicated to all company resources through by means of an

appropriate official notification of the Director General.

All Employees and Senior Staff must sign a special form attesting to their

understanding and acceptance of the Model and should also maintain a paper

or computer copy thereof.

With the signing of their employment contract, new employees declare that

they understand and accept the Model and the corporate Code of Ethics, which

may be consulted in the manner described above. All successive modifications

and information regarding the Model shall be communicated to company

resources through official information channels.

4.3 Training of Staff, agents, and business finders

Participation in training activities aimed at spreading awareness about the

regulations of the Decree, the Model for Organization, Management, and

Control, and the Code of Ethics shall be considered mandatory.

The training shall take into account - with regard to the content and delivery

methods for such courses - the qualification of the Beneficiaries, the level of

risk where they operate, and the assignation (or not) of representative

functions.

Unjustified absence from training sessions shall be deemed a disciplinary

offence, in accordance with the provisions of the Penalty System outlined

above.

MST shall provide for the implementation of training courses which will

illustrate, pursuant to the modular approach:

- the regulatory environment;

- the Code of Ethics and the Organization, Management, and Control

Model adopted by the Company, including the Special Parts;

- the role of the Supervisory Board and the tasks assigned to it by the

Company.

The Supervisory Board ensures that the training programs are qualitatively

adequate and effectively implemented.

4.4 Disclosure to Third-Party Beneficiaries

The Company promotes understanding and compliance with the Model among

so-called "Third-Party Beneficiaries", as defined above, such as Consultants,

Collaborators, Suppliers, agents/brokers, and commercial partners (as well as

those deemed appropriate from time to time by the Beneficiaries themselves)

through the inclusion of specific contractual clauses.

5. Penalty System

5.1 General Profiles

The provision of a suitable disciplinary system to punish against non-

compliance with the regulations established in the Model is a condition

required by Lgs. Decree 231/2001 for exemption from the administrative

liability of the entities in question and to ensure the effectiveness of the Model

itself.

The system itself is aimed at sanctioning against non-compliance with the

principles and rules of conduct set forth in this Organizational Model. The

imposition of disciplinary sanctions for violations of the principles and rules

of conduct set forth in the Organizational Model is independent from the

potential execution of a criminal proceeding and subsequent sentencing for the

commission of one of the offences provided for under the Decree.

Following the communication from the Supervisory Body about the violation

of the Model, an assessment procedure should be initiated in accordance with

the provisions established by the CCNL pertaining to workers; such

assessment procedure shall be conducted by the Supervisory Body itself, in

coordination with the bodies in charge of issuing the disciplinary sanctions,

taking into account the gravity of the conduct, possible recurrence of the

violation, or the degree of culpability.

MST, through the bodies and functions specifically designated for such

purposes, shall then proceed - with with consistency, impartiality and

uniformity - to impose sanctions in proportion to their respective violations of

the Model and in accordance with the provisions in effect regarding labour

relations; the sanctions for the various professionals in question are set forth

below. Such measures specifically take into account the possibility of

expansions, within a short period of time - of the company's workforce and

thus consider individuals who are not currently working with the Company.

5.2 Sanctions against non-executive employees

Employee conduct in violation of any rules of conduct set forth in this Model,

the Code of Ethics, rules, and business protocols adopted by the Company are

defined as disciplinary offences.

Sanctions imposed on employees are adopted in accordance with the

procedures set forth by the applicable legal regulations.

Express reference is made to the categories of sanctionable acts established by

the existing sanction system and the treaty provisions of the CCNL of the

Food Industry (hereinafter, the CCNL).

In application of the proportionality principle, depending on the gravity of the

offense, the following disciplinary sanctions have been established:

a. Verbal warning: this is applied in the case of the least severe instances of

non-compliance with the principles and rules of conduct established by this

Model, with such conduct corresponding to minor non-compliance of the

contractual rules or directives and instructions issued by the Management

or senior officials.

b. Written warning: this applies in the event of non-compliance with the

principles and rules of conduct set forth in this Model, with respect to non-

compliant or inadequate conduct to the extent that they are considered

neither slight nor severe, with such conduct corresponding to a non-serious

violation of the contractual rules or directives and instructions issued by

the Management or senior officials.

c. Fine not exceeding three hours of pay: this applies in the event of non-

compliance with the principles and rules of conduct set forth in this Model,

for conduct which is non-compliant or inadequate in terms of the

requirements of the Model, to the extent that they are considered to be of a

certain degree of severity, even if dependent on recurrence. Such conduct

includes the violation of disclosure obligations in connection with the

Body with regard to the commission of crimes, even if just attempted, as

well as any other violations of the Model. The same sanction shall be

applied in the case of repeated and unjustified non-participation (in-person

or as otherwise required by the Company) in the training sessions required

by the Company with regard to the Lgs. Decree 231/2001 on the

Organization, Management and Control Model and the Code of Ethics

adopted by the Company, or with regard to related matters;

d. Suspension from work and payment for a period not exceeding three

days of actual work: this applies in the case of more serious violations

with respect to the infractions referred to in the previous paragraph.

e. Dismissal without notice, but with severance indemnities: this applies in

the case of serious and/or repeated violations of the rules of conduct and

regulations contained in the Model, in accordance with the statutory and

contractual provisions.

5.3 Sanctions against Executives

Violation of the principles and rules of conduct contained in this Model by

Directors or managers, or the adoption of conduct which is not in accordance

with the established requirements shall be subject to disciplinary measures

modulated according to the severity of the committed violation. More severe

cases may result in the termination of the employment relationship, in light of

the special bond of trust linking executives to the employer.

The following also constitute disciplinary offences:

- lack of supervision by the senior staff on the correct application of the

rules contained in the Model by hierarchically subordinate workers;

- violation of the obligations to disclose information to the Supervisory

Board in relation to the commission of the offences, even if just

attempted;

- violation of the rules of conduct contained therein by the managers or

directors themselves;

- Conduct, during the performance of their duties, which is not in line with

the reasonable expectations of a manager or executive, in relation to the

role in question and the degree of autonomy of the individual(s) in

question.

5.4 Sanctions for Directors and Statutory Auditors

For Directors who have committed a violation against this Model, the Board

of Directors, promptly informed by the Supervisory Body, may apply any and

all appropriate measures permitted by Law, including the following sanctions

determined according to the severity of the offences and the culpability of the

perpetrators, as well as the consequences resulting therefrom:

- formal written notice;

- financial penalty equal to the amount of two to five times the fees

calculated on a monthly basis;

- revocation, in whole or in party, of any powers granted to such persons.

The Board of Directors, in the event of violations establishing just cause for

revocation, proposes to the Assembly the adoption of appropriate measures

and it provides for the additional obligations required by law.

For violations committed by a member of the Board of Auditors, the

Supervisory Body should immediately inform the President of the Board of

Directors by means of a written report. The President of the Board of

Directors, in the case of violations representing just cause for revocation, shall

convene an Assembly and submit the report from the Supervisory Board to the

shareholders. Adoption of the actions in response to the aforementioned

violations is up to the Assembly.

5.5 Sanctions against non-employees

Any violation of the requirements of the Model by Consultants, Collaborators,

Suppliers, Agents/Brokers, and Commercial Partners, as well as by those who

are occasionally deemed to be the "Beneficiaries" thereof, shall be sanctioned

by the competent authorities in accordance with internal company rules,

pursuant to the provisions of the contractual clauses in their respective

contracts, and in any case with the application of conventional penalties which

may include the automatic termination of the Contract (pursuant to Art. 1456

of the Criminal Code), without prejudice to any compensation for damages.