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Juul Labs Authorized Reseller Policy

This Juul Labs Authorized Reseller Policy (“Reseller Policy”) contains the terms and conditions applicable to all customers that purchase portable vaporization products and accessories manufactured by JUUL Labs, Inc. (the “Company”) for resale. Please read it carefully because it impacts your relationship with the Company.

Definitions

Capitalized terms shall have the meaning described herein. The following definitions shall apply in this Reseller Policy:

“Authorized Sub-Distributors” shall be defined as any Reseller, other than a Retailer or Distributor, which may, pursuant to the Company’s written authorization only, purchase Company Products from a Distributor and sell Company Products to Retailers.

“Direct Distributor” shall be defined as any Reseller that has entered in a written contract with the Company to buy Company Products directly from the Company and which may, pursuant to written authorization from the Company, sell Company Products to Retailers and Authorized Sub-Distributors.

“Company Products” shall mean portable vaporization products and accessories manufactured by the Company, including JUUL Devices and JUULpod packs.

“Reseller” shall mean any Direct Distributor, Authorized Sub-Distributor, or Retailer that purchases Company Products for resale.

“Retailer” shall be defined as any Reseller that sells Company Products directly to end user consumers.

“Store” shall be defined as an individual retail location of a Retailer.

 

Policy Terms

All Resellers must comply with the applicable terms of this Reseller Policy. Failure to comply with all the applicable terms of this Reseller Policy may result in escalation of penalties up to and including suspension or termination of your business relationship with the Company and a notification sent to Company customers of the revocation of your status as an authorized Reseller. This Reseller Policy is subject to change by the Company at its sole discretion.

1. Maintain Current Business Information. Disclose All Locations That Carry Company Products and Conduct Sales from a Commercial Business Address.

All Resellers must maintain accurate and up-to-date company information and disclose all retail locations or Reseller customers that carry Company Products throughout the term of the Reseller relationship with the Company.

Qualifying retail locations can only be physical brick-and-mortar Stores. In addition, Resellers may not sell Company Products online. Each Store associated with a Retailer must also adhere to the terms and conditions of this Reseller Policy. Retailers may not use or provide a delivery service unless subject to a separate agreement with the Company.

Retailers must conduct sales of Company Products only from a commercial business address. If the Company discovers that the Retailer is conducting business from a non-commercial address, the Company will notify the Retailer in writing. The Retailer must provide the following information within two (2) weeks of receipt of the notice: (i) the correct business address and (ii) a copy of one of the following official documents: (a) utility bill of the registered commercial business address, (b) official business license and/or reseller permits, (c) certification of incorporation (if applicable), or any other business registration document with the correct commercial business address and the name of the sole or co-owner. Retailers identified as selling from a non-business address that do not address the violation within the 2-week period may be suspended indefinitely pending corrective action.

2. Sell Within the Assigned Geographic Territory

Without the prior written consent of the Company, Resellers shall not ship or sell Company Product outside of the USA or sell Company Product that it knows (or should know) will be sold or shipped outside of the USA. In addition, Resellers shall not sell Company Product outside of the territory where the product in question is intended for sale, regardless of whether it has been repackaged (e.g., sales of Canadian Company Product in the USA). All Company Product shall be appropriately labeled and compliant with the laws of the geographic territory where the sale is intended. Any sale of Company Product outside of a territory where the product is intended to be sold is prohibited unless authorized in advance by the Company in writing.

3. Retailers Must Only Purchase Company Products from the Company Directly or from Direct Distributors and Authorized Sub-Distributors

A Retailer is in violation of this Reseller Policy if it buys Company Products from any source other than the Company directly or from authorized Direct Distributors and Authorized Sub-Distributors. For a list of authorized Direct Distributors and sub-distributors serving your area, please contact your JUUL representative or reach out to orders@juul.com.

4. Channel Sales Restrictions

Retailers may not sell Company Products to other Resellers. Retailers may sell directly to end user consumers only. Direct Distributors may not sell Company Products to end user consumers except with written authorization from the Company and may only sell Company Products to Retailers or Authorized Sub-Distributors. Authorized Sub-Distributors may only sell to Retailers and cannot purchase Company Products except from Direct Distributors.

Furthermore, if a Reseller is subject to sales channel restrictions, it shall be a violation of this Reseller Policy to sell outside the channel where the customer is authorized to sell Company Products (e.g., a Reseller limited only to casinos in a specific state).

5. No Sale of Company Product Purchased from Company Direct to Consumer Websites

A Reseller is in violation of this Reseller Policy if it buys Company Products from any of the Company’s direct to consumer eCommerce websites (“Company Websites”) for resale. The creation of multiple consumer eCommerce accounts is prohibited and constitutes proof of intent to purchase Company Products from Company Websites for resale. Resellers that violate this Reseller Policy shall be suspended as a Company authorized Reseller for a period of up to one-year.

6. Don’t Sell Illegal, Counterfeit, or Products Subject to Enforcement Action

A Reseller is in violation of this Reseller Policy if it buys, markets or sells illegal, counterfeit and/or electronic nicotine delivery systems (“ENDS”) products subject to enforcement action by the U.S. Food & Drug Administration (“FDA”). Counterfeit products are defined as any JUUL-branded products that are not ordered and/or purchased from an authorized Reseller and, as a result, cannot be authenticated. It is also a violation of this Reseller Policy to buy, market, or sell a product subject to an effective Market Denial Order (“MDO”) issued by the FDA. MDOs or whose enforcement or effectiveness is enjoined or stayed by a court or other applicable regulatory authority are excepted and products subject to such stayed or enjoined MDOs remain saleable to the public without being in violation of this Reseller Policy. A list of products that have been issued an MDO is updated regularly and can be found on the FDA’s website. Finally, it is a violation of this Reseller Policy to buy, market, or sell any products subject to enforcement action as a result of not filing a timely Premarket Tobacco Product Application with the FDA. The Company will work in good faith to educate and update Resellers on the status of products in the market.

7. Report Sell-Through Data

Unless otherwise agreed, Direct Distributors and Authorized Sub-Distributors must provide sell-through data and inventory data for the entire nicotine category to the Company and such other information as reasonably requested. Sell-through data must be accurate, and Direct Distributors and Authorized Sub-Distributors must provide Company with any information necessary to confirm accuracy. One example of a mechanism by which a Direct Distributors or Authorized Sub-Distributor may report sell-through data is through Management Science Associates (“MSA”) by SKU for all customers at the Store level.

8. Only Sell Company Products in Original Packaging

Resellers may not alter original Company Product packaging in any way prior to reselling Company Products. Reselling Company Products in different packaging or under a different name is strictly prohibited. In addition, Resellers shall not remove Company Products from original packaging without authorization from the Company. The Company prohibits the sale of unpackaged or individual JUULpods (i.e., “loosies”).

9. No Bundling or Giveaways of Company Products Without Obtaining Permission

Reseller must not re-SKU or bundle Company Products without receiving prior written permission from the Company. Reseller also agrees not to make available to others, or otherwise use or exploit, any Company Product for any contests, sweepstakes, and/or giveaways (or similar events) without the prior written authorization from the Company.

10. Juul Labs Trademark and Brand Policy

Reseller has been provided with a copy of the Juul Labs Trademark and Brand Policy (“Brand Policy”). Reseller must comply with the Brand Policy and represent itself as an authorized Reseller in all advertising and sales collateral.

Setting up businesses, registering domain names, or adopting social media usernames that contain any Company trademarks or create the impression that the Reseller is directly affiliated with the Company is prohibited unless previously agreed to otherwise, in each instance, by the Company in writing. To ensure compliance with the Reseller Policy, Reseller should request and display marketing materials that are approved by the Company.

11. Tailor Promotional Communications to Current Adult Smokers and Vapers

Any promotional communications and advertising materials shall be tailored to current adult smokers and vapers to limit the potential for unintended exposure among non-users, including those who are underage. Direct Distributor and Retailers shall not advertise Company Products through any of the following channels: broadcast, digital, billboards, social media, bloggers, events, or influencers, and in general through any other means beyond the Retailer Stores, unless expressly authorized in writing by the Company. Company guidelines on the use of marketing within Retailer Stores are in Schedule A.

12. Customer Confusion

Reseller will not advertise, market, display, or demonstrate products that are not Company Products together with Company Products in a manner that could create the impression that the non-Company Products are made by, endorsed by, sold by, or associated with the Company.

13. JUUL Online Store Locator

The Company maintains a store locator on its websites and inclusion of any Store on the store locator is at the Company’s sole discretion.

14. Sales and Distribution Restrictions to Restrict Underage Access

Company Products are ENDS, and as such, are age-restricted; subject to federal, state, and local regulations; and subject to regulation and enforcement by the U.S. Food and Drug Administration (FDA).

The Company restricts underage access through various mechanisms including – but not limited to – sales and distribution restrictions, technologies, trade programs, and retailer-compliance monitoring. These mechanisms are subject to continued refinements at the sole discretion of the Company based on the latest guidance from the FDA and the best available data regarding how those below the legal purchasing age are accessing ENDS and Company Products.

Sales and Distribution Restrictions

The Company requires Retailers to follow the law and restrict underage purchasing in retail environments by confirming that purchasers of Company Products are above the age of 21 (“Age-Verification”). Federal law requires photo ID checks for all customers under the age of 27. Individual states may have stricter laws. The Company also requires Retailers to limit the quantity of Company Products that can be purchased in a transaction to mitigate underage access through social sources (“Product-Quantity Limits”). The Company further requires Retailers to restrict the public’s access to JUUL Products and prevent access by unverified individuals. Collectively, Age-Verification, Product-Quantity Limits, and Restricted Access are herein referred to as “Sales and Distribution Restrictions.”

Further details on Age-Verification, Product-Quantity Limits, and Restricted Access are found below.

i. Age-Verification

Retailer must implement and have in place, prior to selling any Company Product, an Age-Verification system and policies to ensure Age-Verification occurs during each sale of Company Products, as well as comply with federal, state, and local laws and regulations applicable to Age-Verification for age-restricted products.

The Company will monitor for such compliance through review of FDA enforcement actions and controlled monitoring by the Company. The Retailer will institute internal measures to drive compliance with Age-Verification and will have a policy in place regarding recognition and reporting of fraudulent IDs.

ii. Product-Quantity Limits

Retailer shall also cooperate with the Company in reducing the potential for social sourcing (i.e., third-party resale or sharing by an of-age purchaser to or with an underage user) and/or unauthorized or illegal sale or exportation of Company Products by instituting product-quantity limits that limit the quantity of Company Products that can be purchased in a transaction.

Company’s limits for an individual sale at retail is a maximum of four (4) packages of JUULpods and one (1) JUUL Device. If applicable, Retailer will provide franchisees with direction regarding Company’s Product-Quantity Limits contained herein.

iii. Restricted Access

Retailers are required to keep all JUUL Products either (1) behind the counter or (2) in a secure location that effectively prevents consumers from accessing the Products without the assistance of a Retailers employee.

Enhanced Access Controls

The Company recommends and may require, as a condition for selling Company Products, implementation and ongoing use of technologies that automate compliance with the Sales and Distribution Restrictions. The Company refers to this system of automation as Enhanced Access Controls. For more information on how you can implement Enhanced Access Controls, please visit our Retailer Resource Center at https://www.juullabsretailer.com/learn/.

15. Intentionally Omitted

 

16. Mystery Shop Program for Compliance Monitoring

All Retailers are subject to the Company’s compliance monitoring program that is intended to monitor compliance with the Age-Verification and Product-Quantity Limits policies set out in Paragraph 14 of this policy. Monitoring is conducted by third party shoppers who visit retail stores to attempt to purchase JUUL Products. The results of each such “Mystery Shop” are shared with the Company. One or more failed Mystery Shops will subject a store to the penalties set forth in the “Penalty Enforcement Policy for Failed Mystery Shop” (attached in Schedule C).

17. Comply with the Company’s No-Sale List

The Company maintains a list of Retailers and other entities that are not authorized to receive Company Products for resale from Resellers (“No-Sale List”). Direct Distributors and Authorized Sub-Distributors shall familiarize themselves with the No-Sale List. It shall be a violation of this Reseller Policy to sell Company Product to any Reseller identified in the then-effective No-Sale List. Direct Distributors who sell to an Authorized Sub-Distributor that makes sales in violation of the No-Sale List will be accountable for those sales as if they had made such sales directly.

Direct Distributors found to have violated the terms of this Section may be subject to reductions to their rebate as described in their rebate terms and a possible decision by the Company to deny all future purchase orders submitted by Direct Distributor and a permanent sales ban.

18. Required Training and Enforcement

All Retailer employees that sell or are involved in the commercialization of Company Products, must be trained at regular intervals on applicable best practices and legal requirements for the sale of Company Products. Resellers shall maintain records of such training and make them available for inspection.

19. No Sale on Websites or Digital Channels without Prior Written Authorization

Resellers may not sell Company Products on consumer-facing eCommerce enabled web pages, hosted websites, or any third-party sites (eBay, Amazon, Alibaba, etc.); through drop-ship accounts (Buy.com, Newegg.com, Overstock.com, etc.); through in-person delivery services which utilize web-based applications; or via direct messages on any social media or other electronic forums without prior written authorization from the Company in each instance. Unauthorized online sales are strictly prohibited. Where a Reseller does sell via an in-person delivery service which utilizes web-based applications (e.g., Postmates), such service must establish protocols which ensure that Age-Verification takes place in-person at the point of delivery, and that the services demonstrate compliance with Company Sales and Distribution Restrictions (Section 14).

20. Obey the Law, Abide by Policy Rules & Serve Customer Needs

Resellers must comply with all applicable federal, state, and local laws and regulations related to the advertising, sale, and marketing of Company Products, including regulatory guidance promulgated by the FDA. Resellers that fail to comply with applicable law and regulations pose an existential risk to the entire category, and where required, and as it is deemed appropriate, the Company may report violations of the law to appropriate authorities.

In addition, Resellers must provide a level of sales support and customer support for Company customers that, at a minimum, demonstrates industry best practices.

Effective: October 11, 2022

Schedule A

1. Principles

The Company is subject to various obligations related to Legal Settlements and a potential Marketing Granted Order from FDA which impact the Company’s marketing guidelines for Retailers. The Company will take reasonable steps to advise Retailers of applicable variances in Company marketing guidelines resulting from these obligations. Retailers are solely responsible for compliance with applicable law.

Retail marketing in the form of point-of-sale collateral and merchandising can help generate awareness and trial among current adult smokers who may want an alternative to combustible cigarettes. While such efforts can inform adult smokers about the availability of alternative nicotine products such as Company Products, the following guidelines are intended to ensure adherence to responsible marketing practices in accordance with Company’s underage use prevention efforts.

Retailers may only advertise Company Products in Retailer Stores. The design for any branded advertising and promotional materials that Direct Distributor may use in carrying out these activities shall be provided or approved by the Company.

Advertising and promotional materials must be displayed in a manner that is consistent with the requirements of these guidelines, this Reseller Policy, and applicable law.

Any promotional communications and advertising materials to be used by Retailers shall be tailored to current adult smokers and limit the potential for unintended exposure among non-users, including those who are underage. Retailers may not advertise the Company Products through any of the following channels: broadcast, digital, billboards, social media, bloggers, events, or influencers, and in general through any other means beyond the Retailer Stores, unless expressly authorized in writing by the Company.

2. Retail Marketing Guidelines

a. Storefront advertising

In storefront advertising areas, JUUL Product advertising must not be presented in any location that is within 100 meters of a school, playground, church, and other restricted areas to minimize underage exposure.

b. Interior advertising

In interior-advertising areas other than the actual point-of-sale where the transaction takes place, Retailers may not present JUUL Product advertising in areas that are more likely to be exposed to underage persons (e.g., near toy and candy displays).

c. Point-of-sale advertising

At the point-of-sale (i.e., the counter and behind-the-counter shelf space), the advertising of Company Products is intended to be positioned near other tobacco products, specifically combustible cigarettes, to engage and communicate directly to adult smokers who may seek an alternative to combustible cigarettes.

Schedule B

Intentionally Omitted

Schedule C

Penalty Enforcement Policy for Failed Mystery Shop(s)

The escalating penalties for failed Mystery Shops are as follows:

First Mystery Shop Failure: The Company will send a letter notifying the Retail Store of its first violation and will perform a second Mystery Shop within twenty (20) to ninety (90) days of the first violation.

Second Mystery Shop Failure: If a Retail Store commits a second violation within one year of its first violation, the Company will send a letter notifying the Retail Store of the second violation. The Retail Store’s eligibility for program or promotional payments will be suspended for a period of six months beginning the first day of the calendar quarter following the date of the second failed mystery shop. The Company will perform a third Mystery Shop within twenty (20) to ninety (90) days of the second violation. In accordance with requirements of the U.S. Food and Drug Administration (FDA) and legal agreements JLI entered into, the Company will inform the FDA of any second consecutive age-verification mystery shop failure.

Third Mystery Shop Failure: If a Retail Store commits a third violation within one year of its first violation, the Company will send a letter notifying the Retail Store of the third violation. The Company will notify all authorized wholesalers, distributors, and sub-distributors to suspend sales of JUUL Products to the Retail Store for a three-year period. The Company will perform a fourth Mystery Shop within twenty (20) to ninety (90) days of the third violation. In accordance with requirements of the U.S. Food and Drug Administration (FDA) and legal agreements JLI entered into, the Company will inform the FDA of any second or third consecutive age-verification mystery shop failure.

Fourth Mystery Shop Failure: If a Retail Store commits a fourth violation within one year of its first violation, the Company will send a letter notifying the Retail Store of the fourth violation. The Company will notify all authorized wholesalers, distributors, and sub-distributors to suspend sales of JUUL Products to the Retail Store. In accordance with requirements of the U.S. Food and Drug Administration (FDA) and legal agreements JLI entered into, the Company will inform the FDA any second, third or fourth consecutive age-verification mystery shop failure.

All penalties hereunder shall remain in effect for the indicated duration unless the ownership of the Retail Store changes to new owners who can demonstrate that (i) they are wholly unrelated to the prior owners and (ii) they have the requisite license to sell JUUL Products. Where the Retail Store is part of a chain or similar group of stores, “ownership” in the preceding sentence refers to the owner or franchisee of the specific Retail Store at issue, and not to a parent company or owner of the chain.