Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 1 (00m00s - 00m06s)

Welcome to Cresco Labs’ Video on our option exchange program. We’re excited to bring you this opportunity Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 2 (00m06s - 00m12s)

to exchange your underwater stock options for a smaller number of new options Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 3 (00m12s - 00m17s)

Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 4 (00m17s - 00m18s)

This may be welcome to you, but you should be aware that option exchanges have certain requirements that are important to understand when deciding what’s right for you. Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 5 (00m18s - 00m27s)

Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 6 (00m27s - 00m28s)

First – let’s define an underwater option. An underwater option is a stock option [definition] whose exercise price, as stated in your grant agreement, is above the current trading price of the stock. Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 7 (00m28s - 00m41s)

Though this is a regular occurrence Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 8 (00m41s - 00m43s)

when an option becomes significantly underwater, Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 9 (00m43s - 00m46s)

employees often lose sight of the possibility that the stock could rebound Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 10 (00m46s - 00m51s)

making their options of real value again Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 11 (00m51s - 00m54s)

Especially Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 12 (00m54s - 00m55s)

with options that have five or more years left, there is a lot of opportunity to make up for a drop in stock price Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 13 (00m55s - 01m01s)

and with that, all options have some degree of value. Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 14 (01m01s - 01m06s)

But we also know Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 15 (01m06s - 01m07s)

it is important to many of you to see opportunity over shorter horizons Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 16 (01m07s - 01m12s)

An option exchange is an opportunity for eligible employees with eligible underwater option grants to exchange their options for new ones Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 17 (01m12s - 01m22s)

This gives you a choice – keep what you have or exchange what you have for something new. Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 18 (01m22s - 01m28s)

There are Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 19 (01m28s - 01m29s)

rules around these types of exchanges to assure that we are both protecting our interests as an employer and doing what’s best for employees. We also need to assure our shareholders that we are acting in their best interests Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 20 (01m29s - 01m44s)

Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 21 (01m44s - 01m45s)

#1 in Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 22 (01m45s - 01m46s)

shareholders’ views is assuring that this is not taken lightly and that it doesn’t become a windfall for employees or executives Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 23 (01m46s - 01m53s)

It is also Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 24 (01m53s - 01m54s)

important for you to understand that Cresco will only make this offering once for these Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 25 (01m54s - 01m59s)

options. There will not be another exchange offer during the life of these options, so it’s important you make this decision during this offer to exchange. Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 26 (01m59s - 02m09s)

Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 27 (02m09s - 02m10s)

For an example of how exchanges work, click here. For more on the tender offering, click here. Storyboard: Cresco Labs | UWSO | 01 | Cresco Labs Option Exchange Program Overview (2024) Scene 28 (02m10s - 02m25s)

Storyboard: Cresco Labs | UWSO | 02 | Option Exchange Example (2024) Scene 1 (00m00s - 00m06s)

Let’s look at an example that uses completely hypothetical prices and exchange ratios. If Cresco stock is trading at $2 Storyboard: Cresco Labs | UWSO | 02 | Option Exchange Example (2024) Scene 2 (00m06s - 00m18s)

you may have options with exercise prices of $6, $8, and $10. If you had 1,000 options granted at each of the three prices, and if you were offered an exchange at 2-1 for the $6 option and 3-1 for the $8 and $10 options Storyboard: Cresco Labs | UWSO | 02 | Option Exchange Example (2024) Scene 3 (00m18s - 00m35s)

would it be worth it? Would you trade 1,000 options with an exercise price of $10 for 333 options with an exercise price of $2? Storyboard: Cresco Labs | UWSO | 02 | Option Exchange Example (2024) Scene 4 (00m35s - 00m45s)

What about trading 1,000 options with a price of $6 options for 500 options with a price of $2? Storyboard: Cresco Labs | UWSO | 02 | Option Exchange Example (2024) Scene 5 (00m45s - 00m50s)

Though choosing to exchange the old options Storyboard: Cresco Labs | UWSO | 02 | Option Exchange Example (2024) Scene 6 (00m50s - 00m57s)

is certainly the better deal if the stock stays below $6, each grant has a break-even point that you need to be aware of, where your current option could be worth more than your exchanged option down the road Storyboard: Cresco Labs | UWSO | 02 | Option Exchange Example (2024) Scene 7 (00m57s - 01m12s)

Also Storyboard: Cresco Labs | UWSO | 02 | Option Exchange Example (2024) Scene 8 (01m12s - 01m13s)

the options will have a new vesting schedule and the new expiration period may be shorter than your current grant’s. Both of those features might also affect your decision Storyboard: Cresco Labs | UWSO | 02 | Option Exchange Example (2024) Scene 9 (01m13s - 01m24s)

Though your exchange will look different than this Storyboard: Cresco Labs | UWSO | 02 | Option Exchange Example (2024) Scene 10 (01m24s - 01m26s)

example, this provides a basic understanding of how they work. Storyboard: Cresco Labs | UWSO | 02 | Option Exchange Example (2024) Scene 11 (01m26s - 01m31s)

Storyboard: Cresco Labs | UWSO | 02 | Option Exchange Example (2024) Scene 12 (01m31s - 01m32s)

Storyboard: Cresco Labs | UWSO | 02 | Option Exchange Example (2024) Scene 13 (01m32s - 01m47s) For more on the exchange offering, click here. To view the overview again, click here

Storyboard: Cresco Labs | UWSO | 03 | The Exchange Offer Period (2024) Scene 1 (00m00s - 00m06s)

Cresco will have an exchange Storyboard: Cresco Labs | UWSO | 03 | The Exchange Offer Period (2024) Scene 2 (00m06s - 00m09s)

allowing you to decide whether to participate in the option exchange Storyboard: Cresco Labs | UWSO | 03 | The Exchange Offer Period (2024) Scene 3 (00m09s - 00m13s)

If you do not make an election, you will retain your original awards Storyboard: Cresco Labs | UWSO | 03 | The Exchange Offer Period (2024) Scene 4 (00m13s - 00m19s)

Storyboard: Cresco Labs | UWSO | 03 | The Exchange Offer Period (2024) Scene 5 (00m19s - 00m20s)

The exchange offer period will last close to one month. You will be provided online access to make your election. If you have multiple grants, you can make different decisions for each grant. Storyboard: Cresco Labs | UWSO | 03 | The Exchange Offer Period (2024) Scene 6 (00m20s - 00m31s)

At any point during the exchange offering, you can enter or even modify your elections. Storyboard: Cresco Labs | UWSO | 03 | The Exchange Offer Period (2024) Scene 7 (00m31s - 00m37s)

Once the election period closes Storyboard: Cresco Labs | UWSO | 03 | The Exchange Offer Period (2024) Scene 8 (00m37s - 00m40s)

you are locked into your final election. If you choose to exchange your options, you will be notified of your new award details after the exchange Storyboard: Cresco Labs | UWSO | 03 | The Exchange Offer Period (2024) Scene 9 (00m40s - 00m51s)

Storyboard: Cresco Labs | UWSO | 03 | The Exchange Offer Period (2024) Scene 10 (00m51s - 00m53s)

Much more information will be made available as you go through the process. Cresco cannot advise you on what makes sense for your unique financial situation, but definitely ask as many questions as needed, so you have the information you need to make the right decision for you. Storyboard: Cresco Labs | UWSO | 03 | The Exchange Offer Period (2024) Scene 11 (00m53s - 01m09s)

Storyboard: Cresco Labs | UWSO | 03 | The Exchange Offer Period (2024) Scene 12 (01m09s - 01m10s)

For an example on how exchanges work, click here. To view the overview again, click here Storyboard: Cresco Labs | UWSO | 03 | The Exchange Offer Period (2024) Scene 13 (01m10s - 01m24s)