Certain employees and other service providers of the Company participate in the equity-based compensation plan of Privateer Holdings, Inc (the “Original Plan”) under the terms and valuation method detailed below. For the year ended December 31, 2020, the total stock-based compensation expenses associated with the

Original Plan was $702 (December 31, 2019 – $469 and 2018 – $359). There were no new grants under the Original Plan for the year ended December 31, 2020.

The fair value of each stock option to employees granted under the Original Plan was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

	2020		2019		2018
Expected stock option life		—		—	5.15 years
Expected volatility		—		—		48.82	%
Risk-free interest rate		—		—		2.35	%
Expected dividend yield		—		—		-	%

The expected life of the stock options represented the period of time stock options were expected to be outstanding and was estimated considering vesting terms and employees’ historical exercise and post-vesting employment termination behavior. Expected volatility was based on historical volatilities of public companies operating in a similar industry to Privateer Holdings. The risk-free rate is based on the United States Treasury yield curve in effect at the time of grant. The expected dividend yield was determined based on the stock option’s exercise price and expected annual dividend rate at the time of grant.

	Stock Options			Weighted- average exercise price		Weighted- average remaining contractual term (years)		Aggregate intrinsic value
Balance December 31, 2019		3,014,004		$	3.04		5.8	$	44,108
Exercised		(1,076,156	)		1.80
Forfeited		(81,658	)		4.59
Cancelled		(66,440	)		3.81
Balance December 31, 2020		1,789,750		$	3.62		3.77	$	25,077
Vested and expected to vest, December 31, 2020		1,784,519		$	3.61		3.76	$	25,020
Vested and exercisable, December 31, 2020		1,731,626		$	3.48		3.65	$	24,449

The weighted-average fair values of all stock options granted in 2020 and 2019 were $0 and $0, respectively. The total intrinsic values of stock options exercised in 2020 and 2019 were $5,910 and $1,686, respectively. As of December 31, 2020, the total remaining unrecognized compensation expenses related to non-vested stock options amounted to $248 (2019 - $921), which will be amortized over the weighted-average remaining requisite service period of approximately 0.7 years (2019 – 0.8 years). The total fair values of stock options vested in 2020 and 2019 were $85 and $2,789, respectively.

The Company adopted the 2018 Equity Incentive Plan (the “2018 EIP”) as amended and approved by stockholders in May 2018 under the terms and valuation methods detailed in our Annual Financial Statements. The 2018 EIP authorizes the award of stock options, restricted stock units (“RSUs”) and stock appreciation rights (“SARs”) to employees, including officers, non-employee directors and consultants and the employees and consultants of our affiliates. Shares subject to awards granted under the 2018 EIP that expire or terminate without being exercised in full, or that are paid out in cash rather than in shares, do not reduce the number of shares available for issuance under the 2018 EIP. Additionally, shares become available for future grant under the 2018 EIP if they were issued under the 2018 EIP and if the Company repurchases them or they are forfeited. This includes shares used to pay the exercise price of an award or to satisfy the tax withholding obligations related to an award. The maximum number of shares of common stock subject to stock awards granted under the 2018 EIP or otherwise during any one calendar year to any non-employee director, taken together with any cash fees paid by the Company to such non-employee director during such calendar year for service on the Board of Directors, will not exceed five hundred thousand dollars in total value, calculating the value of any such stock awards based on the grant date fair value of such stock awards for financial reporting purposes, or, with respect to the calendar year in which a nonemployee director is first appointed or elected to our Board of Directors, one million dollars.

Stock options represent the right to purchase shares of our Class 2 common stock on the date of exercise at a stated exercise price. The exercise price of a stock option generally must be at least equal to the fair market value of our shares of Class 2 common stock on the date of grant. The Company’s compensation committee may provide for stock options to be exercised only as they vest or to be immediately exercisable with any shares issued on exercise being subject to the Company’s right of repurchase that lapses as the shares vest. The maximum term of stock options granted under the 2018 EIP is ten years.

RSUs represent a right to receive Class 2 common stock or their cash equivalent for each RSU that vests, which vesting may be based on time or achievement of performance conditions. Unless otherwise determined by our compensation committee at the time of grant, vesting will cease on the date the participant no longer provides services to the Company and unvested shares will be forfeited. If an RSU has not been forfeited, then on the date specified in the RSUs, the Company will deliver to the holder a number of whole shares of Class 2 common stock, cash or a combination of shares of our Class 2 common stock and cash. Additionally, dividend equivalents may be credited in respect of shares covered by the RSUs. Any additional shares covered by the RSU credited by reason of such dividend equivalents will be subject to all of the same terms and conditions of the underlying RSU agreement to which they relate. The RSUs generally vest over a 3-or-4 year period. The fair value of RSUs are based on the share price as at date of grant.

SARs provide for a payment, or payments, in cash or shares of Class 2 common stock to the holder based upon the difference between the fair market value of shares of our Class 2 common stock on the date of exercise and the stated exercise price. The maximum term of SARs granted under the 2018 EIP is ten years. No SARs were issued to date.

The 2018 EIP permits the grant of performance-based stock and cash awards. The performance goals may be based on company-wide performance or performance of one or more business units, divisions, affiliates or business segments and may be either absolute or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. The length of any performance period, the performance goals to be achieved during the performance period, and the measure of whether and to what degree such performance goals have been attained will be conclusively determined by the Board of Directors.

As of January 1, 2020, 17,037,421 shares of Class 2 common stock had been reserved for issuance under the 2018 EIP. The number of shares of Class 2 common stock reserved for issuance under the 2018 EIP will automatically increase on January 1 of each calendar year, for a period of not more than ten years, starting on January 1, 2019 and ending on and including January 1, 2027, in an amount equal to 4% of the total number of shares of our common stock outstanding on December 31 of the prior calendar year, or a lesser number of shares determined by our Board of Directors. The shares reserved include only the outstanding shares related to stock options and RSUs, and excludes stock options outstanding under the Original Plan.

For the year ended December 31, 2020, the total stock-based compensation expenses associated with the 2018 EIP was $29,014 (2019 – $31,373 and 2018 – $20,629).

The fair value of each stock option granted to employees under the 2018 EIP is estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions:

	Assumptions 2020		Assumptions 2019			Assumptions 2018
Expected stock option life (years)		—	8.97 years			5.79 years
Expected volatility		—		61.33	%		58.54	%
Risk-free interest rate		—		2.10	%		2.92	%
Expected dividend yield		—	-%			-%

The expected life of the award is estimated using the simplified method since the Company does not have adequate historical exercise data to estimate the expected term. Expected volatility is based on historical volatilities of public companies operating in a similar industry to the Company. A forfeiture rate is estimated at the time of grant to reflect the amount of awards that are granted but are expected to be forfeited by the award holder prior to vesting. The estimated forfeiture rate applied to these amounts is derived from management’s estimate of the future stock option forfeiture behavior over the expected life of the awards. The risk-free rate is based on the United States Treasury yield curve in effect at the time of grant.

	Stock Options			Weighted- average exercise price		Weighted- average remaining contractual term (years)		Aggregate intrinsic value
Balance December 31, 2019		5,307,130		$	14.04		8.4	$	44,297
Granted		—			—
Exercised		(703,393	)		7.76
Forfeited		(468,096	)		13.73
Cancelled		(226,082	)		13.20
Balance December 31, 2020		3,909,559		$	15.25		7.4	$	1,700,194
Vested and expected to vest, December 31, 2020		3,840,493		$	15.10		7.4	$	1,675,302
Vested and exercisable, December 31, 2020		3,142,175		$	13.16		13.2	$	1,423,560

The weighted-average fair values of time-based stock options granted in 2020 was $0 per share (2019 – $40.11 and 2018 – $7.74). The total intrinsic values of these stock options exercised in 2020, 2019 and 2018 were, $2,706, $29,655 and $0, respectively. As of December 31, 2020, the total remaining unrecognized compensation expenses related to non-vested stock options amounted to $9,696 (2019 – $23,649 and 2018 – $38,250), which will be amortized over the weighted-average remaining requisite service period of approximately 1.5 years (2019 – 1.9 years and 2018 - 2.8 years). The total fair value of stock options vested in 2020 were $34,001 (2019 - $16,708 and 2018 - $5,508).

	Stock Options			Weighted- average exercise price		Weighted- average remaining contractual term (years)		Aggregate intrinsic value
Balance December 31, 2019		520,000		$	7.76		8.4	$	4,872
Granted		—			—
Exercised		(520,000	)		7.76
Forfeited		—			—
Cancelled		—			—
Balance December 31, 2020		—		$	—			$	—
Vested and expected to vest, December 31, 2020		—		$	—			$	—
Vested and exercisable, December 31, 2020		—		$	—			$	—

The weighted-average fair values of all performance-based stock options granted in 2020 was $0 per share (2019 - $0 and 2018 - $4.15). The total intrinsic values of stock options exercised in 2020, 2019 and 2018 were $1,160, $5,054 and $0 respectively. As of December 31, 2020, the total remaining unrecognized compensation expenses related to non-vested stock options amounted to $0 (2019 – $0 and 2018 – $593), which will be amortized over the weighted-average remaining requisite service period of approximately 0 years (2019 – 0 years and 2018 - 0.6 years). The total fair value of stock options vested in 2020 were $0 (2019 - $1,246 and 2018 - $1,246).

	Time-based RSUs			Weighted-average grant-date fair value per share
Non-vested December 31, 2019		1,423,392		$	42.05
Granted		2,156,079			8.53
Vested		(619,021	)		35.24
Forfeited		(1,058,349	)		25.65
Cancelled		(17,711	)		19.93
Non-vested December 31, 2020		1,884,390		$	15.22

As of December 31, 2020, there was approximately $22,046 (2019 - $41,898 and 2018 - $10,336) of total unrecognized compensation cost related to non-vested time-based RSUs that will be recognized as expenses over a weighted-average period of 1.6 years (2019 – 2.3 years and 2018 - 3.2 years). The total intrinsic values of time-based RSUs vested in 2020, 2019 and 2018 were $187, $3,446 and $0 respectively. The total fair value of time-based RSUs vested in 2020 were $21,815 (2019 - $4,667 and 2018 - $0)

	Performance- based RSUs			Weighted-average grant-date fair value per share
Non-vested December 31, 2019		265,625		$	7.76
Granted		493,961			7.07
Vested		(218,750	)		7.76
Non-vested December 31, 2020		540,836		$	7.13

As of December 31, 2020, there was approximately $1,950 (2019 - $330 and 2018 - $1,882) of total unrecognized compensation cost related to non-vested performance-based RSUs that will be recognized as expenses over a weighted-average period of 0.9 years (2019 – 1.0 year and 2018 - 1.7 years). The total intrinsic values of performance-based RSUs vested in 2020, 2019 and 2018 were $109, $46,423 and $0 respectively. The total fair value of performance-based RSUs vested in 2020 were $1,698 (2019 - $6,087 and 2018 - $ 0).