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## 11. Unitholders’ equity (continued): 

Upon valid tender for redemption of each unit of Finance Trust, the unitholder is entitled to receive, except as provided below, a price per unit payable in cash equal to the Canadian dollar equivalent of the outstanding principal amount of the U.S. Holdco Notes as of the redemption date, divided by the total number of Finance Trust units issued and outstanding immediately prior to the redemption date. In certain circumstances, including where such payment would cause Finance Trust's monthly cash redemption obligations to exceed $50 (subject to adjustment in certain circumstances or waiver by the trustees) the redemption price per Finance Trust unit being redeemed, to which a redeeming unitholder is entitled shall be the fair market value of the Finance Trust units being redeemed, as determined by the trustees, which shall be payable by way of delivery of U.S. Holdco Notes. 

The following number of Stapled Units are issued and outstanding: 

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(a) Unit option plan: 

As at December 31, 2010, a maximum of 8,800,000 (2009 - 8,800,000) Stapled Units were authorized to be issued to the REIT's officers, employees and certain trustees, of which 7,600,000 options (2009 - 7,000,000 options) have been granted. The exercise price of each option approximated the market price of the Stapled Units on the date of grant and shall be increased by the amount, if any, by which, (i) the fair market value of one Finance Trust unit at the time of exercise of such option, exceeds (ii) the fair market value of one Finance Trust unit at the time of grant of such option. The options vest at 33.3% per year from the grant date, will be fully vested after three years, and expire ten years after the date of the grant. 

During the year ended December 31, 2010, 600,000 (2009 - 600,000) options were granted. The fair value of the unit options used to compute compensation cost is the estimated fair value of each option granted on the grant date. This was calculated using an option pricing model with the following weighted average assumptions: expected distribution yield is 5.13%; expected volatility is 25.00%; risk free interest rate is 2.71%; and expected option life is 4.5 years from the date of grant. The grant-date fair value of the options in total is $1,589. Unit-based compensation expense of $1,225 for the year ended December 31, 2010 (2009 - $535) was included in the trust expenses amount recorded in net earnings and charged to unitholders’ equity. 

