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## (D) Warrants and Warrant Reserve 

On October 1, 2013, the date ReD was acquired, ReD warrant holders received 1,356,892 of replacement warrants from Capstone which have an exercise price of $5.19 dollars and expire March 6, 2014. The Corporation determined the fair value of the replacement warrants reserve on October 1, 2013 to be $Nil. 

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(1) Number of individual warrants are not in thousands. 

## (E) Options and Share Option Reserve 

On October 1, 2013, the date ReD was acquired, ReD option holders received301,811 of replacement options from Capstone. The Corporation's share option reserve atDecember 31, 2013 is $144. The number and weighted average exercise prices of stock options are as follows: 

<img src='content_image/248531.jpg'>

The following options were outstanding and exercisable as at December 31, 2013: 

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(1) Number of individual options are not in thousands. 

The grant-date fair value of the share options is measured based on the Black-Scholes formula. Expected volatility is estimated by considering historic average share price volatility. The following assumptions were used to estimate the fair value of the options issued to grantees: 

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## (F) Dividends 

The dividends declared were as follows: 

<img src='content_image/248534.jpg'>

Capstone has included $7,208 of accrued common dividends and $625 of accrued preferred dividends as declared on November 12, 2013 (December 31, 2012 – $5,677 was accrued for common shares and $625 for preferred shares). 

Capstone paid $0.300 per common share and $1.250 per preferred share during the year endedDecember 31, 2013 (December 31, 2012 – $0.450 per common share and $1.250 per preferred share). 

