|
The following series of questions and answers explains some of the key features of the Distribution Reinvestment Plan (the “Plan”) of
Canexus Income Fund (“Canexus”) and Canexus Limited Partnership (“Canexus LP”). The answers are, however, of a summary nature, and as such
are designed only to give holders (“Unitholders”) of Canexus’ trust units (“Trust Units”) and holders (“Exchangeable LP Holders” and, together
with the Unitholders, collectively the “Holders”) of Canexus LP’s exchangeable limited partnership units (“LP Units”) guidelines with respect
to the Plan’s operation. For further information Holders should refer to the complete text of the Plan which is reproduced in the Offering
Circular included in this booklet. Holders should carefully read the complete text of the Plan before making any decisions regarding
participation in the Plan.
 |
What is the Distribution Reinvestment Plan?
The Plan represents a convenient and economical way in which Holders can reinvest all or part of their monthly distributions to maximize
their investment in Canexus without incurring service charges or brokerage fees.
You are not required to participate in the Plan. If you do not participate, then you will continue to receive your cash distributions in
the normal manner.
If you are an eligible Holder and elect to participate in the Plan, you are entitled to acquire additional Trust Units (in the case of
Unitholders) or LP Units (in the case of Exchangeable LP Holders) at a 5% discount to the Average Market Price (as defined in the Plan)
(the “distribution reinvestment”).
Under the Plan, your cash distributions are reinvested in additional Trust Units or LP Units, as applicable, which are accumulated and
held for your account under the Plan.
 back to top
|
What are the advantages of the Plan?
(a) The Plan provides a convenient and cost-effective way for you to increase your investment in Canexus without incurring service charges or brokerage fees.
(b) Trust Units or LP Units, as applicable, purchased with reinvested distributions are bought at a 5% discount to the Average Market Price.
(c) Funds to be invested in new Trust Units or LP Units, as applicable, on your behalf can be fully invested because fractions of Trust Units or LP Units,
as applicable (to six decimal places), as well as whole Trust Units or LP Units, as applicable, may be credited to your account under the Plan. However,
if you are a beneficial Unitholder you should speak with your broker, investment dealer, financial institution or other nominee with respect to the
treatment of fractional Trust Units or LP Units, as applicable, as some nominees will facilitate the accumulation of fractional Trust Units or LP Units,
as applicable, in your account, while others may not.
(d) Once enrolled, any future cash distributions on Trust Units or LP Units, as applicable, enrolled in the Plan will automatically be reinvested in
new Trust Units or LP Units, as applicable, which will be retained in your account.
back to top
|
Am I eligible to participate in the Plan, and if so, to what extent?
Except as noted in the Plan, holders of at least one Trust Unit of Canexus or one LP Unit of Canexus LP may enroll in the Plan at any time.
Residents of the United States are not permitted to participate in the Plan. However, residents of any other jurisdiction outside of Canada
may participate in the Plan if permitted by the laws of the jurisdiction in which they reside, subject to the limitations and restrictions set
out in the full Plan text. Distributions to be reinvested under the Plan on behalf of Holders who are non residents of Canada will be subject
to applicable non resident withholding tax.
The extent to which you may directly participate in the Plan will depend on the manner in which you hold your Trust Units or LP Units. If you
are a registered holder you may directly enrol in the Plan with Computershare Trust Company of Canada, as Plan agent (“Computershare” or the
“Plan Agent”). If you are a beneficial holder then in order to participate in the Plan, you must make arrangements through your broker, investment
dealer, financial institution or other nominee who holds Trust Units on your behalf to enrol in the Plan.
Registered Holders
You are a registered holder of Trust Units or LP Units if your Trust Units or LP Units, as applicable, are registered in your own name; that is,
they are not held on your behalf by a broker, investment dealer, financial institution or other nominee. If you are a registered owner and wish
to participate in the Plan then you may enroll directly with the Plan Agent.
AS THE TRUST UNITS ARE CURRENTLY HELD EXCLUSIVELY BY CDS CLEARING AND DEPOSITORY SERVICES INC. (“CDS”) AS A BOOK-ENTRY ONLY ISSUE, CDS IS THE ONLY
REGISTERED HOLDER OF TRUST UNITS.
Beneficial Holders
You are a beneficial Holder if you hold your Trust Units or LP Units through a broker, investment dealer, financial institution or other nominee.
If you are a beneficial Holder and wish to participate in the Plan, then you must determine whether your nominee allows participation in the Plan.
Please note that not all nominees will allow, nor is any nominee required to allow, participation in the Plan. If you wish to participate and your
nominee does not allow it, it is your responsibility to either transfer your Trust Units or LP Units to a different nominee allowing participation,
or into your own name and enroll directly. If your nominee allows participation, you must arrange for your nominee to enroll in the Plan on your
behalf. If you choose to enroll in the Plan, your nominee will be required to elect to participate on your behalf every distribution period.
Nominee Holders
If you are a broker, investment dealer, financial institution or other nominee for one or more beneficial Holders who wish to participate in the
Plan, then you must enroll on their behalf through CDS Clearing and Depository Services Inc. (“CDS”). You will be required to elect on behalf
of such beneficial Holders every distribution period.
back to top
|
How do I become a participant in the Plan?
Registered Holders
If you are an eligible registered Holder and wish to participate in the Plan, you must complete and deliver to Computershare an Authorization Form.
Once you have enrolled, your participation in the Plan continues automatically until terminated by you voluntarily, until you cease to be an eligible
Holder or until the Plan is terminated by Canexus and Canexus LP. No further action is required by you.
Computershare must receive your initial Authorization Form no later than 5:00 p.m. (E.S.T.) on the third Business Day immediately preceding a
distribution record date in order for your cash distribution to which such record date relates to be reinvested under the Plan. If Computershare
receives an initial Authorization Form after 5:00 p.m. (E.S.T.) on the third Business Day immediately preceding a distribution record date, then
your cash distribution to which such record date relates will not be reinvested under the Plan and the Authorization Form will be effective for
purposes of subsequent distributions only.
Beneficial Holders
If you are an eligible beneficial Holder and wish to participate in the Plan, you must have your broker, investment dealer, financial institution
or other nominee complete and deliver to Computershare (through CDS) an Authorization Form on your behalf. If you wish to participate in the
Plan on an ongoing basis, your nominee must elect to participate in the Plan on your behalf every distribution period.
Your nominee must provide the initial Authorization Form to CDS no later than 5:00 p.m. (E.S.T.) on the third Business Day immediately preceding a
distribution record date (or such other deadline as CDS may set from time to time) in order for your cash distribution to which such record date
relates to be reinvested under the Plan. If CDS receives an Authorization Form after such time, then your cash distribution to which such record
date relates will not be reinvested under the Plan and the Authorization Form will be effective for purposes of subsequent distributions only.
back to top
What will be the price of new Trust Units or LP Units purchased for my account under the Plan?
New Trust Units or LP Units, as applicable, purchased under the Plan with reinvested distributions will be priced at a 5% discount to the
Average Market Price.
back to top
|
Will certificates be issued for new Trust Units or LP Units purchased for me under the Plan?
Registered Holders
Certificates will not normally be issued for new Trust Units or LP Units, as applicable, that are purchased and held for your account under the Plan.
Instead, such units will be held by Computershare either in its own name or the name of its nominee and will be shown on your periodic statement of account.
Plan participants who require a Trust Unit or LP Unit certificate and who do not wish to terminate their participation in the Plan may obtain a
certificate for any number of whole Trust Units or LP Units held in their account by duly completing the reverse side of their Plan statement and
delivering it to Computershare.
Certificates will generally be issued within three weeks of the receipt by the Plan Agent of a request. Certificates will not be issued for fractional
rust Units or LP Units.
Beneficial Holders
Certificates will not normally be issued for new Trust Units or LP Units that are purchased and held by your broker, investment dealer,
financial institution or other nominee, through CDS, on your behalf under the Plan. Instead such Trust Units or LP Units will be held by
CDS on behalf of your nominee.
If you require a Trust Unit certificate or LP Unit certificate and do not wish to terminate your participation in the Plan you must first become a
registered Holder by transferring your Trust Units or LP Units into your own name or into the name of your nominee. You should contact your nominee
for assistance in this regard. No certificates will be issued to Unitholders unless and until such time as CDS ceases to hold Trust Units exclusively
in book-entry form.
In respect of the treatment of fractional Trust Units or LP Units, you should contact your nominee, as some nominees will facilitate the accumulation
of fractional Trust Units or LP Units in your account while others may not.
back to top
Can I sell units held for my account under the Plan?
If you are a registered Holder, any Trust Units or LP Units held by Computershare for your account under the Plan cannot be sold, pledged or
otherwise disposed of while so held. In order for Trust Units or LP Units enrolled in the Plan to be sold, pledged or otherwise disposed of,
you must first request that such Trust Units or LP Units be transferred into your name or into the name of your broker, investment dealer,
financial institution or other nominee by requesting a certificate representing such trust units. See Question #6 above.
back to top
|
How can I terminate my participation under the Plan?
Registered Holders
If you are a registered Holder, your participation continues automatically until your enrolment in the Plan is terminated.
You may request that your participation be terminated by duly completing the reverse side of your Plan statement and delivering it to Computershare.
When participation in the Plan is terminated, you may request a certificate for that number of whole Trust Units or LP Units held for your account
and a cash payment for any fractional Trust Units or LP Units for delivery generally within three weeks of termination of participation.
Any fractional Trust Unit or LP Unit interest will be paid based on the closing market price of a Trust Unit on the Toronto Stock Exchange on the
date notice of termination is received by Computershare.
Upon termination, if you do not request a certificate for the number of whole Trust Units or LP Units held, you may request in writing that
arrange for the sale of such holdings in the manner set forth above in Question #7. The Trust Units or LP Units may be sold on a commingled
basis with other Trust Units or LP Units by Computershare on behalf of other participants in the Plan. Net proceeds of such sale will be
forwarded from Computershare by cheque to you. Any brokerage fees or commissions payable on such sale will be pro-rated among all the
selling participants.
If you do not arrange for termination of your participation in the Plan prior to 5:00 p.m. (E.S.T.) on the third Business Day immediately
preceding a distribution record date, then your participation in the Plan will not be terminated until after the distribution payment
date to which such record date relates.
Beneficial Holders
If you are a beneficial Holder your broker, investment dealer, financial institution or other nominee must elect to participate on your
behalf every distribution period. However, unless otherwise instructed by you, your participation in the Plan will be continued by your
nominee every distribution period.
You may voluntarily terminate your participation in the Plan by contacting your nominee and advising them to deliver to Computershare
(through CDS, if applicable) on your behalf, a written notice of termination signed by your nominee. Your nominee must then make appropriate
arrangements with CDS (which may simply include not enrolling you in the Plan for that distribution period) to ensure that you are no longer
enrolled under the Plan. See “Termination of Participation” in the full Plan text.
When participation in the Plan is terminated, you may instruct your nominee to request a certificate for that number of whole Trust Units or
LP Units held for your account and a cash payment for any fractional Trust Units or LP Units. Any fractional Trust Unit or LP Unit interest will
be paid based on the closing market price of a Trust Unit on the Toronto Stock Exchange on the date notice of termination is received by
Computershare.
Notwithstanding the foregoing, no certificates will be issued to Unitholders unless and until such time as CDS ceases to hold Trust Units
exclusively in book-entry form.
If your nominee does not arrange for your withdrawal from the Plan by delivering notice thereof to CDS prior to 5:00 p.m. (E.S.T.) on the third
Business Day immediately preceding a distribution record date (or such other deadlines as CDS may set), then your participation in the Plan will
not be terminated until after the distribution payment date to which such record date relates.
back to top
|
Are there circumstances where I may not be able to acquire additional Trust Units or LP Units, as the case may be?
Your ability to acquire new Trust Units or LP Units under the Plan on any particular distribution payment date depends on the amount of equity, if any,
that Canexus or Canexus LP decides to make available under the Plan for that distribution payment date, and on the participation of other eligible
Holders in the Plan.
If, in respect of any distribution payment date, fulfilling all of the entitlements under the Plan would result in Canexus or Canexus LP exceeding the
limit on new equity set by Canexus and Canexus LP, then purchases of new Trust Units or LP Units on that distribution payment date will be prorated
among all participants.
If Canexus or Canexus LP determines not to issue any equity through the Plan on a particular distribution payment date, or to the extent that the
availability of new Trust Units or LP Units is prorated in accordance with the terms of the Plan, then participants will receive from Canexus or
Canexus LP, as applicable, the cash distributions to which they would otherwise be entitled on such date.
back to top
|
How will Computershare purchase new Trust Units of Canexus or LP Units of Canexus LP for me?
On each distribution payment date, Canexus and Canexus LP will pay to Computershare all cash distributions made on your Trust Units and LP Units,
respectively, which are enrolled in the Plan, and Computershare will use those funds to purchase new Trust Units and LP Units, respectively,
directly from Canexus and Canexus LP at a 5% discount to the Average Market Price.
Computershare will hold all such Trust Units or LP Units purchased and to be held for your account under Computershare in its own name or the
name of its nominee, in either case as your agent. All cash distributions on Trust Units or LP Units enrolled in the Plan will be reinvested
in new Trust Units or LP Units, as applicable.
These new Trust Units or LP Units will either be credited to your account with Computershare if you are a registered Holder or, to your
broker, investment dealer, financial institution or other nominee if you are a beneficial Holder.
back to top
|
What are the Canadian federal income tax consequences of participating in the Plan?
The following comments apply only to Unitholders who participate in the Plan and thereby acquire additional Trust Units. Exchangeable LP
Holders should obtain their own tax advice.
The fact that Canexus distributions are reinvested under the terms of the Plan does not relieve you of any liability for Canadian income
taxes that may be payable on such distributions.
Reinvestment of Distributions. The Canada Revenue Agency (the “CRA”) generally takes the position that should the fair market value on the
date of purchase of any Trust Units you acquire pursuant to the Plan exceed the purchase price, that amount must be included in your income
for income tax purposes. The amount reinvested by you will be your cost of the Trust Units acquired under the Plan plus, as described above,
the amount of any income included as a result of the CRA position relating to the discounted purchase price. Such total cost must be averaged
with the cost of all other Trust Units you hold for the purpose of determining the adjusted cost base of all your Trust Units held as capital
property. Capital gains or losses arising on a disposition of your Trust Units will be measured by reference to the adjusted cost base of all
your Trust Units.
Additional summary information regarding the income tax consequences of participating in the Plan is set forth in the text of the Plan itself.
You should consult your tax advisors concerning the tax implications of your participation in the Plan having regard to your particular
circumstances.
back to top
Where can I get further information?
If you have any questions regarding the Plan, please direct them to Computershare or to Canexus and Canexus LP as follows:
Computershare Trust Company of Canada
100 University Avenue, 9th Floor
Toronto, Ontario M5J 2Y1
Attention: Dividend Reinvestment Department
Telephone: 1-800-564-6253
Canexus Income Fund
801 – 7th Avenue S.W.
Calgary, Alberta T2P 3P7
Attention: Investor Relations
Telephone: (403) 571-7300
Toll-free: 1-866-574-7833
Facsimile: (403) 571-7800
Email: canexus@canexus.ca
back to top
|
|
0.050
