|
|
| HTR Total Return
Fund (formerly HORIZON Total Return Fund) (the "Trust") hereby
establishes this distribution withdrawal plan (the "Plan") to provide
holders ("Unitholders") of units of the Trust ("Units") with a
means to request to receive a cash payment in each month determined with
reference to Monthly Distributable Income (as defined below) of the HTR Fund
(as referred to below) in accordance with the Plan, as described in further
detail below. |
|
| The participation of
Unitholders who request participation in the Plan ("Plan Participants")
will be subject to the terms of an amended and restated cash payment plan
agency agreement (the "Agreement") dated as of February 14, 2007, as
such agreement may be amended, restated or modified from time to time, between
the Trust, Middlefield TR Management Limited (the "Manager"), and MFL
Management Limited, as plan agent under the Plan (the "Plan Agent"), as
described below. In the event of any inconsistency between any provision set
forth herein and any provision set forth in the Agreement, the provisions set
forth in the Agreement shall govern. |
|
| Participation in the Plan |
| Each Unitholder
registered as such on the register of the Trust may become a Plan Participant
by notifying the Manager in writing of such Unitholder’s request that such
Unitholder participate in the Plan (an "Enrollment Request"). Pursuant
to such Enrollment Request, a Unitholder must (i) specify the number of Units
that the Unitholder owns and which the Unitholder would like to have subject to
the Plan (which may be any number of Units owned by the Unitholder as
determined in the Unitholder’s sole discretion) (the "Plan Units"),
and (ii) must deposit such Plan Units with the Plan Agent or, in the case of
Units that are held through The Canadian Depository for Securities Limited or
its nominee ("CDS"), such Plan Units will be segregated in an account of
CDS. A Plan Participant will be unable to sell, trade, transfer, encumber,
pledge, dispose of or take any other similar action with respect to such Plan
Units until the Plan Participant’s participation in the Plan is terminated
(see "Termination of Participation"). |
|
| Participation in the
Plan for any given month shall commence as of the last day of the month in
which an Enrollment Request has been properly received by the Manager (the last
day of each month being a "Cash Payment Determination Date"). A
Unitholder must provide an Enrollment Request and the other items required
pursuant to (i) and (ii) above at least 10 business days prior to a Cash
Payment Determination Date for participation in the Plan to commence as of that
Cash Payment Determination Date. |
|
| For greater certainty,
a Unitholder who is a Plan Participant may give more than one Enrollment
Request that relates to Units owned and which, at the time of each subsequent
Enrollment Request, are not already Plan Units subject to the Plan. |
|
| Beneficial holders
of Units will not be recognized by the Trust or the Plan Agent as registered
holders of Units or as Plan Participants. Accordingly, beneficial holders of
Units should contact their broker, securities dealer or other party through
whom they hold Units in order to participate in the Plan. The Trust, the
Manager and the Plan Agent may from time to time agree with CDS on procedures
designed to facilitate the efficient operation of the Plan with respect to
Units that are held through CDS. |
|
| Determination of Cash Payment |
| The amount of a Cash
Payment (as defined below) to be made by the Trust to a Participant in respect
of a Cash Payment Determination Date will be based on the number of whole Plan
Units held by the Participant that are to be repurchased by the Trust in
respect of the applicable Cash Payment Determination Date (the "Applicable
Units"), with such number of Applicable Units to be calculated
as: |
|
| (i) |
the number of Plan Units held by a Participant during such
month that are subject to the Plan, multiplied by a fraction, the numerator of
which is equal to the applicable Monthly Distributable Income (as defined
below) and the denominator of which is the total number of Units outstanding as
at the Cash Payment Determination Date; divided by |
|
|
| (ii) |
the net asset value ("NAV") per Unit (determined in
accordance with the declaration of trust of the Trust) as of the applicable
Cash Payment Determination Date. |
|
|
| The number of
Applicable Units as determined in accordance with the preceding sentence will
be rounded down to the nearest whole Unit. If a Participant has fewer Plan
Units that are subject to the Plan than the number of Applicable Units, then
the number of "Applicable Units" will be such lesser number of Plan Units. For
the pursposes of the Plan, "Monthly Distributable Income" means, in
respect of any month, the monthly distributable income of the HTR Fund (a trust
established under the laws of the Province of Ontario pursuant to a declaration
of trust on October 11, 2006) for such month, as determined by the Manager
based on its estimate of distributable income received by the HTR Fund during
such month, net of fees and expenses of the HTR Fund but without any deduction
for tax. |
|
| The Trust automatically
will repurchase as of the applicable Cash Payment Determination Date the number
of Applicable Units of each Participant and each Participant will then receive,
on or before the the 10th business day following the applicable Cash
Payment Determination Date (a "Cash Payment Date"), a cash payment (a
"Cash Payment") from the Trust calculated as: |
|
| (i) |
the number of Applicable Units, multiplied by |
|
|
| (ii) |
the NAV per Unit as at the Cash Payment Determination
Date. |
|
|
| Example of the Plan
Mechanics |
| The following is an
example of the mechanics of the Plan over a two month period. The example
set forth below is presented for illustrative purposes only and is not intended
to be, and should not be construed as, an indication of future performance of
the Trust, the NAV of the Trust or NAV per Unit, Monthly Distributable Income
or the number of Units outstanding at any given time. The actual performance of
the Trust, the NAV of the Trust and the NAV per Unit, Monthly Distributable
Income and the number of Units outstanding at any given time will depend upon a
multitude of factors, many of which are beyond the control of the Trust, the
Manager and the Plan Agent. |
|
| Month
1: |
|
| Investor A elects to
participate in the Plan and submits 1,000 of the 1,500 Units held by Investor A
to the Plan. Investor A provides its Enrollment Request more than 10 business
days prior to the end of month 1. As of the last day of month 1 (such day being
a Cash Payment Determination Date), the following information relates to the
Trust: |
|
Number of Units
outstanding: 2,000,000
Monthly Distributable Income: $140,000
NAV:
$20,000,000
NAV per Unit: $10 |
|
| Using the formuli
described above, Investor A’s Cash Payment in month 1 would be calculated
as follows: |
| Applicable Units
= |
Plan Units of
Investor A |
X (Monthly
Distributable Income divided by
Number of Units outstanding on the Cash
Payment Determination Date) |
| |
NAV per Unit as
of the |
Cash Payment
Determination Date |
| Applicable Units
= |
1,000 X
($140,000/2,000,000) |
|
| |
$10 |
|
| Applicable Units
= |
7 |
|
|
| Cash Payment |
= Applicable Units X NAV per Unit |
| |
= 7 X $10 |
| |
= $70 |
|
|
| Accordingly, a Cash
Payment of $70 would be paid by the Trust to Investor A on or before the
10th business day following the Cash Payment Determination Date in
month 1 and the 7 Applicable Units of Investor A would automatically be
repurchased by the Trust. |
|
| Month
2: |
|
| After the Cash Payment
Date in month 1, Investor A will have 993 Units subject to the Plan. At this
time, Investor A can either (i) terminate its participation in the Plan by
delivering notice of such termination after the Cash Payment Date and and no
later than ten (10) business days prior to the Cash Payment Determination Date
of month 2, (ii) add to the Plan some or all of its 500 Units not currently
subject to the Plan, by providing an additional Enrollment Request, or (iii) do
nothing and leave its 993 Plan Units in the Plan. |
|
| In month 2, Investor A
decides to leave its 993 Plan Units in the Plan. As of the last day of month 2
(such day being a Cash Payment Determination Date), the following information
relates to the Trust: |
|
Number of Units
outstanding: 1,998,000
Monthly Distributable Income: $138,000
NAV:
$20,979,000
NAV per Unit: $10.50 |
|
| Using the formuli
described above, Investor A’s Cash Payment in month 2 would be calculated
as follows: |
|
| Applicable Units
= |
Plan Units of
Investor A |
X (Monthly
Distributable Income divided by
Number of Units outstanding on the Cash
Payment Determination Date) |
| |
NAV per Unit as
of the |
Cash Payment
Determination Date |
| Applicable Units
= |
993 X
($138,000/1,998,000) |
| |
$10.50 |
| Applicable Units
= |
6.5 |
| Applicable Units
= |
6
(being 6.5 rounded down to the nearest whole number) |
|
| Under the Plan, the
number of Applicable Units is rounded down to the nearest whole number and
therefore Investor A’s Applicable Units in month 2 would be equal to 6.
|
| Cash Payment |
= Applicable Units X NAV per Unit |
| |
= 6 X $10.50 |
| |
= $63.00 |
|
|
| Accordingly, a Cash
Payment of $63.00 would be paid by the Trust to Investor A on or before the
10th business day following the Cash Payment Determination Date in
month 2 and the 6 Applicable Units of Investor A would automatically be
repurchased by the Trust. |
|
| After the Cash Payment
Date and prior to the day that is ten (10) business days prior to the Cash
Payment Determination Date for month 3, Investor A provides notice to the
Manager that it wants to terminate its participation in the Plan. Accordingly,
the remaining 987 Plan Units of Investor A will no longer be subject to the
Plan. However, Investor A can provide one or more subsequent Enrollment
Requests (in accordance with the procedure set forth under "Participation in
the Plan" above) should Investor A determine to participate in the Plan at some
future date. |
|
| Termination of
Participation |
|
| The Plan Agent shall
terminate the participation of a Plan Participant in the Plan upon the Manager
receiving written notice (as set forth below) from or on behalf of such Plan
Participant of its desire to so terminate its participation in the Plan. Upon
receipt of any such notice, the Manager shall promptly notify the Plan Agent.
If notice of termination is received by the Manager after a Cash Payment Date
and no later than ten (10) business days prior to the next Cash Payment
Determination Date, such notice of termination will have effect beginning with
such Cash Payment Determination Date. If the notice of termination is received
by the Manager after a Cash Payment Date and less than ten (10) business days
before the next Cash Payment Determination Date, termination of such Plan
Participant’s participation in the Plan will occur as soon as practical
after the next Cash Payment Determination Date. Upon the effectiveness of the
termination of a Plan Participant’s participation in the Plan, thereafter
no repurchases of Plan Units of such former Plan Participant will be made in
respect of subsequent Cash Payment Determination Dates (unless the Unitholder
provides a subsequent Enrollment Request) and the Plan Units of such former
Participant that were not repurchased under the Plan no longer will be subject
to the restrictions placed on Units pursuant to the Plan and the Plan Agent
will, and will instruct the Trust’s registrar and transfer agent to,
release such Plan Units to the Plan Participant. |
|
| In addition,
participation also will automatically terminate if the Participant has no more
Plan Units that are subject to the Plan or if the number of Plan Units of the
Participant that are subject to the Plan are, in the sole discretion of the
Manager, no longer reasonably capable of being repurchased pursuant to the
Plan. For example, this may occur if the number of Units of a Participant that
are subject to the Plan result in the number of Applicable Units, determined as
set forth above, being a number which is less than 1. |
|
| Disposing of Plan
Units |
|
| Plan Units shall not be
sold, transferred, encumbered, pledged or otherwise disposed of by Plan
Participants while such Plan Units remain in the Plan. A Plan Participant may
sell, trade, transfer, encumber, pledge or otherwise dispose of any Plan Units
not already purchased by the Trust pursuant to the Plan, by withdrawing such
Plan Units from the Plan, and, upon receipt of such a request, the Plan Agent
shall issue or cause to be issued, in the name of such Plan Participant, a Unit
certificate representing such Plan Units. |
|
| Administrative
Costs |
|
| Administrative costs
associated with the operation of the Plan will be borne by the Trust out of the
assets of the Trust. |
|
| Responsibilities of the Trust, the Manager and the Plan
Agent |
|
| None of the Trust, the
Manager nor the Plan Agent shall be liable for any act done by it in good faith
or for any good faith omission to act in connection with the administration of
the Plan. In particular, without limiting the generality of the foregoing, none
of the Trust, the Manager nor the Plan Agent shall have any liability with
respect to the prices at which Plan Units are repurchased by the Trust from
Plan Participants as set forth under "Determination of Cash
Payment". |
|
| The Trust will not be
required to repurchase Plan Units from a Plan Participant in any jurisdiction
where such issuance would be contrary to any applicable laws. |
|
| Plan Participants
should recognize that none of the Trust, the Manager nor the Plan Agent can
assure a gain or protect against loss as a result of the Trust repurchasing
Plan Units. To the extent that Units trade in the market at a premium to NAV
per Unit, Participants may be disadvantaged by participating in the Plan under
which Units are repurchased by the Trust on the basis of NAV per
Unit. |
|
| The repurchase of Plan
Units (that are capital property) pursuant to the Plan will generally result in
a Plan Participant incurring a capital gain (or capital loss) to the extent
that the amount paid by the Trust under the Plan exceeds (or is less than) the
adjusted cost base to the Plan Participant of the repurchased Plan Units.
Payments made under the Plan will not be characterized as returns of capital
for Canadian income tax purposes. The Trust strongly recommends that each
Unitholder consult its tax and other professional advisors regarding
pariticipation in the Plan and the tax impact thereof. |
|
| Amendments, Suspension or Termination of Plan and Plan
Agent |
|
| The Manager may also
amend or modify the Plan and/or the Agreement at any time in its sole
discretion, provided that if, in the Manager’s reasonable opinion the
amendment or modification is material to Plan Participants, then at least
thirty (30) days’ prior written notice thereof shall be given to Plan
Participants and to the Plan Agent by the Trust issuing a press release or by
publishing an advertisement in at least one major daily newspaper of general
and regular paid circulation in Canada, containing a summary description of the
amendment or modification, or in any other manner the Manager determines
appropriate. |
|
| The Manager may, in its
sole discretion and on behalf of the Trust, suspend the Plan: |
|
| (a) |
for the whole or part of a period during which normal
trading is suspended on one or more stock exchanges, options exchanges or
futures exchanges on which more than 50% of the portfolio (by value) of HTR
Fund is listed and traded; |
|
|
| (b) |
for any period during which the Manager determines that
conditions exist which render impractical the sale of any of the assets of the
Trust or the HTR Fund or which impair the ability of the Manager to determine
the value of the assets of the Trust or the HTR Fund; or |
|
|
| (c) |
when Monthly Distributable Income in a specific month is
less than or equal to $0.05 per Unit. |
|
|
| The Trust or the
Manager will provide written notice to the Plan Participants and the Plan Agent
of any suspension of the Plan, which notice shall be given by the Trust issuing
a press release or by publishing an advertisement in at least one major daily
newspaper of general and regular paid circulation in Canada. So long as the
circumstances described above which give rise to the suspension continue to
exist, the suspension of the Plan may last for: |
|
| (a) |
a period of up to 120 days; or |
|
|
| (b) |
a period exceeding 120 days upon additional prior written
notice to the Plan Participants and the Plan Agent (which notice shall be given
by the Trust issuing a press release or by publishing an advertisement in at
least one major daily newspaper of general and regular paid circulation in
Canada). |
|
|
| The Manager also has
the right to terminate the Plan, on behalf of the Trust, in its sole discretion
upon not less than thirty (30) days’ prior written notice to the Plan
Participants and the Plan Agent (which notice shall be given by the Trust
issuing a press release or by publishing an advertisement in at least one major
daily newspaper of general and regular paid circulation in Canada, and the
Trust shall also disclose that the Plan has been terminated in the Trust’s
annual information form which the Trust files under applicable securities laws
subsequent to the date of termination of the Plan). |
|
| The Manager may, in
consultation with the Plan Agent, adopt additional rules and regulations to
facilitate the administration of the Plan. |
|
| The Manager may, in its
sole discretion, and upon not less than ninety (90) days’ prior written
notice to the Plan Agent, remove the Plan Agent and appoint another person as
the Plan Agent. |
|
| Similarly, the Plan
Agent may resign as agent under the Plan upon not less than ninety (90)
days’ prior written notice to the Manager and upon delivery to the Trust
of all documents and monies being held by the Plan Agent on the Trust’s
behalf pursuant to the Agreement. |
|
| Effective
Date |
|
| The Plan will be
effective on the date on which all required regulatory approvals are obtained
by the Trust in respect of the Plan. |
|
| Notices |
|
| All notices required to
be given to Plan Participants will be provided as described herein or will
otherwise be mailed to them at the address shown on the records of the Plan
Agent. |
|
| Written communications
to the Plan Agent, the Trust or the Manager should be addressed as
follows: |
|
HTR Total Return
Fund
c/o Middlefield TR Management Limited
1 First Canadian
Place
58th Floor
P.O. Box 192
Toronto, Ontario
M5X
1A6
Attention: HTR Total Return Fund Administration
Telephone: (416)
362-0714
Facsimile: (416) 362-7925 |
|
| DATED February
14, 2007 |
