FORM OF NOVELIS CONVERSION PLAN
Published on January 4, 2005
Exhibit 10.38
NOVELIS CONVERSION PLAN OF 2005
1. PURPOSES AND INTRODUCTORY STATEMENTS.
(a) The purposes of the Novelis Conversion Plan of 2005 (the "PLAN")
are (i) to encourage key employees to continue employment or service with
Novelis Inc. (the "COMPANY") and its subsidiaries following the Distribution
referred to below, (ii) to provide a means for encouraging key employees to
obtain an increased proprietary interest in the enterprise and an additional
incentive to further its growth and development, and (iii) to furnish maximum
incentive to those persons to improve operations and increase profits and to
strengthen the mutuality of interest between those persons and the Company's
shareholders by providing them with stock options.
(b) In connection with the distribution by Alcan Inc. ("ALCAN") of
substantially all of its aluminum rolled products businesses to the Company,
Alcan's capital reorganization and the related ancillary transactions (the
"DISTRIBUTION"), all Alcan stock options (the "ORIGINAL OPTIONS") held by
employees of Alcan or its subsidiaries who have become employees of the Company
or its subsidiaries are to be replaced with options to purchase the Company's
common shares (the "CONVERTED OPTIONS").
(c) Company common shares to be issued upon exercise of the Converted
Options will be delivered under this Plan. The terms of this Plan apply only to
the Converted Options. Certain provisions of the Alcan Executive Stock Option
Plan (the "FORMER PLAN") have been retained in this Plan for reference purposes
only, even though they have no future application given that future awards
(other than the Converted Options) will not be made under this Plan.
2. DEFINITIONS.
"Board of Directors" means the Board of Directors of the Company;
"Committee" means those members of the Human Resources Committee of the
Board of Directors who are not employees of the Company or of any
Subsidiary;
"Common Share" or "Share" means a Common Share of the Company;
"Company" means Novelis Inc.;
"Converted Options" means the options to purchase Shares of the Company to
be granted under this Plan, in connection with the Distribution, to
employees of the Company and its Subsidiaries as replacement options for the
Original Options;
"Director" means a Director of the Company;
"Effective Date" means the date on which an Original Option was granted or
any subsequent date so designated by the relevant Alcan committee at the
time the Original Option was granted;
"Former Plan" means the Alcan Executive Share Option Plan;
"Holding Period" has the meaning set out in paragraph 8 below;
"In the Money Amount" means in relation to an Original Option or a Converted
Option, as applicable, the amount by which the fair market value of the
Alcan common shares or the Shares that are subject to the option, as
applicable, exceeds the subscription price under such option.
"Majority Acquisition" means the acquisition by any person through an
unsolicited take-over bid of more than 50% of the voting shares of the
Company;
"Majority Election" means any election of Directors at which any person who
has made an unsolicited take-over bid succeeds (together with others) in
obtaining the election of a majority of the members of the Board of
Directors of his choice;
"Optionee" means a person who is granted Converted Options pursuant to this
Plan in connection with the Distribution;
"Option Period" has the meaning set out in paragraph 7 below;
"Original Options" means the options to purchase Alcan common shares granted
under the Former Plan that are to be replaced with Converted Options in
connection with the Distribution;
"Plan" means this Novelis Conversion Plan of 2005, adopted by the Company on
December 22, 2004, as amended from time to time;
"Retirement" means (unless otherwise determined by the Committee):
(i) retirement in accordance with the provisions of those employee benefit
plans of the Company or any Subsidiary covering the Optionee, or
(ii) if the Optionee is not covered by any such plan, as determined by the
Committee, or
(iii) the placing of a terminated Optionee on the Company's non-active
payroll in order to permit such Optionee to attain early retirement
age;
"Shareholder" means a holder of Common Share(s);
"Subsidiary" means any company in which the Company owns, directly or
indirectly, more than 50% of the voting stock;
"Vested Portion" means that number of Shares covered by a Converted Option
in respect of which the Converted Option may be exercised at any given time,
as determined in paragraph 7 below; and
"Waiting Period" means a period of at least three months commencing on the
Effective Date and such additional period, if any, as was established by the
relevant Alcan committee at the time of the grant of the Original Option,
such additional period to be subject to such terms and conditions, including
conditions for the earlier termination of such additional period, as the
Committee may determine.
3. ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee shall have
full and complete authority to interpret the Plan and to prescribe such
rules and regulations and make such other determinations as it deems
necessary or desirable for the administration of the Plan.
4. GRANT OF OPTIONS
Each Employee of Alcan or its Subsidiaries holding one or more Original
Options who becomes an employee of the Company or its Subsidiaries in
connection with the Distribution shall, upon the effectiveness of the
Distribution, be hereby granted a Converted Option for each such Original
Option. The number of Shares to be covered by a Converted Option shall be
the number determined on or following the Distribution, established in
accordance with the following:
A = B multiplied by C divided by D
Where:
A means the number of Shares to be covered by the Converted Option,
rounded down to the nearest integer,
B means the number of Alcan common shares covered by the Original
Option,
C means the volume-weighted average price of an Alcan common share on
The Toronto Stock Exchange for the last trading day prior to the
Distribution, in Canadian dollars, and
D means the volume-weighted average price of a Share on The Toronto
Stock Exchange for the first trading day following the Distribution,
in Canadian dollars.
In no event shall the aggregate In the Money Amount applicable to the
Converted Options determined immediately after the Distribution exceed the
aggregate In the Money Amount applicable to the Original Options determined
preceding the Distribution.
5. SUBSCRIPTION PRICE
The subscription price for each Share covered by a Converted Option shall be
the price in United States dollars determined on or following the
Distribution, established in accordance with the following:
E =F multiplied by D multiplied by USD divided by C
Where:
E means the subscription price for each Share covered by a Converted
Option, in United States dollars,
F means the subscription price for each Share covered by the Original
Option, in Canadian dollars,
C means the volume-weighted average price of an Alcan common share on
The Toronto Stock Exchange for the last trading day prior to the
Distribution, in Canadian dollars,
D means the volume-weighted average price of a Novelis common share on
The Toronto Stock Exchange for the first trading day following the
Distribution, in Canadian dollars, and
USD means nominal noon exchange rate for the United States dollar,
expressed in United States dollars per Canadian dollar, as published
by the Bank of Canada on the first trading day following the
Distribution.
6. EXERCISE OF OPTION
A Converted Option may be exercised in respect of the Vested Portion in
whole at any time or in part from time to time during the Option Period. The
subscription price of Shares shall be paid in full in cash at the time of
exercise of the Converted Option.
7. OPTION VESTING AND TERMINATION PERIODS
Each Converted Option shall be exercisable by the Optionee in respect of the
Vested Portion during a period ("Option Period") beginning on the later of
the date of first vesting and the expiry date of the Waiting Period, if any,
and terminating not later than ten years after the Effective Date, except
that:
7.1 in the case of certain Optionees who are, or may be deemed to be,
insiders of the Company in accordance with any applicable law, the
Waiting Period shall not be shorter than the period prescribed by such
law;
7.2 subject to the Option Period stated above, the Option Period shall
terminate not later than five years after the earlier of:
(a) the death of the Optionee, and
(b) the Retirement of the Optionee; and
7.3 the Option Period shall (unless otherwise determined by the Committee)
terminate immediately upon the resignation of the Optionee or other
termination (except if paragraph 7.2 applies) of employment of the
Optionee by the Company.
In the case of death, the Optionee's estate shall have the right to exercise
Converted Options at any time with respect to all, or from time to time with
respect to any portion, of the Vested Portion which the Optionee had not
previously exercised.
All rights under an Converted Option unexercised in whole or in part at the
termination of the Option Period shall be forfeited.
The Vested Portion of a Converted Option granted in respect of an Original
Option that was vested on or before the date of Distribution shall be all of
the Shares covered by such Converted Option, as and from the date of
Distribution. The Vested Portion of a Converted Option granted in respect of
an Original Option that was not vested on the date of Distribution shall be:
one-quarter of the Shares covered by such Converted Option, as and from the
first anniversary of the date of Distribution; one-half of the Shares
covered by such Converted Option, as and from the second anniversary of the
date of Distribution; three-quarters of the Shares covered by such Converted
Option, as and from the third anniversary of the date of Distribution; and
all of the Shares covered by such Converted Option, as and from the fourth
anniversary of the date of Distribution.
8. DISPOSAL OF SHARES ACQUIRED
Shares issued pursuant to the exercise of a Converted Option may not be
disposed of by the Optionee until the expiry of such period ("Holding
Period"), if any, as may have been prescribed by the relevant Alcan
committee at the time of grant of the Original Option, except that, if such
Holding Period has been prescribed:
9.1 in the event of the exercise of a Converted Option by the estate of a
deceased Optionee, the estate may dispose of the related Shares
immediately;
9.2 in the event of the exercise of a Converted Option after the
Retirement of the Optionee, the Optionee may dispose of the related
Shares immediately;
9.3 the Committee may, in the light of special circumstances affecting an
Optionee and at its discretion, waive any Holding Period which has
been prescribed in respect of such Converted Option; and
9.4 notwithstanding the above, in the case of certain Optionees who are,
or may be deemed to be, insiders of the Company in accordance with any
applicable law, the Holding Period shall not be shorter than the
period, if any, prescribed by such law.
9. NON-ASSIGNABLE
No Converted Option or any interest therein shall be assignable by the
Optionee otherwise than by will or the laws of descent and distribution.
During the life of the Optionee, a Converted Option shall be exercisable
only by the Optionee or the Optionee's legal representative.
10. EFFECTS OF CERTAIN TRANSACTIONS
In the event of any change in the outstanding Shares by reason of any stock
dividend, stock split, recapitalization, merger, consolidation, combination
or exchange of Shares or other similar corporate change, an equitable
adjustment shall be made in the number or kind of Shares subject to
outstanding options and/or in the subscription price of such Shares. Such
adjustment shall be made by the Committee and shall be conclusive and
binding for all purposes of the Plan.
11. AMENDMENT AND TERMINATION
The Board of Directors may at any time and from time to time amend, suspend
or terminate the Plan in whole or in part, provided however that the Board
of Directors may not, without approval of the holders of a majority of the
Shares present and voting in person or by proxy at a meeting of Shareholders
of the Company, materially increase the benefits accruing to Optionees, or
increase the number of Shares issuable pursuant to the Plan, or materially
modify the requirements as to eligibility for participation in the Plan. No
such amendment, suspension or termination may, without the consent of the
Optionee to whom Converted Options shall theretofore have been granted,
adversely affect the rights of such Optionee.
The Board of Directors or the Committee may authorize the issuance of
benefits under this Plan in connection with the assumption of, or
substitution for, outstanding benefits previously granted to individuals who
become employees of the Company or any subsidiary as a result of any merger,
consolidation, acquisition of property or stock, or reorganization other
than upon the occurrence of a Majority Acquisition or a Majority Election,
upon such terms and conditions as the Committee may deem appropriate.
12. CONDITION FOR ISSUANCE OF SHARES
The obligation of the Company to issue Shares pursuant to the exercise of
Converted Options shall be subject to the condition that such Shares shall
have been registered with the Securities and Exchange Commission,
Washington, D.C., U.S.A. and shall have been listed or authorized for
listing upon the relevant stock exchanges.
13. CHANGE OF CONTROL
Upon the occurrence of a Majority Acquisition or a Majority Election, all
Converted Options shall become immediately exercisable and all Waiting
Periods and Holding Periods shall be waived, provided that Optionees who
are, or may be deemed to be, insiders of the Company in accordance with any
applicable law shall be subject to such law.
14. SHARES AVAILABLE UNDER THE PLAN.
There is hereby reserved for issuance under the Plan that number of Shares
covered by the aggregate of all Converted Options issued under the Plan,
determined on or following the Distribution in accordance with paragraph 4
of the Plan.
15. TAXES.
The Company shall be entitled to withhold the amount of any tax attributable
to any amounts payable or Shares deliverable under the Plan, after giving
the person entitled to receive such payment or delivery notice and the
Company may defer making payment or delivery as to any award, if any such
tax is payable until indemnified to its satisfaction. A participant may pay
all or a portion of any required withholding taxes arising in connection
with the exercise of a Converted Option by electing to have the Company
withhold Shares having a fair market value equal to the amount required to
be withheld.
16. GOVERNING LAW.
The Plan and any actions taken in connection herewith shall be governed by
and construed in accordance with the laws of Ontario and the laws of Canada
applicable therein.
17. APPROVAL.
The Plan was adopted by the Board of Directors on December 22, 2004.
Pursuant to the rules of The Toronto Stock Exchange and the New York Stock
Exchange, no further shareholder approval of this Plan was required.