EXHIBIT 10.3    ALCAN EXECUTIVE DEFERRED SHARE UNIT PLAN, DATED SEPTEMBER 20,
2006, AS AMENDED.

 

 

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Alcan Inc.                               

EXECUTIVE

DEFERRED

SHARE

UNIT

PLAN

 
 

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Table of Contents

 

1.

INTRODUCTION 2

2.

PURPOSE OF PLAN 3

3.

TAX STATUS 3

4.

ELIGIBILITY 4

5.

TRANSFERS 5

6.

PARTICIPATION 6

7.

EPA VALUE 6

8.

TSR VALUE 6

9.

RSU VALUE 7

10.

DISCRETIONARY DSUs 7

11.

THE VALUE OF A DSU 7

12.

BENEFITS 9

13.

VESTING 12

14.

IN‑SERVICE WITHDRAWALS 12

15.

ADJUSTMENTS 12

16.

BENEFICIARY 12

17.

REDEMPTION 13

18.

RISKS AND UNCERTAINTIES 17

19.

NON‑ALIENATION 17

20.

AMENDMENT OR TERMINATION OF DSUP BY ALCAN 18

21.

ADMINISTRATION 18

APPENDICES

 * EPA Value Election Form (Appendix A)

 * TSR Value Election Form (Appendix B)

 * RSU Value Election Form (Appendix C)

 * Beneficiary Designation Form (Appendix D)

 * Change of Beneficiary Form (Appendix E)

 * Redemption Form (Appendix F)

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DEFERRED SHARE UNIT PLAN

 

  1. Introduction

This booklet sets out the terms of the Alcan Deferred Share Unit Plan (DSUP) as
amended and restated as at September 20, 2006. Deferred Share Units granted
before, shall be administered and paid in accordance with the terms of the DSUP
as they existed immediately prior to this amendment and restatement. If you
require legal, tax or other professional advice on whether or not to participate
in the DSUP, you should speak to your personal, legal or tax advisor.

 

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  2. Purpose of Plan

The DSUP is a recent addition to the range of benefits offered by Alcan to
employees to assist in their personal financial planning. It is a compensation
benefit plan which works in conjunction with the cash‑based Executive
Performance Award (EPA) Plan, the Total Shareholder Return Performance Plan (TSR
Performance Plan) and the Restricted Share Unit Plan (RSU Plan). Under the DSUP,
an eligible employee may elect to receive a selected portion of the potential
value of his or her EPA award (EPA Value) in the form of Deferred Share Units
(EPA DSUs) instead of cash, may elect to receive a selected portion of the
potential value of his or her TSR Performance Plan award (TSR Value) in the form
of Deferred Share Units (TSR DSUs) instead of cash and may also elect to receive
a selected portion of the potential value of his or her RSU Plan award (RSU
Value) in the form of Deferred Share Units (RSU DSUs). Except where specifically
provided otherwise in this booklet, EPA DSUs, TSR DSUs and RSU DSUs will be
referred to as DSUs. DSUs represent a notional investment in Alcan shares and
attract dividend credits which are also invested in DSUs. The balance of the EPA
Value (if any) is payable under the EPA Plan in cash, the balance of the TSR
Value (if any) is payable under the TSR Performance Plan in cash and the balance
of the RSU Value (if any) is payable under the RSU Plan in cash.

It is hoped that the DSUP will strengthen the link between the interests of
employees (like yourself) and the interests of Alcan's shareholders, by
encouraging the former to voluntarily elect to have a portion of their
remuneration tied to the long‑term performance of Alcan shares.

      3. Tax Status

The DSUP was introduced in March 1997, effective as of 1 January 1997, after
approval from Revenue Canada and Revenue Québec. Both Canada Revenue Agency
(formerly Revenue Canada) and Revenue Québec issued tax rulings confirming that
the issue of DSUs and Additional DSUs (corresponding to dividends paid on Alcan
shares, as explained in Section 12) will not attract Federal or Québec income
taxes until they are redeemed as provided for in the DSUP (see Section 17).

The DSUP has been amended and restated as at April 23, 2003, after Canada
Revenue Agency issued a tax ruling confirming that the issue of DSUs and
Additional DSUs on and after April 23, 2003 under the DSUP as amended will not
attract Federal income taxes until they are redeemed as provided for in the
DSUP.

 

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Alcan is seeking to obtain from Canada Revenue Agency a tax ruling to confirm
that the issue of DSUs and Additional DSUs on or after September 20, 2006 will
not attract Federal income taxes until they are redeemed as provided for in the
DSUP.

These rulings are based on the provisions of the Income Tax Act and the Loi sur
les impôts as they existed at the time the rulings were given. No Alcan Group
Company will be liable for any tax or other cost, loss or reduction in rights
incurred by you (or any other person entitled to benefits hereunder) as a result
of any change in these tax laws or the withdrawal of either of the above
rulings.

      4. Eligibility

To participate in the DSUP in respect of the EPA Value in any year (the EPA
year), you must meet every one of the following criteria on the last day of the
previous year:

 * You must be an active, permanent employee of an Alcan Group Company in Canada

 * You must be a resident of Canada; and

 * You must be in the following Grades on the North American and Canadian Salary
   Scales:

‑   43A or above

or

-    40A or 41A or 42A and at least 50 years of age.

To participate in the DSUP in respect of the TSR Value for a Performance Period
(as defined in the TSR Performance Plan), you must meet every one of the
following criteria on the 365th day previous to the end of the Performance
Period:

 * You must be an active, permanent employee of an Alcan Group Company in
   Canada;

 * You must be a resident of Canada; and

 * You must be eligible for a potential cash‑based Award under the TSR
   Performance Plan.

To participate in the DSUP in respect of the RSU Value for a Vesting Period (as
defined in the RSU Plan), you must meet every one of the following criteria on
the 365th day previous to the end of the Vesting Period:

•    You must be an active, permanent employee of an Alcan Group Company in
Canada;

 

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DEFERRED SHARE UNIT PLAN

 

 

 

 * You must be a resident of Canada; and

 * You must be eligible for a potential Award under the RSU Plan.

 

5. Transfers

If you are transferred to an Alcan Group Company outside Canada, the option
selected on your Annual Election Form will be applied to the EPA Value (if any),
TSR Value (if any) and RSU Value (if any) earned by you during your service in
Canada. Similarly, if you are transferred to an Alcan Group Company in Canada,
the option selected on your TSR Value Election Form or RSU Value Election Form
will be applied to the TSR Value (if any) or RSU Value (if any) earned by you
during your service in Canada.

 

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6. Participation

Participation in the DSUP is entirely voluntary on your part.

You may participate if you meet any of the eligibility tests as described in
Section 4.

 

7. EPA Value

If you are eligible and wish to participate with respect to your EPA Value, you
must complete and file an Annual Election Form with the Plan Administrator
before mid‑December of the year preceding the EPA year. In this Form, you will
be asked to indicate what portion (in tranches of 10%) of the EPA Value (if any)
shall be provided under the DSUP and what portion of the EPA Value will be
provided under the EPA Plan.

Your election made as above will be valid for the particular EPA year. An
election once made cannot be revoked or altered.

If you do not file an Annual Election Form by mid‑December as stated above, it
will be assumed that you do not wish to participate in the DSUP for the EPA
Value (if any) to be provided in respect of the particular EPA year.

If you first become eligible to participate in the DSUP during an EPA year, you
may only do so effective the following EPA year.

A new election must be made for every EPA year. Therefore, you need not
participate in the DSUP with respect to your EPA Value each and every year.

 

8. TSR Value

If you are eligible and wish to participate with respect to your TSR Value, you
must complete and file a TSR Value Election Form with the Plan Administrator at
least 12 months prior to the end of the applicable Performance Period. In this
Form, you will be asked to indicate what portion (in tranches of 10%) of the TSR
Value (if any) shall be provided under the DSUP and what portion of the TSR
Value will be provided under the TSR Performance Plan. In accordance with the
terms of the TSR Performance Plan and as an incentive to participate in the
DSUP, you may receive further TSR DSUs (see Section 12.2).

If you do not file a TSR Value Election Form by the deadline stated above, it
will be assumed that you do not wish to participate in the DSUP for the TSR
Value (if any) to be provided in respect of that Performance Period. Your
election made as above will be valid for the particular Performance Period. An
election once made cannot be revoked or altered. A new election must be made for
every Performance Period. Therefore, you need not participate in the DSUP with
respect to each and every Performance Period.

 

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9. RSU Value

If you are eligible and wish to participate with respect to your RSU Value, you
must complete and file a RSU Value Election Form with the Plan Administrator at
least 12 months prior to the end of the applicable Vesting Period. In this Form,
you will be asked to indicate what portion (in tranches of 10%) of the RSU Value
(if any) shall be provided under the DSUP and what portion of the RSU Value will
be provided under the RSU Plan. In accordance with the terms of the RSU Plan and
as an incentive to participate in the DSUP, you may receive further RSU DSUs
(see Section 12.3).

If you do not file a RSU Value Election Form by the deadline stated above, it
will be assumed that you do not wish to participate in the DSUP for the RSU
Value (if any) to be provided in respect of that Vesting Period. Your election
made as above will be valid for the particular Vesting Period. An election once
made cannot be revoked or altered. A new election must be made for every Vesting
Period. Therefore, you need not participate in the DSUP with respect to each and
every Vesting Period.

 

10. Discretionary DSUs

The Alcan Board may, from time to time, grant additional DSUs (Discretionary
DSUs) to individuals employed by an Alcan Group Company, on such dates, in such
amounts and subject to such time based vesting requirements as the Board may in
its sole discretion determine. Except where specifically provided otherwise in
this booklet, Discretionary DSUs will be referred to as DSUs.

 

11. The Value of a DSU

The Value of a DSU on any particular date is calculated as follows:

The average of the closing prices for Alcan Common Shares in board lots on The
Toronto Stock Exchange and in round lots on the New York Stock Exchange over the
21 consecutive trading days preceding the particular date in question.

 

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The Value of a DSU related to the TSR Value and the RSU Value is calculated in
U.S. currency. The Value of a DSU related to the EPA Value is calculated in
Canadian currency.  Any currency conversion required is to be made at the Bank
of Canada noon rate of exchange on the relevant day for the purpose of
calculating the Value of a DSU. 

This Value is used for calculation purposes under the DSUP, such as, to
determine the number of DSUs and Additional DSUs to be issued to you (see
Section 12.5) and the amounts payable on the redemption of your DSUP account
(see Section 17) and the termination of the DSUP (see Section 20).

 

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  12. Benefits        

12.1

EPA DSUs

issued under

DSUP

If you choose to participate in DSUP with respect in your EPA Value, you will
receive DSUs calculated by dividing the portion of your EPA Value determined
according to your election by the Value of one DSU (calculated as described
above on the last day of the year preceding the EPA year) and the result will be
rounded to six decimal places. These EPA DSUs will be credited to your DSUP
account on the same day as the disbursement of the balance of your EPA Value (if
any).

Here is an example:

 

 

Your Election:

 

Your EPA Value:

 

DSU Value:

 

EPA DSUs to be issued to you:

 

50% under DSUP

 

Can. $50,000.00

 

Can. $46.40

 

50% of 50,000.00    =    538.793103 EPA DSUs

         46.40

       

The balance of your EPA Value will be paid to you in cash under the EPA Plan on
the same day.

 

Effective the next calendar quarter after that day, these newly‑issued DSUs will
earn Additional DSUs in respect of cash dividends declared on Alcan Common
Shares (see below). The Additional DSUs will in all cases be redeemed and paid
out at the same time as the redemption and payout of your DSUs.

     

12.2

 

TSR DSUs

issued under

DSUP

If you choose to participate in the DSUP with respect to your TSR Value, you
will receive TSR DSUs calculated by dividing the portion of your TSR Value
determined according to your election by the Value of one DSU (calculated as
described above on the last day of the Performance Period) and the result will
be rounded to six decimal places. These TSR DSUs will be credited to your DSUP
as soon as possible after the end of the Performance Period. In accordance with
the TSR Plan, you may be entitled to receive further TSR DSUs if you elect to
exchange some or all of your Award into TSR DSUs.

Here is an example:

           

 

Your Election:

 

Your TSR Value:

 

DSU Value:

 

TSR DSUs to be issued to you:

 

 

50% under the DSUP

 

U.S. $150,000.00

 

U.S. $40.00

 

50% of 150,000   =   1,875 TSR DSUs

40.00

 

20% of 1,875   =   375 further TSR DSUs in accordance with the TSR Plan, as a
Company incentive to the Participant

 

1,875 + 375    =   2,250 TSR DSUs

 

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The balance of your TSR Value will be paid to you in cash under the TSR
Performance Plan.

 

Commencing in the next quarter following the end of the applicable Performance
Period, these newly‑issued TSR DSUs will earn Additional DSUs in respect of cash
dividends declared on Alcan Common Shares (see below). The Additional DSUs will
in all cases be redeemed and paid out at the same time as the redemption and
payout of your DSUs.

        12.3

RSU DSUs

issued under

DSUP

If you choose to participate in the DSUP with respect to your RSU Value, you
will receive RSU DSUs calculated by dividing the portion of your RSU Value
determined according to your election by the Value of one DSU (calculated as
described above on the last day of the Vesting Period) and the result will be
rounded to six decimal places. These RSU DSUs will be credited to your DSUP as
soon as possible after the end of the Vesting Period. In accordance with the RSU
Plan, you may be entitled to receive further RSU DSUs if you elect to exchange
some or all of your RSUs into RSU DSUs.

Here is an example:

           

Your election:

 

Your RSU Account:

 

RSU DSUs to be issued to you:

 

60% under DSU

 

2,000 RSUs

 

60% of 2,000   =   1,200 RSU DSUs

 

20% of 1,200   =   240 further RSU DSUs in accordance with the RSU Plan, as a
Company incentive to the Participant

 

1,200 + 240    =   1,440 RSU DSUs

           

Commencing in the next quarter following the end of the applicable Vesting
Period, these newly‑issued RSU DSUs will earn Additional DSUs in respect of cash
dividends declared on Alcan Common Shares (see below). The Additional DSUs will
in all cases be redeemed and paid out at the same time as the redemption and
payout of your DSUs.

        12.4

Discretionary

DSUs issued

under DSUP

If you are granted Discretionary DSUs, you will be advised in writing by Alcan
of the number of such DSUs to be credited to your DSUP account, the date on
which such DSUs are granted, the value of such DSUs as at the date of grant and
the vesting requirements (if any) applicable to such DSUs. Effective the next
calendar quarter after the date of grant of the Discretionary DSUs, these
newly‑issued DSUs will earn Additional DSUs in respect of cash dividends
declared on Alcan Common Shares (see below).

 

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12.5

Additional DSUs

in respect of

Dividends on

Alcan Shares

Whenever a cash dividend is declared on Alcan Common Shares, your DSUP account
will be credited with Additional DSUs as explained below:

1.  Dividends on Alcan Common Shares are declared in U.S. currency. The Canadian
currency equivalent of any such dividend will be determined at the Bank of
Canada noon rate of exchange on the date that dividend is declared for the EPA
DSUs.

2.   The EPA DSUs, TSR DSUs, RSU DSUs and discretionary DSUs (if any) in your
account will qualify, for a credit computed on the basis of the dividend
declared (excluding any DSUs of the above issued in the same calendar quarter as
the dividend declaration date).

3.   The dollar amount (in Canadian currency for the EPA DSUs and in U.S.
currency for TSR DSUs and RSU DSUs) obtained by multiplying your qualifying DSUs
by the dividend calculated as in (1) above is divided by the Value of a DSU
(calculated as on the date of dividend declaration) and the result is rounded to
six decimal places.

4.   The resulting DSUs are credited to your account.

Here is an example:

             

EPA DSUs

TSR DSUs/RSU DSUs    

 

Your current balance

(qualifying for Additional DSUs)

 

DSU Value on dividend declaration Date

 

Dividend declared per Alcan share

 

Additional DSUs to be credited

 

 

Your new balance of DSUs

 

 

2,350

 

             Can. $47.05

              

Can. $0.23

 

2,350 x 0.23  =  11.487779

           47.05 

         

2,361.487779

 

 

1,800 

 

         U.S. $36.01

 

           U.S. $0.20

 

1,800 x 0.20 =  9.997223

     36.01

 

       1,809.997223

 

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13. Vesting

 

All EPA DSUs, TSR DSUs and RSU DSUs are fully vested in your favour as soon as
they are credited to your DSUP account. Discretionary DSUs will vest in
accordance with the terms of the written agreement between you and Alcan
relating to the issue of such DSUs (see Section 12.4). Additional DSUs issued in
respect of dividends declared on Alcan Common Shares (see Section 12.5) will
have the same vested status as the DSUs to which those additional DSUs relate.
This means that Additional DSUs corresponding to the EPA DSUs, TSR DSUs and RSU
DSUs in your DSUP account will be fully vested in your favour as soon as they
are credited to your account and additional DSUs corresponding to Discretionary
DSUs (if any) in your DSUP account will vest at the same time as the
corresponding Discretionary DSUs.

 

14. In‑Service Withdrawals

 

As long as you are employed by an Alcan Group Company, you may not withdraw any
part of the balance in your DSUP account.

 

15. Adjustments

 

In the event of a stock split, stock dividend, combination or exchange of shares
by Alcan, a merger or any other event which materially affects the Alcan Common
Shares, the necessary and proportionate adjustments, as determined by the Alcan
Board, will be made with respect to the EPA DSUs, TSR DSUs, RSU DSUs, Additional
DSUs and discretionary DSUs (if any) in your DSUP account.

 

16. Beneficiary

 

Upon joining the DSUP for the first time, you are required to complete a
Beneficiary Designation Form indicating the name of your beneficiary (who must
be either your spouse or the legal representative of your estate) to whom the
benefits under your DSUP account will be paid in the event that you die while
your DSUP account is still open. It is not necessary to complete a Beneficiary
Designation Form every year; however, a Change of Beneficiary Form must be
completed if you wish to change the name of your beneficiary at any time.

 

If your designated beneficiary, predeceases you or if you have not designated a
beneficiary, all benefits under your DSUP account are payable to the legal
representative of your estate.

 

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  17. Redemption            

The EPA DSUs, TSR DSUs, RSU DSUs and vested discretionary DSUs (if any) in your
DSUP account will be redeemed in whole or in part only when you are no longer
employed by any Alcan Group Company or following your retirement from the Alcan
Group of Companies or following death. Discretionary DSUs (if any) which are not
vested at the time of your termination of employment, retirement or death shall
be forfeited and you (and your beneficiary or legal representative) will have no
further right or interest in such DSUs. The EPA DSUs, TSR DSUs, RSU DSUs and
discretionary DSUs in your DSUP account may be redeemed completely on one date
or in portions on several dates.  This redemption of DSUs will be made as
follows:

     

17.1

Termination of

employment or

Retirement

Redemption of your DSUs will occur not earlier than the date of your termination
of employment or retirement but not later than 15 December of the next calendar
year.

In order to redeem your EPA DSUs, TSR DSUs, RSU DSUs and vested discretionary
DSUs (if any) as above, you must file your Redemption Form indicating your
chosen date of redemption determined as above, the portion of EPA DSUs, TSR
DSUs, RSU DSUs and vested discretionary DSUs (if any) that you choose to redeem
on such date.  The Redemption Form must be received by Alcan at least five
working days prior to the chosen date of redemption.

If you do not include a redemption date, it will be assumed to be five working
days after receipt of your Redemption Form (but not earlier than the date of
your termination of employment or retirement and not later than 15 December of
the next calendar year following your termination of employment or retirement).

On the date of redemption determined as above, the EPA DSUs, TSR DSUs, RSU DSUs
and vested Discretionary DSUs (if any) in your DSUP account will be redeemed in
cash based on the Value of a DSU as determined in Section 11.

      17.2 Death

If you should die prior to termination of employment or retirement, your
designated beneficiary or (if you have no surviving beneficiary) the legal
representative of your estate may redeem your EPA DSUs, TSR DSUs, RSU DSUs and
vested Discretionary DSUs (if any) any time between the date of your death and
15 December of the following year by filing a Redemption Form.

If you should die after termination of employment or retirement but without
having filed a Redemption Form, your beneficiary or (if you have no surviving
beneficiary) the legal representative of your estate may redeem your EPA DSUs,
TSR DSUs, RSU DSUs and vested Discretionary DSUs by filing a Redemption Form on
or before 15 December of the year following your termination of employment or
retirement.

 

 

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If you should die after termination of employment or retirement and after filing
a Redemption Form, your EPA DSUs, TSR DSUs, RSU DSUs and vested Discretionary
DSUs will be redeemed in accordance with your Redemption Form and neither your
designated beneficiary nor the legal representative of your estate will be
permitted to file another Redemption Form.

All other rules as stated in this Redemption section will apply.

      17.3

Change of

Control

 

If you retire, die or are terminated, within twelve months of a Change of
Control Event of Alcan, the EPA DSUs, TSR DSUs, RSU DSUs and vested
Discretionary DSUs (if any) in your DSUP account will be redeemed in cash on the
date of retirement, death or termination based on the Value of DSU as determined
in Section 11 as of the date of a Change of Control Event. The amount of the
redeemed DSUs must be paid no later than twelve months from the Change of
Control Event.

If you retire, die or are terminated more than twelve months after the Change of
Control Event of Alcan, the EPA DSUs, TSR DSUs, RSU DSUs and vested
Discretionary DSUs (if any) in your DSUP account will be subject to the
redemption procedure described in Section 17.

A "Change of Control Event" shall mean any of the following:

1.  the acquisition of direct or indirect beneficial ownership of 50% or more of
the Alcan Common Shares by any person or group of associated persons acting
together or jointly and in concert;

2.  any amalgamation, merger, arrangement, reorganization or consolidation (or
substantially similar transactions or series of transactions) in respect of
Alcan, other than where (a) the Alcan Common Shares of Alcan after the
transaction would continue to represent two-thirds or more of the combined
voting securities of the resulting entity, without a concurrent substantial
change in the composition of Alcan's Board of Directors, or (b) it is effected
for the purpose of implementing a recapitalization, without there also occurring
an acquisition of direct or indirect beneficial ownership of 20% or more of the
Alcan Common Shares by any person or group of associated persons acting together
or jointly and in concert;

3.   the approval by Alcan's Shareholders of a plan for the complete or
effective dissolution of Alcan;

4.   the issuance of Alcan Common Shares in connection with an exchange offer
acquisition if such issuance results in the Shareholders holding less than
two-thirds of the combined voting securities of the resulting entity and there
is a concurrent substantial change in the composition of Alcan's Board of
Directors;

5.   the sale of all or substantially all of the assets of Alcan, other than (a)
to an owner or owners of at least two-thirds of Alcan's Common Shares, or (b) in
a manner so that the acquirer is thereafter controlled as to at least two-thirds
of its voting securities by the owner or owners of at least two-thirds of
Alcan's Common Shares, provided in each case that there is no concurrent
substantial change in the composition of the Alcan's Board of Directors;

 

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6.    the completion of the corporate approvals necessary on the part of Alcan
to give effect to any amalgamation, merger, arrangement, reorganization,
continuance or consolidation (or substantially similar transactions or series of
transactions) in respect of Alcan pursuant to which Alcan will not survive as a
stand-alone publicly-traded corporation - without limitation Alcan shall be
deemed not to have survived as a stand-alone publicly-traded corporation if (a)
there is no longer a liquid market for the Alcan Common Shares on the Toronto or
New York stock exchanges, (b) more that 50% of the Alcan Common Shares become
held by any person or group of associated persons acting together or jointly and
in concert, or (c) Alcan becomes a subsidiary of another corporation; or

7.    any occurrence pursuant to which individuals who were the incumbent
Directors on 1 November 2005 cease for any reason to constitute at least
two-thirds of Alcan's Board, provided that any individual who became a Director
subsequently whose election or appointment was approved by at least two-thirds
of the incumbent Directors shall also be considered to be an incumbent Director,
but further provided that no individual elected or appointed initially as a
result of an actual or threatened proxy contest or solicitation of proxies or in
connection with amalgamation, merger, arrangement, reorganization, consolidation
or share exchange acquisition transaction (or substantially similar transactions
or series of transactions) shall be deemed to be an incumbent Director.

For the purposes hereof a substantial change in the composition of the Alcan's
Board of Directors shall be any change involving the departure of at least three
Directors or any other change pursuant to which the Directors in office prior
thereto cease to constitute at least two-thirds of the members of the Board.  In
addition, any "change of control event" which occurs for the purposes of a
change of control agreement in force between Alcan and an employee of Alcan or
one of its subsidiaries as of the date hereof shall be deemed to be a Change of
Control Event hereunder in relation to that employee.

      17.4

Automatic

Redemption

If you, your designated beneficiary or the legal representative of your estate
do not file the Redemption Form as described above, then the redemption shall
take place on 15 December of the next calendar year following the year of the
earliest of your termination of employment, retirement or death.

 

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17.5

Additional DSUs

after Termination

of employment, Retirement or

Death

During the period between termination of employment, retirement or death and the
actual payment date, your DSUP account will be credited with Additional DSUs
whenever cash dividends are declared on Alcan Common Shares (see Section 12.5).
The Additional DSUs will in all cases be redeemed and paid out at the same time
as the redemption and payout of your DSUs.

      17.6

Payment of

redeemed DSUs

 

The cash value of your DSUP account, determined as above, will be paid by the
Alcan Group Company in Canada that last employed you (Final Canadian Alcan
Employer).  If you were employed by more than one Alcan Group Company in Canada
while you participated in the DSUP, your Final Canadian Alcan Employer shall be
reimbursed by each of your other Alcan employers in Canada for an amount equal
to the portion of the EPA DSUs, TSR DSUs, RSU DSUs and vested discretionary DSUs
redeemed by you, including any amount withheld in respect of taxes and other
source deductions, that is attributable (as determined by the DSUP
administrator) to your period of employment with each such Alcan employer in
Canada.  If you were employed by only one Alcan Group Company in Canada while
you participated in the DSUP, there will be no such reimbursement and the EPA
DSUs, TSR DSUs, RSU DSUs and vested discretionary DSUs redeemed by you shall be
paid only by your Final Canadian Alcan Employer.

The cash value of your DSUP account, determined as above, will in any event be
paid on or before the earlier of (a) 30 days from the date of redemption or (b)
31 December of the next calendar year following the year of the earliest of your
termination of employment from the Alcan Group of Companies, retirement or
death.

Federal and Provincial taxes will be deducted from such payment as required by
law irrespective of the country of residence at the time of redemption.

 

 

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DEFERRED SHARE UNIT PLAN

 

 

    18. Risks and Uncertainties          

The Value of a DSU is based on the price of an Alcan Common Share (see Section
11). No amount shall be paid under the DSUP, the EPA Plan, the TSR Performance
Plan, RSU Plan or any other arrangement (nor will any other form of benefit be
conferred) to compensate you or your beneficiary or estate, as the case may be,
should the price of an Alcan Common Share be lower on redemption than at the
time of election.

 

Unless otherwise determined by the Board, the DSUP will remain an unfunded
obligation of Alcan and all benefits payable under the DSUP represent merely
unfunded, unsecured promises of Alcan to pay a sum of money in the future. No
funds will be contributed by any person to a third party or otherwise set aside
to secure benefits under the DSUP.

          19. Non-Alienation          

Except for the designation of your beneficiary (see Section 16), no transfer by
you or your beneficiary or estate, as the case may be, of any right to any
payment or benefit under the DSUP, whether by operation of law or otherwise, and
whether by means of alienation by sale, transfer, assignment, bankruptcy,
pledge, attachment, charge or encumbrance of any kind, shall vest the transferee
with any interest or right, and any attempt to so alienate, sell, transfer,
pledge, attach, charge or otherwise encumber any such amount, whether presently
or thereafter payable, shall be void and of no force or effect.

 

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DEFERRED SHARE UNIT PLAN

 

 

   

20. Amendment or Termination of DSUP by Alcan

         

The DSUP may be amended or terminated at any time by the Alcan Board of
Directors provided that such amendment or termination shall not reduce any
rights which you have acquired prior to the amendment or termination date. No
such amendment or termination shall contravene the requirements of Income Tax
Regulation 6801(d). The Board of Directors will determine the termination date
of the DSUP.

 

In the event of termination of the DSUP, any EPA Value granted to you after the
date the DSUP is terminated will be paid under the EPA Plan in cash, and no part
of such EPA Value will be issued in DSUs, any TSR Value granted to you after the
date the DSUP is terminated will be paid under the terms of the TSR Performance
Plan and any RSU Value granted to you after the DSUP is terminated will be paid
under the terms of the RSU Plan. Additional DSUs in respect of dividends
declared on Alcan Common Shares will not continue to accumulate in your DSUP
account. No new participant will be admitted to the DSUP after that date.

 

If the DSUP is terminated, the cash value of all DSUs in your account will be
determined in accordance with Section 11 on the date of the termination of the
DSUP and these DSUs will be redeemed as soon as possible following the
termination of the DSUP.

          21. Administration          

Once every year, you will be provided with a statement showing the transactions
in your DSUP account including the vested status of your Discretionary DSUs (if
any).

 

On‑going administration of the DSUP will be handled by Alcan's Corporate Human
Resources (Executive Compensation) Department.

The DSUP is governed by the laws of the Province of Québec and the laws of
Canada.

 

If any part of the DSUP is determined to be void or unenforceable, the validity
and enforceability of remaining parts of the DSUP will not be affected as a
consequence.

 

Nothing contained in the DSUP will be deemed to give an employee the right to be
retained in the service of any Alcan Group Company or to interfere with the
rights of any Alcan Group Company to discharge or lay off an employee at any
time.

 

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APPENDIX A

 

ALCAN INC. DEFERRED SHARE UNIT PLAN

Annual Election Form for the EPA Year _________________

 

I,
                                                                                
, hereby exercise my option with respect to participation in the Alcan Deferred
Share Unit Plan (DSUP) in respect of the value of my EPA for the above EPA year
as follows:

 

         %     in DSUP

         %     in cash

    100%    Total

I understand and acknowledge that:

1. This election is irrevocable, and

2. I have read and understood the booklet setting out the terms of the DSUP.

3. For the EPA Year commencing                              , my election to
participate in the DSUP will be conditional upon receipt by Alcan of the advance
tax ruling described in Section 3 of the booklet setting out the terms of the
DSUP.

I hereby recognize that any advantage derived from my participation in the DSUP
is solely as a result of a provision of the Canadian Tax Laws and therefore has
no compensation value.  If I become ineligible to participate in the DSUP by
virtue of an international assignment or otherwise, I will receive no
compensation from Alcan for the loss of such eligibility.

The above election shall take effect for the indicated calendar year upon
receipt and acceptance of this election by Alcan, and it shall remain in effect
during the indicated calendar year. This deferral election is only valid for the
indicated year above. A new deferral election must be completed for each
subsequent year, as indicated in the Plan.

 

                                                  

Signature

 

 

                                                  

Employee Number

 

 

                                                  

Date

 

This election form must be returned by _______________ to the Plan
Administrator; or to Alcan's Human Resources (Executive Compensation)
Department. 

If you do not return this form as aforesaid, you mill be deemed to have declined
participation in the DSUP for the above EPA year.

 

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APPENDIX B

 

 ALCAN INC. DEFERRED SHARE UNIT PLAN

TSR Value Election Form for the Performance Period

commencing                               and ending
                                    

 

I,
                                                                                
, hereby exercise my option with respect to participation in the Alcan Deferred
Share Unit Plan (DSUP) in respect of the value of my TSR Performance Plan for
the above Performance Period as follows:

 

         %     in DSUP

         %     in cash

    100%    Total

I understand and acknowledge that:

1. This election is irrevocable, and

2. I have read and understood the booklet setting out the terms of the DSUP.

I hereby recognize that any advantage derived from my participation in the DSUP
is solely as a result of a provision of the Canadian Tax Laws and therefore has
no compensation value.  If I become ineligible to participate in the DSUP by
virtue of an international assignment or otherwise, I will receive no
compensation from Alcan for the loss of such eligibility.

The above election shall take effect for the indicated calendar year upon
receipt and acceptance of this election by Alcan, and it shall remain in effect
during the indicated calendar year. This deferral election is only valid for the
indicated year above. A new deferral election must be completed for each
subsequent year, as indicated in the Plan.

 

                                                  

Signature

 

 

                                                  

Employee Number

 

 

                                                  

Date

 

This election form must be returned at least 12 months prior to the end of the
Performance Period to the Plan Administrator; or to Alcan's Human Resources
(Executive Compensation) Department. 

If you do not return this form as aforesaid, you mill be deemed to have declined
participation in the DSUP for the above Performance Period.

 

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APPENDIX C

 

ALCAN INC. DEFERRED SHARE UNIT PLAN

RSU Value Election Form for the Vesting Period

commencing                               and ending
                                    

I,
                                                                                
, hereby exercise my option with respect to participation in the Alcan Deferred
Share Unit Plan (DSUP) in respect of the value of my RSU Plan for the above
Vesting Period as follows:

 

         %     in DSUP

         %     in cash

    100%    Total

I understand and acknowledge that:

1. This election is irrevocable, and

2. I have read and understood the booklet setting out the terms of the DSUP.

I hereby recognize that any advantage derived from my participation in the DSUP
is solely as a result of a provision of the Canadian Tax Laws and therefore has
no compensation value.  If I become ineligible to participate in the DSUP by
virtue of an international assignment or otherwise, I will receive no
compensation from Alcan for the loss of such eligibility.

The above election shall take effect for the indicated calendar year upon
receipt and acceptance of this election by Alcan, and it shall remain in effect
during the indicated calendar year. This deferral election is only valid for the
indicated year above. A new deferral election must be completed for each
subsequent year, as indicated in the Plan.

 

                                                  

Signature

 

 

                                                  

Employee Number

 

 

                                                  

Date

 

This election form must be returned at least 12 months prior to the end of the
Vesting Period to the Plan Administrator; or to Alcan's Human Resources
(Executive Compensation) Department. 

If you do not return this form as aforesaid, you mill be deemed to have declined
participation in the DSUP for the above Vesting Period.

 

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APPENDIX D

 

 ALCAN INC. DEFERRED SHARE UNIT PLAN

Beneficiary Designation Form

 

I,                                    , being a Participant of the Deferred
Share Unit Plan (DSUP) hereby designate the following person as my Beneficiary
for purposes of the DSUP and acknowledge that said person is:

 

Name:

 

 

Address:

 

   

 

 

 

Under the terms of the DSUP, I reserve the right to revoke this designation and
to designate another person as my Beneficiary.

 

                                                  

Signature

 

 

                                                  

Employee Number

 

 

                                                  

Date

 

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APPENDIX E

 

ALCAN INC. DEFERRED SHARE UNIT PLAN

Change of Beneficiary Form

I,                                              , being a Participant of the
Deferred Share Unit Plan (DSUP) hereby revoke the Designation of
                                               as my Beneficiary for purposes of
the DSUP and designate instead:

 

Name:

 

 

Address:

 

   

 

 

 

Under the terms of the DSUP, I reserve the right to revoke this designation and
to designate another person as my Beneficiary.

 

                                                  

Signature

 

 

                                                  

Employee Number

 

 

                                                  

Date

 
 

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APPENDIX F

 

ALCAN INC. DEFERRED SHARE UNIT PLAN

Redemption Form

 

1.        Participant's name:
                                                                                            

2.        I am:

____  the Participant

____  the Beneficiary of the Participant

____  a legal representative of the estate of the Participant

 

3.        I hereby wish to redeem the Deferred Share Units vested in the name of
the Participant in following proportion:

 

____  Partial Redemption:                     _____ % of Deferred Share Units

____  Complete Redemption (i.e. 100% of Deferred Share Units)

 

4.    I hereby wish to redeem the Deferred Share Units on the following date:

 

                                              

Redemption Date*

 

                                                  

Signature

 

 

                                                  

Employee Number (if applicable)

 

 

                                                  

Date

 

*Please refer to the Deferred Share Unit Plan Booklet for instructions.

 

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