<PAGE>
EXECUTION COPY
Exhibit 10.6
TAX SHARING AND DISAFFILIATION AGREEMENT
BETWEEN
ALCAN INC.
AND
NOVELIS INC.
AND
ARCUSTARGET INC.
AND
ALCAN CORPORATION
AND
NOVELIS CORPORATION
Dated January 5, 2005
With effect as of the Effective Date
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TABLE OF CONTENT
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ARTICLE I - INTERPRETATION
3
1.01
Definitions..........................................................
3
1.02
Schedules............................................................
10
1.03
Headings.............................................................
10
1.04
Currency.............................................................
10
ARTICLE II - REPRESENTATIONS, WARRANTIES
AND COVENANTS
10
2.01 Representations, Warranties and
Covenants of Alcan in Favour
of Novelis........................................................
10
2.02 Representations, Warranties and
Covenants of Novelis in
Favour of Alcan and AC............................................
12
2.03 Representations, Warranties and
Covenants of AC in
Favour of AAC and Novelis.........................................
15
2.04 Representations, Warranties and
Covenants of AAC in Favour
of AC and Alcan...................................................
16
2.05 Representations, Warranties and
Covenants of Novelis and
Arcustarget in Favour of AC.......................................
17
2.06 Survival of Representations,
Warranties and Covenants................ 18
ARTICLE III - INDEMNIFICATION
19
3.01 Indemnification by
Alcan............................................. 19
3.02 Indemnification by
Novelis........................................... 19
3.03 Indemnification in the Event of
Mutual Breach........................ 19
3.04 Indemnification in the Event of a
Triggering Event................... 19
3.05 Indemnification in Other
Circumstances............................... 20
3.06 Event of Last
Act....................................................
20
ARTICLE IV - GENERAL LIABILITY FOR TAXES
20
4.01 General
Liability....................................................
20
ARTICLE V - ALLOCATION OF LIABILITIES FOR
TRANSFER TAXES
21
5.01 General
Allocation...................................................
21
ARTICLE VI - DISAFFILIATION
21
6.01 Year
End.............................................................
21
6.02 Liabilities Relating to
Pre-Disaffiliation Periods for Tax
Consolidated Groups...............................................
21
6.03
Exception............................................................
24
ARTICLE VII - CONTROL OF TAX CHALLENGES
24
7.01 Control of Challenge of Tax
Claims................................... 24
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ARTICLE VIII - COOPERATION, RECORD
RETENTION AND CONFIDENTIALITY
26
8.01 Cooperation and Record
Retention..................................... 26
8.02
Confidentiality......................................................
27
ARTICLE IX - TAX RETURNS
28
9.01 Tax
Returns..........................................................
28
ARTICLE X - TRANSFER PRICING ISSUES
28
10.01 Transfer Pricing
Issues.............................................. 28
ARTICLE XI - DISPUTE RESOLUTION
30
11.01 Dispute Resolution Agreement to
Apply................................ 30
ARTICLE XII - MISCELLANEOUS
30
12.01 Effect on Other Tax Sharing
Agreements............................... 30
12.02
Counterparts.........................................................
30
12.03 Entire
Agreement.....................................................
31
12.04 Inconsistencies with Separation
Agreement............................ 31
12.05 After-Tax
Liability..................................................
31
12.06 Governing
Law........................................................
31
12.07 Disclaimer Regarding Tax
Attributes.................................. 32
12.08 Tax Services -
Conflicts............................................. 32
12.09 Tax
Liability........................................................
32
12.10
Notices..............................................................
32
12.11
Interest.............................................................
33
12.12
Assignability........................................................
34
12.13
Severability.........................................................
34
12.14 Waivers of
Default...................................................
34
12.15
Deadlines............................................................
34
12.16
Amendments...........................................................
34
12.17 Further
Assurances...................................................
34
LIST OF SCHEDULES
SCHEDULE 2.01 (G)
Repayment Transactions............................. 36
SCHEDULE 2.02(D)
Certain Additional Covenants of Novelis
and Arcustarget................................. 37
SCHEDULE 2.04(B)(III) Certain Additional Covenants
of AAC................ 38
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TAX SHARING AND DISAFFILIATION AGREEMENT
entered into in the City of Montreal,
Province of Quebec dated January __, 2005
with effect as of the Effective Date
(as defined below).
BETWEEN: ALCAN INC., a corporation
organized under the Canada Business
Corporations Act ("ALCAN");
AND:
NOVELIS INC., a corporation incorporated under the Canada
Business
Corporations Act ("NOVELIS");
AND:
ARCUSTARGET INC., a corporation incorporated under the Canada
Business Corporations Act ("ARCUSTARGET");
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AND:
ALCAN CORPORATION, a corporation incorporated under the laws of
the
State of Texas ("AC");
AND:
NOVELIS CORPORATION (FORMERLY, ALCAN ALUMINUM CORPORATION), a
corporation incorporated under the laws of the State of
Texas ("AAC").
RECITALS:
WHEREAS Alcan Group (as defined below)
currently conducts the Alcan Businesses
(as defined below);
WHEREAS Alcan intends to effect a spinoff
of the Separated Businesses (as
defined below) to the holders of the Alcan
Common Shares (as defined below);
WHEREAS such spinoff will be achieved
through (i) the Reorganization (as defined
below), by which Alcan will transfer the
Separated Businesses to Arcustarget;
and (ii) the Arrangement (as defined
below), by which the holders of Alcan
Common Shares will become also shareholders
of Novelis, Arcustarget will become
a Subsidiary (as defined below) of Novelis
and Novelis and Arcustarget will
amalgamate;
WHEREAS Alcan and Novelis have agreed on
the anticipated tax consequences of the
Reorganization and the Arrangement in the
jurisdictions where the transactions
forming part of the Reorganization and the
Arrangement will take place;
WHEREAS Alcan intends in particular, and
Novelis accepts, that:
(i) certain transactions forming part
of the Separation (as defined below), for
Canadian income
tax purposes, be governed by paragraph 55(3)(b) of the Tax
Act (as defined
below) and sections 85.1 and 86 of the Tax Act, such that
no gain will be
realized by Alcan, Novelis and Alcan Common Shareholders
(as defined
below);
(ii) the Separation qualify for United
States federal income tax purposes as a
reorganization
within the meaning of Section 368(a) of the Code (as defined
below), pursuant
to which no gain or loss will be recognized for United
States federal
income tax purposes by Alcan, Novelis, AC, AAC or by the
shareholders of
Alcan under Section 355 of the Code and the related
provisions
thereunder; and
(iii) for United States federal income tax
purposes, the Separation Agreement
(as defined
below) be treated as a plan of reorganization within the
meaning of the
Code;
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WHEREAS the Reorganization will result in
certain entities ceasing to be part of
a group of entities that in certain
jurisdictions were filing, lodging or
otherwise submitting their tax returns on a
consolidated, combined, unitary or
other similar basis;
WHEREAS the Parties (as defined below)
desire, in connection with the
Reorganization and the Arrangement, to (i)
give each other certain
representations and warranties with respect
to certain tax matters, (ii) confirm
that no representations and warranties are
being given with respect to certain
other tax matters, (iii) set out certain
rules which shall govern their conduct
after the Separation and (iv) allocate
certain obligations with respect to
certain tax matters;
WHEREAS Alcan and Novelis have entered into
the Separation Agreement (the
"SEPARATION AGREEMENT") and several
ancillary agreements, as amended, modified,
supplemented or restated to complete the
Separation (as defined below); and
WHEREAS this Agreement (as defined below)
is an "Ancillary Agreement" for the
purposes of the Separation Agreement.
NOW THEREFORE, in consideration of the
mutual agreements, covenants and other
provisions set forth in this Agreement, the
Parties hereby agree as follows:
ARTICLE I -
INTERPRETATION
1.01 DEFINITIONS
The capitalized
words and expressions and variations thereof used in this
Agreement or in
its schedules shall have the meanings ascribed to them as
set forth
herein. Capitalized words and expressions and variations
thereof
not defined in
this Agreement shall have the meanings ascribed to them in
Schedule 1.01 -
Definitions of the Separation Agreement.
"50% INTEREST"
means with respect to any corporation (within the meaning of
the Code) stock
or other equity interests of such corporation possessing at
least 50 percent
of the total combined voting power of all classes of stock
or equity
interests entitled to vote or at least 50 percent of the total
value of shares of all
classes of stock or equity interests.
"AAC GROUP"
means, for any taxable period, AAC and any Subsidiaries of AAC
as of that
taxable period.
"AAC" has the
meaning set forth in the recitals of this Agreement.
"AAC BUSINESS"
means the active conduct of the trade or business (within
the meaning of
Section 355(b)(1) of the Code) by AAC of producing aluminum
rolled products
and ancillary activities as carried on immediately prior to
the Effective
Time.
"AC" has the
meaning set forth in the recitals of this Agreement.
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"AC BUSINESS"
means the active conduct by AC of a trade or business (within
the meaning of
Section 355(b)(1) of the Code) other than the AAC Business.
"AC GROUP"
means, for any taxable period, AC and its Subsidiaries as of
that taxable
period other than members of the AAC Group.
"AFFILIATE" of
any Person means any other Person that directly or
indirectly
through one or more intermediaries, Controls, is Controlled by,
or is under
common Control, with such first Person.
"AGREEMENT"
means this Tax Sharing and Disaffiliation Agreement between the
Parties,
including all of the schedules hereto, and as the same may be
amended from
time to time.
"ALCAN" has the
meaning set forth in the recitals of this Agreement.
"ALCAN
BUSINESSES" has the meaning set forth in the Separation
Agreement.
"ALCAN CLASS A
COMMON SHARES" or "NEW ALCAN COMMON SHARES" means the class
A common shares
of Alcan which Alcan will be authorized to issue upon the
Arrangement
becoming effective and which are to be issued under the
Arrangement to
Alcan Common Shareholders in exchange, in part, for Alcan
Common Shares,
and to be redesignated as Alcan common shares once the
current Alcan
Common Shares have been deleted from the share capital of
Alcan.
"ALCAN COMMON
SHAREHOLDERS" means the holders of Alcan Common Shares.
"ALCAN COMMON SHARES" means the
voting common shares of Alcan.
"ALCAN GROUP"
means Alcan and its Subsidiaries, whether held directly or
indirectly; for
greater certainty, (i) prior to the Effective Time, "Alcan
Group" includes
Arcustarget Group, (ii) on and after the Effective Time,
"Alcan Group"
excludes Arcustarget Group, and (iii) in all circumstances
"Alcan Group"
excludes Novelis.
"ALCAN
INDEMNIFIED PARTIES" has the meaning set forth in Section 3.02
of
this
Agreement.
"ALCAN PECHINEY
CORPORATION" means Alcan Pechiney Corporation, a Texas
Corporation.
"ALCAN PRIMARY
PRODUCTS CORPORATION" means Alcan Primary Products
Corporation, a
Texas Corporation.
"ALCAN PRODUCTS
CORPORATION" means Alcan Products Corporation, a Texas
Corporation.
"ALCAN SPECIAL
SHARES" means the non-voting, redeemable, retractable,
special shares
of Alcan, which Alcan will be authorized to issue upon the
Arrangement
becoming effective
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and which are to
be issued pursuant to the Arrangement to Alcan Common
Shareholders in
exchange, in part, for the Alcan Common Shares.
"ALCAN TAX
CONSOLIDATED GROUP" means a group of Persons that are
Affiliates
of Alcan and
that file, lodge or otherwise submit their Tax Returns on a
consolidated,
combined, unitary or similar basis.
"APPLICABLE LAW"
means any applicable law, statute, rule or regulation of
any Governmental
Authority or any outstanding order, judgment, injunction,
ruling or decree
by any Governmental Authority.
"ARCUSTARGET"
has the meaning set forth in the recitals of this Agreement.
"ARCUSTARGET
GROUP" means Arcustarget and its Subsidiaries, whether held
directly or
indirectly.
"ARRANGEMENT"
means the proposed arrangement under the provisions of
section 192 of
the CBCA on, and subject to, the terms and conditions set
forth in the
Plan of Arrangement.
"BUSINESS DAY"
means any day excluding (i) Saturday, Sunday and any other
day which, in
the City of Montreal (Canada) or in the City of New York
(United States),
is a legal holiday or (ii) a day on which banks are
authorized by
Applicable Law to close in the City of Montreal (Canada) or
in the City of
New York (United States).
"CANADIAN TAX
RULING" means the advance income tax ruling received by Alcan
from the CRA on
December 15, 2004 and as may be further revised,
supplemented or
modified at the request of Alcan confirming the Canadian
federal income
tax consequences of certain aspects of the Arrangement and
certain other
transactions.
"CBCA" means the
Canada Business Corporations Act.
"CLAIM" means
any assessment or reassessment, tax inquiry, audit,
examination,
investigation, dispute, litigation or other proceeding
(including, for
United States federal income tax purposes, a notice of a
potential Claim
such as a Form 5701 Notice of Proposed Adjustment), made by
the CRA, a Provincial
Revenue Authority, the IRS or any other Taxing
Authority, that
would result in any Tax liability to an Indemnitor.
"CLOSING AGENDA"
means the final closing agenda relating to the
Reorganization
and the Arrangement.
"CODE" means the
United States Internal Revenue Code of 1986, as amended.
"CONSTITUENT
DOCUMENTS" means, with respect to any Person, (a) the articles
of
incorporation, certificate of incorporation, constitution or
certificate
of formation (or
the equivalent organizational documents) of such Person,
(b) the by-laws,
operating agreement (or the equivalent governing
documents) of
such Person, (c) any document setting forth the manner of
election and
duties of the directors or managing members of
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such Person (if
any) and the designation, amount or relative rights,
limitations and
preferences of any class or series of such Person's stock
and (d) with
respect to any Person organized under the laws of Canada or
any province
therein, any unanimous shareholders agreement.
"CONTROL" or
"CONTROLLED" means, (a) for purposes of paragraph (a) of the
definition of
Triggering Event, control for purposes of the Tax Act, and
(b) for any
other purpose, the presence of one of the following: (i) the
legal,
beneficial or equitable ownership, directly or indirectly, of
more
than 50% (by
vote or value) of the capital or voting stock (or other
ownership or
voting interest, if not a corporation) of such Person or (ii)
the ability,
directly or indirectly, to direct the voting of a majority of
the directors of
such Person's board of directors or, if such Person does
not have a board
of directors, a majority of the positions on any similar
body, whether
through appointment, voting agreement or otherwise.
"CRA" means the
Canada Revenue Agency.
"DATE OF THE
U.S. INTERNAL DISTRIBUTION" means the date on which the U.S.
Internal
Distribution occurs.
"DISAFFILIATION
DATE" means, for any Former Member and its relevant Alcan
Tax Consolidated
Group in respect of their mutual rights and obligations
under this
Agreement, the date on which such Former Member ceases to be a
member of its
relevant Alcan Tax Consolidated Group in the course of or as
a result of the
Separation.
"DISAFFILIATION
STRADDLE PERIOD" means any Period that begins before and
ends after the
Disaffiliation Date.
"DISPUTE
RESOLUTION AGREEMENT" means the Agreement with Respect to
Dispute
Resolution dated
the Effective Date, as amended, restated or modified from
time to time,
and constituting an Ancillary Agreement to the Separation
Agreement.
"EFFECTIVE DATE"
has the meaning set forth in the Separation Agreement.
"EFFECTIVE TIME"
means 12:00:01 a.m. E.S.T. on the Effective Date.
"FINAL
DETERMINATION" means with respect to any issue (a) a decision,
judgment, decree
or other order by any court of competent jurisdiction,
which decision,
judgment, decree or other order has become final and is not
subject to
further appeal, (b) a closing agreement (in the United States,
whether or not
entered into under Section 7121 of the Code) or any other
binding
settlement agreement (in the United States, whether or not with
the
IRS) entered
into in connection with or in contemplation of an
administrative
or judicial proceeding by a Taxing Authority, or (c) the
completion of
the highest level of administrative proceedings if a judicial
contest is not
or is no longer available.
"FIRST GROUP"
has the meaning set forth in Section 10.01.
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"FISCAL YEAR
2004" means the period beginning January 1, 2004 and ending
December 31,
2004 or on the Disaffiliation Date if such date is prior to
December 31,
2004.
"FORM 10" means
the registration statement on Form 10 (including the
related
information statement) relating to the listing of Novelis
Common
Shares on the
New York Stock Exchange and the related registration of the
class of equity
securities that includes the Novelis Common Shares under
Section 12(b) of
the United States Securities Exchange Act of 1934, in the
form in which it
was declared effective by the Securities and Exchange
Commission.
"FORMER MEMBER"
means any Person that ceases to be part of an Alcan Tax
Consolidated
Group in the course of or as a result of the Separation and
that is a member
of the Novelis Group on or following the Effective Time.
"GOVERNMENTAL
AUTHORITY" means any court, arbitration panel, governmental
or regulatory
authority, agency, stock exchange, commission or body.
"GROUP" means
AAC Group, AC Group, Alcan Group, Arcustarget Group or
Novelis Group,
as the context requires.
"INDEMNIFIED
PARTY" has the meaning set forth in Section 7.01.
"INDEMNITOR" has
the meaning set forth in Section 7.01.
"IRS" means the United States
Internal Revenue Service.
"LIABILITIES"
has the meaning set forth in the Separation Agreement.
"NOVELIS" means
Novelis Inc., a corporation incorporated under the CBCA,
formed to
acquire under the Arrangement and independently carry on the
Separated
Businesses, and to be amalgamated with Arcustarget on the
Effective Date,
and, for greater certainty, includes the corporation
resulting from
the amalgamation of Novelis and Arcustarget and any
successors
thereto.
"NOVELIS COMMON
SHARES" means the voting common shares of Novelis to be
issued to
holders of Alcan Special Shares pursuant to the Arrangement in
exchange for
such Alcan Special Shares.
"NOVELIS GROUP"
means Novelis and its Subsidiaries, whether held directly
or indirectly;
for greater certainty, (i) prior to the Effective Time,
"Novelis Group"
excludes Arcustarget Group, and (ii) on and after the
Effective Time,
"Novelis Group" includes Arcustarget Group.
"NOVELIS
INDEMNIFIED PARTIES" has the meaning set forth in Section 3.01.
"PARTIES" means
the parties to this Agreement and, in the singular, means
any of them.
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"PERIOD" means
any taxable year or other taxable period.
"PERSON" means
any individual, partnership, joint venture, corporation,
limited
liability company, company, trust, unincorporated organization
or
Governmental
Authority.
"PLAN OF
ARRANGEMENT" means the plan of arrangement set out as Schedule
1.01 - "PA" of
the Separation Agreement, as the same may be amended from
time to
time.
"POST-DISAFFILIATION PERIOD" means any Period that begins after
the
Disaffiliation
Date and, in the case of any Disaffiliation Straddle Period,
that part of the
Disaffiliation Straddle Period that begins after the close
of the
Disaffiliation Date.
"PRE-DISAFFILIATION PERIOD" means any Period that ends on or before
the
Disaffiliation
Date and, in the case of any Disaffiliation Straddle Period,
that part of the
Disaffiliation Straddle Period through the close of the
Disaffiliation
Date.
"PRE-SEPARATION
PERIOD" means any Period that ends on or before the
Effective
Date.
"POST-SEPARATION
PERIOD" means any taxable year or other taxable period
that begins on
or after the Effective Date.
"PROVINCIAL
REVENUE AUTHORITY" has the meaning set forth in the Separation
Agreement.
"REORGANIZATION"
means the transactions relating to the transfers of
property,
directly or indirectly, to Arcustarget set out in Part I of the
Closing
Agenda.
"REORGANIZATION
DOCUMENTS" has the meaning set forth in the Separation
Agreement.
"SECOND GROUP"
has the meaning set forth in Section 10.01.
"SEPARATED
BUSINESSES" has the meaning set forth in the Separation
Agreement.
"SEPARATION" has
the meaning set forth in the Separation Agreement.
"SEPARATION
AGREEMENT" has the meaning set forth in the recitals of this
Agreement.
"STRADDLE
PERIOD" means any Period that begins before and ends after the
Effective
Date.
"SUBSIDIARY" of
any Person means any corporation, partnership, limited
liability
entity, joint venture or other organization, whether
incorporated
or
unincorporated, of which a majority of the total voting power of
capital
stock or other
interests entitled (without the occurrence of any
contingency) to
vote in the election of directors, managers or trustees
thereof, is at
the time owned or controlled, directly or indirectly, by
such Person. In
determining whether a Subsidiary is a Subsidiary of AAC or
AC for any
period, AAC and the Subsidiaries of AAC shall not be treated as
Subsidiaries of
AC.
"TAX" or "TAXES"
whether used in the form of a noun or adjective, means all
forms of
taxation, whenever created or imposed, including, but not
limited
to, taxes on
or
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measured by
income, capital, franchise, gross receipts, sales, use, excise,
payroll,
personal property (tangible or intangible), real property,
ad-valorem,
value-added, goods and services, leasing, leasing use or other
taxes, levies,
imposts, duties, charges or withholdings of any nature
whether imposed
by a country, locality, municipality, government, state,
province,
federation, or other Governmental Authority, including any
penalties, fines
and additions to tax and any interest on tax, compounded
or
otherwise.
"TAX ACT" means
the Income Tax Act (Canada), as amended.
"TAX RETURNS"
means all reports, returns, information statements,
questionnaires
or other documents or data (whether in printed, electronic
or other form)
required to be filed or that may be filed for any period
with any Taxing
Authority (whether domestic or foreign) in connection with
any Tax or Taxes
(whether domestic or foreign).
"TAXING
AUTHORITY" means any governmental entity imposing Taxes or
empowered or
authorized to administer any Taxes imposed by any country,
locality,
municipality, government, state, province, federation or other
Governmental
Authority.
"TRANSFER TAXES"
means any transfer, sales, use, real property transfer,
goods and
services, value-added, stamp, filing, recordation and similar
taxes and fees
imposed in connection with the Reorganization or the
Separation. For
greater certainty, Transfer Taxes shall not include income
taxes (including
taxes on capital gains).
"TREASURY
REGULATIONS" means the regulations promulgated by the United
States Treasury
Department under the Code.
"TRIGGERING
EVENT" means:
(a) for the purposes of the Tax Act,
an acquisition of Control of Novelis;
or
(b) for United States federal income
tax purposes, any action or actions
of or involving any Person (other than Alcan or any Person that is
an
Affiliate of Alcan immediately before or immediately after such
action
or actions), or any omission or omissions of such Person of an
action
or actions available to it, after the Date of the U.S. Internal
Distribution, if as a result of such action(s) or omission(s) a
Final
Determination is made that the Separation is not Tax-free (i)
by
failing to qualify as a distribution described in Sections 355
and
368(a)(1)(D) of the Code, (ii) because any stock or securities of
AAC
distributed by AC in the U.S. Internal Distribution fail to qualify
as
"qualified property" within the meaning of Section 355(c)(2) of
the
Code, or (iii) because Section 355(e) of the Code applies to
the
Separation.
"U.S. INTERNAL
DISTRIBUTION" means the distribution by AC to Alcan of all
the shares of
AAC in the course of the Separation.
"UNITED STATES"
means the United States of America.
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1.02 SCHEDULES
The following
schedules are attached to this Agreement and form part
hereof:
Schedule 2.01 (g)
Repayment Transactions
Schedule 2.02 (d)
Certain Additional Covenants of Novelis and Arcustarget
Schedule 2.04 (b)(iii) Certain Additional Covenants
of AAC
1.03 HEADINGS
The article,
section and paragraph headings contained in this Agreement are
for reference
purposes only and shall not affect in any way the meaning or
interpretation
of this Agreement.
1.04 CURRENCY
Unless otherwise
indicated herein, all Dollar amounts referred to in this
Agreement refer
to the lawful currency of the United States and all
payments must be
made in such currency.
ARTICLE II -
REPRESENTATIONS, WARRANTIES AND COVENANTS
2.01 REPRESENTATIONS, WARRANTIES AND
COVENANTS OF ALCAN IN FAVOUR OF NOVELIS
(a) Alcan represents as at the date
hereof and warrants to and in favour
of Novelis as at the date hereof (and acknowledges that Novelis
is
relying upon such representations and warranties in connection
with
the matters contemplated by this Agreement) as follows:
(i) to the best of
Alcan's knowledge, there is no "specified
shareholder" of Alcan as such expression is defined for the
purposes of paragraph 55(3.1)(b) of the Tax Act; and
(ii) all the facts relating to Alcan that are disclosed in the
Canadian Tax Ruling are true and accurate in all material
respects;
(b) Alcan covenants that it shall not,
and that it shall cause each other
member of the Alcan Group not to, enter into any transaction or
permit
any transaction within its control to occur that would cause Alcan
or
any other member of the Alcan Group that is a corporation to cease
to
be a "specified corporation" (within the meaning of the Tax Act) on
or
prior to the Effective Date, except as contemplated in the
Canadian
Tax Ruling, and Alcan and each such member will fulfill, and
will
cause any Person Controlled by it after the Effective Date to
fulfill,
all
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representations or undertakings provided by it to the CRA in
connection with the Canadian Tax Ruling;
(c) Alcan covenants that it shall not,
and that it shall cause each other
member of the Alcan Group not to, take any action, omit to take
any
action or enter into any transaction that could cause the
Arrangement
or any related transaction to be treated in a manner inconsistent
with
the Canadian Tax Ruling;
(d) Alcan covenants that it shall, and
that it shall cause each other
member of the Alcan Group that is required to file Canadian Tax
Returns to, file such Tax Returns (including, for greater
certainty,
any election forms under section 85 of the Tax Act) in accordance
with
the terms of the Plan of Arrangement and the Canadian Tax
Ruling
following the Effective Date;
(e) Alcan covenants that it shall, and
that it shall cause each other
member of the Alcan Group to, cooperate with Novelis and the
relevant
other members of the Novelis Group in the preparation and filing
of
all elections under the Tax Act as contemplated in the
Reorganization,
the Canadian Tax Ruling, the Plan of Arrangement and this
Agreement
(and of any similar elections that may be required under
applicable
provincial or foreign legislation); such elections shall be made
in
the form and within the time limits prescribed in the Tax Act
(or
applicable provincial or foreign legislation); except that Alcan
may
decide, in its sole discretion, to amend or late-file such
elections,
in which case Alcan shall be liable to indemnify any Novelis
Indemnified Party for any late-filing penalties; where an
agreed
amount is to be included in any such election, such amount will
be
within the range contemplated by the Tax Act (or applicable
provincial
or foreign legislation) and will be the amount contemplated by
the
Canadian Tax Ruling, the Plan of Arrangement and this Agreement,
where
such amount is specified therein and, in any other case, will be
the
amount determined by Alcan in its sole discretion; and
(f) Alcan covenants that it shall not,
and that it shall cause each other
member of the Alcan Group not to, take any action that would be
inconsistent with the Reorganization Documents;
(g) Alcan expressly acknowledges and
agrees that for United States federal
income tax purposes the Reorganization (as that term is defined in
the
Separation Agreement) is intended to be treated as a
reorganization
within the meaning of Section 368(a)(1)(D) of the Code and the
subsequent distribution of the Novelis Common Shares to the
shareholders of Alcan is intended to be treated as a
transaction
qualifying under Section 355 of the Code. Without limiting the
generality of the foregoing, Alcan expressly acknowledges and
agrees
that the transfer of the Separated Entities and the Separated
Assets
(as each of those terms are defined in the Separation Agreement)
to
Alcan shall occur simultaneously and pursuant to a single,
integrated,
plan of reorganization within the meaning of Section 368 of the
Code.
Alcan expressly acknowledges and agrees that it will treat and
it
hereby adopts the Separation Agreement, as supplemented by this
<PAGE>
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Agreement, as the plan of reorganization within the meaning of
Section
368 of the Code. Furthermore Alcan expressly covenants and agrees
that
all consideration received by Alcan from Arcustarget other than
the
shares of capital stock of Arcustarget (such consideration the
"Non-Stock Consideration") shall be immediately converted into
cash,
in accordance with the various refinancing transactions that are
a
part of this plan of reorganization, and Alcan shall use such
cash
immediately upon its receipt to repay the creditors referred to
in
SCHEDULE 2.01(G) and otherwise in accordance with the provisions
of
Section 361(b)(3) of the Code. Alcan hereby expressly covenants
and
agrees to (i) convert the "Non-Stock Consideration" into cash
in
accordance with the terms of this Section 2.01(g), and (ii) cause
the
repayment of the Alcan creditors referred to in SCHEDULE 2.01(G)
in
accordance with the terms of this Section 2.01(g).
2.02 REPRESENTATIONS, WARRANTIES AND
COVENANTS OF NOVELIS IN FAVOUR OF ALCAN AND
AC
(a) Novelis covenants that it shall,
and that it shall cause each other
member of the Novelis Group to, use its commercially reasonable
efforts and do all things reasonably required of it to cause
the
Reorganization to be completed within the time periods contemplated
by
the Separation Agreement;
(b) Novelis covenants that it shall,
and that it shall cause each other
member of the Novelis Group to, use its commercially reasonable
efforts and do all things reasonably required of it to cause
the
Arrangement to
become effective within the time periods contemplated
by the Separation Agreement;
(c) Novelis covenants that it shall
not, and that it shall cause each
other member of the Novelis Group not to, enter into any
transaction
or permit any transaction within its control to occur that would
cause
Alcan or any other member of the Alcan Group that is a corporation
to
cease to be a "specified corporation" (within the meaning of the
Tax
Act)
on or prior to the Effective Date, except as contemplated in
the
Canadian Tax Ruling, and Novelis and each other member of the
Novelis
Group will fulfill, and will cause any Person Controlled by it
after
the Effective Date to fulfill, all representations or
undertakings
provided by it to the CRA in connection with the Canadian Tax
Ruling;
(d) Novelis covenants that it shall
not, and that it shall cause each
other member of the Novelis Group not to, take any action, omit
to
take any action or enter into any transaction that could cause
the
Reorganization, the Arrangement or any related transaction to
be
treated in a manner inconsistent with the Canadian Tax Ruling or
that
could cause the Separation to be treated other than as a
Tax-free
under the Code as contemplated in the recitals of this
Agreement
(including but not limited to violating any of the specific
covenants
enumerated in SCHEDULE 2.02(D));
(e) Novelis covenants that it shall,
and that it shall cause each other
member of the Novelis Group that is required to file Canadian
Tax
Returns to, file such Tax Returns (including, for greater
certainty,
any election forms under section 85 of
<PAGE>
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the Tax Act) in accordance with the terms of the Plan of
Arrangement
and the Canadian Tax Ruling following the Effective Date. To
the
extent allowed by Applicable Law, Novelis shall, and shall cause
each
other member of the Novelis Group to, make adjustments to its
stated
capital and paid-up capital accounts in accordance with the terms
of
the Plan of Arrangement and the Canadian Tax Ruling following
the
Effective Date in order that the Reorganization and the Separation
are
implemented on a tax efficient basis for Alcan and the other
members
of the Alcan Group;
(f) Novelis covenants that it shall,
and that it shall cause each other
member of the Novelis Group to, use reasonable best efforts to
apply
for such amendments to the Canadian Tax Ruling and make such
amendments to the Separation Agreement as may be necessary or
desirable to obtain the Canadian Tax Ruling or to implement the
Plan
of Arrangement as may be desired by Alcan (i) to enable it to
implement arrangements or carry out transactions deemed
advantageous
by it for the purposes of the Separation, or (ii) to achieve a
tax
efficient treatment (to be determined in Alcan's discretion) of
transaction costs on a worldwide net basis;
(g) Novelis covenants that it shall,
and that it shall cause each other
member of the Novelis Group to, cooperate with Alcan and the
relevant
other members of the Alcan Group in the preparation and filing of
all
elections under the Tax Act as contemplated in the Reorganization,
the
Canadian Tax Ruling, the Plan of Arrangement and this Agreement
(and
of any similar elections that may be required under applicable
provincial or foreign legislation); such elections shall be made
in
the form and within the time limits prescribed in the Tax Act
(or
applicable provincial or foreign legislation) except that Alcan
may
decide, in its sole discretion, to amend or late-file such
elections,
in which case Alcan Shall be liable to indemnify any Novelis
Indemnified Party for any late-filing penalties; where an
agreed
amount is to be included in any such election, such amount will
be
within the range contemplated by the Tax Act (or applicable
provincial
or foreign legislation) and will be the amount contemplated by
the
Canadian Tax Ruling, the Plan of Arrangement and this Agreement,
where
such amount is specified therein and, in any other case, will be
the
amount determined by Alcan in its sole discretion;
(h) Novelis covenants that it shall
not, and that it shall cause each
other member of the Novelis Group not to, make any Tax election,
pay
or cause to be paid any distribution from a member of the
Novelis
Group or take any other action that could cause an actual increase
in
the Taxes for which a member of the Alcan Group is responsible or
that
will cause an actual reduction in the amount of any refund of
Taxes
payable to a member of the Alcan Group other than as a result of
the
Separation;
(i) Novelis represents as at the date
hereof, warrants and covenants to
and in favour of Alcan and AC as follows:
<PAGE>
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(i) for United States
federal income tax purposes, Novelis has the
plan and intention to and will from the date of this Agreement
until two (2) years after the Effective Date (A) maintain AAC's
status as a corporation directly engaged in the active conduct
of
the AAC Business, and (B) take all actions to carry out, and
not
take any action that would prevent or be inconsistent with the
completion of, the transactions contemplate
