First Supplemental Agreement – Alcoa

FIRST SUPPLEMENTAL AGREEMENT

to the Aluminium Project Framework

Shareholders Agreement

dated 3/1/1431H, corresponding to 20 December

2009 G

SAUDI ARABIAN MINING COMPANY (MA’ADEN)

and

ALCOA INC.

FIRST SUPPLEMENTAL AGREEMENT

THIS FIRST SUPPLEMENTAL AGREEMENT (hereinafter referred to
as the “Supplemental Agreement“), is made and entered into on
14/4/1431H, corresponding to 30/3/2010G, by and between:

(1)

SAUDI ARABIAN MINING COMPANY (MA’ADEN)

, a company organized under the laws and regulations of the Kingdom of Saudi
Arabia with commercial registration No.1010164391, having its head office and
address at PO Box 68861, Riyadh 11537, Kingdom of Saudi Arabia (together with
its legal successors and permitted assigns, hereinafter referred to as
“Ma’aden“); and

(2)	ALCOA INC. , a corporation under the laws of the Commonwealth of Pennsylvania, USA, whose principal place of business is at 390 Park Avenue, New York, NY 1022, USA, (together with its legal successors and permitted assigns, hereinafter referred to as “Alcoa“),

(hereinafter jointly referred to as the “Parties” or
individually as a “Party“).

RECITALS:

(A)	The Parties entered into the Original Agreement on 3/1/1431H corresponding to the 20^th day of December 2009 G pursuant to which the Parties desired to enter into the Joint Venture in respect of the Project (as such terms are defined in the Original Agreement).

(B)	The Parties entered into a Signing Side Letter also on 3/1/1431H corresponding to the 20^th day of December 2009 G clarifying certain matters in the Original Agreement.

(C)	The Parties have agreed to amend the Original Agreement by entering into this Supplemental Agreement.

IT IS AGREED as follows:

1.	INTERPRETATION

1.1	Definitions

In this Supplemental Agreement, the following words and expressions shall
have the following meanings:

“Entire Agreement” means the Original Agreement as amended
by this Supplemental Agreement;

“Original Agreement” means the Aluminium Project Framework
Shareholders Agreement that was entered into on 3/1/1431H corresponding to the
20^th day of December 2009 G, between the Parties, as amended by the
Signing Side Letter of even date;

“Parties” means the signatories to this Supplemental
Agreement; and

“Supplemental Agreement” means this supplemental agreement.

1.2	One agreement

The Original Agreement, together with this Supplemental Agreement, shall,
with effect on and from the date hereof, be read and construed as one document
and references in the Original Agreement to “this Agreement” shall from the date
hereof (but not for any purposes prior to the date hereof) incorporate
references to this Supplemental Agreement.

1.3	Terms defined

In this Supplemental Agreement, unless the context requires otherwise, terms
defined in the Original Agreement and not otherwise defined herein, shall have
the same meanings in this Supplemental Agreement. The principles of
interpretation in Clause 1.2 of the Original Agreement shall also apply
to this Supplemental Agreement.

1.4	Provisions incorporated by reference

The provisions of Clauses 1.3, 19 – 26 (inclusive) of the
Original Agreement apply to this Supplemental Agreement as though incorporated
herein.

1.5	Immediate effect

The amendments provided for in this Supplemental Agreement shall, save where
expressly provided to the contrary, take effect forthwith upon execution of this
Supplemental Agreement by the Parties.

2.	AMENDMENTS TO THE ORIGINAL AGREEMENT

2.1	Amended wording

Clause 4.1 of the Original Agreement shall be deleted and replaced
with the following new Clause 4.1:

“4.1

Share Capital as of Incorporation

(a)

The Parties acknowledge that each Company shall be incorporated with an
initial Share Capital, and the ownership of such shares as at the date of
incorporation shall be, as set out in the tables below:

(i)

In the case of the Mining & Refining Company:


Shareholder	Shareholder Percentage	Number of Shares	Paid In Capital
Ma’aden	74.9%	381,990	SR 3,819,900,000
Alcoa	25.1%	128,010	SR 1,280,100,000
TOTAL	100%	510,000	SR 5,100,000,000

(ii)

In the case of the Smelting Company:


Shareholder	Shareholder Percentage	Number of Shares	Paid In Capital
Ma’aden	74.9%	572,985	SR 5,729,850,000
Alcoa	25.1%	192,015	SR 1,920,150,000
TOTAL	100%	765,000	SR 7,650,000,000

In the case of the Rolling Company:


Shareholder	Shareholder Percentage	Number of Shares	Paid In Capital
Ma’aden	74.9%	292,110	SR 2,921,100,000
Alcoa	25.1%	97,890	SR 978,900,000
TOTAL	100%	390,000	SR 3,900,000,000

(b)

Each Share shall entitle the holder thereof to one (1) vote on each matter
coming before the Shareholders.

(c)

Notwithstanding anything to the contrary contained in the Articles of
Association of each Company, each Share shall entitle the holder thereof to
receive Share Distributions in accordance with Clause 11 of this
Agreement.”

2.2	Amendment to Clause 13

Notwithstanding Clause 13.1(b), the Parties agree that, in view of the
changes to the proposed initial Shareholder Percentages, the amounts payable by
Alcoa in respect of the Entry Payment shall be confirmed and the Agreed
Pre-Incorporation Costs shall be modified as follows:

(i)

the Entry Payment shall comprise an amount of eighty million US Dollars
(US$80 million) which was paid by Alcoa to Ma’aden on 7/1/1431H, corresponding
to 24 December 2009 G; and

(ii)

the amount of Alcoa’s pro rata share of the Agreed Pre-Incorporation Costs
incurred by Ma’aden prior to the Calculation Date, based on its Shareholder
Percentage set out in Clause 4.1 shall comprise thirty-four million US
Dollars (US$34 million) which shall be due and payable by Alcoa to Ma’aden on
1 August 2010, being the Deferred Payment Date (as defined in the Signing Side
Letter).

2.3	Amended wording

Clause 17.1 of the Original Agreement shall be deleted and replaced
with the following new Clause 17.1:

“17.1

General Prohibitions

(a)

Unless permitted by this Clause 17 or with the prior written consent
of Alcoa, neither Ma’aden nor any Affiliate of Ma’aden shall do, or agree to do,
any of the following:

(i)

sell, transfer or otherwise dispose of, any of its Transferable Interests or
any interest in any of its Transferable Interests;

(ii)

encumber any of its Transferable Interests or any interest in any of its
Transferable Interests;

(iii)

enter into any agreement or arrangement in respect of the votes or other
rights attached to any of its Transferable Interests; or

(iv)

enter into any agreement or arrangement to do any of the foregoing.

(b)

The Alcoa Affiliate that will hold Alcoa’s Transferable Interests in the
Smelting Company and the Rolling Company shall be directly or indirectly wholly
legally and beneficially owned by Alcoa, and the Alcoa Affiliate that will hold
its Transferable Interests in the Mining & Refining Company shall be
directly or indirectly wholly legally and beneficially owned 60% (or more) by
Alcoa, and 40% by Alumina Limited, a company listed on the Australian Stock
Exchange with registered number ABN 85 004 820 419 (“Alumina
Limited“), subject to the following provisions of this sub clause (b).
Unless permitted by Clauses 14 or 15 or this Clause 17 but subject
to Clause 17.1(c) below, Alcoa shall not and shall procure that its
Affiliates shall not, (notwithstanding the provisions of Clause 17.2)
without the prior written consent of Ma’aden do, or agree to do, any of the
following:

(i)

enter into any transaction or series of transactions which have the aim or
effect of directly or indirectly selling, transferring or otherwise disposing of
legal and/or beneficial interests in relation to the Transferable Interests to
any person who is not directly or indirectly wholly legally and beneficially
owned by Alcoa (or in the case of any Transferable Interests in the Mining & Refining Company 60% (or more) by Alcoa and 40% by Alumina Limited);

(ii)

enter into any agreement or arrangement in respect of the votes or other
rights attached to any of its Transferable Interests to any person who is not
directly or indirectly wholly legally and beneficially owned by Alcoa (or in the
case of any Transferable Interests in the Mining & Refining Company 60% (or
more) by Alcoa and 40% by Alumina Limited);

(iii)

enter into any agreement or arrangement to encumber any of its Transferable
Interests or any interest in any of its Transferable Interests to any person who
is not directly or indirectly wholly legally and beneficially owned by Alcoa (or
in the case of any Transferable Interests in the Mining & Refining Company
60% (or more) by Alcoa and 40% by Alumina Limited ); or

(iv)

enter into any agreement or arrangement to do any of the foregoing.

(c)

Notwithstanding the above, Alcoa shall, provided it has supplied Ma’aden in
writing with sufficient information to identify the parties involved and all
relevant material terms of such transaction thirty (30) days in advance of the
consummation by Alcoa of any such transaction, be permitted to enter into a
significant strategic joint venture or similar transaction involving all or a
substantial portion of Alcoa’s interests in the relevant business of bauxite
mining and alumina refining, aluminium smelting and/or aluminium rolling, as the
case may be, provided that (i) the proportion of the revenues properly
attributable to Alcoa’s Transferable Interests in the Project is not material in
comparison to the total revenues in respect of all of Alcoa’s operations which
are included within such transaction in the calendar year prior to such
transaction; and (ii) such transaction is entered into only with a strategic
partner rather than financial investors. For the purposes of this clause: a
“strategic partner” is a person and/or group of persons who are, immediately
prior to the date of any such transaction with Alcoa, engaged in the business of
owning and operating bauxite mines and alumina refineries, aluminium smelters
and/or aluminium rolling mills, as the case may be, in each case, including
operations outside the Kingdom: and the proportion of revenues shall not be
considered to be material if it is less than the initial Shareholder Percentage
of Alcoa.”

2.4	New clauses

New Clauses 17.11, 17.12 and 17.13 shall be added to the
Original Agreement as follows:-

“17.11

Put And Call Option

(a)

Alcoa hereby grants to Ma’aden an option (the “Put Option“)
to require Alcoa to purchase from Ma’aden (i) such number of Shares as at the
relevant time constitutes 14.9% of the total issued Shares of each of the
Companies; and (ii) 14.9% of the total aggregate Shareholder Loans provided to
each of the Companies (the “Option Interests“), on the terms
set out in this Clause 17. Ma’aden hereby grants to Alcoa an option (the
“Call Option”) to require Ma’aden to sell to Alcoa all of the
Option Interests on the terms set out in this Clause 17.

(b)

The Put Option may only be exercised by Ma’aden and the Call Option may only
be exercised by Alcoa within a period of six (6) months from the date falling
five (5) years after the Commercial Production Date (the “Option
Period“) and shall be exercised simultaneously for all of the
Companies. If the Put Option or the Call Option is not exercised during the
Option Period, it shall lapse.

(c)

The Put Option shall be exercised by Ma’aden giving Alcoa written notice (the
“Put Option Notice“) which shall include:

(i)

a statement to the effect that Ma’aden is exercising the Put Option; and

(ii)

a signature by or on behalf of Ma’aden.

(d)

The Call Option shall be exercised by Alcoa giving Ma’aden written notice
(the “Call Option Notice“) which shall include:

(i)

a statement to the effect that Alcoa is exercising the Call Option; and

(ii)

a signature by or on behalf of Alcoa.

(e)

The Put Option and the Call Option may be exercised only in respect of all of
the Option Interests.

(f)

All Distributions resolved or declared to be paid or made by the relevant
Company in respect of the Option Interests by reference to a record date which
falls on or before the date on which completion of the sale of the Option
Interests under the Put Option (the “Put Option Completion
Date“) or the Call Option (the “Call Option Completion
Date“) (as the case may be) occurs shall belong to, and be payable to,
Ma’aden. For the purposes of this Clause 17.11, “completion” shall be the
date when the Parties sign before a notary the required shareholders resolutions
authorising the amendment of each of the Companies’ articles of association to
reflect the transfer.

(g)

The consideration payable by Alcoa for the Option Interests (the
“Option Consideration“) shall be calculated in accordance with
the provisions of Clause 17.12.

(h)

The Parties shall use their respective reasonable endeavours to:

(i)

procure that the Option Consideration shall be finally determined as quickly
as possible consistent with the provisions of Clause 17.12; and

(ii)

no later than twelve (12) months following the determination of
the Option Consideration, take all such action as may reasonably be required to
give

effect to any transfer of the Option Interests pursuant to this
Clause 17.11, including cooperating in obtaining approvals required from
all relevant Governmental Authorities.

(i)

On the Put Option Completion Date or Call Option Completion Date (as
applicable), Alcoa shall pay or procure the payment of the Option Consideration
to Ma’aden in cash to a bank account, the details of which Ma’aden shall provide
in writing to Alcoa not less than three (3) Business Days prior to the Put
Option Completion Date or the Call Option Completion Date (as applicable).

17.12

Put and Call Option Valuations

(a)

Option Consideration

The Parties shall act in good faith to determine the Option Consideration
and, in doing so, shall follow the approach and apply the valuation methods set
out below.

(b)

Valuation Panel

In the event that the Parties are unable to agree the Option Consideration
within fifteen (15) days of the date of the Call Option Notice or the Put Option
Notice (as the case may be), the Parties shall refer the valuation to a panel of
independent experts with appropriate experience in the aluminium industry (each
a “Valuer“). The panel shall consist of three Valuers, one of
whom shall be appointed by each Party and the third of whom, who shall act as
chairman of the panel, shall be jointly nominated by the two Valuers nominated
by the Parties. Failing agreement as to the identity of the third Valuer within
five (5) Business Days of being required to do so, such third Valuer shall be
nominated by the International Centre for Expertise in accordance with the
provisions for the appointment of experts under the Rules of Expertise of the
International Chamber of Commerce (who shall be instructed to nominate only a
Valuer experienced in valuing rolling mills, aluminium smelters, alumina
refineries, bauxite mines and/or associated facilities, and shall have
experience in, and relevant knowledge of the Kingdom and the GCC region).

(c)

Submission of Valuation

The Valuers shall be instructed to collectively submit a single Option
Consideration valuation to the Parties within sixty (60) days of the appointment
of the third Valuer (or such longer time as the Parties may agree) and such
valuation shall be final and binding upon the Parties. The Option Consideration
shall be determined on a fair value basis in accordance with Clause
17.12(d) below.

(d)

Valuation Approach

In valuing the Transferable Interests which are the subject of the Put Option
or Call Option, as the case may be, the Valuers:

(i)

shall prepare the valuation by using the discounted cashflows methodology
based on the net present value of cashflows attributable to the Option Interests
which take into account the terms of the Project Agreements (including, for the
avoidance of doubt, the Gas Allocation Letter, the Gas Supply Agreement to be
entered into with Saudi Aramco, the Energy Conversion Agreement entered into
between Ma’aden and SWCC dated 10 October 2009 and other agreements with
Government or publicly held entities) over the remaining life of the Project;

(ii)

shall consider cashflows from Expansions, taking into account any agreed
Expansions;

(iii)

shall use an appropriate discount rate to compute the net present value,
taking into account customary factors such as the industry, the geography, the
Parties’ familiarity with the operations, and other relevant factors;

(iv)

shall not apply any discount to the Option Interests as a result of the
Option Interests not conferring Control over any Company or not conferring any
minority protection rights;

(v)

may consult persons engaged in the marketing of aluminium who, in the
Valuers’ opinion, are experts in the making of price forecasts on a regular
basis;

(vi)

may consult any other experts as the Valuers think fit;

(vii)

shall be entitled to rely in good faith upon the opinions of any experts so
consulted; and

(viii)

shall consider any submissions as to the value of the Option Consideration
which may be made to the Valuers by a Party within thirty (30) days of receipt
by the Party of notice of the appointment of the third Valuer.

17.13

Notwithstanding Clauses 17.1(a), 17.3 and 17.4, Ma’aden
shall be entitled to sell, transfer and assign to one or more Saudi public
companies or public funds or any combination of the same consistent with the
provisions of Clause 17.8 (and may procure the sale, transfer and
assignment by any of its Affiliates to the same), its rights, title and interest
in and to Transferable Interests held by Ma’aden of up to 14.9% of the aggregate
of the Transferable Interests of a Company. Such sale may take place at any time
prior to the Put Option or Call Option being exercised by Ma’aden or Alcoa
respectively pursuant to Clause 17.11. Ma’aden shall give not less than
sixty (60) days’ prior written notice to Alcoa of such a proposed transfer
including details of the proposed Saudi public companies and /or public funds
(the “Transferees“). Ma’aden shall procure that, as a condition
of such transfer, the Transferees shall agree to be bound by all the terms of
this Agreement and shall execute an Adherence Agreement, provided that the
Transferees further agree that Ma’aden shall represent the Transferees in all
dealings with Alcoa that arise in connection with the exercise of the Put Option
or Call Option, as the case may be. The Parties agree that, for the purposes of
determining Ma’aden’s Shareholder Percentage in connection with its rights and
obligations under Clause 5.4 (in respect of the Aluminium offtake) and
Clause 5.12 (in respect of the Ma’aden LOC under the Gas Allocation
Letter), Ma’aden’s Shareholder Percentage shall be deemed to include as between
Ma’aden and Alcoa, any such Shares and Shareholder Loans held by such Saudi
public companies or public funds. The Parties hereby agree to take any action
which may reasonably be required in order to implement the provisions of this
Clause 17.13 including (without limitation) cooperating as necessary to
amend the relevant Company’s foreign investment licence, articles of association
and commercial registration so as to formalize the transfer of the Shares.”

2.5	Amended wording

Clause 21.3(a) of the Original Agreement shall be amended by inserting
the words “, Clause 17.12” in the first line after the words “in
Clause 9“.

3.	NOTICES

All notices, approvals, consents or other communications in connection with
this Supplemental Agreement shall be given in accordance with the notice
provision set out in Clause 23 of the Original Agreement.

4.	COUNTERPARTS

This Supplemental Agreement may be executed in any number of counterparts and
by the parties to it on separate counterparts and each such counterpart shall
constitute an original of this Supplemental Agreement but all of which together
constitute one and the same instrument. This Supplemental Agreement shall not be
effective until each party has executed at least one counterpart.

5.	GOVERNING LAW AND DISPUTE RESOLUTION

This Supplemental Agreement shall be governed by, construed and interpreted
according to English law and, for the avoidance of doubt, the dispute mechanisms
in Clause 21 of the Original Agreement (as amended by this Supplemental
Agreement) shall apply to this Supplemental Agreement as though incorporated
herein.

IN WITNESS WHEREOF, each Party has caused this Supplemental
Agreement to be executed by its duly authorized representative as of the date
first written above.


		SAUDI ARABIAN MINING COMPANY (MA’ADEN)

By:		Dr. Abdullah Dabbagh, President and CEO

Signed:		/s/ Dr. Abdullah Dabbagh
		ALCOA INC.

By:		Klaus Kleinfeld, President and CEO

Signed:		/s/ Klaus Kleinfeld

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