Amended and Restated Executive Severance Agreement - Charles D. McLane, Jr.



 Exhibit 10(gg)(2) 
  

			
	  	  	 Alcoa

 390 Park Avenue

 New York, New York 10022 USA
  
 Klaus Kleinfeld
President and Chief Executive Officer


 October 30, 2008 
 Charles D. McLane, Jr. 
 Alcoa Inc. 
 390 Park Avenue

 New York, New York 10022 
 Dear Chuck: 
 As Executive Vice President and Chief Financial Officer, you are a key part of the senior executive management team of Alcoa Inc. (the
“Company”). The business relationships you have developed both inside and outside of the Company, your knowledge of the Company’s business affairs and your management experience are all of great importance to the Company, and I value
your continuing contributions. As I am sure you can also appreciate, it is important to the Company’s future success that you, me and the other members of the senior executive leadership team are able to enhance our ability to increase
shareholder value, and if necessary, to ease transitions when it is in the best interest of the Company to do so. Accordingly, it is my pleasure to be able to provide you with this letter agreement (the “Agreement”) which sets forth the
terms of an arrangement between you and the Company concerning your continuing and post-employment obligations. This letter agreement supersedes and replaces in its entirety the letter agreement dated January 30, 2008, between you and the
Company. 
  

	I.	You voluntarily resign or retire. 

 You may
terminate your employment with the Company by voluntarily resigning or by retiring. If you wish to resign or retire, you will provide the Company with at least three months’ advance written notice (the “Notice,” which shall contain
your selected date of termination, which must be at least three months after the date the Notice is received by the Company (such date of receipt, the “Notice Date”)), after which the following conditions shall apply: 
 Your active service with the Company will be terminated on the date specified in the Notice (or such later date and on such terms as you and the Company
mutually agree), or such earlier date as the Company may determine in its sole discretion (the “Voluntary Termination Date”). During the period from the Notice Date through the Voluntary Termination Date, (i) the Company may, in its
sole discretion, assign you such duties as it sees fit (but commensurate with your position) and (ii) you agree to continue to provide at least 20% of the average level of services you provided to the Company during the preceding 36-month
period, such that your “separation from service” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“409A”), occurs on the Voluntary Termination Date. 







 If your employment with the Company terminates pursuant to this Section I, you will be paid the following
amounts (which you acknowledge would not be due you in the absence of this Agreement) on the first business day which is at least six months after the Voluntary Termination Date, provided that on or after the Voluntary Termination Date, and at least
10 days prior to the payment date, you execute and return to the Company the release agreement attached as Exhibit A (the “Release Agreement”) and (ii) any period within which you may revoke the Release Agreement pursuant to the terms
thereof has expired without you having revoked the Release Agreement: 
 (i) $50,000 in consideration of execution and
delivery of the Release Agreement as provided above; and 
 (ii) If the Voluntary Termination Date occurs before the date
specified in your Notice and less than three months following the Notice Date (e.g., if the Company elects a Voluntary Termination Date earlier than the date specified in the Notice), a lump sum amount equal to your monthly base salary as of the
Voluntary Termination Date for the time between the Voluntary Termination Date and three months following the Notice Date; or 
 (iii) If you and the Company mutually agree to extend your service to a later date than the date stated in your Notice, upon your Voluntary Termination Date, you will receive: a lump sum amount equal to your monthly base salary for each
month you provided service beyond the date stated in your Notice or for such period of time as you and the Company may mutually agree, not to exceed 24 months (referred to as the “additional period of time”) ; a lump sum amount as provided
under Section II B (iii), (iv) or (v) below except that the amount will be calculated for the “additional period of time”; and continued active medical benefits for the “additional period of time” as described in
Section II B below. 
 If your employment with the Company terminates pursuant to this Section I, upon and following the Voluntary
Termination Date, your other compensation and benefits continue to be governed by the terms of the plans in which you participate; provided however, that payments and benefits under this Section I are in lieu of any other involuntary separation
benefits or severance payments which you may be eligible to receive from the Company; and if you receive severance pay and benefits under the Company’s Change in Control Severance Plan, no payments will be made, or benefits provided, under this
Agreement. 
  

	II.	Company terminates your employment. 

 The
Company may terminate your employment at any time, with or without Cause, with the results described below. In such case, the Company shall determine the effective date of your termination (the “Involuntary Termination Date”). 

A. Involuntary Termination With Cause. If the Company terminates your employment due to Cause, you will receive no severance payment under this
Agreement or any other severance plan, policy or arrangement of the Company or any of its affiliates. For purposes of this Agreement, “Cause” means: (i) your willful and continued failure to substantially perform your duties that has
not been cured within thirty days after a written demand for substantial performance is delivered to you, which demand specifically identifies the manner in which the Company believes that you have not substantially performed your duties, or
(ii) your willful engagement in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act, or failure to act, on your part
shall be deemed “willful” unless done, or omitted to be done, by you not in good faith and without reasonable belief that your act, or failure to act, was in the best interest of the Company, and (y) in the event of a dispute
concerning the application of this 

  

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provision, no claim by the Company that Cause exists shall be given effect unless the Board determines that there is clear and convincing evidence that Cause
exists and the Board finding to that effect is adopted by the affirmative vote of not less than three quarters of the entire membership of the Board (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard
by the Board). 
 B. Involuntary Termination Without Cause. If the Company terminates your employment for reasons other than Cause,
and you fulfill your obligations as set forth in this Agreement, you shall be paid the following amounts (which you acknowledge would not be due you in the absence of this Agreement) on the first business day which is at least six months after the
Involuntary Termination Date, provided that, on or after the Involuntary Termination Date, and at least 10 days prior to the payment date, (i) you execute and return to the Company the Release Agreement and (ii) any period within which you
may revoke the Release Agreement pursuant to the terms thereof has expired without you having revoked the Release Agreement: 
 (i) a lump sum amount equivalent to two times your annual base salary as of the Involuntary Termination Date; 
 (ii)
$50,000 in consideration of execution and delivery of the Release Agreement as provided above; and 
 (iii) if, on the
Involuntary Termination Date, you are an active participant who is accruing benefits under any tax-qualified, supplemental or excess defined benefit pension plan maintained by the Company or any of its affiliates or any other defined benefit plan or
agreement entered into between you and the Company or any of its affiliates which is designed to provide you with supplemental defined benefit retirement benefits (a “DB Pension Plan”), a lump sum amount equal to the excess of (I) the
actuarial equivalent of the aggregate retirement pension as if you had been credited with an additional 24 months of service following the Involuntary Termination Date; over (II) the actuarial equivalent of the aggregate retirement pension which you
had accrued under the provisions of the DB Pension Plans as of the Involuntary Termination Date. For purposes of this Section II.B(iii), actuarial equivalence shall be made consistent with the methodology used in the Alcoa Inc. Change in Control
Severance Plan; or 
 (iv) if, on the Involuntary Termination Date, you are not an active participant who is accruing benefits
under a DB Pension Plan, but are eligible to receive Employer Retirement Income Contributions (ERIC) under an Alcoa Savings Plan, a lump sum amount, in cash, equal to two times the ERIC contribution percent in effect on the Involuntary Termination
Date multiplied by the sum of your annual base salary as of your Involuntary Termination Date plus your target annual variable compensation; or 
 (v) if, on the Involuntary Termination Date, you are not an active participant who is accruing benefits under a DB Pension Plan, but are eligible to participate in the Global Pension Plan, you will receive a lump sum
amount, in cash, equal to two times the Global Pension Plan contribution percent in effect on the Involuntary Termination Date multiplied by the sum of your annual base salary as of your Involuntary Termination Date plus your target annual variable
compensation. 
 In addition, for a period of two years after the Involuntary Termination Date the Company shall arrange to provide you, and
anyone entitled to claim through you, health (including medical, behavioral, prescription drug, dental and vision) benefits substantially similar 

  

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to those provided to active employees, at no greater after tax cost to you than the after tax cost to you immediately prior to the Involuntary Termination
Date. If the company contribution to these benefits becomes taxable to you, you will be grossed up on these contributions. In order to comply with 409A, the following shall apply to the health care benefits provided pursuant to this paragraph, the
costs of which are not fully paid by you (the “Health Benefits”). Any and all reimbursements of eligible expenses made pursuant to the Health Benefits shall be made no later than the end of the calendar year next following the calendar
year in which the expenses were incurred. The amount of expenses that are eligible for reimbursement or of in-kind benefits that are provided pursuant to the Health Benefits in any given calendar year shall not affect the expenses that are eligible
for reimbursement or benefits to be provided pursuant to the Health Benefits in any other calendar year, except as specifically permitted by Treasury Regulation Section 1.409A-3(i)(iv)(B). Your right to the Health Benefits may not be liquidated
or exchanged for any other benefit. 
 If your employment with the Company terminates pursuant to this Section II, upon and following the
Involuntary Termination Date, your other compensation and benefits continue to be governed by the terms of the plans in which you participate; provided however, that payments and benefits under this Section II are in lieu of any other involuntary
separation benefits or severance payments which you may be eligible to receive from the Company; and if you receive severance pay and benefits under the Company’s Change in Control Severance Plan, no payments will be made, or benefits provided,
under this Agreement. 
 Restrictive Covenants 
 In light of the unique character of your position with the Company, the business relationships you have developed and will continue to develop while employed by the Company, and your knowledge of the Company’s
business affairs including the Confidential Information (as defined below), and with the acknowledgment of the continuing consideration which you will receive from the Company as a member of its senior executive management team, and the personal
financial security which is provided under this Agreement, or in the event of a change in control as defined in the Company’s Change in Control Severance Plan, you agree to the following Restrictive Covenants: 
 Noncompetition: During your employment and for a period of two (2) years thereafter (regardless of whether the termination of your employment
is voluntary or involuntary), you will not directly or indirectly provide services, whether as a director, officer, partner, owner, employee, inventor, consultant, advisor, agent, or otherwise, to any domestic or international business or firm that
is engaged or has plans to become engaged in the manufacturing, fabricating, distributing or selling of aluminum and/or aluminum related products for the aerospace, automotive, packaging, or other aluminum fabricated product markets, the mining of
bauxite, conversion and refining of bauxite into alumina and/or the sale or distribution of alumina or alumina related chemical products or any other line of business in which the Company is involved or becomes involved during your employment with
the Company (collectively, the “Aluminum Business”). However, you may own up to five percent (5%) of the outstanding securities of any publicly traded company. 
 It is not the Company’s intention to restrict or limit your activities, unless it is believed that there is a substantial possibility that your
future employment, or activities in any of the lines of business in which the Company is engaged may be detrimental to the Company. So as to not unduly restrict your future employment, if you desire to enter into any employment 

  

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arrangement or relationship with any entity in the above identified markets within the two year period, please consult with me to discuss your intended
relationship with the competitive entity. You and the Company recognize that due to the many different businesses which presently compete, or which in the future may compete with the Company in the Aluminum Business, the Company will discuss your
desire to enter into a business or professional relationship with any manufacturer or firm which may be perceived as a competitor. 
 Non-solicitation: During your employment and for a period of two (2) years thereafter (regardless of whether the termination of your employment was voluntary or involuntary), you will not directly or indirectly (i) solicit,
induce or attempt to solicit or induce any current or future employee of the Company to leave the Company for any reason, or (ii) solicit business from, or engage in business with, any current or future customer or supplier of the Company which
you met and dealt with during your employment with the Company for any purpose. In the event that you become aware that any present or future employee of the Company has been hired by any business or firm with which you are then affiliated, you will
immediately notify the Company’s chief legal officer to confirm your non-solicitation of said employee. 
 Confidentiality:
During your employment with the Company and at all times thereafter, you will maintain the confidentiality of any and all information about the Company which is not generally known or available outside the Company, including without limitation,
strategic plans, technical and operating know-how, business strategy, trade secrets, customer information, business operations and other proprietary information (“Confidential Information”), and you will not, directly or indirectly,
disclose any Confidential Information to any person or entity, or use any Confidential Information, whether for your benefit or the benefit of any new employer or any other person or entity, or in any other manner that is detrimental to or
inconsistent with any interest of the Company. If you receive notice that you may be required to disclose any Confidential Information pursuant to a subpoena or other lawful process, you must notify the Company’s chief legal officer
immediately. 
 You acknowledge and agree that given the nature of the Company’s business, which is conducted throughout the world, and
your position of confidence and trust with the Company, the scope and duration of these Restrictive Covenants are reasonable and necessary to protect the legitimate business interests of the Company. You further acknowledge that you have received
substantial compensation from the Company and that your general skills and abilities are such that you can be gainfully employed in noncompetitive employment, and that this Agreement will in no way prevent you from earning a living following your
employment with the Company. 
 You also recognize and agree that any breach or threatened or anticipated breach of any part of these
Restrictive Covenants will result in irreparable harm to the Company, and that the remedy at law for any such breach or threatened breach will be inadequate. Accordingly, in addition to any other legal or equitable remedies that may be available to
the Company, you agree that the Company shall be entitled to obtain an injunction, without posting a bond, to prevent any breach or threatened breach of any part of these Restrictive Covenants. You agree to reimburse the Company for all costs and
expenses, including reasonable attorney’s fees and costs, incurred by the Company in connection with the enforcement of its rights under this Agreement. 
 In the event that any court of competent jurisdiction finds that the limitations set forth in these Restrictive Covenants are overly broad with respect to duration, geographic scope or scope of prohibited activities,
such court shall have the authority to reduce the duration, area or 

  

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activities of such provisions so as to be enforceable to the maximum extent compatible with applicable law, and such provisions shall then be enforced as
modified. In the event that a court reduces the duration of the restriction, any unpaid amounts, as set forth above, shall be reduced on a pro rata basis. 
 Tax Withholding 
 All amounts payable pursuant to this Agreement shall be subject to withholding for taxes as legally
required, and for other amounts authorized by you. 
 Application of 409A Provisions 
 If you provide a written, unqualified opinion from your tax advisor to the Company stating that you are a non-resident alien not subject to 409A at the
time of your termination of employment, or that 409A otherwise does not apply to you at that time, unless the Company has reason to believe that such opinion is more likely than not incorrect the Company shall cooperate with you to amend this
Agreement in a mutually satisfactory manner to cause any severance payments payable hereunder to be paid as soon as practicable following your termination of employment, and to otherwise remove references to Section 409A from this Agreement;
provided that in no event shall such payments be made unless and until you have returned an executed Release Agreement (signed by you on or following your termination date) and any period within which you may revoke the Release Agreement pursuant to
the terms thereof has expired without you having revoked the Release Agreement. The Company shall have no responsibility for any taxes or penalties you may incur on account of any such amendments, whether pursuant to 409A or otherwise. 

Governing Law; Jurisdiction 
 This Agreement
shall be governed and interpreted in accordance with the laws of the State of New York without reference to its choice of law principles. Any action arising out of or related to this Agreement shall be brought in the state or Federal courts located
in New York City, and you and the Company consent to the jurisdiction and venue of such courts. 
 Amendment; Waiver 
 No provision of this Agreement may be modified, waived, or discharged unless such waiver, modification or discharge is in writing and signed by the Chief
Executive Officer of the Company. Any failure by you or the Company to enforce any of the provisions of this Agreement shall not be construed to be a waiver of such provisions or any right to enforce each and every provision in the future. A waiver
of any breach of this Agreement shall not be construed as a waiver of any other or subsequent breach. 
 Successors; Binding Agreement

 The Company shall have the right to assign its rights and obligations under this Agreement to any entity that acquires all or
substantially all of the assets of the Company and continues the Company’s business. The rights and obligations of the Company under this Agreement shall inure to the benefit and shall be binding upon the successors and assigns of the Company.

  

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 Severability 
 In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of this Agreement shall not in
way be affected or impaired thereby. 
 Entire Agreement 
 You acknowledge that you have not relied upon any representations (whether oral or written) from the Company, other than as set forth in this Agreement. This Agreement sets forth the entire agreement and understanding
between you and the Company and merges and supersedes any and all prior discussions, agreements, arrangements and understandings with regard to the subject matter hereof, and may not be modified, amended, discharged or supplemented in any respect,
except by a subsequent writing signed by you and the Company. In the event that any payments under this agreement in the aggregate are more than 2.99 times of your base salary and bonus, the payments which you will be eligible to receive under this
Agreement will be reduced accordingly. Except for involuntary separation benefits or other similar severance payments, this Agreement does not supersede the terms of any other compensation plans, stock option programs, welfare benefit plans, or
other such plans or programs in which you are eligible to participate, or may become eligible to participate. 
 If you agree to the terms of
this Agreement, please sign on the line provided below and return two signed copies to the Corporate Secretary. A fully executed copy will be returned to you for your files after it is signed by the Company. 
 Sincerely, 
  

			
	ALCOA INC.
		
	By:	 	/s/ Klaus Kleinfeld
	Title:	 	President and Chief Executive Officer
	Dated:	 	December 8, 2008


	
	
	Agreed to and accepted:
	
	/s/ Charles D. McLane, Jr.
	Charles D. McLane, Jr.
	Executive Vice President and Chief Financial Officer

  

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 Exhibit A 
 RELEASE AGREEMENT 
 RELEASE AGREEMENT (this “Release Agreement”), dated as of
                                , between Alcoa Inc. (the
“Company”), and [Name]
(“Releasor”).                                     
                                         
       [DATE]  
 WHEREAS, Releasor was employed by the Company as
                                 
                                         
                                         
                   [TITLE]  
 WHEREAS,
Releasor and the Company are parties to a letter agreement dated [date] (the “Letter Agreement”). 
 WHEREAS, Releasor’s
employment with the Company terminated as of
                                 
                                         
                                         
                                         
      [DATE]  
 NOW, THEREFORE, in consideration of the promises and of the releases, representations,
covenants and obligations contained herein, the parties hereto agree as follows: 
 1. Severance Benefits. Subject to Releasor’s
execution and non-revocation of this Release Agreement within the time periods described in this Release Agreement and the Letter Agreement, and compliance with the other terms of the Letter Agreement, the Company shall pay Releasor the amounts, and
provide Releasor the benefits, described in the Letter Agreement. 
 2. Release. Releasor knowingly and voluntarily releases and forever
discharges the Company, its parents, and each of their respective subsidiaries and affiliates, together with their respective present and former directors, managers, officers, shareholders, employees, agents, and each of their respective
predecessors, heirs, executors, administrators, successors and assigns (collectively, the “Releasees”) from any and all debts, obligations, demands, actions, causes of action, accounts, covenants, contracts, agreements, damages, omissions,
promises, and any and all claims and liabilities whatsoever, of every name and nature, known or unknown, suspected or unsuspected, both in law and equity (“Claims”), which Releasor ever had, now has, or may hereafter claim to have by
reason of any matter, cause or thing whatsoever arising out of or relating to: (a) any events, occurrences or omissions from the beginning of time to the time Releasor signs this Release Agreement, or (b) Releasor’s employment with
the Company or termination thereof (the “Release”). The Release shall apply to any Claim of any type, including, without limitation, any and all Claims of any type that Releasor may have arising under the common law, the Age Discrimination
in Employment Act of 1967, the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Employee
Retirement Income Security Act of 1974, or the New York State and City Human Rights Laws, each as amended, and any other federal, state or local statutes, regulations, ordinances or common law creating employment-related causes of action, or under
any policy, agreement, understanding or promise, written or oral, formal or informal, between Releasor and any of the Releasees, and all Claims for alleged tortious, defamatory or fraudulent conduct; provided, however, that nothing in the Release
shall: (i) affect any vested employee benefits 

  

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(including equity awards) to which Releasor may be entitled under any existing employee benefit plans of the Company, or (ii) prohibit Releasor from
enforcing this Release Agreement or the Letter Agreement. By signing this Release Agreement, Releasor represents that he or she shall not be entitled to any personal recovery in any action or proceeding that may be commenced on his or her behalf in
any way arising out or relating to any of the matters that are the subject of the Release. 
 3. Releasor represents that he or she has not
commenced or joined in any claim, charge or action against any of the Releasees, arising out of or relating in any way to Releasor’s relationship with the Company, or the termination thereof. 
 4. Releasor represents and agrees that the obligations and representations set forth in the Restrictive Covenants in the Letter Agreement, on their
stated terms, regarding noncompetition, nonsolicitation and confidentiality, shall remain in full force and effect. 
 5. Consultation With
Attorney; Voluntary Agreement. Releasor represents that the Company has advised Releasor to consult with an attorney of Releasor’s choosing prior to signing this Release Agreement. Releasor further represents that he or she understands and
agrees that he or she has the right and has been given the opportunity to review this Release Agreement, with an attorney of Releasor’s choice. Releasor further represents that he or she understands and agrees that the Company is under no
obligation to offer the payments and benefits set forth in paragraph 1 above, and that Releasor is under no obligation to consent to this Release Agreement, and that Releasor has entered into this Release Agreement freely and voluntarily. Releasor
shall have twenty-one (21) days to consider this Release Agreement, unless Releasor is terminated in connection with a an exit incentive or other group termination program, in which case Releasor shall have forty-five (45) days to consider
this Release Agreement. In either case, once Releasor has signed this Release Agreement, Releasor shall have seven (7) additional days from the date of execution to revoke his or her consent. Any such revocation shall be made in writing to
Attn: Corporate Secretary, Alcoa Inc., 390 Park Avenue, New York, New York 10022, and shall be deemed to have been duly given when hand delivered or when mailed by United States certified mail, return receipt requested. If no such revocation occurs,
this Release Agreement shall become effective on the eighth (8th) day after Releasor shall have executed and returned it to the Company (the “Effective Date”). In the event that Releasor revokes his or her consent to this Release
Agreement prior to the Effective Date, this Release Agreement shall be null and void and no payments or benefits shall be due hereunder or under the Letter Agreement. 
 6. Entire Agreement. Releasor acknowledges that he or she has not relied upon any representations (whether oral or written) from the Company, other than as set forth in this Release Agreement. This Release Agreement
sets forth the entire agreement and understanding between Releasor and the Company and merges and supersedes any and all prior discussions, agreements, arrangements and understandings with regard to the subject matter hereof, except for the Letter
Agreement, and may not be modified, amended, discharged or supplemented in any respect, except by a subsequent writing signed by Releasor and the Company. 
 7. Successors; Binding Agreement. The Company shall have the right to assign its rights and obligations under this Release Agreement to any entity that acquires all or substantially all of the assets of the Company
and continues the Company’s business. The rights and obligations of the Company under this Release Agreement shall inure to the benefit and shall be binding upon the successors and assigns of the Company. 
  

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 8. Severability. In the event that any one or more of the provisions of this Release Agreement shall be
held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of this Release Agreement shall not in way be affected or impaired thereby. 
 9. Governing Law; Jurisdiction. Without reference to any principles concerning choice of law, this Release Agreement shall be governed and interpreted in
accordance with the laws of the State of New York. Any action arising out of or related to this Release Agreement shall be brought in the state or Federal courts located in New York City, and Releasor and the Company consent to the jurisdiction and
venue of such courts. 
 10. Counterparts. This Release Agreement may be executed in counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument. 
 IN WITNESS WHEREOF, the Company and Releasor have executed this
Release Agreement, on the date and year set forth below. 
  

			
		 	ALCOA INC.
		
	 By: 
	 	 
		 	[NAME]
		 	[TITLE]
		
		 	
	[NAME]
	 Dated:
                                         
       



  

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