Amount of Deferral. Beginning January 1, 2005, until a Director owns beneficial shares of Alcoa Stock and/or has units in the Alcoa Stock Fund at least equal to the then applicable Director Share Ownership Guideline, the Director will be required to defer at least the Required Deferral Amount in the Alcoa Stock Fund. Beyond that requirement, a Director may elect to defer receipt of all Fees, or of all Fees of one or more types, or a specified portion (in 1% increments) otherwise payable to him or her.

Deferring Fees. A Director shall designate the portion of his or her deferred Fees to be invested in one or more of the Investment Options. Deferral of the Required Deferral Amount into the Alcoa Stock Fund is required until the Director Share Guideline is satisfied. Any Director who has satisfied the Director Share Ownership Guideline or who wishes to defer funds other than the Required Deferral Amount may designate Investment Options other than the Alcoa Stock Fund for those amounts. A Director’s deferred Fees shall be credited to the designated Investment Option(s) at the beginning of the calendar quarter following the quarter in which such Fees were earned. Such Fees shall be credited to the Director’s Deferred Fee Account as Credits for “units” in the Director’s Deferred Fee Account. As of any specified date, the value per unit in the Director’s Deferred Fee Account shall be deemed to be the value determined for the comparable fund under the Savings Plan.

Under the stock ownership guidelines, each director is required to invest 50% of his or her retainer fee in Alcoa common stock or in Alcoa deferred share units under Alcoa’s 2005 Deferred Fee Plan for Directors, until the value of the director’s investment in Alcoa common stock and/or deferred share units reaches $750,000. The $750,000 stock ownership level must be retained until the director retires from the Board of Directors. On the first Monday in December of each year, the value of each director’s investment in Alcoa common stock and/or deferred share units will be determined, and each director will be advised whether he or she is required to invest or defer 50% of the retainer fee in Alcoa common stock or deferred share units for the coming year.