Exhibit 10.1

EXECUTION VERSION

AMENDED AND RESTATED CREDIT AGREEMENT

among

ALERIS INTERNATIONAL, INC.,

ALERIS ROLLED PRODUCTS, INC.,

ALERIS ROLLED PRODUCTS, LLC,

ALERIS ROLLED PRODUCTS SALES CORPORATION,

IMCO RECYCLING OF OHIO, LLC,

ALERIS RECYCLING, INC.,

ALERIS SPECIFICATION ALLOYS, INC.,

ALERIS SPECIALTY PRODUCTS, INC.,

ALERIS RECYCLING BENS RUN, LLC,

ETS SCHAEFER, LLC, and

ALERIS OHIO MANAGEMENT, INC.,

as U.S. Borrowers and

each other U.S. Borrower now or hereafter party hereto,

ALERIS SPECIFICATION ALLOY PRODUCTS CANADA COMPANY, as Canadian Borrower,

ALERIS SWITZERLAND GMBH, as European Borrower,

Various Lenders,

 

BANK OF AMERICA, N.A.,

AS ADMINISTRATIVE AGENT AND

COLLATERAL AGENT,

 

BANK OF AMERICA, N.A.,

DEUTSCHE BANK AG NEW YORK

BRANCH

AND

JPMORGAN CHASE BANK, N.A.,

AS CO-COLLATERAL AGENTS

 

RBS BUSINESS CAPITAL, A DIVISION OF

RBS ASSET FINANCE INC., A SUBSIDIARY

OF RBS CITIZENS BANK, N.A., AS A

SENIOR MANAGING AGENT

 

J.P. MORGAN SECURITIES LLC,

AS SYNDICATION AGENT,

 

BARCLAYS CAPITAL,

DEUTSCHE BANK AG

NEW YORK BRANCH

AND

UBS SECURITIES LLC,

AS CO-DOCUMENTATION AGENTS

 

 

Dated as of June 30, 2011

 

 

 

MERRILL LYNCH, PIERCE, FENNER &

SMITH, INCORPORATED AND J.P.

MORGAN SECURITIES LLC,

AS JOINT LEAD ARRANGERS

 

MERRILL LYNCH, PIERCE, FENNER &

SMITH, INCORPORATED, BARCLAYS

CAPITAL, DEUTSCHE BANK SECURITIES

INC., J.P. MORGAN SECURITIES LLC AND

UBS SECURITIES LLC,

AS JOINT BOOK RUNNERS

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AMENDED AND RESTATED CREDIT AGREEMENT

THIS AMENDED AND RESTATED CREDIT AGREEMENT, is dated as of June 30, 2011, among
ALERIS INTERNATIONAL, INC., a Delaware corporation (“Aleris”), ALERIS ROLLED
PRODUCTS, INC., a Delaware corporation, ALERIS ROLLED PRODUCTS, LLC, a Delaware
limited liability company, ALERIS ROLLED PRODUCTS SALES CORPORATION, a Delaware
corporation, IMCO RECYCLING OF OHIO, LLC, a Delaware limited liability company,
ALERIS RECYCLING, INC., a Delaware corporation, ALERIS SPECIFICATION ALLOYS,
INC., a Delaware corporation, ALERIS SPECIALTY PRODUCTS, INC., a Delaware
corporation, ALERIS RECYCLING BENS RUN, LLC, a Delaware limited liability
company, ETS SCHAEFER, LLC, an Ohio limited liability company, and ALERIS OHIO
MANAGEMENT, INC., a Delaware corporation (together with any entity that becomes
a U.S. Borrower pursuant to Section 9.11, collectively, the “U.S. Borrowers” and
each, a “U.S. Borrower”), ALERIS SPECIFICATION ALLOY PRODUCTS CANADA COMPANY, an
unlimited liability company organized under the laws of Nova Scotia (the
“Canadian Borrower”), ALERIS SWITZERLAND GMBH, a company with limited liability
organized under the laws of Switzerland (the “European Borrower” and, together
with the Canadian Borrower and the U.S. Borrowers, the “Borrowers” and each, a
“Borrower”), the Lenders party hereto from time to time, BARCLAYS CAPITAL, the
investment banking division of BARCLAYS BANK PLC, DEUTSCHE BANK AG NEW YORK
BRANCH, and UBS SECURITIES LLC, as Co-Documentation Agents, J.P. MORGAN
SECURITIES LLC, as Syndication Agent, RBS BUSINESS CAPITAL, a division of RBS
ASSET FINANCE INC., a subsidiary of RBS CITIZENS BANK, N.A., as a Senior
Managing Agent, BANK OF AMERICA, N.A., DEUTSCHE BANK AG NEW YORK BRANCH and
JPMORGAN CHASE BANK, N.A., as Co-Collateral Agents, and BANK OF AMERICA, N.A.,
as Administrative Agent. Capitalized terms used herein and not otherwise defined
shall have the meanings provided in Section 1.

W I T N E S S E T H:

WHEREAS, Borrowers, Agents and the Lenders party thereto (the “Existing
Lenders”) previously entered into a certain Credit Agreement dated as of June 1,
2010, pursuant to which Agents and Existing Lenders agreed to provide to
Borrowers a secured revolving credit facility (as at any time amended, restated,
modified or supplemented prior to the date hereof, the “Existing Credit
Agreement”), on the terms and subject to the conditions set forth in the
Existing Credit Agreement;

WHEREAS, Borrowers have requested that the Existing Credit Agreement be amended
and restated in its entirety to become effective and binding on the Credit
Parties pursuant to the terms hereof, and the Lenders (including the Existing
Lenders that are parties hereto), the Administrative Agent and the other Agents
have agreed, subject to the terms of this Agreement, to amend and restate the
Existing Credit Agreement in its entirety to read as set forth herein, and it
has been agreed by the parties hereto that (a) the commitments that the Existing
Lenders that are parties hereto extended to the Borrowers under the Existing
Credit Agreement and the commitments of new Lenders that are or become parties
hereto shall be extended or advanced upon the amended and restated terms and
conditions contained in this Agreement and (b) the Loans (as defined in the
Existing Credit Agreement) and other Obligations (as defined in the Existing
Credit Agreement) outstanding under the Existing Credit Agreement shall be
governed by and deemed to be outstanding under the amended and restated terms
and conditions contained herein;

WHEREAS, the existing Obligations (as defined in the Existing Credit Agreement)
are and shall continue to be (and all Obligations incurred pursuant hereto shall
be) secured by, among other things, the Security Agreements and the other Credit
Documents in the manner described therein;

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WHEREAS, the Guarantors have agreed to provide the Guarantees in consideration
of the applicable Lenders’ commitment to extend the financial accommodations set
forth herein;

WHEREAS, subject to and upon the terms and conditions set forth herein, the
Borrowers have requested the credit facilities more fully provided pursuant to
the terms of this Agreement, namely the facility evidenced by the Total
Commitments (and the extensions of credit made pursuant thereto), which
extensions of credit shall be made (x) subject to Section 15.08 to the U.S.
Borrowers on a joint and several basis and (y) subject to the Total European
Sub-Limit, to the European Borrower (z) and subject to the Total Canadian
Sub-Limit, to the Canadian Borrower; and

WHEREAS, extensions of credit hereunder to the Canadian Borrower shall be fully
guaranteed (as more fully provided and described herein) by the U.S. Credit
Parties and the Canadian Credit Parties; and

WHEREAS, the extensions of credit to the European Borrower hereunder shall be
guaranteed by the U.S. Credit Parties, the Canadian Credit Parties, the European
Parent Guarantors, the Subsidiaries of the European Borrower, and the U.K.
Guarantor, but shall not be guaranteed by any other Foreign Subsidiary of Aleris
(except to the extent any such Subsidiary constitutes a Transitory European
Subsidiary); and

WHEREAS, all obligations of the U.S. Credit Parties hereunder (whether as
borrowers or guarantors) shall be secured pursuant to the relevant U.S. Security
Documents executed and delivered by the U.S. Credit Parties, with the intent
being that First Priority security interests be granted to secure the
Obligations in all Collateral of the U.S. Credit Parties; and

WHEREAS, all obligations of the Canadian Credit Parties (whether as borrowers or
guarantors) shall be secured by First Priority security interests in the
Collateral of the Canadian Credit Parties and the U.S. Credit Parties as
provided pursuant to the relevant Security Documents; and

WHEREAS, all obligations of the European Borrower shall be secured by a First
Priority security interest in Collateral of the European Borrower and certain of
its Subsidiaries, the UK Guarantor and its Subsidiaries, the U.S. Credit Parties
and the Canadian Credit Parties as provided pursuant to the relevant Security
Documents; and

WHEREAS, the assets of German Sub-Holdco and its Subsidiaries and other Foreign
Subsidiaries (other than the European Borrower and its Subsidiaries, the UK
Guarantor and its Subsidiaries and the European Parent Guarantors) shall not
(except to the extent at any time constituting assets of a Specified European
Manufacturing Subsidiary or a Transitory European Subsidiary or assets sold to
the European Borrower pursuant to Receivables Purchase Agreement) secure the
Obligations; and

WHEREAS, subject to the terms and conditions of this Agreement and the other
Credit Documents, the Lenders are willing to enter into this Agreement in order
to amend and restate the Existing Credit Agreement, and to make available to the
Borrowers the respective credit facilities provided for herein, in each case on
the terms and conditions set forth herein;

 

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NOW, THEREFORE, IT IS AGREED:

SECTION 1. Defined Terms. As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):

“Account” shall mean an “account” (as such term is defined in Article 9 of the
UCC (or Section 1 of the PPSA as applicable to the Collateral of the Canadian
Credit Parties)) and includes any and all rights to payment for the sale or
lease of goods, or rendition of services, whether or not they have been earned
by performance, and any and all supporting obligations (as such term is defined
in Article 9 of the UCC) in respect thereof.

“Account Debtor” shall mean each Person who is obligated on an Account, chattel
paper (as such term is defined in Article 9 of the UCC (or Section 1 of the PPSA
as applicable to the Collateral of the Canadian Credit Parties)), or a General
Intangible constituting a payment intangible (as such term is defined in Article
9 of the UCC (or Section 1 of the PPSA as applicable to the Collateral of the
Canadian Credit Parties)).

“Account Party” shall mean, with respect to any Letter of Credit, (i) in the
case of a U.S. Letter of Credit, all of the U.S. Borrowers, as joint and several
account parties with respect to such Letter of Credit, (ii) in the case of a
Canadian Letter of Credit, the Canadian Borrower, as the account party with
respect to such Letter of Credit and (iii) in the case of a European Letter of
Credit, the European Borrower as account party with respect to such Letter of
Credit.

“Acquired Entity or Business” shall mean either (x) the assets constituting a
business, division or product line of any Person or (y) the assets or business
of a Person who shall, as a result of the respective acquisition, become a
Subsidiary (or, in accordance with Section 9.15, an Unrestricted Subsidiary) of
Aleris (or shall be merged with and into Aleris (with Aleris being the surviving
Person) or a Subsidiary of Aleris with the surviving Person being a Subsidiary
(or, in accordance with Section 9.15, an Unrestricted Subsidiary) of Aleris).

“Acquisition Liquidity Condition” means, with respect to an acquisition or
investment, either:

(a) the sum of Excess Availability plus Pledged Cash is not less than 30% of the
lesser of (I) the Total Commitments or (II) the Total Borrowing Base for each
day during the preceding thirty (30) day period prior to the applicable
investment or acquisition date and on such investment or acquisition date on a
Pro Forma Basis, or

(b) (I) the sum of Excess Availability plus Pledged Cash is not less than 15% of
the lesser of (A) the Total Commitments or (B) the Total Borrowing Base for each
day during the preceding thirty (30) day period prior to the applicable
investment or acquisition date and such investment or acquisition date on a Pro
Forma Basis, and (II) the Fixed Charge Coverage Ratio is at least l.10 to 1.0
for the immediately preceding 12-month period as of the end of the most recently
ended Fiscal Quarter for which financial statements have been delivered pursuant
to Section 9.01(b) on a Pro Forma Basis.

For purposes of this definition, the term “Pledged Cash” means cash of the
Borrowers maintained in Deposit Accounts subject to the Administrative Agent’s
First Priority security interest and Lien, and over which Deposit Accounts the
Administrative Agent has been granted exclusive control by the Borrowers;
provided, that, for purposes of determining whether the Acquisition Liquidity
Condition has been satisfied, (i) the amount of Pledged Cash added to Excess
Availability shall not exceed 40% of the amount of Excess Availability, and
(ii) only Pledged Cash in excess of $25,000,000 shall be included in the
determination of satisfaction of the Acquisition Liquidity Condition. For
purposes of utilizing

 

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Pledged Cash to determine satisfaction of the Acquisition Liquidity Condition,
Aleris shall deliver to the Administrative Agent and the Co-Collateral Agents a
written report of Pledged Cash, and other evidence thereof as may be reasonably
requested by the Administrative Agent or any Co-Collateral Agent (which may
include current bank account statements).

“Action” shall have the meaning provided in Section 9.13(a).

“Additional Debt” shall have the meaning provided in Section 10.04(xiv).

“Additional Security Documents” shall mean each additional security agreement,
pledge, hypothecation, mortgage or other document granting a lien in the
Collateral delivered pursuant to Section 9.11 (as amended, restated, reaffirmed,
modified or supplemented from time to time).

“Adjustment Date” shall mean the first day of each Fiscal Quarter of Aleris.

“Administrative Agent” shall mean Bank of America, N.A., in its capacity as
administrative agent and collateral agent for the Lenders hereunder, and shall
include any successor to the Administrative Agent appointed pursuant to
Section 12.09.

“Affiliate” shall mean, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to control another Person if
such Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such other Person, whether through
the ownership of voting securities, by contract or otherwise; provided, however,
that neither the Administrative Agent nor any Lender nor any Affiliate thereof
shall, as a result of its acting as such, be considered an Affiliate of Aleris
or any Subsidiary thereof. It being understood that (1) no Sponsor shall be
deemed to be an Affiliate of Aleris unless such Sponsor holds directly or
indirectly more than 15% of the Equity Interests of Aleris and (2) for purposes
of the definition of Eligible Accounts no portfolio company of any Sponsor shall
be an Affiliate of Aleris or its Subsidiaries.

“Agent Advance” shall have the meaning provided in Section 2.01(e).

“Agent Advance Period” shall have the meaning provided in Section 2.01(e).

“Agents” shall mean the Administrative Agent, the Co-Collateral Agents, the
Syndication Agent, each Co-Documentation Agent, the Joint Lead Arrangers, the
Joint Book Runners, and the Senior Managing Agents.

“Aggregate Canadian Exposure” at any time shall mean the sum of (i) the
aggregate principal amount of all Canadian Revolving Loans then outstanding (for
this purpose, using the Dollar Equivalent of each Canadian Dollar Denominated
Loan then outstanding), (ii) the aggregate amount of all Letter of Credit
Outstandings with respect to Canadian Letters of Credit (for this purpose, using
the Dollar Equivalent of all amounts denominated in a currency other than U.S.
Dollars) at such time and (iii) the aggregate principal amount of all Canadian
Borrower Swingline Loans (for this purpose, using the Dollar Equivalent of each
Canadian Dollar Denominated Loan then outstanding) then outstanding.

“Aggregate European Borrower Exposure” at any time shall mean (i) the aggregate
principal amount of all European Borrower Revolving Loans then outstanding (for
this purpose, using the Dollar Equivalent of each Non-Dollar Denominated Loan
then outstanding), (ii) the aggregate amount of all Letter of Credit
Outstandings with respect to European Letters of Credit (for this purpose, using
the Dollar Equivalent of all amounts denominated in a currency other than U.S.
Dollars) at such time and (iii) the aggregate principal amount of all European
Borrower Swingline Loans then outstanding (for this purpose, using the Dollar
Equivalent of each Non-Dollar Denominated Loan then outstanding).

 

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“Aggregate Exposure” at any time shall mean the sum of the Aggregate U.S.
Borrower Exposure, the Aggregate European Borrower Exposure and the Aggregate
Canadian Exposure.

“Aggregate U.S. Borrower Exposure” at any time shall mean the sum of (i) the
aggregate principal amount of all U.S. Borrower Revolving Loans then
outstanding, (ii) the aggregate amount of all Letter of Credit Outstandings with
respect to U.S. Letters of Credit at such time and (iii) the aggregate principal
amount of all U.S. Borrower Swingline Loans then outstanding.

“Agreement” shall mean this Amended and Restated Credit Agreement, as modified,
supplemented, amended, restated (including any subsequent amendment and
restatement hereof), extended or renewed from time to time.

“Aleris” shall have the meaning provided in the first paragraph of this
Agreement.

“Aleris Common Stock” shall mean the common stock of Aleris, Holdings or any
other direct or indirect parent company of Aleris or Holdings.

“Applicable Commitment Commission Percentage” shall mean with respect to any
period during which Commitment Commission is payable hereunder, if on or after
the Closing Date, the percentage per annum set forth below opposite the
applicable daily average Total Unutilized Commitment for the period for which
such Commitment Commission is payable:

 

TOTAL UNUTILIZED COMMITMENT

  

APPLICABLE COMMITMENT

COMMISSION

LESS THAN 33% OF THE TOTAL COMMITMENTS

   0.250%

LESS THAN 67% OF THE TOTAL COMMITMENTS BUT GREATER THAN OR EQUAL TO 33% OF THE
TOTAL COMMITMENTS

   0.375%

GREATER THAN OR EQUAL TO 67% OF THE TOTAL COMMITMENTS

   0.500%

“Applicable Eligible Jurisdiction” shall mean (i) in the case of Eligible
Accounts or Eligible Inventory of the U.S. Borrowers, the United States, Canada
and, in the case of Eligible Accounts only, Puerto Rico, (ii) in the case of
Eligible Accounts or Eligible Inventory of the Canadian Borrower, Canada and the
United States and (iii) in the case of Eligible Accounts of the European
Borrower, an Applicable European Jurisdiction.

“Applicable European Jurisdiction” shall mean each Tier I Country and each Tier
II Country.

“Applicable Margin” initially shall mean a percentage per annum equal to in the
case of Revolving Loans maintained as (A) Base Rate Loans, Canadian Prime Rate
Loans or Swingline Loans

 

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(other than Swingline Loans constituting Euro Rate Loans), 1.00% and (B) Euro
Rate Loans or B/A Equivalent Loans, 2.00%; provided that the Applicable Margin
shall be adjusted quarterly on a prospective basis on each Adjustment Date
(commencing with the Adjustment Date to occur on October 1, 2011) in accordance
with the table below based on the Average Historical Excess Availability for
such Adjustment Date:

 

AVERAGE HISTORICAL

EXCESS AVAILABILITY

   REVOLVING LOAN EURO
RATE AND B/A
EQUIVALENT RATE
APPLICABLE MARGIN     REVOLVING LOAN BASE
RATE AND CANADIAN
PRIME RATE MARGIN
APPLICABLE MARGIN  

LESS THAN OR EQUAL TO 25% OF THE TOTAL COMMITMENTS

     2.50 %      1.50 % 

GREATER THAN 25% OF THE TOTAL COMMITMENTS BUT LESS THAN OR EQUAL TO 50% OF THE
TOTAL COMMITMENTS

     2.25 %      1.25 % 

GREATER THAN 50% OF THE TOTAL COMMITMENTS BUT LESS THAN OR EQUAL TO 75% OF THE
TOTAL COMMITMENTS

     2.00 %      1.00 % 

GREATER THAN 75% OF THE TOTAL COMMITMENTS

     1.75 %      0.75 % 

The Applicable Margins as so determined shall apply from the relevant Adjustment
Date to the next Adjustment Date; provided that if an Event of Default shall
have occurred and be continuing at the time any reduction in the Applicable
Margin would otherwise be implemented, no such reduction shall be implemented
until the date on which such Event of Default shall have been cured or waived.

“Asset Sale” shall mean the sale, conveyance, transfer or other disposition,
whether in a single transaction or a series of related transactions, of property
or assets (including by way of a Sale and Lease-Back Transaction) of Aleris or
any Restricted Subsidiary (each referred to in this definition as a
“disposition”), in each case, other than:

(i) a disposition of cash, Cash Equivalents or Investment Grade Securities or
excess, damaged, obsolete or worn out assets in the ordinary course of business
or any disposition of inventory or goods held for sale in the ordinary course of
business;

 

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(ii) the disposition of all or substantially all of the assets of Aleris in a
manner permitted pursuant to Section 10.02 or any disposition that constitutes a
Change of Control;

(iii) the making of any Investment that is not prohibited under Section 10.05 or
the making of any Dividend that is not prohibited by Section 10.03;

(iv) any disposition of property or assets or issuance of securities by a
Restricted Subsidiary to Aleris or by Aleris or a Restricted Subsidiary to a
Restricted Subsidiary;

(v) to the extent allowable under Section 1031 of the Code (or a similar
provision of other applicable law), any exchange of like property (excluding any
boot thereon) for use in a Similar Business;

(vi) the lease, assignment, license, sublicense, or sub-lease of any real or
personal property in the ordinary course of business;

(vii) foreclosures on assets on which Aleris or any Restricted Subsidiary has a
Lien;

(viii) the unwinding of any Hedging Obligations;

(ix) the sale in the ordinary course of business of accounts receivable arising
in the ordinary course of business pursuant to a Receivables Purchase Agreement;
and

(x) the sale or discount, in each case without recourse and in the ordinary
course of business, of accounts receivable arising in the ordinary course of
business, but only in connection with the compromise or collection thereof and
not as part of any financing transaction or bulk sale.

“Asset Swap” shall mean the substantially concurrent purchase and sale or
exchange of Related Business Assets or a combination of Related Business Assets
and cash or Cash Equivalents between Aleris or any of its Subsidiaries and
another Person.

“Assignment and Assumption Agreement” shall mean an Assignment and Assumption
Agreement in form and substance reasonably satisfactory to the Administrative
Agent.

“Attributable Debt” in respect of a Sale and Lease-Back Transaction shall mean,
as at the time of determination, the present value (discounted at the interest
rate then borne by the Eurodollar Loans, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale and Lease-Back Transaction (including any period for
which such lease has been extended); provided, however, that if such Sale and
Lease-Back Transaction results in a Capitalized Lease Obligation, the amount of
Indebtedness represented thereby will be determined in accordance with the
definition of “Capitalized Lease Obligation”.

“Available Currency” shall mean with respect to (i) U.S. Borrower Revolving
Loans, U.S. Borrower Swingline Loans and U.S. Letters of Credit, U.S. Dollars,
(ii) European Borrower Revolving Loans and European Letters of Credit, U.S.
Dollars, Euros, Swiss Francs, Pounds Sterling and any other currency that the
European Borrower requests, by at least ten (10) Business Days’ prior written
notice to the Lenders through the Administrative Agent, be included as an
additional Available Currency for purposes of this Agreement, so long as at such
time (A) such currency is dealt with in the London interbank deposit market,
(B) such currency is freely transferable and convertible into U.S. Dollars in
the London foreign exchange market or the European foreign exchange market, as
applicable, (C) no central

 

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bank or other governmental authorization in the country of issue of such
currency is required to permit the use of such currency by any Lender or any
Issuing Lender, as applicable, for making any European Borrower Revolving Loan
or issuing any European Letter of Credit hereunder and/or to permit the European
Borrower to borrow and repay the principal thereof (or, in the case of European
Letters of Credit, to request the issuance of and reimburse Unpaid Drawings in
respect thereof) and to pay interest thereon, unless such authorization has been
obtained and remains in full force and effect and (D) no Lender or Issuing
Lender shall have objected to the inclusion of such currency as an Available
Currency by notice to Aleris and the Administrative Agent given within ten
(10) Business Days of such Lender’s or Issuing Lender’s, as applicable, receipt
of the notice referred to above (which notice shall be promptly transmitted by
the Administrative Agent to such Lenders upon its receipt thereof), (iii) with
respect to European Borrower Swingline Loans, Euros, U.S. Dollars, Swiss Francs,
Pounds Sterling and other currencies agreed between the Borrowers and the
Administrative Agent pursuant to the procedures set forth in clause (ii) above,
and (iv) with respect to Canadian Revolving Loans, Canadian Borrower Swingline
Loans and Canadian Letters of Credit, U.S. Dollars and Canadian Dollars.

“Average Historical Excess Availability” shall mean, at any Adjustment Date, the
average daily Excess Availability for the thirty (30) day period immediately
preceding such Adjustment Date.

“B/A Equivalent Loan” shall mean each set of Canadian Revolving Loans, in
Canadian Dollars, that bears interest at a rate determined by reference to the
B/A Equivalent Rate and having a common length and commencement of Interest
Period.

“B/A Equivalent Rate” shall mean, for the Interest Period of each B/A Equivalent
Loan, the rate of interest per annum equal to the annual rates applicable to
Canadian Dollar bankers’ acceptances having an identical term (or a term as
closely as possible comparable) as the proposed B/A Equivalent Loan displayed
and identified as such on the display referred to as the “CDOR Page” of Reuter
Monitor Money Rates Service (or any display substituted therefor) as at
approximately 10:00 A.M. Eastern time on the first day of such Interest Period
(or, if such day is not a Business Day, as of 10:00 A.M. Toronto time on the
immediately preceding Business Day), plus five basis points, provided that if
such rates do not appear on the CDOR Page at such time on such date, the rate
for such date will be the annual discount rate (rounded upward to the nearest
whole multiple of 1/100 of 1%) as of 10:00 A.M. Toronto time on such day at
which a Canadian chartered bank listed on Schedule 1 of the Bank Act (Canada) as
selected by the Administrative Agent is then offering to purchase Canadian
Dollar bankers’ acceptances accepted by it having such specified term (or a term
as closely as possible comparable to such specified term), plus five (5) basis
points.

“Bank of America Account” shall have the meaning provided in Section 5.03(d)(i).

“Bank of America Canada Account” shall have the meaning provided in Section
5.03(d)(ii).

“Bank Product Provider” shall mean each Guaranteed Creditor party to a Treasury
Services Agreement with a Guaranteed Party.

“Bank Product Reserve” shall mean, as of any date of determination, a reserve
for the Guaranteed Parties’ exposure under any Treasury Services Agreement which
exposure is to be secured by a First Priority Lien on the Collateral as notified
by the respective Bank Product Provider or any Borrower to the Administrative
Agent and the Co-Collateral Agents and updated from time to time.

“Bankruptcy Case” means Case No. 09-10478 commenced under Chapter 11 of the
Bankruptcy Code in the United States Bankruptcy Court for the District of
Delaware.

 

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“Bankruptcy Code” shall have the meaning provided in Section 11.05.

“Base Rate” shall mean, at any time, the highest of (i) the Prime Lending Rate
at such time, (ii) 1/2 of 1% in excess of the overnight Federal Funds Rate at
such time, and (iii) the Eurodollar Rate for a Eurodollar Loan with an Interest
Period of one month plus 1.00%.

“Base Rate Loan” shall mean (i) each U.S. Borrower Swingline Loan and (ii) each
other Dollar Denominated Loan designated or deemed designated as such by the
applicable Borrower or Borrowers at the time of the incurrence thereof or
conversion thereto.

“Books” shall mean all of each Borrower’s and its Subsidiaries’ now owned or
hereafter acquired books and records (including all of their Records indicating,
summarizing, or evidencing their assets (including the Collateral) or
liabilities, all of each Borrower’s or its Subsidiaries’ Records relating to
their business operations or financial condition, and all of their goods or
General Intangibles related to such information).

“Borrowers” shall have the meaning provided in the first paragraph of this
Agreement. Unless the context otherwise requires, and subject to Section 15.08,
each reference in this Agreement to “each Borrower” or “the applicable Borrower”
shall be deemed to be a reference to (x) each U.S. Borrower on a joint and
several basis, (y) the Canadian Borrower or (z) the European Borrower, as the
case may be.

“Borrowing” shall mean the borrowing of one Type of Loan of a single currency by
either the U.S. Borrowers (on a joint and several basis), the Canadian Borrower
or the European Borrower, from all the Lenders (or from the Swingline Lender, in
the case of Swingline Loans) on a given date (or resulting from a conversion or
conversions on such date) having in the case of B/A Equivalent Loans or Euro
Rate Loans the same Interest Period, provided that Base Rate Loans incurred
pursuant to Section 2.10(b) shall be considered part of the related Borrowing of
Euro Rate Loans and Canadian Prime Rate Loans shall be considered part of the
related Borrowing of B/A Equivalent Loans.

“Borrowing Base” shall mean the U.S. Borrowing Base, the Canadian Borrowing
Base, the European Borrowing Base and/or the Total Borrowing Base, as the
context may require.

“Borrowing Base Certificate” shall have the meaning provided in Section 9.01(i).

“Business Day” shall mean (i) for all purposes other than as covered by
clauses (ii) and (iii) below, any day except Saturday, Sunday and any day which
shall be in New York City a legal holiday or a day on which banking institutions
are authorized or required by law or other government action to close, (ii) with
respect to all notices and determinations in connection with, and payments of
principal and interest on or with respect to, Euro Rate Loans, any day which is
a Business Day described in clause (i) and which is also (A) a day for trading
by and between banks in deposits in the applicable Available Currency in which
such Euro Rate Loans were incurred in the London interbank market and which
shall not be a legal holiday or a day on which banking institutions are
authorized or required by law or other government action to close in the country
in whose Available Currency the applicable payment is denominated and (B) in
relation to any transaction in Euros (or a notice with respect thereto), a day
on which the Trans-European Automated Real-Time Gross Settlement Express
Transfer (TARGET) System is open and (iii) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
Canadian Revolving Loans, any day which is a Business Day described in
clauses (i) and, if relevant, (ii) above and which is also a day which is not a
legal holiday or a day on which banking institutions are authorized or required
by law or other government action to close in Toronto, Ontario.

 

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“Calculation Period” shall mean, in the case of any Permitted Acquisition, the
Test Period most recently ended prior to the date of any such Permitted
Acquisition for which financial statements are available.

“Canadian Borrower” shall have the meaning provided in the first paragraph of
this Agreement.

“Canadian Borrower Obligations” shall mean all Obligations owing to the Secured
Parties by the Canadian Credit Parties.

“Canadian Borrower Swingline Loans” shall have the meaning provided in Section
2.01(b).

“Canadian Borrowing Base” shall mean, as of any date of determination, the
result of, in each case using the Dollar Equivalent of all amounts not
denominated in U.S. Dollars:

(a) 85% of the amount of Eligible Canadian Accounts, plus

(b) the lower of:

(i) 75% of the net book value of Eligible Canadian Inventory,

and

(ii) 85% times the then extant Net Liquidation Percentage times the net book
value of the Eligible Canadian Inventory, minus

(c) the aggregate amount of reserves, if any, established by the Co-Collateral
Agents under Section 2.01(d) with respect to the Canadian Borrowing Base.

“Canadian Collection Account” shall mean each account established at a Canadian
Collection Bank and subject to a Cash Management Control Agreement into which
funds shall be transferred as provided in Section 5.03(b).

“Canadian Collection Banks” shall have the meaning provided in
Section 5.03(b)(i).

“Canadian Credit Party” shall mean the Canadian Borrower and each Canadian
Subsidiary Guarantor.

“Canadian Disbursement Account” shall mean each checking and/or disbursement
account of the Canadian Borrower for its general corporate purposes, including
for the purpose of paying the Canadian Borrower’s trade payables and other
operating expenses.

“Canadian Dollar Denominated Loan” shall mean each Canadian Borrower Swingline
Loan and each Canadian Revolving Loan denominated in Canadian Dollars at the
time of the incurrence thereof, unless and until converted into Dollar
Denominated Loans pursuant to Section 2.14.

“Canadian Dollars” shall mean the lawful currency of Canada, as in effect from
time to time.

“Canadian Lender” shall mean each Lender, each of which is a Canadian Resident
unless otherwise permitted in this Agreement, and which has a Commitment or
which has any outstanding Canadian Revolving Loans. Unless the context otherwise
requires, each reference in this Agreement to a Lender includes each Canadian
Lender and shall include references to any Affiliate or branch of any such
Lender which is acting as a Canadian Lender.

 

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“Canadian Letter of Credit” shall have the meaning provided in Section 3.01(a).

“Canadian Prime Rate” shall mean, for any day, the greater of (i) a fluctuating
rate of interest per annum equal to the rate of interest in effect for such day
as publicly announced from time to time by the Canadian Reference Lender as the
rate it will charge for commercial loans made in Canadian Dollars in Canada and
which it refers to as its “Prime Rate” (which rate is set by the Canadian
Reference Lender based upon various factors including the Canadian Reference
Lender’s costs and desired return, general economic conditions and other factors
and is used as a reference point for pricing some loans, which may be priced at,
above, or below such announced rate, with any change in such rate announced by
the Canadian Reference Lender taking effect at the opening of business on the
day specified in the public announcement of such change), (ii) the sum of the
Bank of Canada overnight rate, which is the rate of interest charged by the Bank
of Canada on one-day loans to financial institutions, for such day, plus 0.50%,
and (iii) the sum of the B/A Equivalent Rate for a one month Interest Period as
determined on such day, plus 1.0%. Each interest rate based on the Canadian
Prime Rate hereunder, shall be adjusted simultaneously with any change in the
Canadian Prime Rate. In the event that the Canadian Reference Lender (including
any successor or assignor) does not at any time publicly announce a prime rate,
the “Prime Rate” shall mean the “prime rate” publicly announced by a Schedule 1
chartered bank in Canada selected by the Administrative Agent.

“Canadian Prime Rate Loans” shall mean any Canadian Dollar Denominated Loan
designated or deemed designated as such by the Canadian Borrower at the time of
the incurrence thereof or conversion thereto.

“Canadian Reference Lender” shall mean Bank of America, N.A. (acting through its
Canada branch).

“Canadian Resident” shall mean a financial institution that is not prohibited by
applicable law, including under the Bank Act (Canada), from having a Commitment
or making any Canadian Revolving Loans to the Canadian Borrower hereunder, and
if such financial institution is not resident in Canada and is not deemed to be
resident in Canada for purposes of the Income Tax Act (Canada), that financial
institution deals at arm’s length with each Canadian Credit Party for purposes
of the Income Tax Act (Canada).

“Canadian Revolving Loan” shall have the meaning provided in Section 2.01(a).

“Canadian Security Agreement” shall mean each security agreement, deed of
hypothec or document or agreement delivered by a Canadian Credit Party pursuant
to the Existing Credit Agreement or this Agreement, as amended, restated,
reaffirmed, modified or supplemented from time to time.

“Canadian Security Documents” shall mean each Canadian Security Agreement and
each Additional Security Document covering assets of any Canadian Credit Party.

“Canadian Subsidiaries Guaranty” shall mean a guarantee of the Obligations of
the Canadian Borrower and the European Borrower substantially in the form of
Exhibit E-2 or such other form satisfactory to the Administrative Agent, in each
case, as amended, modified, restated and/or supplemented from time to time.

“Canadian Subsidiary” shall mean each Subsidiary of Aleris that is incorporated
or organized under the laws of Canada or any province or territory thereof;
provided that Aleris Aluminum Canada S.E.C./Aleris Aluminum Canada L.P., a
bankrupt entity, shall not be deemed a Subsidiary for purposes hereof.

 

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“Canadian Subsidiary Guarantor” shall mean each Wholly-Owned Canadian Subsidiary
of the Canadian Borrower that is a Material Subsidiary, in each case, unless and
until such time as the relevant Canadian Subsidiary Guarantor is released from
all of its obligations under its Canadian Subsidiaries Guaranty in accordance
with the terms and provisions thereof.

“Capital Expenditures” shall mean, with respect to any Person, (a) all
expenditures by such Person which should be capitalized in accordance with GAAP
and, without duplication, the amount of Capitalized Lease Obligations incurred
by such Person less (b) any expenditure which is contractually required to be,
and is, reimbursed to the Credit Parties in cash by a third party (including
landlords and developers) during such period of calculation.

“Capitalized Lease Obligations” shall mean, with respect to any Person, all
rental obligations of such Person which, under GAAP or Local GAAP (each as in
effect on the Original Closing Date), as applicable, are required to be
capitalized on the books of such Person, in each case taken at the amount
thereof accounted for as indebtedness in accordance with such principles.

“Cash Equivalents” shall mean, as to any Person, (i) securities issued or
directly and fully guaranteed or insured by the United States or any agency,
instrumentality or sponsored corporation thereof and backed by the full faith
and credit of the United States, and in each case having maturities of not more
than twenty-four (24) months from the date of acquisition, (ii) U.S. Dollar
denominated time deposits, certificates of deposit, overnight bank deposits and
bankers’ acceptances having maturities within one (1) year from the date of
acquisition thereof issued by any Lender or any commercial bank of recognized
standing, having capital and surplus in excess of $250,000,000, (iii) repurchase
obligations for underlying securities of the types described in clauses (i) and
(ii) above and entered into with any commercial bank meeting the qualifications
specified in clause (ii) above, (iv) other investment instruments having
maturities within one hundred eighty (180) days from the date of acquisition
thereof offered or sponsored by financial institutions having capital and
surplus in excess of $500,000,000, (v) readily marketable direct obligations
issued by any state of the United States or any political subdivision thereof
having maturities within one hundred eighty (180) days from the date of
acquisition thereof and having, at the time of acquisition thereof, one of the
two highest rating categories obtainable from either Moody’s or S&P (or if at
such time neither is issuing ratings, then a comparable rating of another
nationally recognized rating agency), (vi) commercial paper rated, at the time
of acquisition thereof, at least A-2 or the equivalent thereof by S&P or at
least P-2 or the equivalent thereof by Moody’s (or if at such time neither is
issuing ratings, then a comparable rating of another nationally recognized
rating agency), in each case maturing within one year after the date of
acquisition, (vii) investments in money market funds which invest substantially
all their assets in securities of the types described in clauses (i) through
(vi) above, (viii) in the case of any Foreign Subsidiary of Aleris,
(x) certificates of deposit or bankers’ acceptances of any bank organized under
the laws of Canada, Japan or any country that is a member of the European
economic and monetary union pursuant to the Treaty whose short term commercial
paper, at the time of acquisition thereof, is rated at least A-2 or the
equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody’s
(or if at such time neither is issuing ratings, then a comparable rating of
another nationally recognized rating agency), or, if no such commercial paper
rating is available, a long term debt rating, at the time of acquisition
thereof, of at least A or the equivalent thereof by S&P or at least A-2 or the
equivalent thereof by Moody’s (or if at such time neither is issuing ratings,
then a comparable rating of another nationally recognized rating agency), in
each case maturing not more than one (1) year from the date of acquisition by
such Foreign Subsidiary, (y) overnight deposits and demand deposit accounts
maintained with any bank that such Foreign Subsidiary regularly transacts
business and (z) securities of the type and maturity described in clause
(1) above but issued by the principal Governmental Authority in which such
Foreign Subsidiary is organized so long as such security has the highest rating
available from either S&P or Moody’s, (ix) Indebtedness or Preferred Stock
issued by Persons with a rating of “A” or higher from S&P or “A2” or higher from
Moody’s with maturities of

 

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one year or less from the date of acquisition, (x) U.S. Dollars and
(xi) Canadian Dollars, Japanese yen, pounds sterling, Euros or, in the case of
any Foreign Subsidiary that is a Restricted Subsidiary, such local currencies
held by it from time to time in the ordinary course of business.

“Cash Management Control Agreement” shall mean a “control agreement,” “blocked
account agreement”, power of attorney in respect of the respective Deposit
Account(s) or other agreement, in each case, in form and substance reasonably
acceptable to the Administrative Agent and containing terms regarding the
treatment of all cash and other amounts on deposit in the Deposit Account(s)
governed by such Cash Management Control Agreement consistent with the
requirements of Section 5.03.

“CERCLA” shall mean the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as the same has been amended and may hereafter be amended
from time to time, 42 U.S.C. § 9601 et seq.

“Change of Control” shall mean the occurrence of the following:

(a) prior to a Qualified Public Offering by Aleris, (i) the Permitted Holders
individually or collectively cease to own and control, beneficially and of
record, at least 40% of all Voting Stock of Aleris, or (ii) any “person” or
“group” of related persons (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act), is or becomes the beneficial owner (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that, for the purpose of
this clause, such person or group shall be deemed to have “beneficial ownership”
of all shares that any such person or group has the right to acquire, whether
such right is exercisable immediately or only after the passage of time) of a
percentage of voting equity securities of Aleris which exceeds the percentage of
Voting Stock held by the Permitted Holders, or

(b) following a Qualified Public Offering by Aleris, any “person” or “group” of
related persons (as described above) (other than the Permitted Holders), is or
becomes the beneficial owner (as described above) of 35% or more of all Voting
Stock of Aleris, the ownership percentage of which person or group exceeds the
percentage of voting equity securities held by the Permitted Holders.

“Chief Executive Office” shall mean, with respect to any Person, the location
from which such Person manages the main part of its business operations or other
affairs.

“Closing Date” shall have the meaning provided in Section 13.10.

“Code” shall mean the U.S. Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated thereunder. Section references to the
Code are to the Code as in effect at the date of this Agreement and any
subsequent provisions of the Code amendatory thereof, supplemental thereto or
substituted therefor.

“Co-Collateral Agents” shall mean each of Bank of America, N.A., Deutsche Bank
AG New York Branch and JPMorgan Chase Bank, N.A., in its capacity as
Co-Collateral Agent for the Lenders hereunder, and any successor thereto.

“Co-Documentation Agents” shall mean each of Barclays Capital, the investment
banking division of Barclays Bank PLC, Deutsche Bank AG New York Branch, and UBS
Securities LLC, in their respective capacities as Co-Documentation Agents, and
any successors thereto.

“Collateral” shall mean the Current Asset Collateral.

 

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“Collateral Access Agreement” shall mean a landlord waiver, bailee letter, or
acknowledgment agreement of any lessor, warehouseman, processor, consignee,
customs broker or other Person (other than Aleris or any other Credit Party) in
possession of, having a Lien upon, or having rights or interests in the Books,
Equipment or Inventory of any Borrower or any Subsidiary of a Borrower, in each
case, in form and substance reasonably satisfactory to the Administrative Agent.

“Collection Accounts” shall mean and include each U.S. Collection Account, each
Canadian Collection Account and each European Collection Account.

“Collection Banks” shall mean each U.S. Collection Bank, each Canadian
Collection Bank and each European Collection Bank.

“Collections” shall mean, with respect to any Collateral, all cash, checks,
notes, instruments, and other items of payment, including, without limitation,
insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds.

“Commitment” shall mean, for each Lender, the amount set forth opposite such
Lender’s name in Schedule I-A directly below the column entitled “Commitments”,
as the same may be reduced, adjusted or terminated from time to time in
accordance with the provisions hereof.

“Commitment Commission” shall have the meaning provided in Section 4.01(a).

“Compliance Period” shall mean any period during which Excess Availability is
less than the greater of (x) $45,000,000 and (y) 12.5% of the lesser of the
Total Commitment or the Borrowing Base, and continuing until the date on which
Excess Availability shall have been more than the greater of (x) $45,000,000 and
(y) 12.5% of the lesser of the Total Commitment or the Borrowing Base for thirty
(30) consecutive calendar days (and written or telephonic notice of such
determination is provided by the Administrative Agent to Aleris).

“Conditions” shall have the meaning provided in Section 8.16(a)(iii).

“Consolidated EBITDA” shall mean, as determined on a Pro Forma Basis with
respect to Aleris and its Subsidiaries for any period, the sum of (without
duplication) (i) net income (or loss) of Aleris and its Subsidiaries on a
consolidated basis for such period (excluding extraordinary, non-recurring or
unusual gains or losses), (ii) plus all cash and non-cash interest expense of
Aleris and its Subsidiaries on a consolidated basis for such period, (iii) plus
all charges against or minus credits to income of Aleris and its Subsidiaries on
a consolidated basis for such period for federal, state, territorial,
provincial, local and foreign taxes, (iv) plus depreciation expenses of Aleris
and its Subsidiaries on a consolidated basis for such period, (v) plus
amortization expenses of Aleris and its Subsidiaries (including, without
limitation, amortization of goodwill and other intangible assets) on a
consolidated basis for such period, (vi) plus any expenses or charges related to
the Transactions and any equity issuance, investment, acquisition (whether or
not such acquisition has been or will be consummated), disposition,
recapitalization or the incurrence of Indebtedness permitted to be incurred
hereunder including a refinancing thereof (whether or not successful) and any
amendment or modification to the terms of any such transactions, in each case,
deducted in computing net income, (vii) plus the amount of any cash
restructuring charge or reserve deducted in such period in computing net income
(A) as of the Original Closing Date and for the previous 12-month period, and
(B) after the Original Closing Date, provided that such charges and reserves
deducted after the Original Closing Date shall be limited to an amount of up to
$50,000,000 for any 12-month period and an aggregate amount of $150,000,000
during the term of the Commitments under this Agreement, (viii) plus any
professional fees incurred in connection with the Bankruptcy Case, (ix) plus any
costs incurred in connection with the closing of any production or manufacturing
facilities, (x) plus

 

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any write offs, write downs or other noncash charges reducing net income for
such period, (xi) plus or minus the amount of any minority interest expense or
income included in computing net income, (xii) minus, after the Original Closing
Date, the amount (if any) in excess of $15,000,000 by which contributions to
pension and retirement plans exceed the sum of expensed amounts included in net
income (or loss), (xiii) minus (without duplication) non-cash gains increasing
net income for such period, excluding any gains that represent the reversal of
any accrual of, or cash reserve for, anticipated cash charges in any prior
period (other than such cash charges that have been added back to net income in
computing EBITDA in accordance with this definition), (xiv) plus or minus, as
applicable (without duplication) (a) any net non-cash gain or loss resulting in
such period from hedging obligations and the application of Accounting Standards
Codification 815 (formerly Statement of Financial Accounting Standards 133),
(b) any net gain or loss resulting in such period from currency translation
gains or losses related to currency re-measurements of Indebtedness (including
intercompany indebtedness), (c) any net gain or loss resulting in such period
attributable to asset dispositions other than in the ordinary course of
business, as determined by Aleris in good faith, (d) the impact of the
adjustment of inventory and other items to fair value through purchase
accounting, (e) any non-cash stock-based compensation expense, and (f) any gain
or loss on the early extinguishment of debt, and (xv) plus factually supportable
and reasonably identifiable synergies and cost savings and expenses that are
certified to the Administrative Agent in writing, and which synergies, cost
savings and expenses are in the aggregate (without duplication, but including
any adjustments made pursuant to clause (iii) of the definition of “Pro Forma
Basis”) either (A) not, for any calculation period, in excess of the greater of
(a) $30,000,000 or (b) 10% of the amount of Consolidated EBITDA (calculated on a
Pro Forma Basis (excluding any adjustment thereto pursuant to this clause (A))
for the immediately preceding 12 month period as of the most recent Fiscal
Quarter for which financial statements have been delivered pursuant to
Section 9.01(b), or (B) in accordance with Regulation S-X and otherwise
reasonably acceptable to the Administrative Agent.

“Consolidated Senior Secured Debt” shall mean the aggregate principal amount of
Indebtedness of Aleris and its Subsidiaries on a consolidated basis that is
secured by a Lien.

“Consolidated Total Assets” shall mean Total Assets of Aleris and its
Subsidiaries that are not Unrestricted Subsidiaries, on a Pro Forma Basis.

“Contingent Obligation” shall mean, as to any Person, any obligation of such
Person guaranteeing or intended to guarantee any Indebtedness (“primary
obligations”) of any other Person (the “primary obligor”) in any manner, whether
directly or indirectly, including, without limitation, any obligation of such
Person, whether or not contingent, (i) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (x) for the purchase or payment of any such primary
obligation or (y) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (iv) otherwise
to assure or hold harmless the holder of such primary obligation against loss in
respect thereof, provided, however, that the term Contingent Obligation shall
not include endorsements of instruments for deposit or collection in the
ordinary course of business, or customary and reasonable indemnity obligations
in effect on the Original Closing Date or entered into in connection with any
acquisition or disposition of assets permitted hereunder (other than obligations
with respect to Indebtedness). The amount of any Contingent Obligation shall be
deemed to be an amount equal to the lesser of (x) the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith and (y) in the case of
any Contingent Obligation which is expressly limited in amount, the stated
maximum amount of such Contingent Obligation.

 

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“Conversion Event” shall mean (i) the occurrence of any Event of Default with
respect to any Borrower pursuant to Section 11.05, (ii) the declaration of the
termination of any Commitment, or the acceleration of the maturity of any
Revolving Loans, in each case pursuant to Section 11 or (iii) the failure of any
Borrower to pay any principal of, or interest on, Loans or any Letter of Credit
Outstandings on or before the tenth Business Day following the Final Maturity
Date (or in the case of Swingline Loans, the Swingline Expiry Date).

“Core Canadian Concentration Account” shall have the meaning provided in
Section 5.03(c).

“Core European Concentration Account” shall have the meaning provided in
Section 5.03(c).

“Core U.S. Concentration Account” shall have the meaning provided in
Section 5.03(c).

“Corresponding Debt” shall have the meaning provided in Section 13.22.

“Credit Account” shall have the meaning provided in Section 5.03(e).

“Credit Documents” shall mean this Agreement and, after the execution and
delivery thereof pursuant to the terms of this Agreement, each Note, the Fee
Letter, each Guaranty and each Security Document.

“Credit Event” shall mean the making of any Loan or the issuance of any Letter
of Credit (including any assumption, extension, amendment or renewal of any
Letters of Credit).

“Credit Party” shall mean each Borrower and each Guarantor.

“Cure Amount” shall have the meaning set forth in Section 10.07(b).

“Cure Period” shall have the meaning provided in Section 10.07(b).

“Cure Right” shall have the meaning provided in Section 10.07(b).

“Currency Hedging Agreement” shall mean any foreign exchange contracts, currency
swap agreements, currency hedging agreements, currency options or arrangements
similar to any of the foregoing, or other arrangements designed to protect
against fluctuations in currency values or arrangements to offset (on a partial
or whole basis) or terminate positions executed by any of the foregoing.

“Current Asset Collateral” shall mean, all Current Assets and shall include,
collectively, all of the personal property in which First Priority Liens are
granted (or purported to be granted) pursuant to the Security Documents as
security for the Obligations including, without limitation, all Accounts and
Inventory of Borrowers and certain of the Guarantors.

“Current Assets” shall mean, and include (i) Accounts (but excluding such
Accounts for equipment sold or leased), (ii) Inventory, (iii) to the extent
evidencing or governing any of the items referred to in the preceding clauses,
General Intangibles, Documents, contract rights, Chattel Paper (including
Tangible Chattel Paper and Electronic Chattel Paper) and Instruments (including
promissory notes), (iv) to the extent relating to any of the items referred to
in the preceding clauses, guarantees, letters of credit, security and other
credit enhancements, Letter-of-Credit Rights and Supporting Obligations,
(v) cash and cash equivalents from whatever source derived, all lockboxes,
Deposit Accounts and, to the extent constituting cash or Cash Equivalents or
representing a claim to Cash Equivalents,

 

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Securities Accounts as original collateral, (vi) all intercompany loans and
advances among any Person and its subsidiaries, (vii) to the extent relating to
any of the items referred to in the preceding clauses, books and Records and
(viii) proceeds of any of the foregoing, but excluding the Excluded Assets.

“Default” shall mean any event, act or condition which with notice or lapse of
time, or both, unless cured or waived, would constitute an Event of Default.

“Defaulting Lender” shall mean any Lender with respect to which a Lender Default
is in effect; provided that solely for purposes of Section 2.01 with respect to
Swingline Loans, Section 3 and Section 16.07 only, the term “Defaulting Lender”
shall also include (a) any Lender with an Affiliate that (x) either (A) Controls
such Lender or (B) is Controlled by such Lender and (y) that is deemed currently
insolvent by a Governmental Authority of competent jurisdiction that is such
Lender’s primary regulating body or is the subject of a bankruptcy or insolvency
proceeding or in receivership, provided that a Person shall not be a Defaulting
Lender solely by virtue of a Governmental Authority’s ownership of an equity
interest in such Affiliate, and (b) any Lender that previously constituted a
“Defaulting Lender” under this Agreement, unless such Lender has ceased to
constitute a “Defaulting Lender” for a period of at least ninety
(90) consecutive days (or such shorter period as shall be agreed to in writing
by Aleris, the Administrative Agent and the Issuing Lenders, which agreement
shall not be unreasonably withheld).

“Deposit Account” shall mean any “deposit account” (as such term is defined in
Article 9 of the UCC).

“Designated Fronting Bank” shall have the meaning set forth in Section 16.01.

“Disbursement Account” shall mean each U.S. Disbursement Account, each Canadian
Disbursement Account and each European Disbursement Account.

“Disqualified Lender” shall mean any Person designated by Aleris in writing to
the Administrative Agent in accordance with that certain letter agreement dated
as of June 1, 2010 between Aleris and Bank of America, N.A.

“Disqualified Stock” shall mean any Equity Interests that are not Qualified
Equity Interests.

“Distribution Conditions” shall mean with respect to any Dividends permitted to
be paid pursuant to Section 10.03(viii), each of the following conditions are
satisfied at the time of each dividend or distribution and after giving effect
thereto: (i) no Event of Default shall have occurred and be continuing, and
(ii) the Excess Availability shall have been equal to or greater than 17.5% of
the lesser of (A) the Total Commitments and (B) the Total Borrowing Base for
each day in the preceding 30 day period, and shall be at least 17.5% of the
lesser of (A) the Total Commitments and (B) the Total Borrowing Base after
giving pro forma effect thereto, and (iii) the Fixed Charge Coverage Ratio is at
least 1.10 to 1.0 for the immediately preceding 12-month period for which
financial statements have been delivered pursuant to Section 9.01(b).

“Distribution Subsidiary” shall mean each Subsidiary of the European Borrower.

“Dividend” shall mean any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in any
Borrower or its Subsidiaries, or any payment (whether in cash, securities or
other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any such Equity Interests in any Borrower or any option, warrant or other
right to acquire any such Equity Interests in any Borrower.

 

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“Dollar Denominated Loan” shall mean a Loan incurred in U.S. Dollars.

“Dollar Equivalent” shall mean, the amount of U.S. Dollars which could be
purchased with the amount of the applicable Available Currency involved in such
computation at (x) the exchange rate updated by Bloomberg (or other commercially
available source designated by the Administrative Agent) on the date which is
one Business Day prior to any such determination or (y) if the provisions of the
foregoing clause (x) are not applicable, the “official” exchange rate (if
applicable) or the spot exchange rate for the purchase of the applicable
Available Currency in question in Administrative Agent’s principal foreign
exchange trading office (each such exchange rate, the “Spot Exchange Rate”);
provided that notwithstanding anything to the contrary contained in this
definition, at any time that a Default or an Event of Default then exists, the
Administrative Agent may revalue the Dollar Equivalent of any amounts
outstanding under the Credit Documents in a currency other than U.S. Dollars in
its reasonable discretion using the Spot Exchange Rates therefor.

“Domestic Subsidiary” shall mean each Subsidiary of Aleris incorporated or
organized in the United States or any State or territory thereof.

“Dominion Period” shall mean any Enhanced Disclosure Period.

“Drawing” shall have the meaning provided in Section 3.05(b).

“Eligible Accounts” shall mean those Accounts created by one of the Borrowers or
Guarantors in the ordinary course of its business (or, in the case of Accounts
of the European Borrower, created by one of the Distribution Subsidiaries or
Specified European Manufacturing Subsidiaries, or a Transitory European
Subsidiary in the ordinary course of its business and acquired by the European
Borrower pursuant to a Receivables Purchase Agreement), that arise out of its
sale of goods or rendition of services, that comply with each of the
representations and warranties respecting Eligible Accounts made in the Credit
Documents, and that are not excluded as ineligible by virtue of one or more of
the excluding criteria set forth below. In determining the amount to be
included, Eligible Accounts shall be calculated net of customer deposits,
unapplied cash, returns, rebates, discounts, credits, allowances or sales or
excise taxes. Eligible Accounts shall not include the following:

(a) Accounts that the Account Debtor has failed to pay within 120 days of
original invoice date or more than 60 days after the original due date,

(b) Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of
the total amount of all Accounts owed by that Account Debtor (or its Affiliates)
are deemed ineligible hereunder,

(c) Accounts with respect to which the Account Debtor is (i) an Affiliate of any
Borrower (or Guarantor) or (ii) an employee or agent of any Borrower (or
Guarantor) or any Affiliate of such Borrower (or Guarantor),

(d) the sale to the Account Debtor is on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase or return
basis or is evidenced by chattel paper,

(e) Accounts that are not payable in U.S. Dollars; provided that (i) Eligible
Canadian Accounts may also be payable in Canadian Dollars and (ii) Eligible
European Accounts may also be payable in any Available Currency,

 

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(f) Accounts with respect to which the Account Debtor is not a Governmental
Authority unless: (i) the Account Debtor either (A) maintains its Chief
Executive Office in an Applicable Eligible Jurisdiction, or (B) is organized
under the laws of an Applicable Eligible Jurisdiction or any state, territory,
province or subdivision thereof; or (ii) (A) the Account is supported by an
irrevocable letter of credit reasonably satisfactory to the Co-Collateral Agents
in their Permitted Discretion (as to form, substance, and issuer or domestic
confirming bank), or (B) the Account is covered by credit insurance in form,
substance, and amount, and by an insurer, reasonably satisfactory to the
Co-Collateral Agents, in their Permitted Discretion,

(g) Accounts with respect to which the Account Debtor is a Governmental
Authority (other than Accounts (x) with respect to which the applicable Borrower
(or Guarantor) has complied, to the reasonable satisfaction of the Co-Collateral
Agents, with the Assignment of Claims Act, 31 USC § 3727, the Financial
Administration Act (Canada) or any applicable similar laws of the jurisdiction
of such Governmental Authority or (y) the assignability of which, and the
enforcement of such assignment against the relevant Governmental Authority of
which, is not restricted pursuant to the laws of the jurisdiction of such
Governmental Authority), unless (i) the Account is supported by an irrevocable
letter of credit reasonably satisfactory to the Co-Collateral Agents, in their
Permitted Discretion (as to form, substance, and issuer or domestic confirming
bank), or (ii) the Account is covered by credit insurance in form, substance,
and amount, and by an insurer, reasonably satisfactory to the Co-Collateral
Agents, in their Permitted Discretion,

(h) Accounts with respect to which the Account Debtor (i) is a creditor of any
Borrower (or Guarantor), (ii) has or has asserted a right of setoff, or
(iii) has disputed its obligation to pay all or any portion of the Account, in
each case to the extent of such claim, right of setoff, or dispute or the
Account is contingent in any respect or for any reason (the amount of each such
offset includes, but is not limited to, tolling liability, which is represented
by the value of materials that are owned by any Account Debtor but that are in
the possession of a Borrower or Guarantor for the purpose of being tolled into
finished goods for an Account Debtor) unless, (x) such Account Debtor executed a
non-offset agreement in form and substance reasonably satisfactory to the
Co-Collateral Agents in respect of such claims, right of setoff, or dispute, or
(y) such tolling agreements expressly waive and/or exclude offset rights with
such provisions reasonably satisfactory to the Co-Collateral Agents,

(i) Accounts with respect to an Account Debtor whose total obligations owing to
one or more Borrowers (or Guarantors) exceed 15% of all Eligible Accounts, to
the extent of the obligations owing by such Account Debtor in excess of such
percentage; provided, however, that, in each case, the amount of Eligible
Accounts that are excluded because they exceed the foregoing percentage shall be
determined by the Co-Collateral Agents based on all of the otherwise Eligible
Accounts prior to giving effect to any eliminations based upon the foregoing
concentration limit,

(j) Accounts with respect to which the Account Debtor shall (i) apply for,
suffer, or consent to the appointment of, or the taking of possession by, a
receiver, interim receiver, national receiver, receiver-manager, monitor,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property or call a meeting of its creditors, (ii) admit in writing its
inability, or be generally unable, to pay its debts as they become due or cease
operations of its present business, (iii) make a general assignment for the
benefit of creditors, or any assignment in bankruptcy, (iv) commence a voluntary
case under any state, federal or foreign bankruptcy or insolvency laws (as now
or hereafter in effect), (v) be adjudicated bankrupt or insolvent, (vi) file a
petition, notice of intention to make a proposal, or proceeding seeking to take
advantage of any other law providing for the relief of debtors, (vii) acquiesce
to, or fail to have dismissed, any petition which is filed against it in any
involuntary case under such bankruptcy or insolvency laws, or (viii) take any
action for the purpose of effecting any of the foregoing,

 

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(k) Accounts that are not subject to a valid and perfected First Priority Lien
in favor of the Administrative Agent pursuant to the relevant Security Document
or are subject to any other Lien (other than Liens permitted pursuant to
Section 10.01),

(1) Accounts with respect to which (i) the goods giving rise to such Account
have not been shipped to the Account Debtor or the goods have been shipped to
the Account Debtor with shipping terms of FOB destination and the goods have not
been received by the Account Debtor, (ii) the services giving rise to such
Account have not been performed by the applicable Borrower (or Guarantor) and
its Subsidiaries or (iii) the Account otherwise does not represent a final sale,

(m) Accounts that represent the right to receive progress payments or other
advance billings that are due prior to the completion of performance by the
applicable Borrower (or Guarantor) and its Affiliates of the subject contract
for goods or services,

(n) the applicable Borrower (and/or, in the case of Accounts of the European
Borrower, the applicable Specified European Manufacturing Subsidiary) (or
Guarantor) has made any agreement with any Account Debtor for any deduction
therefrom (but only to the extent of such deductions from time to time), except
for discounts or allowances, made in the ordinary course of business for prompt
payment and except for volume discounts, all of which discounts or allowances
are reflected in the calculation of the face value of each respective invoice
related thereto and except for returns, rebates or credits reflected in the
calculation of the face value of each such amount,

(o) any return, rejection or repossession of the merchandise has occurred or the
rendition of services has been disputed,

(p) such Account is not payable to a Borrower (or Guarantor) (or, in the case of
the European Borrower, such Account has not been sold to the European Borrower
by a European Distribution Subsidiary, a Specified European Manufacturing
Subsidiary or a Transitory European Subsidiary pursuant to a Receivables
Purchase Agreement, or the Account Debtor for such Account has not been notified
by the applicable Specified European Manufacturing Subsidiary, European
Distribution Subsidiary or Transitory European Subsidiary (pursuant to the
applicable jurisdiction requirements if any, set forth on Schedule XVIII hereto)
to make payment to European Borrower),

(q) such Account has not been invoiced,

(r)(i) such Account is subject to enforceable restrictions on assignment of such
Account (other than with respect to Accounts of Account Debtors located in the
United States) or (ii) with respect to any German law governed Account of the
European Borrower, such Account is subject to extended retention of title
arrangements (verlängerter Eigentumsvorbehalft), unless such Account was
purchased pursuant to, and in accordance with, any of the Receivables Purchase
Agreements (which provide for the sale and assignment by way of true sale and
permit such sale and assignment in respect to Accounts that are subject to
extended retention of title arrangements (verlängerter Eigentumsvorbehalft) so
long as the extended retention of title arrangements are commonly accepted in
the relevant industry (branchenüblich) and do not prevent the sale and
assignment of the relevant Account pursuant to the Receivables Purchase
Agreement),

 

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(s) with respect to Accounts of the European Borrower, (i) Accounts which are
not otherwise excluded under clause (f) of this definition where the Account
Debtor either (A) maintains its Chief Executive Office in a Tier II Country, or
(B) is organized under the laws of a Tier II Country or any state, territory,
province or subdivision thereof, to the extent aggregate amount of all Accounts
described in this clause (s) would exceed $20,000,000, or (ii) to the extent the
Account is not supported by an irrevocable letter of credit reasonably
satisfactory to the Co-Collateral Agents, in their Permitted Discretion (as to
form, substance, and issuer or domestic confirming bank), or is not covered by
credit insurance in form, substance, and amount, and by an insurer reasonably
satisfactory to the Co-Collateral Agents, in their Permitted Discretion,

(t) with respect to Accounts of the European Borrower, Accounts with respect to
which the agreement evidencing such Accounts (A) are not governed by the laws of
Switzerland, Germany, France, Belgium, England or any state in the United
States, or the laws of such other jurisdictions acceptable to the Co-Collateral
Agents in their Permitted Discretion, (each, an “Acceptable Governing Law”) or
(B) if governed by an Acceptable Governing Law, the requirements, if any, set
forth on Schedule XVIII hereto with respect to such Acceptable Governing Law (or
the respective Accounts) are not satisfied,

(u) with respect to Accounts of the European Borrower, Accounts where the
Account Debtor either maintains its Chief Executive Office or is organized under
the laws of an Applicable European Jurisdiction and the requirements, if any,
set forth on Schedule XVIII with respect to such Account Debtor in such
Applicable European Jurisdiction have not been satisfied,

(v) Accounts to the extent representing service charges and late fees, or

(w) Accounts acquired pursuant to a Receivables Purchase Agreement which is not
in full force and effect or under which any party thereto has defaulted in its
obligations thereunder or disaffirmed in writing its obligations thereunder.

“Eligible Canadian Accounts” shall mean the Eligible Accounts owned by the
Canadian Borrower or a Canadian Subsidiary Guarantor.

“Eligible Canadian Inventory” shall mean the Eligible Inventory owned by the
Canadian Borrower or a Canadian Subsidiary Guarantor.

“Eligible European Accounts” shall mean the Eligible Accounts owned by the
European Borrower pursuant to a Receivables Purchase Agreement or by the U.K.
Guarantor, provided, that, in addition to the categories of Eligible Accounts
set forth in the definition thereof, Eligible European Accounts shall include
amounts owing to the European Borrower or the U.K. Guarantor with respect to
applicable value added taxes, in an aggregate amount not to exceed $15,000,000
at any time, so long as Co-Collateral Agents shall have determined, in their
Permitted Discretion, that no Governmental Authority shall have Liens with
respect to such amounts having priority over the Liens of Administrative Agent
under applicable law.

“Eligible Inventory” shall mean Inventory of the U.S. Borrowers, the U.K.
Guarantor (to the extent located in the United Kingdom), the Canadian Borrower
and the Canadian Subsidiary Guarantors, consisting of first quality goods,
including raw materials and work in progress, of a type held for sale in the
ordinary course of the Borrowers’ or Guarantor’s business, that complies with
each of the representations and warranties respecting Eligible Inventory made in
the Credit Documents, and that is not excluded as ineligible by virtue of one or
more of the excluding criteria set forth below. In determining the amount to be
so included, Inventory shall be valued at the lower of cost or market on a

 

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basis consistent with the Borrowers’ historical accounting practices. An item of
Inventory shall not be included in Eligible Inventory if:

(a) a Borrower (or Guarantor) does not have good, valid, and marketable title
thereto,

(b) it is not located at one of the locations in the continental United States
or Canada set forth on Schedule XIII, or in the case of any Eligible U.K.
Inventory, at one of the locations in the United Kingdom set forth on Schedule
XIII, in each case as same may be modified from time to time to the extent
promptly notified to the Co-Collateral Agents,

(c) it is located on real property leased by a Borrower (or Guarantor), in a
contract warehouse or in a warehouse owned or leased by the supplier of such
goods (other than a Borrower (or Guarantor)), in each case, unless (i) it is
subject to a Collateral Access Agreement; executed by the lessor, warehouseman
or supplier, as the case may be, and (except in the case of raw materials
consisting of zinc) unless it is segregated or otherwise separately identifiable
from goods of others, if any, stored on the premises; provided that to the
extent a Collateral Access Agreement has not been obtained with respect to
Inventory located on any such property on or prior to the Original Closing Date,
such Inventory shall not be deemed ineligible pursuant to this clause (c)(i) so
long as the relevant Collateral Access Agreement is obtained on or prior to the
45th day (or in the case of raw materials consisting of zinc, 90th day) after
the Original Closing Date (or such later date as may be agreed to by the
Co-Collateral Agents), (ii) a Rent Reserve (other than with respect to inventory
in a warehouse owned or leased by a supplier of such goods (other than a
Borrower (or Guarantor))) has been taken against such Inventory in the
Co-Collateral Agents’ Permitted Discretion or (iii) the aggregate Dollar
Equivalent of the amount of all Inventory of the Borrowers (or Guarantors)
located at such location does not exceed $100,000,

(d) it is not subject to a valid and perfected First Priority Lien in favor of
the Administrative Agent pursuant to the relevant Security Document,

(e) it consists of goods that are obsolete or slow moving, restrictive or custom
items, or goods that constitute spare parts, packaging and shipping materials,
supplies used or consumed in a Borrower’s (or Guarantor’s) business, bill and
hold goods, defective or unusable goods, or Inventory acquired on consignment,

(f) it is not owned by such Borrower (or Guarantor) free and clear of all Liens
and rights of any other Person (including the rights of a purchaser that has
made progress payments and the rights of a surety that has issued a bond to
assure such Borrower’s (or Guarantor’s) performance with respect to that
Inventory), except the Liens created pursuant to the Security Documents and
other Liens permitted pursuant to Section 10.01,

(g) it is in transit unless such otherwise Eligible Inventory is in transit from
(A) (1) a location in an Applicable Eligible Jurisdiction owned or, subject to
the restrictions set forth in clause (c) above, leased by a Credit Party or
(2) a location in an Applicable Eligible Jurisdiction identified on
Schedule XIII (as such Schedule may be updated from time to time as promptly
notified to the Co-Collateral Agents) to (B) (1) a location in an Applicable
Eligible Jurisdiction owned or, subject to the restrictions set forth in clause
(c) above, leased by a Credit Party or (2) a location in an Applicable Eligible
Jurisdiction identified on Schedule XIII (as such Schedule may be updated from
time to time as promptly notified to the Co-Collateral Agents),

 

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(h) it is covered by a negotiable document of title, unless such document has
been delivered to Administrative Agent with all necessary endorsements, free and
clear of all Liens except those created pursuant to the Security Documents,

(i) it consists of any costs associated with “freight-in” charges,

(j) it consists of any gross profit mark-up in connection with the sale and
distribution thereof to any division of any Borrower (or Guarantor) or to any
Affiliate of such Borrower (or Guarantor),

(k) it consists of Hazardous Materials or goods that can be transported or sold
only with licenses that are not readily available (unless otherwise deemed to be
Eligible Inventory by Co-Collateral Agents in their Permitted Discretion),

(1) it is not covered by casualty insurance as required by terms of this
Agreement, or

(m) it was produced in violation of the Fair Labor Standards Act and subject to
the “hot goods” provision contained in Title 29 U.S.C. §215(a)(1), to the extent
applicable.

“Eligible Transferee” shall mean and include a commercial bank, an insurance
company, a finance company, a financial institution, any fund that invests in
loans or any other “accredited investor” as defined in Regulation D of the
Securities Act) (but excluding natural persons), but in any event excluding the
Permitted Holders and their Affiliates and Subsidiaries (other than a Permitted
Holder constituting a Permitted Holder Lender); provided, however, that, unless
otherwise agreed by Aleris, during the existence of an Event of Default, no
Person (other than a Lender) shall be an “Eligible Transferee” if the assignment
of any Commitment (or, if the Commitments have terminated, outstanding
Obligations) to such Person would cause such Person to have Commitments (or, if
the Commitments have terminated, outstanding Obligations) in excess of 25% of
the Total Commitment (or, if the Commitments have terminated, aggregate
outstanding Obligations) at such time or would constitute a breach of the Ten
Non-Bank Regulation or the Twenty Non-Bank Regulation and provided further that,
except during the existence of a Significant Event of Default, each transferee
becoming a Canadian Lender shall be a Canadian Resident. Notwithstanding the
foregoing, for purposes of this Agreement, an “Eligible Transferee” must have
the ability to fund under each of the Sub-Limits unless both the Administrative
Agent and Aleris shall have provided their prior written consent.

“Eligible U.K. Inventory” shall mean the Eligible Inventory owned by the U.K.
Guarantor.

“Eligible U.S. Accounts” shall mean the Eligible Accounts owned by the U.S.
Borrowers.

“Eligible U.S. Inventory” shall mean the Eligible Inventory owned by the U.S.
Borrowers.

“Eligible U.S. Unbilled Accounts” shall mean Accounts (which are Eligible U.S.
Accounts except for their failure to comply with clause (q) of the definition of
Eligible Accounts) which have not been invoiced but for which Inventory has been
sold and shipped or services have been rendered and which shall be billed not
more than 30 days after such Account is first included on the Borrowing Base
Certificate or otherwise reported to the Co-Collateral Agents as Collateral.

“Enhanced Disclosure Period” shall mean any period during which (i) an Event of
Default has occurred and is continuing or (ii) Excess Availability is less than
the greater of (x) $50,000,000 and (y) 15% of the lesser of the Total Commitment
or the Borrowing Base, in each case for five (5) consecutive Business Days, and
continuing until the date on which (i) Excess Availability shall have been more
than

 

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the greater of (x) $50,000,000 and (y) 15% of the lesser of the Total Commitment
or the Borrowing Base for thirty (30) consecutive calendar days (and written or
telephonic notice of such determination is provided by the Administrative Agent
to Aleris) and (ii) no Event of Default exists.

“Enhanced Exam Period” shall mean any period during which (i) an Event of
Default has occurred and is continuing or (ii) Excess Availability is less than
the greater of (x) $50,000,000 and (y) 25% of the lesser of the Total Commitment
or the Borrowing Base, in each case for five (5) consecutive Business Days, and
continuing until the date on which (i) Excess Availability shall have been more
than the greater of (x) $50,000,000 and (y) 25% of the lesser of the Total
Commitment or the Borrowing Base for thirty (30) consecutive calendar days (and
written or telephonic notice of such determination is provided by the
Administrative Agent to Aleris) and (ii) no Event of Default exists.

“Environmental Claims” shall mean any and all administrative, regulatory or
judicial actions, suits, written demands, demand letters, directives, claims,
liens, notices of noncompliance or violation, investigations or proceedings
relating in any way to any Environmental Law or any permit issued, or any
approval given, under any such Environmental Law (hereafter, “Claims”),
including, without limitation, (a) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and
(b) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in connection
with alleged injury or threat of injury to health, safety or the environment due
to the presence of Hazardous Materials.

“Environmental Law” shall mean any federal, state, provincial, territorial,
foreign, multi-national, municipal or local statute, law, rule, regulation,
ordinance, code, directive, guidance or policy having the effect of law, and
rule of common law now or hereafter in effect and in each case as amended, and
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment or
Hazardous Materials, including, without limitation, CERCLA; the Resource
Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; the Federal Water
Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Toxic Substances Control
Act, 15 U.S.C. § 2601 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the
Safe Drinking Water Act, 42 U.S.C. § 3803 et seq.; the Oil Pollution Act of
1990, 33 U.S.C. § 2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq.; the Hazardous Material
Transportation Act, 49 U.S.C. § 1801 et seq.; and any state, provincial,
territorial, municipal and local or foreign counterparts or substantive
equivalents, in each case as amended from time to time.

“Equipment” shall mean “equipment” (as such term is defined in Article 9 of the
UCC or Section 1 of the PPSA, as applicable to the Collateral of the Canadian
Credit Parties) and includes machinery, machine tools, motors, furniture,
furnishings, fixtures, vehicles (including motor vehicles), computer hardware,
tools, parts, and goods (other than consumer goods, farm products, or
Inventory), wherever located, including all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of
the foregoing.

“Equity Interests” shall mean (a) in the case of a corporation, corporate stock,
(b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a partnership or limited or unlimited
liability company, partnership or membership interests (whether general or
limited) and (d) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.

 

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“ERISA Affiliate” shall mean any trade or business (whether or not incorporated)
that together with Aleris is treated as a single employer under Section 414(b)
or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.

“ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Pension Plan
(other than an event for which the 30 day notice period is waived); (b) the
existence with respect to any Pension Plan of, an “accumulated funding
deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Pension Plan; (d) the incurrence by Aleris or any
of its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Pension Plan; (e) the receipt by Aleris or any ERISA
Affiliate from the PBGC or a plan administrator of any notice of an intent to
terminate any Pension Plan or Pension Plans or to appoint a trustee to
administer any Pension Plan; (f) the incurrence by Aleris or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal
from any Pension Plan or Multiemployer Plan; or (g) the receipt by Aleris or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from
Aleris or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is insolvent
or in reorganization, within the meaning of Title IV of ERISA.

“EURIBOR Rate” shall mean, with respect to Other Foreign Currency Denominated
Loans, (i) the rate per annum that appears on page 3750 of the Dow Jones Markets
Screen (or any successor page) for deposits in the applicable Available Currency
with maturities comparable to the Interest Period applicable to the Other
Foreign Currency Denominated Loans incurred in such Available Currency subject
to the respective Borrowing commencing two Business Days thereafter as of 11:00
a.m. (London time) on the date which is two (2) Business Days prior to the
commencement of the respective Interest Period or (ii) if such a rate does not
appear on page 3750 of the Dow Jones Markets Screen (or any successor page), the
offered quotation to first-class banks in the London interbank market by the
Administrative Agent for deposits in the respective Available Currency of
amounts in immediately available funds comparable to the outstanding principal
amount of the Other Foreign Currency Denominated Loan to be made by the
Administrative Agent as part of such Borrowing (or, if the Administrative Agent
is not a Lender with respect thereto, taking the average principal amount of
Other Foreign Currency Denominated Loans then being made by the various Lenders
pursuant thereto) with maturities comparable to the Interest Period applicable
to such Other Foreign Currency Denominated Loan commencing two (2) Business Days
thereafter as of 11:00 a.m. (London time) on the date which is two (2) Business
Days prior to the commencement of such Interest Period; provided that, in the
event the Administrative Agent has made any determination pursuant to
Section 2.10(a)(i) in respect of Other Foreign Currency Denominated Loans, or in
the circumstances described in clause (i) to the proviso to Section 2.10(b) in
respect of Other Foreign Currency Denominated Loans, the “EURIBOR Rate”
determined pursuant to this definition shall instead be the rate determined by
the Administrative Agent as the all-in-cost of funds for the Administrative
Agent to fund a Borrowing of Other Foreign Currency Denominated Loans in the
applicable Available Currency with maturities comparable to the Interest Period
applicable thereto.

“Euro Denominated Loan” shall mean each European Borrower Revolving Loan and
European Borrower Swingline Loan, in each case denominated in Euros at the time
of the incurrence thereof, unless and until converted into Dollar Denominated
Loans pursuant to Section 2.14.

“Euro LIBOR Rate” shall mean, with respect to each Borrowing of Euro Denominated
Loans, (i) the rate per annum for deposits in Euros as determined by the
Administrative Agent for a period corresponding to the duration of the relevant
Interest Period which appears on Reuters

 

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Page EURIBOR- 01 (or any successor page) at approximately 11:00 a.m. (Brussels
time) on the date which is two (2) Business Days prior to the commencement of
such Interest Period or (ii) if such rate is not shown on Reuters Page
EURIBOR-01 (or any successor page), the average offered quotation to prime banks
in the Euro-zone interbank market by the Administrative Agent for Euro deposits
of amounts comparable to the principal amount of the Euro Denominated Loan to be
made by the Administrative Agent as part of such Borrowing (or, if the
Administrative Agent is not a Lender with respect thereto, taking the average
principal amount of Euro Denominated Loans then being made by the various
Lenders pursuant thereto) with maturities comparable to the Interest Period to
be applicable to such Loan (rounded upward to the next whole multiple of 1/16 of
1%), determined as of 11:00 a.m. (Brussels time) on the date which is two
(2) Business Days prior to the commencement of such Interest Period; provided
that in the event the Administrative Agent has made any determination pursuant
to Section 2.10(a)(i) in respect of Euro Denominated Loans, or in the
circumstances described in clause (i) to the proviso to Section 2.10(b) in
respect of Euro Denominated Loans, Euro LIBOR determined pursuant to this
definition shall instead be the rate determined by the Administrative Agent as
the all-in-cost of funds for the Administrative Agent (or such other Lenders) to
fund a Borrowing of Euro Denominated Loans with maturities comparable to the
Interest Period applicable thereto.

“Euro Rate” shall mean and include each of the Eurodollar Rate, Euro LIBOR Rate
and the EURIBOR Rate.

“Euro Rate Loan” shall mean and include each Eurodollar Loan, each Euro
Denominated Loan and each Other Foreign Currency Denominated Loan.

“Eurodollar Loans” shall mean each Dollar Denominated Loan (excluding Swingline
Loans) designated as such by the respective Borrower or Borrowers at the time of
the incurrence thereof or conversion thereto.

“Eurodollar Rate” shall mean the rate per annum obtained by dividing (i)(a) the
per annum rate that appears on page 3750 of the Dow Jones Markets Screen (or any
successor page) for U.S. Dollar deposits with maturities comparable to the
Interest Period applicable to the Eurodollar Loan subject to the respective
Borrowing commencing two Business Days thereafter as of 10:00 a.m. (New York
time) on the date which is two Business Days prior to the commencement of the
respective Interest Period or (b) if such a rate does not appear on page 3750 of
the Dow Jones Markets Screen (or any successor page), the offered quotation to
first-class banks in the New York interbank Eurodollar market by the
Administrative Agent for U.S. Dollar deposits of amounts in immediately
available funds comparable to the outstanding principal amount of the applicable
Eurodollar Loan for which the Eurodollar Rate is being determined with
maturities comparable to the Interest Period applicable to such Eurodollar Loan
commencing two Business Days thereafter as of 10:00 a.m. (New York time) on the
applicable Interest Determination Date, in each case, (and rounded upward to the
nearest 1/16 of 1%) by (ii) a percentage equal to 100% minus the then stated
maximum rate of all reserve requirements (including, without limitation, any
marginal, emergency, supplemental, special or other reserves required by
applicable law) applicable to any member bank of the Federal Reserve System in
respect of Eurocurrency funding or liabilities as defined in Regulation D (or
any successor category of liabilities under Regulation D).

“European Borrower” shall have the meaning provided in the first paragraph of
this Agreement.

“European Borrower Obligations” shall mean all Obligations owing to the Secured
Parties by the European Borrower.

“European Borrower Revolving Loan” shall have the meaning provided in
Section 2.01(a).

 

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“European Borrower Swingline Loans” shall have the meaning provided in
Section 2.01(b).

“European Borrowing Base” shall mean, as of any date of determination, the
result of, in each case using the Dollar Equivalent of all amounts in any
Available Currency:

(a) 85% of the amount of Eligible European Accounts, plus

(b) the lower of:

(i) 75% of the net book value of Eligible U.K. Inventory, and

(ii) 85% times the then extant Net Liquidation Percentage times the net book
value of the Eligible U.K. Inventory, minus

(c) the aggregate amount of reserves, if any, established by the Co-Collateral
Agents under Section 2.01(d) with respect to the European Borrowing Base;

“European Collection Account” shall mean each account established at a European
Collection Bank and subject to a Cash Management Control Agreement into which
funds shall be transferred as provided in Section 5.03(b).

“European Collection Banks” shall have the meaning provided in
Section 5.03(b)(i).

“European Credit Party” shall mean the European Borrower and each European
Subsidiary Guarantor.

“European Disbursement Account” shall mean each checking and/or disbursement
account of the European Borrower or a European Distribution Subsidiary for its
general corporate purposes, including for the purpose of paying the European
Borrower’s or the relevant European Distribution Subsidiary’s trade payables and
other operating expenses.

“European Distribution Subsidiary” shall mean each Distribution Subsidiary that
is incorporated or organized under the laws of any country which is a member
state of the European Community established pursuant to the Treaty.

“European Intercompany Loans” shall have the meaning provided in
Section 10.05(viii).

“European Letter of Credit” shall have the meaning provided in Section 3.01(a).

“European Manufacturing Subsidiaries” shall mean each of the Subsidiaries of
Aleris organized in any country which is a member state of the European
Community established pursuant to the Treaty or any other jurisdiction
reasonably satisfactory to the Administrative Agent, designated by Aleris in
writing to the Administrative Agent as a “European Manufacturing Subsidiary”;
provided that in no event shall such term include the European Borrower or any
of its Subsidiaries. On the Closing Date, the European Manufacturing
Subsidiaries consist of the Subsidiaries set forth on Schedule VIII-B.

“European Parent Guarantor” shall mean each of (i) the direct parent of the
European Borrower and (ii) the direct or indirect parent of the entity described
in preceding clause (i) which is not a U.S. Credit Party. On the Closing Date,
the European Parent Guarantors are Dutch Aluminum C.V., a limited partnership
organized under the laws of The Netherlands, and Aleris Recycling Holding B.V.,
a private company with limited liability organized under the laws of The
Netherlands.

 

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“European Parent Guaranty” shall mean the European Parent Guaranty in the form
of Exhibit E-4 (as amended, restated, reaffirmed, modified or supplemented from
time to time).

“European Security Agreement” shall mean each security agreement or document
delivered by a European Credit Party pursuant to the Existing Credit Agreement
or this Agreement, as amended, restated, reaffirmed, modified or supplemented
from time to time.

“European Security Documents” shall mean each European Security Agreement and
each Additional Security Document covering assets of the European Credit
Parties.

“European Subsidiary” shall mean each European Parent Guarantor and each of its
Subsidiaries.

“European Subsidiaries Guaranty” shall mean a guarantee of the Obligations of
the European Borrower in substantially the form of Exhibit E-3 or such other
form as shall be reasonably satisfactory to the Administrative Agent, in each
case, as amended, restated, reaffirmed, modified or supplemented from time to
time.

“European Subsidiary Guarantor” shall mean the U.K. Guarantor and each Material
Subsidiary of the European Borrower which executes and delivers a European
Subsidiaries Guaranty unless and until such time as the applicable European
Subsidiary Guarantor is released from all of its obligations under its European
Subsidiaries Guaranty in accordance with the terms and provisions hereof or
thereof.

“Euros” and the designation “€” shall mean the currency introduced on January 1,
1999 at the start of the third stage of European economic and monetary union
pursuant to the Treaty.

“Event of Default” shall have the meaning provided in Section 11.

“Excess Availability” shall mean, on any date of determination, the amount by
which (x) the lesser of (A) the Total Commitment and (B) the Total Borrowing
Base exceeds (y) the Aggregate Exposure on such date; provided, that, for
purposes of determining Excess Availability, the Total Borrowing Base shall be
determined by the Administrative Agent based on the most recent Borrowing Base
Certificate delivered by Aleris, subject to adjustment by the Co-Collateral
Agents in their Permitted Discretion, in accordance with the terms of this
Agreement, and the Aggregate Exposure shall be determined by the Administrative
Agent on each applicable date of determination.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

“Excluded Assets” shall have the meaning provided in the Security Agreements.

“Excluded Capital Expenditures” shall mean (i) Capital Expenditures by Aleris or
its Subsidiaries made in China if at the time such Capital Expenditures are made
Excess Availability is no less than $175,000,000; provided that if such Capital
Expenditures are specifically funded with the proceeds of Revolving Loans or
Swingline Loans and after giving effect to such Borrowings, Excess Availability
is less than $175,000,000, then an amount equal to the difference between Excess
Availability prior to giving effect to such Borrowing and $175,000,000 shall be
considered Excluded Capital Expenditures; provided, further, that the amount of
such Capital Expenditures described in this clause (i) shall not exceed
$75,000,000 in any Test Period; and (ii) Capital Expenditures that were
specifically funded by (x) Indebtedness (other than a Revolving Loan or
Swingline Loan), or (y) with respect to Capital Expenditures by Aleris or its
Subsidiaries made in China or by Aleris or its Subsidiaries organized under the
Laws of Brazil made in Brazil, the proceeds from the sale of Equity Interests of

 

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Aleris (without duplication with any Cure Amount), or (z) with respect to all
other Capital Expenditures, the proceeds of up to $25,000,000 per Test Period
from the sale of Equity Interests of Aleris (without duplication with any Cure
Amount).

“Exempted Deposit Account” shall mean a Deposit Account the balance of which
consists exclusively of (A) withheld income taxes and federal, state, local or
foreign employment taxes in such amounts as are required in the reasonable
judgment of any Borrower to be paid to the Internal Revenue Service or any other
U.S., federal, state or local or foreign government agencies within the
following two months with respect to employees of any of the Credit Parties,
(B) amounts required to be paid over to an employee benefit plan pursuant to DOL
Reg. Sec. 2510.3-102 or any Foreign Plan on behalf of or for the benefit of
employees of one or more Credit Parties, (C) amounts other than Collections,
(D) amounts which are required to be pledged or otherwise provided as security
pursuant to any Law, other requirements of any Governmental Authority or foreign
pension requirement, (E) any accounts opened and amounts or deposits relating to
liens permitted by Section 10.01(xii) and/or (xviii), in each case which are
permitted hereunder, and (F) amounts to be used to fund payroll obligations
(including, but not limited to, amounts payable to any employment contracts
between Aleris and any of its Subsidiaries and their respective employees).

“Exempted Disbursement Account” shall mean a U.S. Disbursement Account, a
Canadian Disbursement Account or a European Disbursement Account designated as
an “Exempted Disbursement Account” on Part C of Schedule VI from time to time.

“Existing Credit Agreement” shall have the meaning provided in the recitals
hereof.

“Existing Letters of Credit” shall have the meaning provided in Section 3.01(c).

“Expenses” shall mean all present and future reasonable and invoiced expenses
incurred by or on behalf of the Administrative Agent, each Co-Collateral Agent,
or any Issuing Lender in connection with this Agreement, any other Credit
Document or otherwise in its capacity as the Administrative Agent, a
Co-Collateral Agent, or the Administrative Agent under this Agreement or under
any Security Document or as an Issuing Lender under this Agreement, whether
incurred heretofore or hereafter, which expenses shall include, without
limitation, the cost of record searches, the reasonable fees and expenses of
attorneys and paralegals, all reasonable and invoiced costs and expenses
incurred by the Administrative Agent in opening bank accounts, depositing
checks, electronically or otherwise receiving and transferring funds, and any
other charges imposed on the Administrative Agent due to insufficient funds of
deposited checks and the standard fee of the Administrative Agent relating
thereto, reasonable collateral examination fees and expenses (for examinations
conducted as contemplated by Section 9.06(b)), reasonable fees and expenses of
accountants, appraisers (for appraisals conducted as contemplated by
Section 9.06(b)) or other consultants, experts or advisors employed or retained
by the Administrative Agent, fees and taxes related to the filing of financing
statements, reasonable costs of preparing and recording any other Credit
Documents, all expenses, costs and fees set forth in this Agreement and the
other Credit Documents, all other fees and expenses required to be paid pursuant
to any other letter agreement and all reasonable fees and expenses incurred in
connection with releasing Collateral and the amendment or termination of any of
the Credit Documents, in each case to the extent that such costs, fees or
expenses are reimbursable pursuant to Section 13.01.

“Extended Commitment” shall have the meaning provided in Section 4.04.

“Extended Maturity Date” means, with respect to any Extended Loan or Extended
Commitment, the date occurring on the first anniversary of the Initial Maturity
Date unless otherwise agreed to by the Lenders that have accepted an Extension.

 

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“Extension” shall have the meaning provided in Section 4.04.

“Extension Offer” shall have the meaning provided in Section 4.04.

“Extension Notice Date” shall have the meaning provided in Section 4.04.

“Facing Fee” shall have the meaning provided in Section 4.01(c).

“FATCA” means Sections 1471 through 1474 of the Code (including any technical
amendments that may be made thereto and any implementing regulations thereof).

“Federal Funds Rate” shall mean, for any period, a fluctuating interest rate
equal for each day during such period to the weighted average of the rates on
overnight Federal Funds transactions with members of the Federal Reserve System
arranged by Federal Funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Administrative Agent from three Federal Funds brokers of
recognized standing selected by the Administrative Agent.

“Fee Letter” shall mean the fee letter agreement between Administrative Agent
and Borrowers dated the Closing Date.

“Fees” shall mean all amounts payable pursuant to or referred to in
Section 4.01.

“Final Maturity Date” shall mean (a) with respect to any Loans or Commitments
that have not been extended pursuant to Section 4.04, the Initial Maturity Date
and (b) with respect to any Extended Loans and Extended Commitments, the
Extended Maturity Date.

“Financial Officer” of any Person shall mean the chief financial officer,
controller or treasurer of such Person.

“First Priority” shall mean, with respect to any Lien purported to be created on
any Collateral pursuant to any Security Document, that such Lien is prior in
right to any other Lien thereon, other than Permitted Liens described in
clauses (ii), (viii), (xi), (xiii), (xvii), and (xxvii) and of Section 10.01
applicable to such Collateral which have priority over the respective Liens on
such Collateral created pursuant to the relevant Security Document.

“Fiscal Quarter” shall mean a fiscal quarter of any Fiscal Year.

“Fiscal Year” shall mean the fiscal year of Aleris and its Subsidiaries ending
on December 31 of each calendar year.

“Fixed Charge Coverage Ratio” shall mean and include, with respect to any Test
Period, the ratio of (a) Consolidated EBITDA for such period; minus, Capital
Expenditures that are funded by Aleris and its Wholly-Owned Subsidiaries and
that are not Excluded Capital Expenditures; minus, cash taxes of Aleris and its
Subsidiaries on a consolidated basis paid during such period to (b) Fixed
Charges for such period.

“Fixed Charges” shall mean, with respect to any fiscal period, the sum of
(a) interest expense of Aleris and its Subsidiaries on a consolidated basis with
respect to such period (for this purpose, excluding that portion of interest
expense which is capitalized and/or paid-in-kind through the issuance of

 

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Indebtedness in the same form as the Indebtedness with respect to which such
interest is required to be paid in accordance with the terms thereof, and so
long as such interest shall not be paid in cash (until the maturity of the
respective Indebtedness and so long as same does not occur in such period),
non-cash deferred financing fees and amortization of premiums paid in respect of
the repayment or prepayment of Indebtedness), plus (b) any scheduled principal
payments on long-term Indebtedness of Aleris and its Subsidiaries on a
consolidated basis with respect to such period (other than payments made by
Aleris or a Subsidiary to Aleris or a Subsidiary), plus (c) Dividends (to the
extent such Dividends are regularly declared cash Dividends and not
extraordinary one-time cash Dividends) of Aleris and its Subsidiaries on a
consolidated basis paid in cash during such period as permitted by
Section 10.03.

“Foreign Lender” shall mean a Lender to the U.S. Borrowers that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code).

“Foreign Pension Plan” shall mean a Pension Plan or other employee pension
benefit plan which is subject to applicable pension legislation other than ERISA
or the Code, which Aleris or a Subsidiary of Aleris sponsors or maintains, or to
which it makes or is obligated to make contributions with respect to which any
liability is borne, outside the 50 states of the United States.

“Foreign Plan” shall mean each Foreign Pension Plan, and each material deferred
compensation or other retirement or superannuation plan, fund, program,
agreement, commitment or arrangement whether oral or written, funded or
unfunded, sponsored, established, maintained or contributed to, or required to
be contributed to, or with respect to which any liability is borne, outside the
fifty states of the United States of America, by Aleris or any of its
Subsidiaries, which plan, fund, agreement, commitment or arrangement provides,
or results in, retirement income, a deferral of income in contemplation of
retirement or payments to be made upon termination of employment and which plan
is not subject to ERISA or the Code.

“Foreign Subsidiary” shall mean each Subsidiary of Aleris that is incorporated
or organized under the laws of any jurisdiction other than the United States or
any State or territory thereof.

“Funded Specified Foreign Currency Participation” shall mean, to the extent
consented to by the Joint Book Runners pursuant to Section 16 of this Agreement,
with respect to any Participating Specified Foreign Currency Lender relating to
Specified Foreign Currency Loans funded by the Designated Fronting Bank, (i) the
aggregate amount paid by such Participating Specified Foreign Currency Lender to
the Designated Fronting Bank, pursuant to Section 16 of this Agreement in
respect of such Participating Specified Foreign Currency Lender’s participation
in the principal amount of Specified Foreign Currency Loans funded by the
Designated Fronting Bank, minus, (ii) the aggregate amount paid to such
Participating Specified Foreign Currency Lender by the Designated Fronting Bank,
pursuant to Section 16 of this Agreement in respect of its participation in the
principal amount of Specified Foreign Currency Loans funded by the Designated
Fronting Bank, excluding in each case any payments made in respect of interest
accrued on the Specified Foreign Currency Loans funded by the Designated
Fronting Bank, the Designated Fronting Bank’s Funded Specified Foreign Currency
Participation in any Specified Foreign Currency Loans funded by the Designated
Fronting Bank, shall be equal to the outstanding principal amount of such
Specified Foreign Currency Loans minus the total Funded Specified Foreign
Currency Participation of all other Lenders therein.

“GAAP” shall mean generally accepted accounting principles in the United States
as in effect from time to time; provided that determinations in accordance with
GAAP for purposes of Section 10, including defined terms as used therein, and
for all purposes of determining the Fixed Charge Coverage Ratio, are subject (to
the extent provided therein) to Section 13.07(a).

 

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“General Intangibles” shall mean “general intangibles” (as such term is defined
in Article 9 of the UCC) and, as applicable to the Canadian Credit Parties,
“intangibles” (as defined in Section 1 of the PPSA), including payment
intangibles, contract rights, rights to payment, rights arising under common
law, statutes, or regulations, choses or things in action, goodwill, patents,
trade names, trade secrets, trademarks, servicemarks, copyrights, blueprints,
drawings, purchase orders, customer lists, monies due or recoverable from
pension funds, route lists, rights to payment and other rights under any royalty
or licensing agreements, infringement claims, computer programs, information
contained on computer disks or tapes, software, literature, reports, catalogs,
insurance premium rebates, tax refunds, and tax refund claims, and any and all
supporting obligations in respect thereof, and any other personal property other
than Accounts, Deposit Accounts, goods, Investment Property, and Negotiable
Collateral.

“German Security” means any security interest created under the Security
Documents which are governed by German law.

“German Sub-Holdco” shall mean Aleris Deutschland Holding GmbH.

“Governmental Authority” shall mean any federal (including the federal
government of Canada), state, local, provincial, foreign, multi-national or
other governmental or administrative body, instrumentality, department, board,
or agency or any court, tribunal, administrative hearing body, arbitration
panel, commission, or other similar dispute-resolving panel or body.

“Guaranteed Creditors” shall mean and include (x) the Administrative Agent, each
Lender and each Issuing Lender, (y) each Other Creditor and (z) each Treasury
Services Creditor.

“Guaranteed Party” shall mean (x) each Borrower and (y) each Subsidiary thereof
party to a Secured Hedging Agreement and/or a Treasury Services Agreement with
any Other Creditor or any Treasury Services Creditor.

“Guarantor” shall mean each U.S. Borrower, each U.S. Subsidiary Guarantor, each
Canadian Credit Party, each European Parent Guarantor, and each European
Subsidiary Guarantor.

“Guaranty” shall mean the U.S. Borrower Guaranty, the U.S. Subsidiaries
Guaranty, each Canadian Subsidiaries Guaranty, each European Parent Guaranty and
each European Subsidiaries Guaranty.

“Hazardous Materials” shall mean (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation and dielectric fluid containing levels of
polychlorinated biphenyls; (b) any chemicals, materials or substances defined as
or included in the definition of “hazardous substances,” “hazardous waste,”
“hazardous materials,” “extremely hazardous substances,” “restricted hazardous
waste,” “toxic substances,” “toxic pollutants,” “contaminants,” or “pollutants,”
under any applicable Environmental Law; and (c) any other chemical, material or
substance, the exposure to, or Release of which is prohibited, limited or
regulated by any Governmental Authority under any applicable Environmental Law.

“Hedge Product Reserve” shall mean, as of any date of determination, a reserve
for the Guaranteed Parties’ exposure under any Secured Hedging Agreement which
exposure is to be secured by a First Priority Lien on the Collateral as notified
by the respective hedge product provider or any Borrower to the Administrative
Agent and updated from time to time.

 

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“Hedging Obligations” shall mean, with respect to any Person, the obligations of
such Person under currency exchange, interest rate or commodity swap agreements,
currency exchange, interest rate or commodity cap agreements and currency
exchange, interest rate or commodity collar agreements and other agreements or
arrangements, in each case designed to protect such Person against fluctuations
in currency exchange, interest rates. or commodity prices,

“Holdings” shall mean Aleris Corporation, a Delaware corporation.

“IFRS” shall mean the body of pronouncements issued by the International
Accounting Standards Board (IASB), including International Financial Reporting
Standards and interpretations approved by the IASB, International Accounting
Standards and Standing Interpretations Committee interpretations approved by the
predecessor International Accounting Standards Committee and adapted for use in
the European Union.

“Immaterial Subsidiary” shall mean, at any date of determination, any Subsidiary
designated as such in writing by Aleris to the Administrative Agent that had
consolidated assets representing 5% or less of the Total Assets of Aleris and
its Subsidiaries on the last day of the most recent Fiscal Quarter ended more
than forty-five (45) days prior to the date of determination; provided, that
Total Assets of all Subsidiaries that would otherwise be deemed Immaterial
Subsidiaries under this definition shall not exceed 10% of the Total Assets, as
applicable, of Aleris and its Subsidiaries on a consolidated basis. The
Immaterial Subsidiaries as of the Closing Date are listed on Schedule XIX;
provided, that notwithstanding the foregoing, unless otherwise designated as
such by Aleris, each Subsidiary of Aleris organized under the Laws of the
People’s Republic of China shall constitute an Immaterial Subsidiary.

“Incremental Commitment” shall mean, for any Lender, any commitment by such
Lender to make Revolving Loans and participate in Swingline Loans and Letters of
Credit pursuant to Section 2.01 as agreed to by such Lender in an Incremental
Commitment Agreement delivered pursuant to Section 2.15; it being understood
that on each date upon which an Incremental Commitment of any Lender becomes
effective, such Incremental Commitment of such Lender shall be added to (and
thereafter become a part of) the Commitment of such Lender specified in the
related Incremental Commitment Agreement for all purposes of this Agreement as
contemplated by Section 2.15.

“Incremental Commitment Agreement” shall mean each Incremental Commitment
Agreement in substantially the form of Exhibit I (appropriately completed)
executed and delivered in accordance with Section 2.15.

“Incremental Commitment Date” shall mean each date upon which an Incremental
Commitment under an Incremental Commitment Agreement becomes effective as
provided in Section 2.15(b).

“Incremental Commitment Requirements” shall mean with respect to any provision
of an Incremental Commitment on a given Incremental Commitment Date, the
satisfaction of each of the following conditions on or prior to the effective
date of the respective Incremental Commitment Agreement: (i) the delivery by
Aleris to the Administrative Agent of an opinion or opinions, in form and
substance reasonably satisfactory to the Administrative Agent, from counsel to
the Credit Parties reasonably satisfactory to the Administrative Agent and dated
such date, covering such matters incident to the transactions contemplated
thereby as the Administrative Agent may reasonably request; and (ii) the
completion by each Credit Party of such other actions as the Administrative
Agent may reasonably request in connection with such Incremental Loan Commitment
in order to create, continue or maintain the security interests of the
Administrative Agent in the Collateral and the perfection thereof.

“Incremental Lender” shall have the meaning specified in Section 2.15(b).

 

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“Indebtedness” shall mean, as to any Person, without duplication, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (excluding ordinary course trade payables or
similar obligations to a trade creditor) except any earn-out obligation until
such obligation becomes a liability on the balance sheet of such Person in
accordance with GAAP or Local GAAP, as applicable, (ii) the maximum amount
available to be drawn or paid under all letters of credit (other than commercial
letters of credit), bankers’ acceptances, bank guaranties and similar
obligations issued for the account of such Person and all unpaid drawings in
respect of such letters of credit, bankers’ acceptances and similar obligations,
or (iii) representing any Hedging Obligations, if and to the extent that any of
the foregoing Indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet (excluding the
footnotes thereto) of such Person prepared in accordance with GAAP, (iv) all
Indebtedness of the types described in clause (i), (ii), (iii), (v), (vi) or
(vii) of this definition secured by any Lien on any property owned by such
Person, whether or not such Indebtedness has been assumed by such Person
(provided that, if the Person has not assumed or otherwise become liable in
respect of such Indebtedness, such Indebtedness shall be deemed to be in an
amount equal to the lesser of the fair market value of the property to which
such Lien relates as determined in good faith by such Person and the amount of
such Indebtedness), (v) the aggregate amount of all Capitalized Lease
Obligations and Synthetic Lease Obligations of such Person, (vi) all Contingent
Obligations of such Person and (vii) all preferred stock of such Person (other
than preferred stock consisting of Qualified Equity Interests). Notwithstanding
the foregoing, Indebtedness shall not include trade payables and accrued
expenses incurred by any Person in the ordinary course of business of such
Person or purchase price holdbacks arising in the ordinary course of business in
respect of a portion of the purchase price of an asset to satisfy warranties or
other unperformed obligations of the seller of such asset (other than earn-out
obligations).

“Indirect Section 5.04 Indemnitee” shall mean each Section 5.04 Indemnitee that
is not a Lender, an Issuing Lender or the Administrative Agent.

“Individual Canadian Exposure” of any Canadian Lender shall mean, at any time,
the sum of (I) the aggregate principal amount of all Canadian Revolving Loans
made by such Canadian Lender and then outstanding, (II) the sum of such Canadian
Lender’s L/C Participation Percentage in each then outstanding Canadian Letter
of Credit multiplied by the sum of the Stated Amount of the respective Canadian
Letter of Credit and any Unpaid Drawings relating thereto and (III) such
Canadian Lender’s Percentage multiplied by the aggregate principal amount of all
outstanding Canadian Borrower Swingline Loans. For purposes of this definition,
the Dollar Equivalent of amounts not denominated in U.S. Dollars shall be used.

“Individual European Borrower Exposure” of any European Lender shall mean, at
any time, the sum of (I) the aggregate principal amount of all European Borrower
Revolving Loans made by such European Lender (and the aggregate principal amount
of all Specified Foreign Currency Participations purchased by such Lender
pursuant to Section 16) and then outstanding, (II) the sum of such European
Lender’s L/C Participation Percentage in each then outstanding European Letter
of Credit multiplied by the sum of the Stated Amount of the respective European
Letter of Credit and any Unpaid Drawings relating thereto and (III) such
European Lender’s Percentage multiplied by the aggregate principal amount of all
outstanding European Borrower Swingline Loans. For purposes of this definition,
(x) the Dollar Equivalent amounts not denominated in U.S. Dollars shall be used
and (y) the amount of European Borrower Revolving Loans made by Bank of America,
N.A. at any time shall be reduced by the aggregate amount of Specified Foreign
Currency Participations therein purchased by the other Lenders in such Loans
pursuant to Section 16.

 

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“Individual Exposure” of any Lender shall mean, at any time, the sum of the
Individual U.S. Borrower Exposure, the Individual European Borrower Exposure and
the Individual Canadian Exposure of such Lender at such time, and, after payment
in full of the foregoing, any other Obligations.

“Individual U.S. Borrower Exposure” of any U.S. Lender shall mean, at any time,
the sum of (I) the aggregate principal amount of all U.S. Borrower Revolving
Loans made by such U.S. Lender and then outstanding, (II) the sum of such U.S.
Lender’s L/C Participation Percentage in each then outstanding U.S. Letter of
Credit multiplied by the sum of the Stated Amount of the respective U.S. Letter
of Credit and any Unpaid Drawings relating thereto and (III) such U.S. Lender’s
Percentage multiplied by the aggregate principal amount of all outstanding U.S.
Borrower Swingline Loans.

“Initial Maturity Date” shall mean June 29, 2016.

“Intercompany Loan” shall have the meaning provided in Section 10.05(viii).

“Interest Determination Date” shall mean, with respect to any Euro Rate Loan for
any Interest Period, the second Business Day prior to the commencement of such
Interest Period.

“Interest Period” shall mean as to any Borrowing of B/A Equivalent Loans or Euro
Rate Loans, the interest period applicable to such Borrowing of B/A Equivalent
Loans or Euro Rate Loans selected pursuant to, and otherwise subject to the
provisions of Section 2.09.

“Interest Rate Protection Agreement” shall mean any interest rate swap
agreement, interest rate cap agreement, interest collar agreement, interest rate
hedging agreement or other similar agreement or, arrangement.

“IntermediateCo Notes” shall mean subordinated unsecured notes issued by Aleris
pursuant to the IntermediateCo Note Indenture in an aggregate principal amount
equal to $45,000,000.

“IntermediateCo Note Indenture” shall mean that certain IntermediateCo Note
Indenture dated June 1, 2010.

“Inventory” shall mean “inventory” (as such term is defined in Article 9 of the
UCC, Section 1 of the PPSA as applicable to the Collateral of the Canadian
Credit Parties, and Inventory of the U.K. Guarantor).

“Investment Grade Securities” shall mean securities with a rating established by
a third party rating agency equivalent to “BBB-” by S&P or “Baa3” by Moody’s, or
better.

“Investment Property” shall mean “investment property” (as such term is defined
in Article 9 of the UCC or Section 1 of the PPSA as applicable to the Collateral
of the Canadian Credit Parties), and any and all supporting obligations in
respect thereof.

“Investments” shall mean, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (including by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others, purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities issued by
any other Person and investments that are required by GAAP to be classified on
the balance sheet (excluding the footnotes) of such Person in the same manner as
the other investments included in this definition to the extent such
transactions involve the transfer of cash or other property.

 

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“Issuing Lender” shall mean each of (i) Bank of America, N.A. (except as
otherwise provided in Section 12.09), (ii) any other Lender reasonably
acceptable to the Administrative Agent and the respective Account Party that
agrees at such Lender’s sole option to issue Letters of Credit hereunder, and
(iii) any Lender that issued an Existing Letter of Credit. Any Issuing Lender
may, in its discretion, arrange for one or more Letters of Credit to be issued
by one or more branches or Affiliates of such Issuing Lender, in which case any
such branches or Affiliates also shall be an Issuing Lender hereunder.

“Joinder Agreement” shall have the meaning provided in Section 9.11.

“Joint Book Runners” shall mean Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Barclays Capital, the investment banking division of Barclays Bank
PLC, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and UBS
Securities LLC, and any successors thereto.

“Joint Lead Arrangers” shall mean Merrill Lynch, Pierce, Fenner & Smith
Incorporated and J.P. Morgan Securities LLC, and any successors thereto.

“Judgment Currency” shall have the meaning provided in Section 13.21(a).

“Judgment Currency Conversion Date” shall have the meaning provided in
Section 13.21(a).

“L/C Participant” shall have the meaning provided in Section 3.04(a).

“L/C Participation Percentages” shall have the meaning provided in
Section 3.04(a).

“L/C Supportable Obligations” shall mean (i) obligations of each Account Party
or any of its Subsidiaries with respect to workers’ compensation, surety bonds
and other similar statutory or regulatory obligations, (ii) obligations of each
Account Party or any of its Subsidiaries with respect to customer contracts
entered into in the ordinary course of business and (iii) such other obligations
of each Account Party or any of its Subsidiaries as are permitted to exist
pursuant to the terms of this Agreement (other than obligations in respect of
the Indebtedness which is subordinated to any of the Obligations or Equity
Interests).

“Leaseholds” of any Person shall mean all the right, title and interest of such
Person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures.

“Lender” shall mean (i) each financial institution listed on Schedule I-A, as
well as any Person that becomes a “Lender” hereunder pursuant to Section 2.13,
2.15 or 13.04(b) and (ii) each Swingline Lender. Unless the context otherwise
requires, each reference in this Agreement to a Lender includes each Canadian
Lender and shall include references to any Affiliate or branch of any such
Lender which is acting as a Canadian Lender.

“Lender Default” shall mean (i) the refusal (which has not been retracted) or
the failure of a Lender to make available its portion of any Borrowing or to
fund its portion of any unreimbursed payment under Section 3.04(c) unless such
Lender’s failure to fund (solely in the case of a failure to make available its
portion of a Borrowing) is the result of a good faith dispute, (ii) a Lender
having notified in writing any Credit Party and/or the Administrative Agent that
such Lender does not intend to comply with its obligations under Section 2.01 or
3 unless such intention is the result of a good faith dispute, or (iii) for
purposes of Section 2.13 and Section 4.02(b) and the definition of “Defaulting
Lender” only, the commencement of any insolvency proceeding with respect to a
Lender or the takeover by any Governmental Authority of the assets or management
of a Lender; provided that a Lender Default shall not exist solely by virtue of
a Governmental Authority’s ownership of an equity interest in such Lender.

 

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“Letter of Credit” shall have the meaning provided in Section 3.01(a).

“Letter of Credit Back-Stop Arrangements” shall have the meaning provided in
Section 3.01(b).

“Letter of Credit Fee” shall have the meaning provided in Section 4.01(b).

“Letter of Credit Outstandings” shall mean, at any time, the sum of (i) the
Stated Amount of all outstanding Letters of Credit and (ii) the aggregate amount
of all Unpaid Drawings in respect of all Letters of Credit.

“Letter of Credit Request” shall have the meaning provided in Section 3.03(a).

“Lien” shall mean any mortgage, pledge, hypothecation, collateral assignment,
deposit arrangement, trust (statutory, deemed or otherwise), encumbrance, lien
(statutory or other) or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
the UCC, the PPSA or any other similar recording or notice statute (other than
any unauthorized notice or filing for which there is not otherwise any
underlying lien or obligation, so long as the Borrowers are (if aware of the
same) using commercially reasonable efforts to cause the removal of the same),
and any financing lease (other than operating leases) having substantially the
same effect as any of the foregoing).

“Loan” shall mean each Revolving Loan and each Swingline Loan.

“Local GAAP” shall mean with respect to any Foreign Subsidiary of Aleris
generally accepted accounting principles in the jurisdiction of organization of
such Subsidiary as in effect from time to time or, at the option of such Foreign
Subsidiary, IFRS.

“Management Stockholders” shall mean the members of management of Aleris (or its
direct parent) who are holders of Equity Interests of Aleris (or any of its
direct or indirect parent companies) on the Closing Date.

“Mandatory Borrowing” shall have the meaning provided in Section 2.01(c).

“Mandatory Cost” shall mean the cost imputed to each Lender of compliance with
any reserve asset requirements of the European Central Bank.

“Margin Stock” shall have the meaning provided in Regulation U.

“Material Adverse Effect” shall mean a material adverse effect on (a) the
financial condition, results of operations or business of Aleris and its
Subsidiaries taken as a whole, (b) Aleris and its Subsidiaries’ collective
ability to pay the Obligations in accordance with the terms thereof or (c) the
rights of, or remedies available to, the Administrative Agent, the Co-Collateral
Agents, the Issuing Lenders or the Lenders under the Credit Documents.

“Material Indebtedness” shall mean any Indebtedness of Aleris or any of its
Subsidiaries in an aggregate principal amount exceeding $30,000,000.

“Material Real Property” shall mean any Real Property owned in fee by Aleris or
any of its Subsidiaries the fair market value of which (as determined in good
faith by Aleris) is equal to or greater than $2,500,000.

 

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“Material Subsidiary” shall mean a Subsidiary that is not an Immaterial
Subsidiary.

“Maximum Incremental Commitment Amount” shall mean $300,000,000.

“Maximum Swingline Amount” shall mean $30,000,000 (for this purpose using the
Dollar Equivalent of any Non-Dollar Denominated Loans).

“Minimum Borrowing Amount” shall mean (i) in the case of Euro Rate Loans,
$5,000,000, (ii) in the case of Base Rate Loans, $1,000,000, and (iii) in the
case of Swingline Loans, $1,000,000 and (iv) in the case of a Loan not
denominated in U.S. Dollars, Canadian Dollars, Euros, Swiss Francs or Pounds
Sterling, the amount specified by the Administrative Agent.

“Minimum Extension Condition” shall have the meaning provided in Section 4.04.

“Moody’s” shall mean Moody’s Investors Service, Inc.

“Mortgage” shall mean each mortgage (if any) granted by Aleris or any of its
Subsidiaries in order to create and perfect the mortgage Liens intended to be
created thereby under the local law of the jurisdiction in which the relevant
Real Property is located.

“Mortgage Policy” shall mean a Person’s title insurance policy (Form 1992).

“Mortgaged Property” shall mean any Real Property owned by Aleris or any of its
Subsidiaries which is encumbered by a Mortgage.

“Multiemployer Plan” shall mean a “multiemployer plan” as defined in
Section 3(37) or 4001(a)(3) of ERISA, which is contributed to by (or to which
there is an obligation to contribute of) Aleris or an ERISA Affiliate, and each
such plan for the five (5) year period immediately following the latest date on
which Aleris or an ERISA Affiliate contributed or had an obligation to
contribute to such plan.

“NAIC” shall mean the National Association of Insurance Commissioners.

“Negotiable Collateral” shall mean letters of credit, letter of credit rights,
instruments, promissory notes, drafts, documents, and chattel paper (including
electronic chattel paper and tangible chattel paper), and any and all supporting
obligations in respect thereof.

“Net Debt Proceeds” shall mean, with respect to any incurrence or issuance of
Indebtedness for borrowed money, the cash proceeds (net of underwriting
discounts and commissions and other reasonable fees, expenses and costs
associated therewith including, without limitation, those of attorneys,
accountants and other professionals) received by the respective Person from the
respective incurrence of such Indebtedness for borrowed money.

“Net Insurance Proceeds” shall mean, solely with respect to any assets included
in the Collateral, and with respect to any Recovery Event, the cash proceeds
(net of costs incurred by Aleris or any of its Restricted Subsidiaries in good
faith in connection with such Recovery Event) received by the applicable Person
in connection with such Recovery Event, and shall be net of (i) any taxes paid
or payable in connection with the applicable Recovery Event and taxes paid or
payable as a result of any transactions effected or deemed effected in order to
make the related required prepayment of the Obligations under Section 5.02(d),
including, without limitation, in respect of proceeds received by any Foreign
Subsidiary of Aleris, taxes that are or would be payable if such proceeds were
repatriated to any direct or indirect

 

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parent of such Foreign Subsidiary which has made all or a portion of any
required prepayment of the Obligations under Section 5.02(d) in respect of such
proceeds, (ii) all appropriate amounts that must be set aside as a reserve in
accordance with GAAP or Local GAAP, as applicable, against any liabilities
associated with such Recovery Event, provided that, upon any termination of such
reserve, all amounts not paid-out in connection therewith shall be deemed to be
“Net Insurance Proceeds” of such Recovery Event and (iii) required payments of
any Indebtedness (other than Indebtedness secured pursuant to the Security
Documents) which is secured by a Lien that is senior to the Liens granted
pursuant to the Credit Documents on the respective assets which were subject to
such Recovery Event. Notwithstanding the foregoing, no Net Insurance Proceeds
calculated in accordance with the foregoing shall constitute Net Insurance
Proceeds for purposes of Section 5.02(d) (i) unless such Net Insurance Proceeds
shall exceed $2,500,000 (or $1,000,000 in the case of Inventory) from any single
Recovery Event and (ii) until the aggregate amount of all such Net Insurance
Proceeds in any applicable Fiscal Year (together with any Net Sale Proceeds from
Asset Sales in such Fiscal Year) exceed $25,000,000 (or $10,000,000 in the case
of Inventory) (and thereafter only Net Insurance Proceeds in excess of such
amount shall constitute Net Insurance Proceeds for purposes of Section 5.02(d)).

“Net Liquidation Percentage” shall mean the percentage of the book value of the
U.S. Borrowers’, the Canadian Borrower’s, or the U.K. Guarantor’s, as the case
may be, Eligible Inventory that is estimated to be recoverable in an orderly
liquidation of such Inventory, such percentage to be as determined from time to
time by Sector3 Appraisals or any other qualified appraisal company reasonably
satisfactory to the Administrative Agent, net of the expenses reasonably
estimated to be associated with any such liquidation.

“Net Sale Proceeds” shall mean, solely with respect to any assets included in
the Collateral, for any Asset Sale (including an Asset Swap), the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a
promissory note, receivable or otherwise, but only as and when received)
received by Aleris or any of its Restricted Subsidiaries from such Asset Sale,
in each case net of (i) the costs of such Asset Sale incurred by Aleris or any
of its Subsidiaries in good faith (including fees and commissions, attorneys’
and other professional fees, payments of unassumed liabilities relating to the
assets sold and required payments of any Indebtedness (other than Indebtedness
secured pursuant to the Security Documents) which is secured by a Lien that is
senior to the Liens granted pursuant to the Credit Documents on the respective
assets which were sold), (ii) taxes paid or payable as a result of such Asset
Sale and taxes paid or payable as a result of any transactions effected or
deemed effected in order to make the related required prepayment of the
Obligations under Section 5.02(c), including in respect of any proceeds received
by any Foreign Subsidiary of Aleris, taxes that are or would be payable if such
proceeds were repatriated to any direct or indirect parent of such Foreign
Subsidiary which has made all or a portion of any required prepayment of the
Obligations under Section 5.02(c) in respect of such proceeds, (iii) all
appropriate amounts that must be set aside as a reserve in accordance with GAAP
or Local GAAP, as applicable, against any liabilities associated with the asset
sold pursuant to such Asset Sale; provided that, upon any termination of such
reserve, all amounts not paid-out in connection therewith shall be deemed “Net
Sale Proceeds” of such Asset Sale and (iv) the amount of any payments to be made
by Aleris or any Subsidiary as agreed between such Person and the purchaser of
any assets sold pursuant to such sale in connection therewith; provided further
that Net Sale Proceeds arising from any Asset Sale to a non-Wholly-Owned
Subsidiary shall equal the amount of such Net Sale Proceeds calculated as
provided above less the percentage thereof equal to the percentage of any Equity
Interests of such non-Wholly-Owned Subsidiary owned by Aleris and its
Subsidiaries. Notwithstanding the foregoing, no Net Sale Proceeds calculated in
accordance with the foregoing shall constitute Net Sale Proceeds for purposes of
Section 5.02(c) until the aggregate amount of all such Net Sale Proceeds in any
applicable Fiscal Year (together with any Net Insurance Proceeds in such Fiscal
Year from Recovery Events where the Net Insurance Proceeds exceed $2,500,000 (or
$1,000,000 in the case of Inventory)) exceed $25,000,000 (or $10,000,000 in the
case of Inventory) (and thereafter only Net Sale Proceeds in excess of such
amount shall constitute Net Sale Proceeds for purposes of Section 5.02(c)).

 

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“New Senior Unsecured Notes” shall mean the $500,000,000 7 5/8% Senior Notes due
2018 issued by Aleris pursuant to the Senior Notes Indenture.

“Non-Defaulting Lender” shall mean and include each Lender other than a
Defaulting Lender.

“Non-Dollar Denominated Euro Rate Loan” shall mean Euro Rate Loans which are
Non-Dollar Denominated Loans.

“Non-Dollar Denominated Loans” shall mean all Loans other than Dollar
Denominated Loans.

“Non-Wholly-Owned Subsidiary” shall mean, as to any Person, any Subsidiary of
such Person which is not a Wholly-Owned Subsidiary of such Person.

“Note” shall mean each Revolving Note and each Swingline Note.

“Notice of Borrowing” shall have the meaning provided in Section 2.03(a).

“Notice of Conversion/Continuation” shall have the meaning provided in
Section 2.06.

“Notice Office” shall mean (i) for credit notices, the office of the
Administrative Agent located at Bank of America, N.A., 300 Galleria Parkway,
Suite 800, Atlanta, Georgia 30339, Attention: Aleris Loan Administration Manager
(telephone: (404) 607-3200, facsimile: (404) 607-3264), and (ii) for operational
notices, the office of the Administrative Agent located at Bank of America,
N.A., 300 Galleria Parkway, Suite 800, Atlanta, Georgia 30339, Attention: Aleris
Loan Administration Manager (telephone: (262) 207-3281, facsimile:
(312) 453-6062), or such other office or person as the Administrative Agent may
hereafter designate in writing as such to the other parties hereto.

“Obligations” shall mean all (a) principal of and premium, if any, on the Loans,
(b) reimbursement of amounts drawn under, obligations to cash collateralize, and
other obligations of Credit Parties with respect to, Letters of Credit,
(c) interest, expenses (including Expenses), fees and other sums payable by
Credit Parties under the Credit Documents, (d) obligations of Credit Parties
under any indemnity for claims, including, without limitation, pursuant to
Section 13.01, (e) Treasury Services Obligations and obligations under Secured
Hedging Agreements, and (f) other Indebtedness, obligations and liabilities of
any kind owing by Credit Parties pursuant to the Credit Documents, whether now
existing or hereafter arising, whether evidenced by a note or other writing,
whether allowed in any bankruptcy or similar proceeding, whether arising from an
extension of credit, issuance of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, and whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, or joint or several.
Without limiting the generality of the foregoing, the Obligations of the Credit
Parties under the Credit Documents include (a) the obligation to pay principal,
interest, charges, expenses, fees, attorneys’ fees and disbursements,
indemnities and other amounts payable by any Credit Party under any Credit
Document and (b) the obligation to reimburse any amount in respect of any of the
foregoing that the Administrative Agent, any Lender, or any Issuing Lender, in
its sole discretion, may elect to pay or advance on behalf of such Credit Party
pursuant to the terms hereof.

“Obligation Currency” shall have the meaning provided in Section 13.21(a).

 

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“Onlending Conditions” shall mean that each of the following conditions are
satisfied at the time of each action and after giving effect thereto: (i) no
Default or Event of Default shall have occurred and be continuing, (ii) the
Excess Availability under the U.S. Borrowing Base shall have been equal to or
greater than 10% of the lesser of (x) the Total Commitments or (y) the U.S.
Borrowing Base for the preceding 30 day period and after giving effect thereto,
and (iii) the Borrowers are solvent on a consolidated basis.

“Original Closing Date” shall mean June 1, 2010.

“Other Creditors” shall mean each Person (other than any Credit Party or any
Subsidiary of Aleris) party to (or participating in) a Secured Hedging
Agreement.

“Other Foreign Currency Denominated Loan” shall mean each Revolving Loan and
European Borrower Swingline Loan denominated in a currency other than U.S.
Dollars, Canadian Dollars or Euros at the time of incurrence thereof.

“Other Hedging Agreements” shall mean any Currency Hedging Agreements or
commodity contracts, including futures contracts, forward contracts, options and
other commodity related derivative transactions or other arrangements similar to
the foregoing or other arrangements designed to protect against fluctuations in
commodity prices.

“Parallel Debt” shall have the meaning provided in Section 13.22.

“Participant” shall mean a Lender that acquires a participation following the
occurrence of a Conversion Event pursuant to an agreement among the Lenders and
the Administrative Agent in form and substance reasonably satisfactory to the
Administrative Agent; provided, however, that a Lender shall be considered a
Participant only in respect of its interest in the acquired participation.

“Participant Register” shall have the meaning provided in Section 13.26.

“Participating Specified Foreign Currency Lender” shall have the meaning
provided in Section 16.01.

“PATRIOT Act” shall have the meaning provided in Section 13.20.

“Payment Office” shall mean (i) in respect of Dollar Denominated Loans and other
amounts owing in U.S. Dollars, Bank of America, N.A., 300 Galleria Parkway,
Suite 800, Atlanta, Georgia 30339, Attention: Aleris Loan Administration
Manager, or such other office as the Administrative Agent may hereafter
designate in writing as such to the other parties hereto, (ii) in the case of
all payments of principal, interest and/or other amounts owing with respect to
Canadian Revolving Loans, “Payment Office” shall mean the office of the
Administrative Agent located at Bank of America, N.A., 300 Galleria Parkway,
Suite 800, Atlanta, Georgia 30339, Attention: Aleris Loan Administration
Manager, (iii) in respect of Euro Denominated Loans and other amounts owing in
Euros, to Bank of America, N.A., 300 Galleria Parkway, Suite 800, Atlanta,
Georgia 30339, Attention: Aleris Loan Administration Manager, and (iv) in the
case of Other Foreign Currency Loans and any other amount owing in any other
Available Currency, such office as the Administrative Agent may hereafter
designate in writing as such to the other parties hereto or, in each case, such
other office as the Administrative Agent may hereafter designate in writing as
such to the other parties hereto.

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant
to Section 4002 of ERISA, or any successor thereto.

 

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“Pension Plan” shall mean any pension plan as defined in Section 3(2) of ERISA,
subject to Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA,
which is maintained or contributed to by (or to which there is an obligation to
contribute of) Aleris or any ERISA Affiliate, and each such plan which is
subject to Title IV of ERISA for the five year period immediately following the
latest date on which Aleris, a Subsidiary of Aleris or an ERISA Affiliate
maintained, contributed to or had an obligation to contribute to such plan but
in all cases other than a Foreign Plan, Foreign Pension Plan or Multiemployer
Plan.

“Percentage” of any Lender at any time shall be that percentage which is equal
to a fraction (expressed as a percentage) the numerator of which is the
Commitment of such Lender at such time and the denominator of which is the Total
Commitment at such time, provided that if any such determination is to be made
after the Total Commitment (and the related Commitments of the Lenders) has
terminated, the determination of such percentages shall be made immediately
before giving effect to such termination.

“Permitted Acquisition” shall mean the acquisition by Aleris or a Subsidiary of
Aleris of an Acquired Entity or Business; provided that (in each case) (A) the
Acquired Entity or Business acquired pursuant to the respective Permitted
Acquisition is in a business permitted by Section 10.10, and (B) all applicable
requirements of Sections 9.13, 10.02 and 10.11 applicable to Permitted
Acquisitions are satisfied. Notwithstanding anything to the contrary contained
in the immediately preceding sentence, an acquisition which does not otherwise
meet the requirements set forth above in the definition of “Permitted
Acquisition” shall constitute a Permitted Acquisition if, and to the extent, the
Required Lenders agree in writing, prior to the consummation thereof, that such
acquisition shall constitute a Permitted Acquisition for purposes of this
Agreement.

“Permitted Discretion” shall mean the commercially reasonable exercise of the
Administrative Agent’s, or the Co-Collateral Agents’, as applicable, good faith
credit judgment in accordance with customary business practices for comparable
asset-based lending transactions in Aleris’ industry in consideration of any
factor which is reasonably likely to (i) materially and adversely affect the
value of any Collateral, the enforceability or priority of the Liens thereon or
the amount that the Agents and Lenders would be likely to receive (after giving
consideration to delays in payment and costs of enforcement) in the liquidation
thereof, or (ii) suggest that any collateral report or financial information
delivered to any Agent or Lenders by any Person on behalf of any Borrower is
incomplete, inaccurate or misleading in any material respect. In exercising such
commercially reasonable credit judgment, such Agent may consider, without
duplication, such factors already included in or tested by the definition of
Eligible Accounts or Eligible Inventory, as well as any of the following:
(i) changes after the Original Closing Date in any material respect in
collection history and dilution or collectability with respect to the Accounts;
(ii) changes after the Original Closing Date in any material respect in demand
for, pricing of, or product mix of Inventory; (iii) changes after the Original
Closing Date in any material respect in any concentration of risk with respect
to the respective Borrower’s Accounts or Inventory; and (iv) any other factors
arising after the Original Closing Date that change in any material respect the
credit risk of lending to the Borrowers on the security of the Borrowers’
Accounts or Inventory.

“Permitted Distribution Subsidiary Activities” shall mean (i) purchasing and/or
holding items of Inventory to be held for sale in the ordinary course of
business, (ii) the sale of such Inventory to end-use customers, (iii) selling
Accounts arising out of the sale of Inventory to the European Borrower pursuant
to the Receivables Purchase Agreements, (iv) soliciting sales of finished
aluminum product to end-use customers by and on behalf of the European Borrower,
(v) performance of obligations under and in connection with the Credit
Documents, (vi) actions incidental to the consummation of the Transactions,
(vii) actions required by law to maintain its existence, (viii) the holding of
cash in amounts reasonably required to pay for its own costs and expenses,
(ix) owing and paying legal, registered office and auditing fees, (x) the
issuance of common Equity Interests to the extent otherwise permitted by this
Agreement and (xi) activities incidental to any of the foregoing (including,
without limitation, advertising and promotion and the employment of personnel in
connection with the foregoing).

 

 

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“Permitted Encumbrance” shall mean, collectively, (i) those Liens and other
matters affecting title to any Mortgaged Property listed in the Mortgage
Policies in respect thereof and (ii) zoning, building codes, land/use and other
similar laws, easements, servitudes, rights of way, restrictions, encroachments
and municipal ordinances or any other rights similar thereto which are not
violated in any material respect by the existing improvements and the present
use by the mortgagor of the respective Mortgaged Property.

“Permitted European Borrower Activities” shall mean (i) operations related to
the provision of certain shared services to the European Parent Guarantors and
their Subsidiaries (including legal, human resources, finance, treasury, tax,
payroll, customer service, non-metals purchasing, and information technology) in
connection with its central entrepreneur status for the European business of
Aleris and its Subsidiaries, (ii) the retention and employment of management
personnel and other employees, (iii) entering into the Supply Agreements with
the seller’s aluminum smelting operations and other third-party suppliers for
the purchase of raw materials necessary for the European Borrower and its
Subsidiaries to conduct the business permitted pursuant to Section 10.10 and the
performance of its obligations thereunder, (iv) entering into Other Hedging
Agreements in connection with the foregoing, to the extent otherwise permitted
by this Agreement, (v) entering into the Tolling Agreements with the European
Manufacturing Subsidiaries or other tolling agreements with third party tolling
providers for the processing of raw materials into finished aluminum product and
the payment of tolling fees thereunder, (vi) acquiring legal title to Inventory
pursuant to the Supply Agreements permitted pursuant to preceding clause (iii),
(vii) the sale of Inventory to the Distribution Subsidiaries or end-use
customers, (viii) acquiring and holding Accounts arising out of the sale of
Inventory and/or purchasing Accounts from the Distribution Subsidiaries,
Specified European Manufacturing Subsidiaries and the Transitory European
Subsidiaries arising out of the sale of such Inventory pursuant to the
Receivables Purchase Agreements, (ix) ownership of the Equity Interests in the
Distribution Subsidiaries, together with activities directly related thereto,
(x) performance of its obligations under and in connection with the Credit
Documents, (xi) actions incidental to the consummation of the Transactions,
(xii) actions required by law to maintain its existence, (xiii) the holding of
cash in amounts reasonably required to pay for its own costs and expenses,
(xiv) owing and paying legal, registered office and auditing fees, (xv) the
issuance of common Equity Interests to the extent otherwise permitted by this
Agreement and (xvi) activities incidental to any of the foregoing (including,
without limitation, sales, advertising and promotion).

“Permitted Holder Lender” shall mean a Sponsor, provided, that, such Sponsor,
together with the other Sponsors, holds no more than 10% of the Commitments and
outstanding Obligations in the aggregate at any time, and such Sponsor executes
a waiver in form and substance reasonably satisfactory to the Administrative
Agent that it shall have no right whatsoever with respect to that portion of the
facility made available to the Borrowers hereunder which it holds (a) to consent
to any amendment, modification, waiver, consent or other such action with
respect to any of the terms of any Credit Documents, (b) otherwise to vote on
any matter related to any Credit Documents, (c) to require Administrative Agent
or any Lender to undertake any action (or refrain from taking any action) with
respect to any Credit Documents, (d) to attend any meeting with the
Administrative Agent or any Lender (unless otherwise invited by the
Administrative Agent) or receive any information from the Administrative Agent
or any Lender (other than information provided by Aleris to Administrative Agent
or Lenders), or (e) make or bring any claim, in its capacity as a Lender,
against the Administrative Agent with respect to the fiduciary duties of the
Administrative Agent or any Lender and the other duties and obligations of the
Administrative Agent under the Credit Documents; except, that, no amendment,
modification or waiver to any Credit Document shall, without such Permitted
Holder Lender’s consent, deprive any Permitted Holder Lender of its pro rata
share of any payments to which the Lenders as a group are otherwise hereunder or
otherwise single out, or intentionally discriminate against, the Permitted
Holder Lender, as such.

 

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“Permitted Holders” shall mean each of (i) the Sponsors, (ii) their respective
controlling stockholders or partners and (iii) any other entity or individual
holding more than 50% controlling interests in the entities referred to in the
foregoing clauses (i) and (ii).

“Permitted Liens” shall have the meaning provided in Section 10.01.

“Permitted Refinancing Indebtedness” shall mean any Indebtedness of Aleris and
its Subsidiaries issued or given in exchange for, or the proceeds of which are
used to, extend, refinance, renew, replace, substitute or refund Indebtedness
permitted under clauses (ii), (v), (vii), (xii), (xiv), (xv), (xxiii), (xxiv),
(xxv) and (xxx) of Section 10.04, or any Indebtedness issued to so extend,
refinance, renew, replace, substitute or refund any such Indebtedness, so long
as (a) in the case of the refinancing of Indebtedness incurred pursuant to
clause (xiv) of Section 10.04, such refinancing Indebtedness shall satisfy the
conditions set forth in sub-clauses (A), (B) and (C) of Section 10.04(xiv),
(b) in each case, such Indebtedness has a weighted average life to maturity
greater than or equal to the weighted average life to maturity of the
Indebtedness being refinanced, (c) in each case, such refinancing or renewal
does not (i) increase the principal amount of such Indebtedness outstanding
immediately prior to such refinancing or renewal other than as a result of the
refinancing of accrued unpaid interest, premiums (including applicable
prepayment penalties) or fees and the costs of issuance of such refinancing
Indebtedness or (ii) add guarantors, obligors or security from that which
applied to such Indebtedness being refinanced or renewed, and (d) in each case,
such refinancing or renewal Indebtedness has substantially the same (or, from
the perspective of the Lenders, more favorable) subordination provisions, if
any, as applied to the Indebtedness being renewed or refinanced.

“Person” shall mean any individual, partnership, joint venture, firm,
corporation, association, limited or unlimited liability company, trust or other
enterprise or any government or political subdivision or any agency, department
or instrumentality thereof.

“Pounds Sterling” and the sign “£” shall mean freely transferable lawful money
of the United Kingdom (expressed in Pounds Sterling).

“PPSA” shall mean the Personal Property Security Act (Ontario) and the
regulations promulgated thereunder and other applicable personal property
security legislation of the applicable Canadian province or provinces in
connection with the issue, perfection, effect of perfection, enforcement,
enforceability, validity, priority or effect of security interests, hypothecs or
other applicable Liens (including the Civil Code of the Province of Quebec and
the regulations respecting the Register of Personal and Movable Real Rights
promulgated thereunder) as all such legislation now exists or may from time to
time hereafter be amended, modified, recodified, supplemented or replaced,
together with all rules, regulations and interpretations thereunder or related
thereto.

“Preferred Stock” shall mean any Equity Interest with preferential rights of
payment of dividends or upon liquidation, dissolution, or winding up.

“Prime Lending Rate” shall mean the rate which the Administrative Agent publicly
announces from time to time as its prime lending rate through its offices in New
York City (and, in the case of Base Rate Loans made to the Canadian Borrower,
such prime lending rate announced by the Canadian Reference Lender for
U.S. Dollar and Canadian Dollar denominated commercial loans made through its
office in Toronto, Canada), the Prime Lending Rate to change when and as such
prime lending rate changes. The Prime Lending Rate is a reference rate and does
not necessarily represent the lowest or best rate actually charged to any
customer by the Administrative Agent, which may make commercial loans or other
loans at rates of interest at, above or below the Prime Lending Rate.

 

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“Priority Payables” shall mean, at any time, with respect to the Borrowers:

(a) (i) the amount past due and owing by each Borrower, or the accrued amount
for which such Borrower has an obligation to remit to a Governmental Authority
or other Person pursuant to any applicable law, rule or regulation, in respect
of (u) pension fund obligations; (v) unemployment insurance; (w) goods and
services taxes, sales taxes, employee income taxes and other taxes payable or to
be remitted or withheld; and (ii) the amount of fees which an insolvency
administrator in an insolvency proceeding is allowed to collect pursuant to
German law, including, without limitation, determination fees and collection
fees; (x) workers’ compensation; (y) vacation pay; and (z) other like charges
and demands; in each case with respect to the preceding clauses (i) and (ii), to
the extent any Governmental Authority or other Person may claim a security
interest, Lien, trust or other claim ranking or capable of ranking in priority
to or pari passu with one or more of the First Priority Liens granted in the
Security Documents;

(b) the aggregate amount of any other liabilities of each Borrower (i) in
respect of which a trust has been or may be imposed on any Collateral to provide
for payment or (ii) which are secured by a security interest, pledge, Lien,
charge, right or claim on any Collateral; in each case, pursuant to any
applicable law, rule or regulation and which trust, security interest, pledge,
Lien, charge, right or claim ranks or, in the Permitted Discretion of the
Administrative Agent, is capable of ranking in priority to or pari passu with
one or more of the First Priority Liens granted in the Security Documents (such
as Liens, trusts, security interests, pledges, Liens, charges, rights or claims
in favor of employees, landlords, warehousemen, carriers, mechanics,
materialmen, laborers, or suppliers, or Liens, trusts, security interests,
pledges, Liens, charges, rights or claims for ad valorem, excise, sales, or
other taxes where given priority under applicable law); and

(c) without duplication, the aggregate of amounts payable by the Canadian Credit
Parties and secured by any Liens, choate or inchoate, which rank or which would
reasonably be expected to rank in priority to or pari passu with the
Administrative Agent’s Liens and/or for amounts which represent costs in
connection with the preservation, protection, collection or realization of the
Collateral, including any such amounts due and not paid for wages, vacation pay,
severance pay, amounts payable under the Wage Earner Protection Program Act
(Canada), amounts due and not paid under any legislation relating to workers’
compensation or to employment insurance, all amounts deducted or withheld and
not paid and remitted when due under the Income Tax Act (Canada), sales tax,
goods and services tax, value added tax, harmonized sales tax, excise tax, tax
payable pursuant to Part IX of the Excise Tax Act (Canada) or similar applicable
provincial legislation, government royalties, amounts currently or past due and
not paid for realty, municipal or similar taxes and all amounts currently or
past due and not contributed, remitted or paid to any Foreign Plan under any
applicable law or otherwise as required to be contributed pursuant to any
applicable law relating to Foreign Plans, or any similar statutory or other
claims that would have or would reasonably be expected to have priority over or
pari passu with any Liens granted to the Administrative Agent in the future;

in each case net of the aggregate amount of all Restricted cash held or set
aside for the payment of such obligations.

“Pro Forma Basis” shall mean, in connection with any calculation of compliance
with any financial covenant or financial term, the calculation thereof after
giving effect on a pro forma basis to (w) the incurrence of any Indebtedness
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incurred to refinance other outstanding Indebtedness or to finance a Permitted
Acquisition) after the first day of the relevant Calculation Period as if such
Indebtedness had been incurred (and the proceeds thereof applied) on the first
day of the relevant Calculation Period, (x) the permanent repayment of any
Indebtedness (other than revolving Indebtedness except to the extent accompanied
by a corresponding permanent commitment reduction) after the first day of the
relevant Calculation Period as if such Indebtedness had been retired or redeemed
on the first day of the relevant Calculation Period, (y) any Asset Sale
(including any Asset Swap) consummated after the first day of the relevant
Calculation Period as if such Asset Sale (including any Asset Swap) (and the
application of the proceeds therefrom) had occurred (and the proceeds therefrom
had been applied) on the first day of the relevant Calculation Period, and/or
(z) the Permitted Acquisition or any other acquisition of an Acquired Entity or
Business permitted pursuant to Section 10.05, if any, then being consummated as
well as any other Permitted Acquisition consummated after the first day of the
relevant Calculation Period and on or prior to the date of the respective
Permitted Acquisition then being effected, as the case may be, with the
following rules to apply in connection therewith:

(i) all Indebtedness (x) (other than revolving Indebtedness, except to the
extent same is incurred to refinance other outstanding Indebtedness or to
finance a Permitted Acquisition) incurred or issued after the first day of the
relevant Calculation Period (whether incurred to finance a Permitted
Acquisition, to refinance Indebtedness or otherwise) shall be deemed to have
been incurred or issued (and the proceeds thereof applied) on the first day of
the respective Calculation Period and remain outstanding through the date of
determination and (y) (other than revolving Indebtedness except to the extent
accompanied by a corresponding permanent commitment reduction) permanently
retired or redeemed after the first day of the relevant Calculation Period shall
be deemed to have been retired or redeemed on the first day of the respective
Calculation Period and remain retired through the date of determination;

(ii) all Indebtedness assumed to be outstanding pursuant to preceding clause
(i) shall be deemed to have borne interest at (x) the rate applicable thereto,
in the case of fixed rate indebtedness, or (y) at the rate which would have been
applicable thereto on the last day of the respective Calculation Period, in the
case of floating rate Indebtedness (although interest expense with respect to
any Indebtedness for periods while same was actually outstanding during the
respective period shall be calculated using the actual rates applicable thereto
while same was actually outstanding); and

(iii) in making any determination of Consolidated EBITDA, pro forma effect shall
be given to any Asset Sale (including any Asset Swap), Permitted Acquisition or
acquisition of an Acquired Entity or Business permitted pursuant to
Section 10.05 consummated during the periods described above, with such
Consolidated EBITDA to be determined as if such Asset Sale (including any Asset
Swap) or Permitted Acquisition was consummated on the first day of the relevant
Calculation Period, and, in the case of any Permitted Acquisition or other
acquisition, taking into account factually supportable and reasonably
identifiable synergies and cost savings and expenses directly attributable to
any such Permitted Acquisition or other acquisition that are certified to the
Administrative Agent in writing and which synergies, cost savings and expenses
are in the aggregate (without duplication, but together with any other add back
to Consolidated EBITDA under clause (xiv) of the definition thereof for
identifiable synergies, cost savings and expenses) either (A) not, for any
calculation period, in excess of the greater of (a) $30,000,000 or (b) 10% of
the amount of Consolidated EBITDA (calculated on a Pro Forma Basis (excluding
any adjustment thereto pursuant to this clause (A)) for the immediately
preceding 12 month period as of the most recent Fiscal Quarter for which
financial statements have been delivered pursuant to Section 9.01(b), or (B) in
accordance with Regulation S-X, and otherwise reasonably acceptable to the
Administrative Agent, in each case, as if such cost savings or expenses were
realized on the first day of the respective period.

 

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“Projections” shall mean the projections for the five Fiscal Years ended after
the Closing Date (prepared on an annual basis) that were prepared by or on
behalf of Aleris in connection with the Transaction and delivered to the Joint
Lead Arrangers and the Lenders prior to the Closing Date.

“Qualified Equity Interests” shall mean any Equity Interests so long as the
terms of any such Equity Interests (a) do not contain any mandatory put,
redemption, repayment, sinking fund or other similar provision (other than
solely for Qualified Equity Interests) which could be triggered (including,
without limitation, upon the occurrence of a change of control event) on or
prior to the date that is ninety-one (91) days after the earlier of the Final
Maturity Date and the date the Loans are no longer outstanding and the
Commitments have expired or been terminated and (b) do not require the cash
payment of dividends or distributions on or prior to the date that is ninety-one
(91) days after the earlier of the Final Maturity Date and the date the Loans
are no longer outstanding and the Commitments have expired or been terminated;
provided that if such Equity Interests are issued to any plan for the benefit of
employees of any Borrower or its Subsidiaries or by any such, plan to such
employees, such Equity Interests shall not fail to constitute Qualified Equity
Interests solely because they may be required to be repurchased by such Borrower
or any of its Subsidiaries in order to satisfy applicable statutory or
regulatory obligations. Notwithstanding the preceding sentence, any Equity
Interests that would not constitute Qualified Equity Interests solely because
the holders of such Equity Interests have the right to require Aleris to
repurchase such Equity Interests upon the occurrence of a change of control or
an asset sale will constitute Qualified Equity Interests if the terms of such
Equity Interests provide that Aleris may not repurchase or redeem any such
Equity Interests pursuant to such provisions unless such repurchase or
redemption complies with Section 10.03 or provide that such repurchase or
redemption shall be subject to the prior repayment in full of the Loans and all
other Obligations that are then accrued and payable and the termination of the
Commitments.

“Qualified Public Offering” shall mean any public or private sale of common
stock or Preferred Stock of Aleris or any direct or indirect parent of Aleris
pursuant to an effective registration statement filed with the Securities and
Exchange Commission in accordance with the Securities Act (other than a
registration statement on Form S-8 or any successor form).

“Quarterly Payment Date” shall mean the last Business Day of each March, June,
September and December occurring after the Closing Date.

“Real Property” shall mean, collectively, all land, improvements and fixtures of
any Person, including all the right, title and interest of such Person in and to
land, improvements and fixtures, including Leaseholds.

“Receivables Purchase Agreement” shall mean each receivables purchase agreement
and any related servicing agreements between the European Borrower, on the one
hand, and one or more Subsidiaries of Aleris, on the other hand, in
substantially the form of Exhibit K or otherwise in form and substance
reasonably satisfactory to the Administrative Agent, in each case providing,
inter alia, for the sale and transfer of Accounts by such Subsidiary to the
European Borrower, as each such agreement may be amended, modified or
supplemented from time to time in accordance with the terms hereof and thereof.

“Record” shall mean information that is inscribed on a tangible medium or which
is stored in an electronic or other medium and is retrievable in perceivable
form.

 

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“Recovery Event” shall mean the receipt by Aleris or any of its Subsidiaries of
any cash insurance proceeds or condemnation awards payable by reason of theft,
loss, physical destruction, damage, taking or any other similar event with
respect to any property or assets of Aleris or any of its Subsidiaries included
in the Collateral.

“Register” shall have the meaning provided in Section 13.15.

“Regulation D” shall mean Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof establishing reserve requirements.

“Regulation S-X” shall mean Regulation S-X promulgated under the Securities Act
as from time to time in effect and any successor regulation to all or a portion
thereof.

“Regulation T” shall mean Regulation T of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof.

“Regulation U” shall mean Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof.

“Regulation X” shall mean Regulation X of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof.

“Related Business Assets” shall mean assets (other than cash or Cash
Equivalents) used or useful in a Similar Business; provided that any assets
received by Aleris or a Restricted Subsidiary in exchange for assets transferred
by Aleris or a Restricted Subsidiary shall not be deemed to be Related Business
Assets if they consist of securities of a Person, unless upon receipt of the
securities of such Person, such Person would become a Restricted Subsidiary of
Aleris.

“Related Pass Through Entity” shall mean, with respect to an Indirect
Section 5.04 Indemnitee, the pass through entity for tax purposes which such
Indirect Section 5.04 Indemnitee, by virtue of being a partner or member
thereof, is an Indirect Section 5.04 Indemnitee; provided that such entity shall
be a Related Pass Through Entity only if it is a Lender, an Issuing Lender or
the Administrative Agent.

“Release” shall mean actively or passively disposing, discharging, injecting,
spilling, pumping, leaking, leaching, dumping, emitting, escaping, emptying,
pouring, seeping or migrating, into or upon any land or water or air, or
otherwise entering into the environment.

“Relevant Guaranteed Obligations” shall mean in the case of the U.S. Borrower
Guaranty provided by each of the U.S. Borrowers, (a) the principal and interest
on each Note issued by the Canadian Borrower, the European Borrower and each
other Guaranteed Party (other than such U.S. Borrower) to each Lender, and all
Loans made to the Canadian Borrower, the European Borrower and each other
Guaranteed Party (other than such U.S. Borrower) under this Agreement, all
reimbursement obligations and Unpaid Drawings with respect to Letters of Credit,
together with all the other obligations (including obligations which, but for
the automatic stay under Section 362(a) of the Bankruptcy Code or any other stay
under the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors
Arrangement Act (Canada) or any other applicable bankruptcy or insolvency law,
would become due) and liabilities (including, without limitation, indemnities,
fees and interest thereon) of the Canadian Borrower, the European Borrower and
each other Guaranteed Party (other than such U.S. Borrower) to any Guaranteed
Creditor now existing or hereafter incurred under, arising out of or in
connection with this Agreement and each other Credit Document, (b) all
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automatic stay under Section 362(a) of the Bankruptcy Code or any other stay
under the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors
Arrangement Act (Canada) or any other applicable bankruptcy or insolvency law,
would become due) and liabilities of each other Guaranteed Party (other than
such U.S. Borrower) owing under any Secured Hedging Agreement entered into by
such Guaranteed Party with any Guaranteed Creditor, whether now in existence or
hereafter arising, and (c) all obligations (including obligations which, but for
the automatic stay under Section 362(a) of the Bankruptcy Code or any other stay
under the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors
Arrangement Act (Canada) or any other applicable bankruptcy or insolvency law,
would become due) and liabilities of each other Guaranteed Party (other than
such U.S. Borrower) owing under any Treasury Services Agreement entered into by
such Guaranteed Party with any Guaranteed Creditor, whether now in existence or
hereafter arising.

“Remedial Action” shall mean all actions to (a) clean up, remove, remediate,
contain, treat, monitor or investigate Hazardous Materials in the indoor or
outdoor environment, (b) prevent or minimize a Release or threatened Release of
Hazardous Materials so they do not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment, (c) restore or
reclaim natural resources or the environment, or (d) perform any pre-remedial,
restoration or reclamation studies, investigations, or post-remedial,
restoration or reclamation operation and maintenance activities.

“Rent Reserve” shall mean, a reserve established by the Administrative Agent in
an amount equal to the latest three months rent payments made by any Credit
Party for each location at which Inventory of the Credit Parties is located that
is not subject to a Collateral Access Agreement (as reported to the
Administrative Agent by Aleris from time to time as requested by the
Administrative Agent), as such amount may be adjusted from time to time by the
Co-Collateral Agents in their Permitted Discretion taking into account any
statutory provisions detailing the extent to which landlords may make claims
against Inventory located thereon.

“Replaced Lender” shall have the meaning provided in Section 2.13.

“Replacement Lender” shall have the meaning provided in Section 2.13.

“Required Lenders” shall mean Non-Defaulting Lenders the sum of whose
outstanding Commitments (or after the termination thereof, outstanding
Individual Exposures) represent at least a majority of the sum of the Total
Commitment less the Commitments of all Defaulting Lenders (or after the
termination thereof, the sum of the Individual Exposures of Non-Defaulting
Lenders at such time).

“Requirements of Law” shall mean, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

“Responsible Officer” of any Person shall mean the chief executive officer, the
president, any vice president, the chief operating officer or any Financial
Officer of such Person and any other officer or similar official thereof
responsible for the administration of the obligations of such Person in respect
of this Agreement, and, as to any document delivered on the Closing Date (but
subject to the express requirements set forth in Section 6), shall include any
secretary or assistant secretary of a Credit Party. Any document delivered
hereunder that is signed by a Responsible Officer of a Credit Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Credit Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Credit Party.

 

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“Restricted” shall mean, when referring to cash or Cash Equivalents of Aleris or
any of its Subsidiaries, that such cash or Cash Equivalents (i) appear (or would
be required to appear) as “restricted” on a consolidated balance sheet of Aleris
or of any such Subsidiary, (ii) is subject to any Lien (other than Liens
permitted pursuant to Sections 10.01(i), (iv), (xiv) and (xvi)) in favor of any
Person other than the Administrative Agent for the benefit of the Secured
Parties or (iii) is not otherwise generally available for use by Aleris or any
of its Subsidiaries.

“Restricted Payment Conditions” shall mean that each of the following conditions
are satisfied at the time of each payment pursuant to Section 10.08(i) and after
giving effect thereto: (i) no Default or Event of Default shall have occurred
and be continuing, and (ii) the Excess Availability shall have been equal to or
greater than 17.5% of the lesser of (A) the Total Commitments and (B) the Total
Borrowing Base for each day in the preceding 30 day period, and shall be at
least 17.5% of the lesser of (A) the Total Commitments and (B) the Total
Borrowing Base after giving effect thereto, and (iii) the Fixed Charge Coverage
Ratio is at least 1.0 to 1.0 for the immediately preceding 12 month period as of
the most recent Fiscal Quarter for which financial statements have been
delivered pursuant to Section 9.01(b).

“Restricted Sub-Participation” shall mean a sub-participation of the rights
and/or the obligations of a Lender under this Agreement which is not
substantially in the form recommended from time to time by the London Loan
Market Association (LMA) (including, in particular, a provision on status of
participation substantially in the form set out in Clause 6.1 of the LMA Funded
Participation (PAR) form as at the date of this Agreement and Clause 7.1 of the
current LMA Risk Participation (PAR) form as at the date of this Agreement,
except for changes that have been approved by the Administrative Agent.

“Returns” shall have the meaning provided in Section 8.09.

“Revolving Loan” shall mean each U.S. Borrower Revolving Loan, each European
Borrower Revolving Loan and each Canadian Revolving Loan.

“Revolving Note” shall mean each promissory note duly executed and delivered by
Borrowers to each Lender to evidence the Revolving Loans owing by Borrowers to
such Lender, substantially in the form of Exhibit B-1, with blanks appropriately
completed in conformity herewith.

“S&P” shall mean Standard & Poor’s Rating Services, a division of McGraw-Hill,
Inc., or any successor thereto.

“Sale and Lease-Back Transaction” shall mean any arrangement with any Person
providing for the leasing by Aleris or any Restricted Subsidiary of any real or
tangible personal property, which property has been or is to be sold or
transferred by Aleris or such Restricted Subsidiary to such Person in
contemplation of such leasing.

“Section 5.04 Indemnitee” shall mean a Lender, an Issuing Lender or the
Administrative Agent (and, in the case of a Lender, an Issuing Lender or
Administrative Agent that is a flow-through entity for tax purposes, each member
or partner of such Lender, Issuing Lender or Administrative Agent, as the case
may be). For this purpose, the term “Lender” shall include any Participant.

“Section 5.04(b)(ii) Certificate” shall have the meaning provided in
Section 5.04(b)(ii).

“Secured Debt Agreement” shall mean and include (w) this Agreement, (x) the
other Credit Documents, (y) the Secured Hedging Agreements entered into with any
Other Creditors and (z) the Treasury Services Agreements entered into with any
Treasury Services Creditors.

 

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“Secured Hedging Agreement” shall mean each Interest Rate Protection Agreement
and/or Other Hedging Agreements provided that (i) either the confirmation or the
master agreement (however described therefor) governing such Interest Rate
Protection Agreement and/or Other Hedging Agreement expressly states that it
constitutes a “Secured Hedging Agreement” for purposes of this Agreement and the
other Credit Documents, (ii) Aleris and the other parties thereto shall have
delivered to the Administrative Agent a written notice specifying that (x) such
Interest Rate Protection Agreement and/or Other Hedging Agreement (and all
trades made pursuant thereto) constitutes a “Secured Hedging Agreement” for
purposes of this Agreement and the other Credit Documents, and (y) in the case
of Aleris, that such Interest Rate Protection Agreement and/or Other Hedging
Agreement and the obligations of Aleris and its Subsidiaries thereunder have
been, and will be, incurred in compliance with this Agreement, (iii) on the
effective date of such Interest Rate Protection Agreement and/or Other Hedging
Agreement and from time to time thereafter, at the request of the Administrative
Agent, Aleris and the other parties thereto shall have notified the
Administrative Agent in writing of the aggregate amount of exposure under such
Interest Rate Protection Agreement and/or Other Hedging Agreement and (iv) such
Other Creditor, if it is not a Lender or an Affiliate thereof (even if such
Lender subsequently ceases to be a Lender under this Agreement for any reason),
has entered into an intercreditor agreement with respect to the relevant
Interest Rate Protection Agreement or Other Hedging Agreement on terms
reasonably satisfactory to the Administrative Agent; it being understood,
however, that each Interest Rate Protection Agreement and/or Other Hedging
Agreement with a Lender or an Affiliate thereof (even if such Lender
subsequently ceases to be a Lender under this Agreement for any reason) in
effect on the Closing Date which does not meet the requirements of clauses
(i) and (ii) of the proviso in this definition but otherwise satisfies the
condition set forth in clause (iii) of the such proviso (other than any notice
required on or prior to the Closing Date) shall be deemed a Secured Hedging
Agreement for purposes of this Agreement and the other Credit Documents.

“Secured Parties” shall mean (i) Lenders (including, in any event, each Issuing
Lender and each Swingline Lender) and Agents, (ii) the Other Creditors and
(iii) the Treasury Services Creditors.

“Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

“Security Agreement” shall mean the U.S. Security Agreement, each Canadian
Security Document and each European Security Document.

“Security Agreement Collateral” shall mean all “Collateral” as defined in the
respective Security Agreement.

“Security Documents” shall mean and include each Security Agreement and each
other Additional Security Document.

“Senior Managing Agents” shall mean Key Bank National Association and RBS
Business Capital and any successors thereto.

“Senior Notes Indenture” shall mean that certain Indenture dated as of
February 9, 2011 among Aleris, the guarantors party thereto and U.S. Bank
National Association, as Trustee.

“Senior Secured Leverage Ratio” shall mean and include, as of any date of
determination, the ratio of (a) Consolidated Senior Secured Debt as of such date
to (b) Consolidated EBITDA for the period of four Fiscal Quarters most recently
ended prior to such date.

“Significant Event of Default” shall mean any Event of Default under
Section 11.01 or 11.05.

 

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“Similar Business” shall mean any business conducted by Aleris and its
Restricted Subsidiaries on the Closing Date or any business that is similar,
reasonably related, incidental or ancillary thereto.

“Specified European Manufacturing Subsidiary” shall mean Aleris Aluminum Duffel
BVBA, Aleris Aluminum Koblenz GmbH, Aleris Aluminum Bonn GmbH, Aleris Aluminum
Vogt GmbH, Aleris Aluminum Bitterfeld GmbH, Aleris Recycling (German Works)
GmbH, and, Aleris Recycling (Swansea) Ltd., and any other Subsidiary of Aleris
which shall be reasonably satisfactory to the Administrative Agent.

“Specified Event of Default” shall mean any Event of Default under
Section 11.01, Section 11.03 (with respect to a breach of Section 10.07) or
11.05.

“Specified Foreign Currency” shall have the meaning provided in Section 2.01(a).

“Specified Foreign Currency Funding Capacity” at any date of determination, for
any Lender, shall mean the ability of such Lender to fund European Borrower
Revolving Loans denominated in an Available Currency other than U.S. Dollars, as
set forth in the records of the Administrative Agent as notified in writing by
such Lender to the Administrative Agent within three (3) Business Days of such
Lender becoming a Lender hereunder.

“Specified Foreign Currency Loan” shall have the meaning provided in
Section 16.01.

“Specified Foreign Currency Participation” shall have the meaning provided in
Section 16.01.

“Specified Foreign Currency Participation Fee” shall have the meaning provided
in Section 16.06.

“Specified Foreign Currency Participation Settlement” shall have the meaning
provided in Section 16.02(i).

“Specified Foreign Currency Participation Settlement Amount” shall have the
meaning provided in Section 16.02(ii).

“Specified Foreign Currency Participation Settlement Date” shall have the
meaning provided in Section 16.02(i).

“Specified Foreign Currency Participation Settlement Period” shall have the
meaning provided in Section 16.02(i).

“Sponsors” shall mean Oaktree Capital Management L.P., Apollo ALS Holdings II,
L.P., Sankaty Advisors, LLC and their respective Affiliates.

“Spot Exchange Rate” shall have the meaning given to it in the definition of
Dollar Equivalent.

“Stated Amount” shall mean at, any time, as to any Letter of Credit, the maximum
amount available to be drawn thereunder (regardless of whether any conditions
for drawing could then be met) (using in the case of Letters of Credit not
denominated in U.S. Dollars, the Dollar Equivalent thereof).

“Sub-Limits” shall mean the Total Canadian Sub-Limit and the Total European
Sub-Limit.

“Subordinated Indebtedness” of a Person shall mean any Indebtedness of such
Person that is by its terms subordinated in right of payment to the Obligations
on terms and conditions no less favorable to the Administrative Agent and the
Lenders than are provided on Part A of Schedule XXIII attached hereto.

 

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“Subsidiary” shall mean, as to any Person, (i) any corporation more than 50% of
whose stock of any class or classes having by the terms thereof ordinary voting
power to elect a majority of the directors of such corporation (irrespective of
whether or not at the time stock of any class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time owned by such Person and/or one or more Subsidiaries
of such Person and (ii) any partnership, limited or unlimited liability company,
association, joint venture or other entity in which such Person and/or one or
more Subsidiaries of such Person has more than a 50% equity interest at the
time. Notwithstanding the foregoing (and except for the purposes of the
definition of Unrestricted Subsidiary contained herein and Sections 9.01(a),
(b) and (c)) an Unrestricted Subsidiary shall be deemed not to be a Subsidiary
of Aleris or any of its other Subsidiaries for the purposes of this Agreement.

“Supermajority Lenders” shall mean Non-Defaulting Lenders the sum of whose
outstanding Commitments (or after the termination thereof, outstanding
Individual Exposures) represent at least 66 2/3% of the sum of the Total
Commitment less the Commitments of all Defaulting Lenders (or after the
termination thereof, the sum of the Individual Exposures of Non-Defaulting
Lenders at such time).

“Supply Agreement” shall mean each supply agreement entered into by the European
Borrower for the purchase of raw materials in accordance with the Permitted
European Borrower Activities.

“Swingline Expiry Date” shall mean the date that is five (5) Business Days prior
to the Final Maturity Date.

“Swingline Lender” shall mean Bank of America, N.A. (or as regards the Canadian
Borrower, Bank of America, N.A. (acting through its Canada branch), as
applicable), or any Person serving as a successor Administrative Agent
hereunder, in its capacity as a lender of Swingline Loans.

“Swingline Loans” shall have the meaning provided in Section 2.01(b).

“Swingline Note” shall mean each promissory note duly executed and delivered by
Borrowers to evidence the Swingline Loans, substantially in the form of Exhibit
B-2, with blanks appropriately completed in conformity herewith.

“Swiss Francs” shall mean the lawful currency of Switzerland, as in effect from
time to time.

“Swiss Guarantor” shall mean a Credit Party organized under the laws of, or for
tax purposes resident in, Switzerland.

“Swiss Non-Qualifying Bank” shall mean a Person which does not qualify as a
Swiss Qualifying Bank.

“Swiss Obligor” shall mean the European Borrower, or a Swiss Guarantor (if any).

“Swiss Qualifying Bank” shall mean a financial institution which (i) qualifies
as a bank pursuant to the banking laws in force in its country of incorporation,
(ii) carries on a true banking activity in such jurisdiction as its main
purpose, and (iii) has personnel, premises, communication devices and
decision-making authority of its own, all as per explanatory notes of the Swiss
Federal Tax Administration No. S-02-123(9.86) and No. S-02.128(1.2000) or
legislation or explanatory notes addressing the same issues which are in force
at such time.

 

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“Swiss Withholding Tax” shall mean any withholding tax in accordance with the
Swiss Federal Statute on Anticipatory Tax of 13 October 1965 (Bundesgesetz über
die Ver-rechnungssteuer) and any successor provision, as appropriate.

“Syndication Agent” shall mean J.P. Morgan Securities LLC, in its capacity as
Syndication Agent, and any successor thereto.

“Synthetic Lease” shall mean, as to any Person, any lease (including leases that
may be terminated by the lessee at any time) of any property (whether real,
personal or mixed) (a) that is accounted for as an operating lease under GAAP
and (b) in respect of which the lessee retains or obtains ownership of the
property so leased for purposes of U.S. Federal income tax or other taxes
applicable thereto, other than any such lease under which such person is the
lessor.

“Synthetic Lease Obligations” shall mean, as to any Person, an amount equal to
the capitalized amount of the remaining lease payments under any Synthetic Lease
that would appear on a balance sheet of such person in accordance with GAAP if
such obligations were accounted for as Capitalized Lease Obligations.

“Taxes” shall mean any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein with respect to payments made by any Credit Party under any Credit
Document (but excluding (i) any tax imposed on or measured by the net income or
net profits (or any franchise or similar tax imposed in lieu of a net income or
net profits tax and any branch profits tax imposed by the United States or any
similar tax imposed by any other jurisdiction in which the Borrowers or any
other Credit Party is located) of a Section 5.04 Indemnitee pursuant to the laws
of the country or national jurisdiction (or any political subdivision thereof)
in which such Section 5.04 Indemnitee is organized or the country or national
jurisdiction (or any political subdivision thereof) in which the principal
office or applicable lending office of such Section 5.04 Indemnitee is located
and (ii) any United States federal withholding tax imposed by FATCA), and all
interest, penalties or similar liabilities with respect to such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges.

“Ten Non-Bank Regulations” shall mean, at any time, the regulations pursuant to
the explanatory notes of the Swiss Federal Tax Administration No.
S-02.128(1.2000), S-02.122.2(4.1999) and S-02.122.1(4.1999) or legislation or
explanatory notes addressing the same issues which are in force at such time.

“Test Period” shall mean each period of four consecutive Fiscal Quarters of
Aleris then last ended (in each case taken as one accounting period).

“Tier I Country” shall mean each country listed on Schedule XVI and each
additional country as agreed by the Co-Collateral Agents from time to time in
their Permitted Discretion.

“Tier II Country” shall mean each country listed on Schedule XVII and each
additional country as agreed by the Co-Collateral Agents from time to time in
their Permitted Discretion.

“Tolling Agreement” shall mean each tolling agreement entered into by the
European Borrower with a European Manufacturing Subsidiary for the processing of
raw materials into finished aluminum product, in each case, in form and
substance reasonably satisfactory to the Administrative Agent; provided that all
tolling fees and other amounts payable under each Tolling Agreement shall be
subordinated to the payment of the Obligations on terms reasonably satisfactory
to the Administrative Agent.

 

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“Total Assets” shall mean the total amount of all assets of any Person,
determined on a consolidated basis in accordance with GAAP (or Local GAAP, as
applicable) as shown on the most recent balance sheet of Aleris.

“Total Borrowing Base” shall mean, as of any date of determination, the sum of
the U.S. Borrowing Base, the Canadian Borrowing Base and the European Borrowing
Base.

“Total Canadian Sub-Limit” at any time shall mean $15,000,000 as such amount may
be adjusted from time to time pursuant to Section 2.15.

“Total Commitments” shall mean, at any time, the sum of the Commitments of each
of the Lenders at such time.

“Total European Sub-Limit” at any time shall mean $240,000,000 as such amount
may be adjusted from time to time pursuant to Section 2.15.

“Total Unutilized Commitment” shall mean, at any time, an amount equal to the
remainder of (x) the Total Commitment as in effect at such time less (y) the
Aggregate Exposure at such time.

“Transactions” shall mean, collectively, (i) the entering into of the Credit
Documents and the incurrence of Loans and issuance of Letters of Credit on the
Closing Date, and (ii) the payment of all fees and expenses in connection with
the foregoing.

“Transitory European Subsidiary” shall mean each Subsidiary of Aleris acquired
pursuant to a Permitted Acquisition or an acquisition of an Acquired Entity or
Business permitted by Section 10.05 and organized under the laws of any country
which is a member state of the European Community established pursuant to the
Treaty, or any other jurisdiction reasonably satisfactory to the Administrative
Agent, designated by Aleris in writing to the Administrative Agent as a
“Transitory European Subsidiary”; provided that at the time of any such
designation (i) such Subsidiary has either (A) entered into a Receivables
Purchase Agreement with the European Borrower or (B) entered into a guaranty of
the Obligations of the European Borrower pursuant to a guarantee agreement
reasonably satisfactory in form and substance to the Administrative Agent and
secured such guaranty with valid and enforceable first priority, perfected
security interests or charges in all of the Accounts owned by such Subsidiary
and such security interests shall not be subject to avoidance under any
fraudulent transfer, preference or other similar principle, (ii) the
Administrative Agent shall have received opinions of counsel from counsel
reasonably satisfactory to the Administrative Agent covering such matters as the
Administrative Agent may reasonably request and (iii) to the extent requested by
the Administrative Agent pursuant to the proviso to Section 9.06(b), any
collateral examinations and appraisals of the Accounts of such Subsidiary shall
have been completed; provided further, that each such Subsidiary shall cease to
be a Transitory European Subsidiary on the 181st day (or upon the expiration of
such longer period as agreed by the Administrative Agent) following the date of
its acquisition by Aleris or any of its Subsidiaries.

“Treasury Services Agreement” shall mean, collectively, any and all “Treasury
Services Agreements”, as defined in the Security Agreements.

“Treasury Services Creditors” shall mean, collectively, any and all “Treasury
Services Creditors”, as defined in the Security Agreements.

“Treasury Services Obligations” shall mean, collectively, any and all “Treasury
Services Obligations”, as defined in the Security Agreements.

 

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“Treaty” shall mean the Treaty establishing the European Community being the
Treaty of Rome of March 25, 1957, as amended by the Single European Act 1986,
the Maastricht Treaty (which was signed at Maastricht on February 7, 1992) and
the Treaty of Amsterdam (which was signed in Amsterdam on October 2, 1997).

“Twenty Non-Bank Regulations” shall mean the regulations pursuant to the
explanatory notes S-02.122.1(4.99) and S-02.122.2(4.99) of the Swiss Federal Tax
Administration (or legislation or explanatory notes addressing the same issues
which are in force at such time) pursuant to which the aggregate number of
persons and legal entities, which are not Swiss Qualifying Banks and to which
the European Borrower directly or indirectly, including, without limitation,
through a Restricted Sub-Participation or other sub-participations under any
other agreement, owes interest-bearing borrowed money under all interest-bearing
instruments including, inter alia, this Agreement, taken together (other than
bond issues which are subject to Swiss Withholding Tax), shall not exceed twenty
at any time in order to not trigger Swiss Withholding Tax.

“Type” shall mean the type of Loan determined with regard to the interest option
applicable thereto, i.e., whether a Base Rate Loan, a Euro Rate Loan of a given
currency, a Canadian Prime Rate Loan or a B/A Equivalent Loan.

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in
the State of New York; provided that if by reason of mandatory provisions of
law, the perfection, the effect of perfection or non-perfection or the priority
of the Liens of the Administrative Agent in any Collateral is governed by the
Uniform Commercial Code as in effect in a United States jurisdiction other than
New York, “UCC” means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection,
effect of perfection or non-perfection or priority.

“U.K. Guarantor” shall mean Aleris Recycling (Swansea) Ltd., a company organized
under the laws of England and Wales.

“United States” and “U.S.” shall each mean the United States of America.

“Unpaid Drawing” shall have the meaning provided in Section 3.05(a).

“Unpaid Supplier Reserve” shall mean, at any time, the amount equal to the
percentage applicable to Inventory in the calculation of the applicable
Borrowing Base multiplied by the aggregate value of the Eligible Inventory which
the Co-Collateral Agents in their Permitted Discretion, considers is or may be
subject to a right of a supplier to repossess goods pursuant to (i) Section 81.1
of the Bankruptcy and Insolvency Act (Canada) or any other laws of Canada (or
any province or territory thereof), or (ii) any other applicable jurisdiction
(including the United Kingdom) granting revendication or similar rights to
unpaid suppliers, in the case of either (i) or (ii), where such supplier’s right
ranks or is capable of ranking in priority to or pari passu with one or more of
the First Priority Liens granted in the Security Documents.

“Unrestricted Subsidiary” shall mean (A) any Subsidiary of Aleris designated by
the board of directors of Aleris as an Unrestricted Subsidiary pursuant to
Section 9.15 subsequent to the Original Closing Date and (B) any Subsidiary of
an Unrestricted Subsidiary.

“Unutilized Commitment” shall mean, with respect to any Lender at any time,
(x) the sum of such Lender’s Commitment, less (y) the sum of such Lender’s
Individual U.S. Borrower Exposure, Individual European Exposure and Individual
Canadian Exposure.

“U.S. Borrower Guaranty” shall mean the guaranty of the U.S. Borrowers pursuant
to Section 14.

 

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“U.S. Borrower Obligations” shall mean all Obligations owing to the Secured
Parties by any U.S. Borrower.

“U.S. Borrower Revolving Loan” shall have the meaning provided in
Section 2.01(a).

“U.S. Borrower Swingline Loans” shall have the meaning provided in
Section 2.01(b).

“U.S. Borrowers” shall have the meaning provided in the first paragraph of this
Agreement.

“U.S. Borrowing Base” shall mean, as of any date of determination, the result
of:

(a) 85% of the amount of Eligible U.S. Accounts, plus

(b) 75% of the amount of Eligible U.S. Unbilled Accounts, plus

(c) the lower of

(i) 75% of the net book value of Eligible U.S. Inventory, and

(ii) 85% times the then extant Net Liquidation Percentage times the net book
value of U.S. Borrowers’ Eligible U.S. Inventory, minus

(d) the aggregate amount of reserves, if any, established by the Co-Collateral
Agents under Section 2.01(d) with respect to the U.S. Borrowing Base;

provided, however, that the amount calculated under clause (b) of this
definition of U.S. Borrowing Base shall not exceed more than $20,000,000.

“U.S. Collection Account” shall mean each account established at a U.S.
Collection Bank subject to a Cash Management Control Agreement into which funds
shall be transferred as provided in Section 5.03(b).

“U.S. Collection Banks” shall have the meaning provided in Section 5.03(b)(i).

“U.S. Credit Party” shall mean each U.S. Borrower and each U.S. Subsidiary
Guarantor.

“U.S. Disbursement Account” shall mean each checking and/or disbursement account
of Aleris and its Domestic Subsidiaries for their general corporate purposes,
including for the purpose of paying Aleris and its Domestic Subsidiaries’ trade
payables and other operating expenses.

“U.S. Dollars” and the sign “$” shall each mean freely transferable lawful money
of the United States.

“U.S. Lender” shall mean each Lender which has a Commitment (without giving
effect to any termination of the Total Commitment if any U.S. Borrower Swingline
Loans or Letter of Credit Outstandings remain outstanding) or which has any
outstanding U.S. Revolving Loans (or an L/C Participation Percentage in any then
outstanding Letter of Credit Outstandings).

“U.S. Letter of Credit” shall have the meaning provided in Section 3.01(a).

“U.S. Security Agreement” shall mean the Security Agreement in the form of
Exhibit F, as amended, restated, reaffirmed, modified or supplemented from time
to time, made by the U.S. Credit Parties in favor of the Administrative Agent to
the benefit of the Secured Parties covering all of such U.S. Credit Parties’
Guaranty Agreement Collateral (as defined therein).

 

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“U.S. Security Documents” shall mean the U.S. Security Agreement and such
Additional Security Document covering the assets of a U.S. Credit Party.

“U.S. Subsidiaries Guaranty” shall mean the U.S. Subsidiaries Guaranty in the
form of Exhibit E-1, as amended, restated, reaffirmed, modified or supplemented
from time to time, made by the U.S. Subsidiary Guarantors in favor of
Administrative Agent and the other Guaranteed Creditors guaranteeing all of the
obligations of the Borrowers as more fully provided therein.

“U.S. Subsidiary Guarantor” shall mean each Wholly-Owned Domestic Subsidiary of
Aleris that is a Material Subsidiary and which executes and delivers a U.S.
Subsidiaries Guaranty, in each case, unless and until such time as the
respective U.S. Subsidiary Guarantor is released from all of its obligations
under the U.S. Subsidiaries Guaranty in accordance with terms and provisions
thereof (it being understood that no Domestic Subsidiary of Aleris which is also
a Subsidiary of a Foreign Subsidiary of Aleris shall be a U.S. Subsidiary
Guarantor).

“Voting Stock” of any Person as of any date shall mean the Equity Interests of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

“Wholly-Owned Canadian Subsidiary” shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person which is also a Canadian Subsidiary of
such Person.

“Wholly-Owned Domestic Subsidiary” shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person which is also a Domestic Subsidiary of
such Person.

“Wholly-Owned European Distribution Subsidiary” shall mean, as to any Person,
any Wholly-Owned Subsidiary of such Person which is also a European Distribution
Subsidiary.

“Wholly-Owned Foreign Subsidiary” shall mean, as to any Person, any Wholly-Owned
Subsidiary of such Person which is also a Foreign Subsidiary of such Person.

“Wholly-Owned Subsidiary” shall mean, as to any Person, (i) any corporation 100%
of whose Equity Interests (other than director’s qualifying shares and/or other
nominal amounts of shares required by applicable law to be held by Persons other
than such Person) is at the time owned by such Person and/or one or more
Wholly-Owned Subsidiaries of such Person and (ii) any partnership, association,
joint venture or other entity in which such Person and/or one or more
Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such
time; provided that Aleris Aluminum GmbH, Aleris Recycling (German Works) GmbH
or any other Subsidiary of Aleris which is organized in Germany which owns real
property shall constitute a “Wholly-Owned Subsidiary” for all purposes of the
Credit Documents so long as no more than 5.1% of the Equity Interests of such
Subsidiary are owned by a Person other than Aleris or a Wholly-Owned Subsidiary
of Aleris so long as (i) the holder of such Equity Interests is reasonably
satisfactory to the Administrative Agent and (ii) all of the economic interests
attributable to the Equity Interests in such Subsidiary are owned directly or
indirectly by Aleris and its Subsidiaries.

“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

 

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Interpretation (Quebec). For purposes of any Collateral located in the Province
of Quebec or charged by any deed of hypothec (or any other Credit Document) and
for all other purposes pursuant to which the interpretation or construction of a
Credit Document may be subject to the laws of the Province of Quebec or a court
or tribunal exercising jurisdiction in the Province of Quebec, (q) “personal
property” shall be deemed to include “movable property”, (r) “real property”
shall be deemed to include “immovable property”, (s) “tangible property” shall
be deemed to include “corporeal property”, (t) “intangible property” shall be
deemed to include “incorporeal property”, (u) “security interest” and “mortgage”
shall be deemed to include a “hypothec”, (v) all references to filing,
registering or recording under the UCC or the PPSA shall be deemed to include
publication under the Civil Code of Quebec, (w) all references to “perfection”
of or “perfected” Liens shall be deemed to include a reference to the
“opposability” of such Liens to third parties, (x) any “right of offset”, “right
of setoff” or similar expression shall be deemed to include a “right of
compensation”, (y) “goods” shall be deemed to include “corporeal movable
property” other than chattel paper, documents of title, instruments, money and
securities, and (z) an “agent” shall be deemed to include a “mandatary”. The
terms “Chattel Paper,” “Documents” (or “documents of title” in the case of
Collateral of the Canadian Credit Parties), “Electronic Chattel Paper,”
“Instrument,” “Letter-of-Credit Rights,” and “Supporting Obligations” shall have
the respective meanings given to such terms in the U.S. Security Agreement or,
to the extent defined in the PPSA and relating to the Collateral of the Canadian
Credit Parties, the PPSA. The term “Securities Account” shall have the meaning
given to it in Article 8 of the UCC or, as applicable to the Collateral of the
Canadian Credit Parties, Section 1 of the PPSA.

SECTION 2. Amount and Terms of Credit.

2.01 The Commitments.

(a) Subject to and upon the terms and conditions set forth herein (including,
without limitation, the conditions set forth in Sections 7.01, 7.02, and 7.03),
each Lender with a Commitment severally agrees to make, at any time and from
time to time on or after the Closing Date and prior to the Final Maturity Date,
(x) a revolving loan or revolving loans to the U.S. Borrowers (on a joint and
several basis) (each, a “U.S. Borrower Revolving Loan”), (y) a revolving loan or
revolving loans to the Canadian Borrower (each, a “Canadian Revolving Loan”),
and (z) a revolving loan or revolving loans to the European Borrower (each, a
“European Borrower Revolving Loan”), which Revolving Loans:

(i) shall be denominated in the applicable Available Currency elected by the
applicable Borrower;

(ii) shall (x) in the case of U.S. Borrower Revolving Loans at the option of the
U.S. Borrowers, be incurred and maintained as, and/or converted into, Base Rate
Loans or Eurodollar Loans, (y) at the option of the Canadian Borrower, be
incurred and maintained as, and/or converted into, (I) Base Rate Loans
denominated in U.S. Dollars, (II) Eurodollar Loans denominated in U.S. Dollars,
(III) Canadian Prime Rate Loans denominated in Canadian Dollars, or (IV) B/A
Equivalent Loans denominated in Canadian Dollars, and (z) in the case of
European Borrower Revolving Loans, be incurred and maintained as Euro Rate
Loans, provided that except as otherwise specifically provided in
Section 2.10(b), all Revolving Loans comprising the same Borrowing shall at all
times be of the same Type;

(iii) may be repaid and reborrowed in accordance with the provisions hereof;

(iv) in the case of any Borrowing of Revolving Loans, shall not be made (and
shall not be required to be made) by any Lender in any instance where the
incurrence thereof (after giving effect to the use of the proceeds thereof on
the date of the incurrence thereof to repay any

 

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amounts theretofore outstanding pursuant to this Agreement) would cause (w) the
Individual Exposure of such Lender to exceed the amount of its Commitment at
such time, (x) the Aggregate Exposure to exceed the Total Commitments at such
time, (y) the Aggregate Canadian Exposure to exceed the Total Canadian Sub-Limit
at such time or (z) the Aggregate European Borrower Exposure at such time to
exceed the Total European Sub-Limit at such time; and

(v) subject to Section 16, in the case of Revolving Loans which are denominated
in Euros, Swiss Francs, Pounds Sterling and any other currency agreed by Bank of
America (each a “Specified Foreign Currency”) which are required to be made by a
Participating Specified Foreign Currency Lender, shall be made at their option
by the Joint Lead Arrangers.

(b) Subject to and upon the terms and conditions set forth herein (including,
without limitation, the conditions set forth in Sections 7.01, 7.02 and 7.03),
(x) the Swingline Lender agrees to make, at any time and from time to time on or
after the Closing Date and prior to the Swingline Expiry Date a revolving loan
or revolving loans to the U.S. Borrowers (on a joint and several basis) (each, a
“U.S. Borrower Swingline Loan”), (y) the Swingline Lender agrees to make, at any
time and from time to time on or after the Closing Date and prior to the
Swingline Expiry Date a revolving loan or revolving loans to the Canadian
Borrower (each, a “Canadian Borrower Swingline Loan”), and (z) the Swingline
Lender agrees to make, at any time and from time to time on or after the Closing
Date and prior to the Swingline Expiry Date a revolving loan or revolving loans
to the European Borrower (each, a “European Borrower Swingline Loan”; and with
the European Borrower Swingline Loans, the Canadian Borrower Swingline Loans and
the U.S. Borrower Swingline Loans being each called a “Swingline Loan”), which
Swingline Loans:

(i) shall (x) in the case of U.S. Borrower Swingline Loans, be denominated in
U.S. Dollars, (y) in the case of the Canadian Borrower Swingline Loans, be
denominated in the applicable Available Currency elected by the Canadian
Borrower and (z) in the case of European Borrower Swingline Loans, be
denominated in the applicable Available Currency elected by the European
Borrower;

(ii) shall (x) in the case of U.S. Borrower Swingline Loans be incurred and
maintained as Base Rate Loans, (y) in the case of the Canadian Borrower
Swingline Loans be incurred and maintained as Base Rate Loans (in the case of
Canadian Borrower Swingline Loans denominated in U.S. Dollars) or Canadian Prime
Rate Loans (in the case of Canadian Borrower Swingline Loans denominated in
Canadian Dollars) and (z) in the case of European Borrower Swingline Loans, be
incurred and maintained as Euro Rate Loans subject to an interest period of one
(1) to seven (7) days, as selected by the Swingline Lender;

(iii) may be repaid and reborrowed in accordance with the provisions hereof;

(iv) shall not be made by the applicable Swingline Lender in any instance where
the incurrence thereof (after giving effect to the use of the proceeds thereof
on the date of the incurrence thereof to repay any amounts theretofore
outstanding pursuant to this Agreement) would cause (x) the Aggregate Exposure
to exceed the Total Commitment as then in effect, (y) Aggregate Canadian
Exposure to exceed the Total Canadian Sub-Limit as then in effect or (z) the
Aggregate European Borrower Exposure at such time to exceed the Total European
Sub-Limit at such time; and

(v) shall not exceed in aggregate principal amount at any time outstanding the
relevant Maximum Swingline Amount.

 

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Notwithstanding anything to the contrary contained in this Section 2.01(b),
(i) at any time when a Defaulting Lender exists, each Swingline Lender shall
withhold such Defaulting Lender’s Percentage of any Swingline Loans made as cash
collateral to eliminate the Swingline Lender’s risk with respect to such
Defaulting Lender’s participation in such Swingline Loans, and (ii) no Swingline
Lender shall make any Swingline Loan after such Swingline Lender has received
written notice from the Borrowers, any other Credit Party or the Required
Lenders stating that a Default or an Event of Default exists and is continuing
until such time as such Swingline Lender shall have received written notice
(A) of rescission of all such notices from the party or parties originally
delivering such notice or notices or (B) of the waiver of such Default or Event
of Default by the Required Lenders.

(c) On any Business Day, the applicable Swingline Lender may, in its sole
discretion, give notice to the Lenders that the Swingline Lender’s outstanding
Swingline Loans shall be funded with one or more Borrowings of Revolving Loans
(provided that such notice shall be deemed to have been automatically given upon
the occurrence of a Default or an Event of Default under Section 11.05 or upon
the exercise of any of the remedies provided in the last paragraph of
Section 11), in which case one or more Borrowings of Revolving Loans
constituting Base Rate Loans, in the case of Swingline Loans maintained in U.S.
Dollars, Euro Rate Loans subject to an Interest Period of one month, in the case
of Swingline Loans maintained in a currency other than U.S. Dollars or Canadian
Dollars, or Canadian Prime Rate Loans, in the case of Canadian Borrower
Swingline Loans maintained in Canadian Dollars, (each such Borrowing, a
“Mandatory Borrowing”) shall be made on the immediately succeeding Business Day
(or, in the case of a Mandatory Borrowing of Euro Rate Loans, the second
succeeding Business Day) by all Lenders pro rata based on each such Lender’s
Percentage (determined before giving effect to any termination of the
Commitments pursuant to Section 11) and the proceeds thereof shall be applied
directly by such Swingline Lender to repay such Swingline Lender for such
outstanding Swingline Loans. Each Lender hereby irrevocably agrees to make
Revolving Loans upon one (1) Business Day’s notice (or, in the case of a
Mandatory Borrowing of Euro Rate Loans, two (2) Business Days’ notice) pursuant
to each Mandatory Borrowing in the amount and in the manner specified in the
preceding sentence and on the date specified in writing by the relevant
Swingline Lender notwithstanding (i) the amount of the Mandatory Borrowing may
not comply with the Minimum Borrowing Amount otherwise required hereunder,
(ii) whether any conditions specified in Section 7 are then satisfied,
(iii) whether a Default or an Event of Default then exists, (iv) the date of
such Mandatory Borrowing, and (v) the amount of any Borrowing Base or Commitment
at such time. In the event that any Mandatory Borrowing cannot for any reason be
made on the date otherwise required above (including, without limitation, as a
result of the commencement of a proceeding under the Bankruptcy Code or any
other relevant bankruptcy or insolvency laws with respect to any Borrower), then
each Lender hereby agrees that it shall forthwith purchase (as of the date the
Mandatory Borrowing would otherwise have occurred, but adjusted for any payments
received from the relevant Borrowers on or after such date and prior to such
purchase) from the relevant Swingline Lender such participations in the
outstanding Swingline Loans of such Swingline Lender as shall be necessary to
cause the Lenders with Commitments to share in such relevant Swingline Loans
ratably based upon their respective Percentages (determined before giving effect
to any termination of the Commitments pursuant to Section 11), provided that
(x) all interest payable on such Swingline Loans shall be for the account of
such Swingline Lender until the date as of which the respective participation is
required to be purchased and, to the extent attributable to the purchased
participation, shall be payable to the participant from and after such date and
(y) at the time any purchase of participations pursuant to this sentence is
actually made, the purchasing Lender shall be required to pay the relevant
Swingline Lender interest on the principal amount of participation purchased for
each day from and including the day upon which the Mandatory Borrowing would
otherwise have occurred to but excluding the date of payment for such
participation, at the overnight Federal Funds Rate for the first three (3) days
and at the interest rate otherwise applicable to Revolving Loans maintained as
Base Rate Loans (or, in the case of Non-Dollar Denominated Loans, the interest
rate that is applicable to the respective Mandatory Borrowing) hereunder for
each day thereafter. Notwithstanding anything to the contrary contained in this

 

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Section 2.01(c), if any Lender becomes a Defaulting Lender at any time that a
Swingline Loan is outstanding, such Defaulting Lender shall, within two
(2) Business Days following notice by the Swingline Lender, cash collateralize
such Defaulting Lender’s Percentage of all outstanding Swingline Loans. If the
relevant Defaulting Lender shall fail to comply with such demand for cash
collateral, the U.S. Borrowers shall, within two (2) Business Days’ notice by
the Swingline Lender, cash collateralize such Defaulting Lender’s Percentage of
all outstanding Swingline Loans.

If the Initial Maturity Date shall have occurred at a time when Extended
Commitments are in effect, then on the Initial Maturity Date, all then
outstanding Swingline Loans shall be repaid in full on such date (and there
shall be no adjustment to the participations in such Swingline Loans as a result
of the occurrence of such Initial Maturity Date); provided that, if on the
occurrence of the Initial Maturity Date (after giving effect to any repayments
of Loans and any reallocation of Letter of Credit participations as contemplated
in Section 4.05), there shall exist sufficient unutilized Extended Commitments
so that the respective outstanding Swingline Loans could be incurred pursuant
the Extended Commitments, which will remain in effect after the occurrence of
the Initial Maturity Date, then there shall be an automatic adjustment on such
date of the participations in such Swingline Loans and same shall be deemed to
have been incurred solely pursuant to the Extended Commitments, as the case may
be, and such Swingline Loans shall not be so required to be repaid in full on
the Initial Maturity Date.

(d) Notwithstanding anything to the contrary in Sections 2.01(a), (b), (c) or
(d), Section 7.03 or elsewhere in this Agreement, the Co-Collateral Agents shall
have the right to establish reserves in such amounts, and with respect to such
matters, as the Co-Collateral Agents in their Permitted Discretion shall deem
necessary, against any Borrowing Base upon five (5) Business Days’ notice to the
Borrowers in the case of new reserve categories established after the Original
Closing Date and changes in the methodology for determining a reserve and upon
two (2) Business Days’ notice to the Borrowers in other cases and based on an
event, condition or other circumstance arising after the Original Closing Date
or based on facts not known to the Co-Collateral Agents as of the Original
Closing Date, including, without limitation, (i) an Unpaid Supplier Reserve and
a Rent Reserve against Eligible Inventory included in any Borrowing Base,
(ii) Hedge Product Reserves and Bank Product Reserves and (iii) reserves for
Priority Payables; provided, however, that the Co-Collateral Agents may not
implement reserves with respect to matters which are already specifically
reflected as ineligible Accounts or Inventory or criteria deducted in computing
the cost or market value of Eligible Inventory or the Net Liquidation Percentage
of Eligible Inventory; and provided, further, that the Co-Collateral Agents may
only establish or increase a reserve (other than Rent Reserves, Hedge Product
Reserves and Bank Product Reserves) after the Original Closing Date based on an
event, condition or other circumstance arising after the Original Closing Date
or based on facts not known to the Co-Collateral Agents as of the Original
Closing Date.

The amount of any reserve established by the Co-Collateral Agents shall have a
reasonable relationship to the event, condition or other matter that is the
basis for the reserve. Upon delivery of written notice to Aleris as provided
above, the Co-Collateral Agents shall be available to discuss the proposed
reserve or increase, and Aleris and its Subsidiaries may take such action as may
be required so that the event, condition or matter that is the basis for such
reserve or increase no longer exists, in a manner and to the extent reasonably
satisfactory to the Co-Collateral Agents in the exercise of their Permitted
Discretion. In no event shall such notice and opportunity limit the right of the
Co-Collateral Agents to establish or change such reserve, unless the
Co-Collateral Agents shall have determined in their Permitted Discretion that
the event, condition or other matter that is the basis for such new reserve or
such change no longer exists or has otherwise been adequately addressed by the
Borrowers.

(e) In the event any of the U.S. Borrowers, the Canadian Borrower, the European
Borrower is unable to comply with the conditions precedent to the making of
Revolving Loans or the issuance of Letters of Credit set forth in Section 7
(including, without limitation, the Borrowing Base limitations set

 

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forth in Section 7.03), the U.S. Lenders authorize the Administrative Agent,
(x) to make U.S. Borrower Revolving Loans to the U.S. Borrowers, (y) to make
European Borrower Revolving Loans to the European Borrower and (z) to make
Canadian Revolving Loans to the Canadian Borrower (each, an “Agent Advance”),
which, in each case, (i) may only be made in U.S. Dollars as Base Rate Loans or
in Canadian Dollars as Canadian Prime Rate Loans, and (ii) may be made at any
time or from time to time on or after the date the Administrative Agent first
receives a Notice of Borrowing requesting an Agent Advance until the earlier of
(A) the 30th Business Day after such date, (B) the date the respective Borrowers
or Borrower are (or is) again able to comply with the Borrowing Base limitations
and the conditions precedent to the making of Revolving Loans and issuance of
Letters of Credit, or obtain (or obtains) an amendment or waiver with respect
thereto and (C) the date the Required Lenders instruct the Administrative Agent
to cease making Agent Advances (in each case, the “Agent Advance Period”). The
Administrative Agent shall not make any Agent Advance to the extent that at such
time the amount of such Agent Advance (A) in the case of Agent Advances made to
the Canadian Borrower, (I) when added to the aggregate outstanding amount of all
other Agent Advances made to the Canadian Borrower and the U.S. Borrowers at
such time, would exceed 10% of the Canadian Borrowing Base at such time or (II)
when added to the Aggregate Canadian Exposure as then in effect (immediately
prior to the incurrence of such Agent Advance), would exceed the Total Canadian
Sub-Limit at such time, (B) in the case of Agent Advances made to the European
Borrower, (I) when added to the aggregate outstanding amount of all other Agent
Advances made to the European Borrower at such time, would exceed 10% of the
European Borrowing Base at such time or (II) when added to the Aggregate
European Exposure as then in effect (immediately prior to the incurrence of such
Agent Advance), would exceed the Total European Sub-Limit at such time, or
(C) in the case of Agent Advances made to the U.S. Borrowers, (I) when added to
the aggregate outstanding amount of all other Agent Advances made to the U.S.
Borrowers at such time, would exceed 10% of the U.S. Borrowing Base at such
time, (II) when added to the aggregate outstanding amount of all other Agent
Advances made to the U.S. Borrowers, the European Borrower and the Canadian
Borrower at such time, would exceed 10% of the Total Borrowing Base at such time
at such time or (III) when added to the Aggregate Exposure at such time
(immediately prior to the incurrence of such Agent Advance), would exceed the
Total Commitment at such time. It is understood and agreed that, subject to the
requirements set forth above, Agent Advances may be made by the Administrative
Agent in the case of Canadian Borrower Obligations and the European Borrower
Obligations in their respective discretion to the extent the Administrative
Agent deems such Agent Advances necessary or desirable (x) to preserve and
protect the applicable Collateral, or any portion thereof, (y) to enhance the
likelihood of, or maximize the amount of, repayment of the Revolving Loans and
other obligations of the Credit Parties hereunder and under the other Credit
Documents or (z) to pay any other amount chargeable to or required to be paid by
the Borrowers pursuant to the terms of this Agreement, including payments of
reimbursable expenses and other sums payable under the Credit Documents, and
that the Borrowers shall have no right to require that any Agent Advances be
made. Agent Advances will be deemed U.S. Borrower Swingline Loans (if made to
the U.S. Borrowers), European Borrower Swingline Loans (if made to the European
Borrower) or Canadian Borrower Swingline Loans (if made to the Canadian
Borrower) for all purposes of this Agreement and shall be subject to refunding
as a Mandatory Borrowing pursuant to Section 2.01(c), in each case,
notwithstanding (i) after giving effect thereto, the relevant Maximum Swingline
Amount may be exceeded and (ii) the other conditions set forth in
Sections 2.01(b) or (c), as applicable may not be satisfied at such time.

2.02 Minimum Amount of Each Borrowing; Limitation on Euro Rate Loans. The
aggregate principal amount of each Borrowing of Loans shall not be less than the
Minimum Borrowing Amount applicable to such Loans. More than one Borrowing may
occur on the same date, but at no time shall there be outstanding more than
(x) fifteen (15) Borrowings of Euro Rate Loans in the aggregate and (y) more
than five (5) Borrowings of B/A Equivalent Loans.

 

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2.03 Notice of Borrowing. (a) Whenever a Borrower desires to incur (x) Euro Rate
Loans (excluding Borrowings of Swingline Loans and Mandatory Borrowings) or B/A
Equivalent Loans hereunder, such Borrower shall give the Administrative Agent at
the Notice Office no later than 2:00 p.m. (New York time) at least three
(3) Business Days’ prior notice of each Euro Rate Loan or B/A Equivalent Loan to
be incurred hereunder, (y) Base Rate Loans hereunder (excluding Borrowings of
Swingline Loans and Mandatory Borrowings), such Borrower shall give the
Administrative Agent prior notice at the Notice Office no later than 2:00 p.m.
(New York time) at least one (1) Business Day’s prior notice of each Base Rate
Loan to be incurred hereunder (or in the case of such Loans made to the U.S.
Borrowers, on the same date as such Base Rate Loan) and (z) Canadian Prime Rate
Loans hereunder (excluding Borrowings of Swingline Loans and Mandatory
Borrowings), such Borrower shall give the Administrative Agent at the Notice
Office no later than 12:00 noon (New York time) at least one (1) Business Day’s
prior notice of each Canadian Prime Rate Loan to be incurred hereunder. Each
such notice (each, a “Notice of Borrowing”), except as otherwise expressly
provided in Section 2.10, shall be irrevocable and shall be in writing, or by
telephone promptly confirmed in writing, in the form of Exhibit A-1,
appropriately completed to specify: (i) the aggregate principal amount of the
Loans to be made pursuant to such Borrowing (stated in the applicable Available
Currency), (ii) the date of such Borrowing (which shall be a Business Day),
(iii) whether the applicable Borrowing shall consist of U.S. Borrower Revolving
Loans, Canadian Revolving Loans or European Borrower Revolving Loans, (iv) in
the case of Dollar Denominated Loans, whether the Dollar Denominated Loans being
made pursuant to such Borrowing are to be initially maintained as Base Rate
Loans or Eurodollar Loans and, if Eurodollar Loans, the Interest Period to be
initially applicable thereto, (v) in the case of Euro Denominated Loans and
Other Foreign Currency Denominated Loans, the Interest Period to be initially
applicable thereto, and (vi) in the case of Canadian Dollar Denominated Loans,
whether the applicable Borrowing shall consist of Canadian Prime Rate Loans or
B/A Equivalent Loans and, if B/A Equivalent Loans, the term thereof. The
Administrative Agent shall promptly give each Lender notice of such proposed
Borrowing, of such Lender’s proportionate share thereof and of the other matters
required by the immediately preceding sentence to be specified in the Notice of
Borrowing.

(b) (i) Whenever a Borrower desires to make a Borrowing of (x) U.S. Borrower
Swingline Loans or Canadian Borrower Swingline Loans hereunder, such Borrower
shall give the relevant Swingline Lender, not later than 1:00 p.m. (New York
time) on the date such relevant Swingline Loan is to be made or (y) European
Borrower Swingline Loans hereunder, such Borrower shall give the relevant
Swingline Lender, not later than 1:00 p.m. (London time) on the date such
European Borrower Swingline Loan is to be made, written notice or telephonic
notice promptly confirmed in writing of each Swingline Loan to be made
hereunder. Each such notice shall be irrevocable and shall be given by or on
behalf of the respective Borrower in the form of Exhibit A-l, appropriately
completed to specify: (A) the date of Borrowing (which shall be a Business Day),
(B) the aggregate principal amount of the Swingline Loans to be made pursuant to
such Borrowing and (C) in the case of Canadian Borrower Swingline Loans or
European Borrower Swingline Loans, the relevant Available Currency in which such
Swingline Loans are to be denominated.

(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 2.01(c), with the U.S. Borrowers, the European Borrower or the Canadian
Borrower, as applicable, irrevocably agreeing, by its incurrence of any
Swingline Loan, to the making of the Mandatory Borrowings as set forth in
Section 2.01(c).

(c) Without in any way limiting the obligation of any Borrower to confirm in
writing any telephonic notice of any Borrowing or prepayment of Loans, the
Administrative Agent, or the relevant Swingline Lender (in the case of a
Borrowing of Swingline Loans) may act without liability upon the basis of
telephonic notice of such Borrowing or prepayment, as the case may be,
reasonably believed

 

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by the Administrative Agent, or such Swingline Lender, as the case, may be, in
good faith to be from the president, the chief executive officer or a Financial
Officer of such Borrower, or from any other authorized officer of such Borrower
designated in writing by such Borrower to the Administrative Agent, as
applicable, or the Swingline Lender, as the case may be, as being authorized to
give such notices, prior to receipt of written confirmation. In each such case,
such Borrower hereby waives the right to dispute the Administrative Agent’s, or
the Swingline Lender’s, as the case may be, record of the terms of such
telephonic notice of such Borrowing or prepayment of Loans, as the case may be,
absent manifest error.

2.04 Disbursement of Funds. No later than 3:00 p.m. (New York time) on the date
specified in each Notice of Borrowing (or (x) in the case of Swingline Loans,
not later than 3:00 p.m. (New York time) on the date specified pursuant to
Section 2.03(b)(i) or (ii), as applicable, (y) in the case of Mandatory
Borrowings, not later than 10:00 a.m. (New York time) on the date specified in
Section 2.01(c) and (z) in the case of a Borrowing of Euro Denominated Loans and
Other Foreign Currency Denominated Loans, no later than 3:00 p.m. (New York
time), on such date), each Lender will, subject to Section 16, make available
its pro rata portion (determined in accordance with Section 2.07) of each such
Borrowing requested to be made on such date (or, in the case of Swingline Loans,
the respective Swingline Lender shall make available the full amount thereof).
All such amounts will be made available in the relevant Available Currency, and
in immediately available funds at the Payment Office, and the Administrative
Agent, will make available to the respective Borrower or Borrowers (or to the
relevant Swingline Lender, in the case of a Mandatory Borrowing at the Payment
Office the aggregate of the amounts so made available by the Lenders. Unless the
Administrative Agent, shall have been notified by any Lender prior to the date
of Borrowing that such Lender does not intend to make available to the
Administrative Agent such Lender’s portion of any Borrowing to be made on such
date (other than in the circumstances described in Section 16), the
Administrative Agent may assume that such Lender has made such amount available
to the Administrative Agent on such date of Borrowing and the Administrative
Agent may (but shall not be obligated to), in reliance upon such assumption,
make available to the relevant Borrower or Borrowers a corresponding amount. If
such corresponding amount is not in fact made available to the Administrative
Agent by such Lender, the Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender. If such Lender does not pay
such corresponding amount forthwith upon the Administrative Agent’s demand
therefor, the Administrative Agent shall promptly notify the relevant Borrower
or Borrowers and such Borrower or Borrowers shall immediately pay such
corresponding amount to the Administrative Agent. The Administrative Agent also
shall be entitled to recover on demand from such Lender or the relevant Borrower
or Borrowers, as the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount was made available
by the Administrative Agent to such Borrower or Borrowers until the date such
corresponding amount is recovered by the Administrative Agent, at a rate per
annum equal to (i) if recovered from such Lender, the overnight Federal Funds
Rate (or (x) in the case of Canadian Dollar Denominated Loans, the Bank of
Canada overnight rate, (y) in the case of Euro Denominated Loans, the cost to
the Administrative Agent of acquiring overnight funds in Euros or (z) in the
case of Other Foreign Currency Denominated Loans, the cost to the Administrative
Agent of acquiring overnight funds in the applicable Available Currency in which
such Other Foreign Currency Denominated Loans were incurred) for the first three
days and at the interest rate otherwise applicable to such Loans for each day
thereafter, and (ii) if recovered from the relevant Borrower or Borrowers, the
rate of interest applicable to the respective Borrowing, as determined pursuant
to Section 2.08. Nothing in this Section 2.04 shall be deemed to relieve any
Lender from its obligation to make Loans hereunder or to prejudice any rights
which any Borrower may have against any Lender as a result of any failure by
such Lender to make Loans hereunder; provided that the funding of all Revolving
Loans which are also denominated in a Specified Foreign Currency shall also be
subject to the provisions of Section 16.

 

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2.05 Notes. (a) Each Borrower’s obligation to pay the principal of, and interest
on, the Loans made by each Lender shall be evidenced in the Register maintained
by the Administrative Agent pursuant to Section 13.15 and shall, if requested by
such Lender, also be evidenced by a Revolving Note.

(b) The Revolving Note issued to each Lender that has a Commitment or
outstanding Loans shall (i) mature on the Final Maturity Date, (ii) bear
interest as provided in the appropriate clause of Section 2.08 in respect of the
Base Rate Loans and Euro Rate Loans, as the case may be, evidenced thereby,
(iii) be subject to voluntary prepayment as provided in Section 5.01, and
mandatory repayment as provided in Section 5.02, and (iv) be entitled to the
benefits of this Agreement and the other Credit Documents.

(c) The Swingline Note issued to the Swingline Lender shall (i) be payable to
the Swingline Lender or its registered assigns and be dated the Closing Date,
(iii) be in a stated principal amount (expressed in U.S. Dollars) equal to the
relevant Maximum Swingline Amount and be payable in the outstanding principal
amount of the Swingline Loans evidenced thereby from time to time, (iv) mature
on the Swingline Expiry Date, (v) bear interest as provided in the appropriate
clause of Section 2.08, (vi) be subject to voluntary prepayment as provided in
Section 5.01 and mandatory repayment as provided in Section 5.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.

(d) Each Lender will note on its internal records the amount of each Loan made
by it and each payment in respect thereof and prior to any transfer of any of
its Notes will endorse on the reverse side thereof the outstanding principal
amount of Loans evidenced thereby.

Failure to make any such notation or any error in such notation shall not affect
any Borrower’s obligations in respect of such Loans.

(e) Notwithstanding anything to the contrary contained above in this
Section 2.05 or elsewhere in this Agreement, Notes shall only be delivered to
Lenders which at any time specifically request the delivery of such Notes. No
failure of any Lender to request or obtain a Note evidencing its Loans to any
Borrower shall affect or in any manner impair the obligations of the applicable
Borrower to pay the Loans (and all related Obligations) incurred by such
Borrower which would otherwise be evidenced thereby in accordance with the
requirements of this Agreement, and shall not in any way affect the security or
guaranties therefor provided pursuant to the various Credit Documents. Any
Lender which does not have a Note evidencing its outstanding Loans shall in no
event be required to make the notations otherwise described in preceding clause
(h). At any time when any Lender requests the delivery of a Note to evidence any
of its Loans, the applicable Borrower shall promptly execute and deliver to the
relevant Lender, at such Borrower’s expense, the requested Note in the
appropriate amount or amounts to evidence such Loans.

2.06 Conversions. Each Borrower shall have the option to convert, on any
Business Day, all or a portion equal to at least the Minimum Borrowing Amount of
the outstanding principal amount of Dollar Denominated Loans (other than
Swingline Loans, which shall at all times be maintained as Base Rate Loans or
Canadian Prime Rate Loans, as the case may be) made pursuant to one or more
Borrowings of one or more Types of Dollar Denominated Loans into a Borrowing of
another Type of Dollar Denominated Loan, provided that (i) except as otherwise
provided in Section 2.10(b), Eurodollar Loans may be converted into Base Rate
Loans and B/A Equivalent Loans may be converted into Canadian Prime Rate Loans
only on the last day of an Interest Period applicable to the Loans being
converted and no such partial conversion of Eurodollar Loans or B/A Equivalent
Loans shall reduce the outstanding principal amount of such Eurodollar Loans or
B/A Equivalent Loans made pursuant to a single Borrowing to less than the
Minimum Borrowing Amount applicable thereto, (ii) Revolving Loans maintained as
Base Rate Loans may not be converted into Eurodollar Loans and Canadian Prime
Rate Loans may not be

 

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converted into B/A Equivalent Loans if any Event of Default is in existence on
the date of the conversion and the Administrative Agent, at the request of the
Required Lenders, so notifies the relevant Borrower, and (iii) no conversion
pursuant to this Section 2.06 shall result in a greater number of Borrowings of
Eurodollar Loans or B/A Equivalent Loans than is permitted under Section 2.02.
Each such conversion shall be effected by the respective Borrower by giving the
Administrative Agent at the Notice Office prior to 2:00 p.m. (New York time) at
least three (3) Business Days’ prior notice (each, a “Notice of
Conversion/Continuation”) in the form of Exhibit A-2, appropriately completed to
specify the Loans to be so converted, the Borrowing or Borrowings pursuant to
which such Loans were incurred and, if to be converted into Eurodollar Loans or
B/A Equivalent Loans, the Interest Period to be initially applicable thereto.
The Administrative Agent shall give each Lender prompt notice of any such
proposed conversion affecting any of its Loans. Upon any such conversion the
proceeds thereof will be deemed to be applied directly on the day of such
conversion to prepay the outstanding principal amount of the Loans being
converted.

2.07 Pro Rata Borrowings. All Borrowings of Revolving Loans under this Agreement
shall be incurred from the Lenders pro rata on the basis of their Percentages.
All Borrowings of U.S. Borrower Swingline Loans, Canadian Borrower Swingline
Loans and European Swingline Loans shall be incurred from the Swingline Lender.
It is understood that no Lender shall be responsible for any default by any
other Lender of its obligation to make Loans hereunder and that each Lender
shall be obligated to make the Loans provided to be made by it hereunder,
regardless of the failure of any other Lender to make its Loans hereunder.

2.08 Interest. (a) The U.S. Borrowers (jointly and severally) agree to pay (in
the case of U.S. Borrower Revolving Loans and U.S. Borrower Swingline Loans),
the Canadian Borrower agrees to pay (in the case of Canadian Revolving Loans and
Canadian Borrower Swingline Loans) and the European Borrower agrees to pay
interest in respect of the unpaid principal amount of each Base Rate Loan from
the date of Borrowing thereof until the earlier of (i) the maturity thereof
(whether by acceleration or otherwise) and (ii) the conversion of such Base Rate
Loan to a Eurodollar Loan pursuant to Section 2.06 or 2.09, as applicable, at a
rate per annum which shall be equal to the sum of the relevant Applicable Margin
as in effect from time to time plus the Base Rate as in effect from time to
time.

(b) The U.S. Borrowers (jointly and severally) agree to pay (in the case of U.S.
Borrower Revolving Loans), the Canadian Borrower agrees to pay (in the case of
Canadian Revolving Loans) and the European Borrower agrees to pay (in the case
of European Borrower Revolving Loans and European Borrower Swingline Loans)
interest in respect of the unpaid principal amount of each Euro Rate Loan from
the date of Borrowing thereof until the earlier of (i) the maturity thereof
(whether by acceleration or otherwise) and (ii) in the case of Eurodollar Loans,
the conversion of such Eurodollar Loan to a Base Rate Loan pursuant to
Section 2.06 or 2.09, as applicable, at a rate per annum which shall, during
each Interest Period applicable thereto, be equal to the sum of the relevant
Applicable Margin as in effect from time to time during such Interest Period
plus the relevant Euro Rate for such Interest Period plus in the case of
Non-Dollar Denominated Euro Rate Loans, any Mandatory Costs.

(c) The Canadian Borrower agrees to pay (in the case of Canadian Revolving Loans
and Canadian Borrower Swingline Loans, in each case, which are Canadian Dollar
Denominated Loans) interest in respect of the unpaid principal amount of each
Canadian Prime Rate Loan and B/A Equivalent Rate Loan made to it from the date
the proceeds thereof are made available to it, until the earlier of (i) the
maturity thereof (whether by acceleration, or otherwise) and (ii) the conversion
of such Canadian Prime Rate Loan to a B/A Equivalent Loan pursuant to
Section 2.06, at a rate per annum which shall be equal to the sum of the
Canadian Prime Rate in effect from time to time during the period such Canadian
Prime Rate Loan is outstanding plus in each case, the relevant Applicable Margin
as in effect from time to time.

 

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(d) To the extent permitted by law, overdue principal and overdue interest in
respect of each Loan and any other overdue amount payable hereunder and under
any other Credit Document shall, in each case, bear interest at a rate per annum
(1) in the case of overdue principal of, and interest or other amounts owing
with respect to, Loans and any other amounts owing in Canadian Dollars, equal to
2% plus the Applicable Margin for Canadian Prime Rate Loans plus the Canadian
Prime Rate, each as in effect from time to time, (2) in the case of overdue
principal of, and interest or other overdue amounts owing with respect to,
Non-Dollar Denominated Euro Rate Loans and B/A Equivalent Loans, equal to 2%
plus the Applicable Margin for Euro Rate Loans or B/A Equivalent Loans as in
effect from time to time plus the relevant Euro Rate or B/A Equivalent Rate for
such successive periods not exceeding one month as the Administrative Agent may
determine from time to time in respect of amounts comparable to the amount not
paid plus any Mandatory Costs and (3) in all other cases, equal to the greater
of (x) the rate which is 2% in excess of the rate then borne by such Loans and
(y) the rate which is 2% in excess of the rate otherwise applicable to Base Rate
Loans from time to time. Interest that accrues under this Section 2.08(d) shall
be payable on demand.

(e) Accrued (and theretofore unpaid) interest shall be payable (i) in respect of
each Base Rate Loan and Canadian Prime Rate Loan (including, without limitation,
Swingline Loans), (x) quarterly in arrears on each Quarterly Payment Date, and
(y) at maturity (whether by acceleration or otherwise) and, after such maturity,
on demand, and (ii) in respect of each Euro Rate Loan or B/A Equivalent Loan,
(x) on the last day of each Interest Period applicable thereto and, in the case
of an Interest Period in excess of three (3) months, on each date occurring at
three (3) month intervals after the first day of such Interest Period, (y) on
the date of any repayment or prepayment (on the amount repaid or prepaid), and
(z) at maturity (whether by acceleration or otherwise) and, after such maturity,
on demand.

(f) Upon each Interest Determination Date, the Administrative Agent shall
determine the relevant Euro Rate and B/A Equivalent Rate for each Interest
Period applicable to the relevant Euro Rate Loans and B/A Equivalent Loans and
shall promptly notify Aleris and the Lenders thereof. Each such determination
shall, absent manifest error, be final and conclusive and binding on all parties
hereto.

2.09 Interest Periods for Euro Rate Loans and B/A Equivalent Loans. At the time
any Borrower gives any Notice of Borrowing or Notice of Conversion/Continuation
in respect of the making of, or conversion into, any B/A Equivalent Loan or Euro
Rate Loan (in the case of the initial Interest Period applicable thereto) or
prior to 12:00 noon (New York time) on the third Business Day prior to the
expiration of an Interest Period applicable to such B/A Equivalent Loan or Euro
Rate Loan (in the case of any subsequent Interest Period), such Borrower shall
have the right to elect the Interest Period applicable to such B/A Equivalent
Loan or Euro Rate Loan, which Interest Period shall, at the option of such
Borrower be a one (1) week period, or a one (1), two (2), three (3) or six
(6) month (or, if agreed by all Lenders with Commitments and/or Loans, nine
(9) or twelve (12) month) period, provided that (in each case):

(i) all B/A Equivalent Loans or Euro Rate Loans comprising a Borrowing shall at
all times have the same Interest Period;

(ii) the initial Interest Period for any B/A Equivalent Loan or Euro Rate Loan
shall commence on the date of Borrowing of such B/A Equivalent Loan or Euro Rate
Loan (including the date of any conversion thereto from a Base Rate Loan or
Canadian Prime Rate Loan, as applicable) and each Interest Period occurring
thereafter in respect of such B/A Equivalent Loan or Euro Rate Loan shall
commence on the day on which the next preceding Interest Period applicable
thereto expires;

 

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(iii) if any Interest Period for a B/A Equivalent Loan or a Euro Rate Loan
begins on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such Interest Period shall
end on the last Business Day of such calendar month;

(iv) if any Interest Period for a B/A Equivalent Loan or a Euro Rate Loan would
otherwise expire on a day which is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day; provided, however, that if any
Interest Period for a B/A Equivalent Loan or a Euro Rate Loan would otherwise
expire on a day which is not a Business Day but is a day of the month after
which no further Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;

(v) no Interest Period for any Borrowing of B/A Equivalent Loan or Euro Rate
Loans may be selected at any time when an Event of Default is then in existence
and the Administrative Agent, at the request of the Required Lenders, has
notified the relevant Borrower of same; and

(vi) no Interest Period in respect of any Borrowing of any B/A Equivalent Loan
or Euro Rate Loans shall be selected which extends beyond the Final Maturity
Date.

If by 12:00 noon (New York time) on the third Business Day prior to the
expiration of any Interest Period applicable to a Borrowing of B/A Equivalent
Loans or Euro Rate Loans, any Borrower has failed to elect, or is not permitted
to elect, a new Interest Period to be applicable to such B/A Equivalent Loans or
Euro Rate Loans as provided above, such Borrower shall be deemed to have
elected, (x) if Eurodollar Loans to convert such Eurodollar Loans into Base Rate
Loans, and if B/A Equivalent Loans, to convert such B/A Equivalent Loans into
Canadian Prime Rate Loans, and (y) if Non-Dollar Denominated Euro Rate Loans, to
select a one-month Interest Period for such Non-Dollar Denominated Euro Rate
Loans, in any case, effective as of the expiration date of such current Interest
Period.

2.10 Increased Costs, Illegality, etc. (a) In the event that any Lender shall
have determined in good faith (which determination shall, absent manifest error,
be final and conclusive and binding upon all parties hereto but, with respect to
clauses (i) and (iv) below, may be made only by the Administrative Agent):

(i) on any Interest Determination Date that, by reason of any changes arising
after the Closing Date affecting the applicable interbank market, adequate and
fair means do not exist for ascertaining the applicable interest rate on the
basis provided for in the definition of the relevant Euro Rate or B/A Equivalent
Rate; or

(ii) at any time, that such Lender shall incur increased costs or reductions in
the amounts received or receivable hereunder with respect to any Euro Rate Loan
because of any change since the Closing Date in any applicable law or
governmental rule, regulation, order, guideline or request (whether or not
having the force of law) or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule, regulation,
order, guideline or request, such as, but not limited to (A) a change in the
basis of taxation of payment to any Lender of the principal of or interest on
the Loans or the Notes or any other amounts payable hereunder (except for
changes in taxes that are determined by reference to the net income or net
profits or franchise taxes imposed in lieu thereof of such Lender or, in the
case of a Lender that is a flow-through entity for tax purposes, a member or a
partner of such Lender, pursuant to the laws of the country or national
jurisdiction (or any political subdivision thereof) in which it is organized or
in which its principal office or applicable lending office is located) and (B) a
change in official reserve requirements, but, in all events, excluding reserves

 

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required under Regulation D to the extent included in the computation of the
relevant B/A Equivalent Rate or Euro Rate, as applicable (provided that
increased costs or reductions in the amounts received or receivable with respect
to Taxes and Swiss Withholding Taxes shall be dealt with exclusively pursuant to
Sections 5.04 and 5.05, respectively); or

(iii) at any time, that the making or continuance of any B/A Equivalent Loan or
Euro Rate Loan has been made (x) unlawful by any change since the Closing Date
in any applicable law or governmental rule, regulation or order, or
(y) impossible by compliance by any Lender in good faith with any governmental
request (whether or not having force of law) made after the Closing Date; or

(iv) at any time there is no market for bankers’ acceptances by reason of
circumstances affecting the Canadian money market generally or the relevant
Available Currency (other than U.S. Dollars) is not available in sufficient
amounts, as determined in good faith by the Administrative Agent, acting
reasonably, to support funding any Borrowing of B/A Equivalent Loans, Non-Dollar
Denominated Loans, as the case may be, requested pursuant to Section 2.01;

then, and in any such event, such Lender (or the Administrative Agent, in the
case of clauses (i) or (iv) above) shall promptly give notice (by telephone
promptly confirmed in writing) to the affected Borrower and, except in the case
of clauses (i) and (iv) above, to the Administrative Agent of such determination
(which notice the Administrative Agent shall promptly transmit to each of the
other Lenders). Thereafter (w) in the case of clause (i) above, (A) in the event
Eurodollar Loans are so affected, Eurodollar Loans shall no longer be available
until such time as the Administrative Agent notifies the affected Borrower and
the Lenders that the circumstances giving rise to such notice by the
Administrative Agent no longer exist, and any Notice of Borrowing or Notice of
Conversion/Continuation given by any Borrower with respect to Eurodollar Loans
which have not yet been incurred (including by way of conversion) shall be
deemed rescinded by such Borrower, and (B) in the event that any Non-Dollar
Denominated Loan is so affected, the relevant Euro Rate shall be determined on
the basis provided in the proviso to the definition for the relevant Euro Rate,
(x) in the case of clause (ii) above, the Borrowers agree to pay to such Lender,
upon such Lender’s written request therefor, such additional amounts (in the
form of an increased rate of, or a different method of calculating, interest or
otherwise as such Lender in its reasonable discretion shall determine) as shall
be required to compensate such Lender for such increased costs or reductions in
amounts received or receivable hereunder (a written notice as to the additional
amounts owed to such Lender, showing in reasonable detail the basis for and the
calculation thereof, submitted to the Borrowers by such Lender shall, absent
manifest error, be final and conclusive and binding on all the parties hereto),
(y) in the case of clause (iii) above, the affected Borrower or Borrowers shall
take one of the actions specified in Section 2.10(b) as promptly as possible
and, in any event, within the time period required by law, and (z) in the case
of clause (iv) above, B/A Equivalent Loans or Loans in the relevant Available
Currency, as applicable (exclusive of any such Loans, that have theretofore been
funded), shall no longer be available until such time as the Administrative
Agent notifies the affected Borrower or Borrowers and the Lenders that the
circumstances giving rise to such notice by the Administrative Agent no longer
exist, and any Notice of Borrowing or notice pursuant to Section 2.03 given by
the respective Borrower or Borrowers with respect to such Loans which have not
been incurred shall be deemed rescinded by such Borrower or Borrowers. Each of
the Administrative Agent and each Lender agrees that if it gives notice to any
Borrower of any of the events described in clause (i), (ii), (iii) or
(iv) above, it shall promptly notify such Borrower and, in the case of any such
Lender, the Administrative Agent, promptly after it becomes aware that such
event has ceased to exist.

(b) At any time that any B/A Equivalent Loan or Euro Rate Loan is affected by
the circumstances described in Section 2.10(a)(ii), the affected Borrower may
and, in the case of a B/A Equivalent Loan or Euro Rate Loan affected by the
circumstances described in Section 2.10(a)(iii) or (iv),

 

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the affected Borrower shall, either (x) if the affected B/A Equivalent Loan or
Euro Rate Loan is then being made initially or pursuant to a conversion, cancel
such Borrowing (or the conversion thereof) by giving the Administrative Agent
telephonic notice (confirmed in writing) on the same date on which such Borrower
was notified by the affected Lender or the Administrative Agent pursuant to
Section 2.10(a)(ii) or (iii) or (y) if the affected B/A Equivalent Loan or Euro
Rate Loan is then outstanding, upon at least three (3) Business Days’ written
notice to the Administrative Agent, (A) in the case of a Eurodollar Loan,
require the affected Lender to convert such, Eurodollar Loan into a Base Rate
Loan, (B) in the case of a B/A Equivalent Loan, require the affected Canadian
Lender to convert such B/A Equivalent Loan into a Canadian Prime Rate Loan, or
(C) in the case of any Non-Dollar Denominated Euro Rate Loan, repay such
affected Non-Dollar Denominated Euro Rate Loan in full in accordance with the
applicable requirements of Section 5.01; provided that, (i) if the circumstances
described in Section 2.10(a)(iii) apply to any Non-Dollar Denominated Euro Rate
Loan, the Borrowers may, in lieu of taking the actions described above, maintain
such Non-Dollar Denominated Euro Rate Loan outstanding, in which case, the
relevant Euro Rate shall be determined on the basis provided in the proviso to
the definition of the relevant Euro Rate unless the maintenance of such
Non-Dollar Denominated Euro Rate Loan outstanding on such basis would not stop
the conditions described in Section 2.10(a)(iii) from existing (in which case
the actions described above, without giving effect to this proviso, shall be
required to be taken) and (ii) if more than one Lender is affected at any time,
then all affected Lenders must be treated the same pursuant to this
Section 2.10(b).

(c) If any Lender or Issuing Lender reasonably determines that after the Closing
Date the introduction of or any change in any applicable law or governmental
rule, regulation, order, guideline, directive or request (whether or not having
the force of law) concerning capital adequacy, or any change in interpretation
or administration thereof by the NAIC or any Governmental Authority, central
bank or comparable agency charged with the administration thereof, will have the
effect of increasing the amount of capital required or expected to be maintained
by such Lender or such Issuing Lender or any corporation controlling such Lender
or such Issuing Lender based on the existence of such Lender’s Commitments
hereunder or its obligations hereunder, then each affected Borrower agrees to
pay to such Lender or such Issuing Lender, as applicable, upon its written
demand therefor, such additional amounts as shall be required to compensate such
Lender or Issuing Lender or such other corporation for the increased cost to
such Lender or such Issuing Lender or such other corporation or the reduction in
the rate of return to such Lender, such Issuing Lender or such other corporation
as a result of such increase of capital. In determining such additional amounts,
each Lender and each Issuing Lender shall act reasonably and in good faith and
shall use averaging and attribution methods which are reasonable, provided that
such Lender’s or such Issuing Lender’s determination of compensation owing under
this Section 2.10(c) shall, absent manifest error, be final and conclusive and
binding on all the parties hereto. Each Lender or Issuing Lender, upon
determining that any additional amounts will be payable pursuant to this
Section 2.10(c), shall give prompt written notice thereof to each affected
Borrower, which notice shall show in reasonable detail the basis for calculation
of such additional amounts. For the avoidance of doubt, any changes resulting
from requests, rules, guidelines or directives concerning capital adequacy
(x) issued in connection with the Dodd-Frank Wall Street Reform and Consumer
Protection Act or (y) promulgated by the Bank for International Settlements, the
Basel Committee on Banking Supervision (or any successor or similar authority)
or the United States or foreign regulatory authorities shall be deemed to occur
after the date of this Agreement, regardless of the date enacted, adopted or
issued.

(d) Failure or delay on the part of any Lender or Issuing Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s or Issuing Lender’s right to demand such compensation; provided that
(x) the affected Borrower or Borrowers shall not be required to compensate a
Lender or Issuing Lender pursuant to this Section 2.10 for any increased costs
or reductions incurred more than one hundred eighty (180) days prior to the date
on which such Lender or Issuing Lender notifies the Borrowers of the change in
law or other circumstance described in

 

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Section 2.10(a)(ii) or 2.10(c) giving rise to such increased costs or reductions
and of such Lender’s or Issuing Lender’s intention to claim compensation
therefor and (y) if such change in law giving rise to such increased costs or
reductions is retroactive, then the 180-day period referred to above shall be
extended to include the period of retroactive effect thereof.

2.11 Compensation. Each Borrower agrees to compensate each Lender, upon its
written request (which request shall set forth in reasonable detail the basis
for requesting such compensation), for all losses, expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or other funds required by
such Lender to fund its B/A Equivalent Loans, or Euro Rate Loans but excluding
loss of anticipated profits and Mandatory Costs) which such Lender may sustain:
(i) if for any reason (other than a default by such Lender or the Administrative
Agent) a Borrowing of, or conversion from or into, Euro Rate Loans or B/A
Equivalent Loans does not occur on a date specified therefor in a Notice of
Borrowing or Notice of Conversion/Continuation (whether or not withdrawn by the
applicable Borrower or Borrowers or deemed withdrawn pursuant to
Section 2.10(a)); (ii) if any prepayment or repayment (including any prepayment
or repayment made pursuant to Section 5.01, Section 5.02 or as a result of an
acceleration of the Loans pursuant to Section 11) or conversion of any of its
Euro Rate Loans or B/A Equivalent Loans occurs on a date which is not the last
day of an Interest Period with respect thereto; (iii) if any repayment
(including any repayment made pursuant to Sections 5.01 or 5.02 or as a result
of an acceleration of the Loans pursuant to Section 11 or as a result of the
replacement of a Lender pursuant to Sections 2.13 or 13.12(d)); (iv) if any
prepayment of any of its Euro Rate Loans or B/A Equivalent Loans is not made on
any date specified in a notice of prepayment given by any Borrower; or (v) as a
consequence of (x) any other default by any Borrower to repay Euro Rate Loans or
B/A Equivalent Loans when required by the terms of this Agreement or any Note
held by such Lender or (y) any election made pursuant to Section 2.10(b). For
purposes of determining the amount owing hereunder to any Lender in connection
with any of the foregoing circumstances, the following formula shall be utilized
by the Administrative Agent:

L = (R - T) x P x D

    360 (or 365 for B/A Equivalent Loans)

where

L = amount payable

R = interest rate applicable to the Euro Rate Loan or B/A Equivalent Loan
(i) requested but not borrowed, continued or converted; (ii) prepaid; or
(iii) not paid

T = effective interest rate per annum at which any readily marketable bond or
other obligations of the United States, selected at the Administrative Agent’s
sole discretion, maturing on or nearest the last day of the then applicable or
requested Interest Period for such Euro Rate Loan or B/A Equivalent Loan and in
approximately the same amount as such Euro Rate Loan or B/A Equivalent Loan, can
be purchased by the Administrative Agent on the day of such payment of principal
or failure to borrow

P = the principal amount of the Euro Rate Loan or B/A Equivalent Loan
(i) requested but not borrowed, continued or converted; (ii) prepaid; or
(iii) not paid

D = the number of days remaining in the Interest Period as of the date of such
prepayment or failure to borrow or pay

 

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Borrowers shall pay such amount upon presentation by the Administrative Agent of
a statement setting forth in reasonable detail the amount, the Administrative
Agent’s calculation thereof pursuant hereto, and the basis for requesting such
amount under this Agreement, which statement shall be deemed true and correct
absent manifest error.

2.12 Change of Lending Office. (a) Each Lender may at any time or from time to
time designate, by written notice to the Administrative Agent to the extent not
already reflected on Schedule II, one or more lending offices (which, for this
purpose, may include Affiliates or branches of the respective Lender) for the
various Loans made, and Letters of Credit participated in, by such Lender
(including, in the case of Canadian Lenders, by designating a separate lending
office (or branch or Affiliate) to act as such with respect to Dollar
Denominated Loans and Letter of Credit Outstandings versus Non-Dollar
Denominated Loans; provided that, for designations made after the Closing Date
(unless such designation is made after the occurrence of a Conversion Event), to
the extent such designation shall result in increased costs under Section 2.10,
3.06 or 5.04 in excess of those which would be charged in the absence of the
designation of a different lending office (including a different Affiliate of
the respective Lender), then the Borrowers shall not be obligated to pay such
excess increased costs (although the Borrowers, in accordance with and pursuant
to the other provisions of this Agreement, shall be obligated to pay the costs
which would apply in the absence of such designation and any subsequent
increased costs of the type described above resulting from changes after the
date of the respective designation). Each lending office and branch or Affiliate
of any Lender designated as provided above shall, for all purposes of this
Agreement, be treated in the same manner as the respective Lender (and shall be
entitled to all indemnities and similar provisions in respect of its acting as
such hereunder).

(b) Each Lender agrees that on the occurrence of any event giving rise to the
operation of Section 2.10(a)(ii) or (iii), Section 2.10(c), Section 3.06 or
Section 5.04, with respect to such Lender, it will, if requested by any
Borrower, use reasonable efforts to designate another lending office for any
Loans or Letters of Credit affected by such event, provided that such
designation is made on such terms that would not subject such Lender to any
material unreimbursed cost or expense and would not otherwise be disadvantageous
to such Lender in any material respect, with the object of avoiding or
mitigating the consequence of the event giving rise to the operation of such
Section. The Borrowers hereby agree to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation. Nothing in this
Section 2.12(b) shall affect or postpone any of the obligations of the Borrowers
or the right of any Lender provided in Sections 2.10, 3.06 and 5.04.

2.13 Replacement of Lenders. (x) If any Lender becomes a Defaulting Lender,
(y) upon the occurrence of an event giving rise to the operation of
Section 2.10(a)(ii) or (iii), Section 2.10(c), Section 3.06 or Section 5.04 with
respect to any Lender which results in such Lender charging to any Borrower
increased costs or (z) in the case of a refusal by a Lender to consent to
certain proposed changes or waivers with respect to this Agreement which have
been approved by the Required Lenders as (and to the extent) provided in
Section 13.12(d) but which require the consent of each Lender or each directly
affected Lender, subject to the limitations set forth in Section 2.18, Aleris
shall have the right to replace such Lender with one or more other Eligible
Transferees, none of whom shall constitute a Defaulting Lender at the time of
such replacement (collectively, the “Replacement Lender”) and each of whom shall
be reasonably acceptable to the Administrative Agent, and which Replacement
Lender shall replace the Commitment (and sub-commitments and outstandings
pursuant thereto) of the Replaced Lender with an identical Commitment provided
by the Replacement Lender (each such Lender which is replaced by a Replacement
Lender or whose Commitment (and related Loans) is replaced) is referred to
herein as a “Replaced Lender”); provided that:

(i) at the time of any replacement pursuant to this Section 2.13, the
Replacement Lender shall enter into one or more Assignment and Assumption
Agreements pursuant to

 

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Section 13.04(b) (and with all fees payable pursuant to said Section 13.04(b) to
be paid by the Replacement Lender) pursuant to which the Replacement Lender
shall acquire all of the Commitments and all then outstanding Loans of, and all
participations in all then outstanding Letters of Credit and, in connection
therewith, shall pay to (w) the Replaced Lender in respect thereof an amount
equal to the sum of (A) an amount equal to (in the relevant currency or
currencies) the aggregate principal of, and all accrued and unpaid interest on,
all then outstanding Loans of the respective Replaced Lender, (B) an amount
equal to all Unpaid Drawings (if any) with respect to which the relevant
Replaced Lender is being replaced, in each case that have been funded by (and
not reimbursed to) such Replaced Lender at such time, together with all then
unpaid interest with respect thereto at such time, and (C) an amount equal to
all accrued, but theretofore unpaid, Fees owing to the Replaced Lender pursuant
to Section 4.01, (x) the relevant Issuing Lender amounts equal to such Replaced
Lender’s relevant Percentage of any Unpaid Drawings pursuant to Letters of
Credit evidenced by such Commitments (which at such time remain Unpaid Drawings)
with respect to Letters of Credit issued by such Issuing Lender to the extent
such amount was not theretofore funded by such Replaced Lender and (y) in the
case of any replacement of Commitments, the Swingline Lender, an amount equal to
such Replaced Lender’s pro rata share of any Mandatory Borrowing (determined in
accordance with Section 2.07), to the extent such amount was not theretofore
funded by such Replaced Lender, without duplication; and

(ii) all obligations of the Borrowers due and owing to the Replaced Lender at
such time (other than those specifically described in clause (i) of this
Section 2.13 in respect of which the assignment purchase price has been, or is
concurrently being, paid) shall be paid in full to such Replaced Lender
concurrently with such replacement.

Upon receipt by the Replaced Lender of all amounts required to be paid to it
pursuant to this Section 2.13, the Administrative Agent shall be entitled (but
not obligated) and authorized to execute an Assignment and Assumption Agreement
on behalf of such Replaced Lender, and any such Assignment and Assumption
Agreement so executed by the Administrative Agent and the Replacement Lender
shall be effective for purposes of this Section 2.13 and Section 13.04 Upon the
execution of the respective Assignment and Assumption Agreement, the payment of
amounts referred to in clauses (i) and (ii) of this Section 2.13, if so
requested by the Replacement Lender, delivery to the Replacement Lender of the
appropriate Note or Notes executed by the relevant Borrowers and the
satisfaction of the other applicable conditions in Section 13.04(b), the
Replacement Lender shall become a Lender hereunder and the Replaced Lender shall
cease to constitute a Lender hereunder, except with respect to indemnification
provisions under this Agreement (including, without limitation, Sections 2.10,
2.11, 3.06, 5.04, 12.06 and 13.01), which shall survive as to such Replaced
Lender.

2.14 Special Provisions Applicable to Lenders Upon the Occurrence of a
Conversion Event. On the date of the occurrence of any Conversion Event (i) if
any Swingline Loans are outstanding, one or more Mandatory Borrowings shall be
made in accordance with the requirements of Section 2.01(b), and (ii) if there
have been any Drawings pursuant to Letters of Credit which have not yet been
reimbursed to the respective Issuing Lender pursuant to Section 3, the various
L/C Participants in the respective Letters of Credit shall make payments to the
Issuing Lender therefor in accordance with the requirements of Section 3.04.
Each Lender which is required to make payments pursuant to the immediately
preceding sentence shall be obligated to do so in accordance with the terms of
this Agreement.

2.15 Incremental Commitments.

(a) So long as no Default or Event of Default then exists or would result
therefrom, the Borrowers shall have the right, in coordination with the
Administrative Agent as to all of the matters

 

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set forth below in this Section 2.15, but without requiring the consent of any
of the Lenders or the Administrative Agent, to request at any time and from time
to time after the Closing Date and prior to the Final Maturity Date, that one or
more Lenders (and/or one or more other Persons which are Eligible Transferees
and which will become Lenders as provided below) provide Incremental Commitments
and make Revolving Loans and participate in Swingline Loans and Letters of
Credit pursuant thereto, it being understood and agreed, however, that (i) no
Lender shall be obligated to provide an Incremental Commitment as a result of
any such request by the Borrowers, and until such time, if any, as such Lender
has agreed in its sole discretion to provide an Incremental Commitment and
executed and delivered to the Administrative Agent an Incremental Commitment
Agreement in respect thereof as provided in clause (b) of this Section 2.15,
such Lender shall not be obligated to fund any Revolving Loans or participate in
Swingline Loans or Letters of Credit in excess of its Commitment as in effect
prior to giving effect to such Incremental Commitment provided pursuant to this
Section 2.15, (ii) any Lender (including any Eligible Transferee who will become
a Lender) may so provide an Incremental Commitment without the consent of any
other Lender, (iii) each provision of Incremental Commitments on a given date
pursuant to this Section 2.15 shall be in a minimum aggregate amount (for all
Lenders (including any Eligible Transferee who will become a Lender) of at least
$5,000,000 and in integral multiples of $1,000,000 in excess thereof, (iv) the
aggregate amount of all Incremental Commitments provided pursuant to this
Section 2.15, shall not exceed the Maximum Incremental Commitment Amount and
(v) all Revolving Loans (and all interest, fees and other amounts payable
thereon), made pursuant to an Incremental Commitment shall be entitled to the
benefits of the guarantees and security provided under the Credit Documents to
the other Obligations on a pari passu basis.

(b) At the time of the provision of Incremental Commitments pursuant to this
Section 2.15, each Borrower, the Administrative Agent and each such Lender or
other Eligible Transferee which agrees to provide an Incremental Commitment
(each, an “Incremental Lender”) shall execute and deliver to the Administrative
Agent an Incremental Commitment Agreement, with the effectiveness of such
Incremental Lender’s Incremental Commitment to occur on the date set forth in
such Incremental Commitment Agreement, which date in any event shall be no
earlier than the date on which (w) all fees required to be paid in connection
therewith at the time of such effectiveness shall have been paid (including,
without limitation, any agreed upon up-front or arrangement fees owing to the
Administrative Agent (or any Affiliate thereof)), (x) all Incremental Commitment
Requirements are satisfied, (y) all other conditions set forth in this
Section 2.15 shall have been satisfied, and (z) all other conditions precedent
that may be set forth in such Incremental Commitment Agreement shall have been
satisfied; provided, that interest rate margins may be greater than those
applicable to the existing Revolving Loans so long as the applicable margins on
all Revolving Loans are increased to match those on the Incremental Commitments.
The fees applicable to the Incremental Commitments shall be agreed upon by the
Borrowers, the Administrative Agent and the Incremental Lenders. The
Administrative Agent shall promptly notify each Lender as to the effectiveness
of each Incremental Commitment Agreement, and at such time, (i) the Total
Commitment under, and for all purposes of, this Agreement shall be increased by
the aggregate amount of such Incremental Commitments, (ii) if the Total
Commitment is then being increased and the relevant Incremental Commitment
Agreement so provides, the Total European Sub-Limit and/or the Total Canadian
Sub-Limit shall be increased by the amount specified in such Incremental
Commitment Agreement (not to exceed the amount of the related Incremental
Commitment); (iii) Schedule I-A shall be deemed modified to reflect the revised
Commitments of the affected Lenders and (iv) to the extent requested by any
Incremental Lender, Revolving Loan Notes will be issued, at the expense of each
applicable Borrower, to such Incremental Lender in conformity with the
requirements of Section 2.05.

(c) At the time of any provision of Incremental Commitments pursuant to this
Section 2.15, the Borrowers shall, in coordination with the Administrative
Agent, repay outstanding Revolving Loans of certain of the Lenders, and incur
additional Revolving Loans from certain other

 

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Lenders (including the Incremental Lenders), even though as a result thereof
such new Loans (to the extent required to be maintained as B/A Equivalent Loans
or Euro Rate Loans) may have a shorter Interest Period than the then outstanding
Borrowings, of such Loans, in each case to the extent necessary so that all of
the Lenders participate in each outstanding Borrowing of Revolving Loans pro
rata on the basis of their respective Commitments (after giving effect to any
increase in the Total Commitment) pursuant to this Section 2.15) and with each
affected Borrower being obligated to pay to the respective Lenders any costs of
the type referred to in Section 2.11 and such amounts, as reasonably determined
by the respective Lenders, to compensate them for funding the various Revolving
Loans during an existing Interest Period (rather than at the beginning of the
respective Interest Period, based upon rates then applicable thereto) in
connection with any such repayment and/or incurrence. All determinations by any
Lender pursuant to the preceding sentence shall, absent manifest error, be final
and conclusive and binding on all parties hereto. Without limiting the
obligations of the Borrowers under this Section 2.15(c), the Administrative
Agent and the Lenders agree that they will use their commercially reasonable
efforts to attempt to minimize the costs of the type referred to in Section 2.11
that the Borrowers would otherwise incur in connection with the implementation
of any Incremental Commitments.

2.16 Interest Act (Canada); Criminal Rate of Interest; Nominal Rate of Interest.
(a) Notwithstanding anything to the contrary contained in this Agreement or in
any other Credit Document, solely to the extent that a court of competent
jurisdiction finally determines that the calculation or determination of
interest or any fee payable by the Canadian Borrower or any other Canadian
Credit Party in respect of the Obligations pursuant to this Agreement and the
other Credit Documents shall be governed by the laws of any province of Canada
or the federal laws of Canada, in no event shall the aggregate “interest” (as
defined in Section 347 of the Criminal Code, R.S.C. 1985, c. C-46, as the same
shall be amended, replaced or re-enacted from time to time) payable by the
Canadian Borrower or any other Canadian Credit Party to the Agents or any Lender
under this Agreement or any other Credit Document exceed the effective annual
rate of interest on the “credit advances” (as defined in that section) under
this Agreement or such other Credit Document lawfully permitted under that
section and, if any payment, collection or demand pursuant to this Agreement or
any other Credit Document in respect of “interest” (as defined in that section)
is determined to be contrary to the provisions of that section, such payment,
collection or demand shall be deemed to have been made by mutual mistake of the
Agents, the Lenders and the Canadian Borrower and the amount of such payment or
collection shall be refunded by the relevant Agents and Lenders to the Canadian
Borrower or any other Canadian Credit Party. For the purposes of this Agreement
and each other Credit Document to which the Canadian Borrower or any other
Canadian Credit Party is a party, the effective annual rate of interest payable
by the Canadian Borrower or any other Canadian Credit Party shall be determined
in accordance with generally accepted actuarial practices and principles over
the term of the loans on the basis of annual compounding for the lawfully
permitted rate of interest and, in the event of dispute, a certificate of a
Fellow of the Canadian Institute of Actuaries appointed by or for the account of
the Canadian Borrower or other applicable Canadian Credit Party will be
conclusive for the purpose of such determination in the absence of evidence to
the contrary.

(b) For the purposes of the Interest Act (Canada) and with respect to Canadian
Credit Parties only:

(i) whenever any interest or fee payable by the Canadian Borrower is calculated
using a rate based on a year of 360 days or 365 days, as the case may be, the
rate determined pursuant to such calculation, when expressed as an annual rate,
is equivalent to (x) the applicable rate based on a year of 360 days or 365
days, as the case may be, (y) multiplied by the actual number of days in the
calendar year in which such rate is to be ascertained and (z) divided by 360 or
365, as the case may be; and

 

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(ii) all calculations of interest payable by the Canadian Borrower under this
Agreement or any other Credit Document are to be made on the basis of the
nominal interest rate described herein and therein and not on the basis of
effective yearly rates or on any other basis which gives effect to the principle
of deemed reinvestment of interest.

The parties hereto acknowledge that there is a material difference between the
stated nominal interest rates and the effective yearly rates of interest and
that they are capable of making the calculations required to determine such
effective yearly rates of interest.

2.17 Canadian Lenders. (a) Each Canadian Lender shall at all times be a Canadian
Resident or, at its option, such Canadian Lender shall designate an Affiliate or
branch of such Lender which is a Canadian Resident (which branch or Affiliate
shall be a signatory to this Agreement, or shall become a party hereto by
signing an assumption agreement in form and substance reasonably satisfactory to
the Administrative Agent) to act as a Canadian Lender hereunder, in which case
the Affiliate or branch so designated as a Canadian Lender hereunder shall be
required to be satisfactory to (and approved by) the Administrative Agent and
shall at all times hold the Commitment (and all extensions of credit pursuant
thereto) of the respective Canadian Lender. To the extent legally entitled to do
so, the Administrative Agent and each Canadian Lender shall, upon written
request by any Canadian Borrower, deliver to the Canadian Borrower or the
applicable taxing authority, any form or certificate required in order that any
payment by the Canadian Borrower under this Agreement may be made free and clear
of, and without deduction or withholding for or on account of, any Taxes,
provided that (x) in determining the reasonableness of such a request such
Person shall be entitled to consider the cost (to the extent unreimbursed by the
Canadian Borrower) which would be imposed on such Person of complying with such
request, and (y) nothing in this Section 2.17(a) shall require a Lender to
disclose any confidential information (including, without limitation, its tax
returns or its calculations).

(b) A Canadian Lender may change its Affiliate or branch acting as Canadian
Lender hereunder but only pursuant to an assignment in form and substance
reasonably satisfactory to the Administrative Agent (with the consent of the
Administrative Agent), where the relevant assignee represents and warrants that
it is an Affiliate or branch of the relevant Canadian Lender and represents and
warrants to the Administrative Agent and to Aleris that it is a Canadian
Resident and will act directly as a Canadian Lender with respect to the
Commitment of the relevant Canadian Lender.

(c) In connection with any assignment pursuant to Section 2.13 or 13.04 of all
or any part of the Commitment of any Canadian Lender the Assignment and
Assumption Agreement shall contain the representation and warranties specified
in the Assignment and Assumption Agreement including that it is a Canadian
Resident.

(d) The foregoing shall in no event limit the sales or purchases of
participations in Canadian Revolving Loans after the occurrence of a Conversion
Event or a Significant Event of Default.

2.18 European Lenders. Each Lender party hereto on the Closing Date represents
that it is a Swiss Qualifying Bank or a Swiss Non-Qualifying Bank as further
indicated on Schedule I-B. Any Lender which ceases to be a Swiss Qualifying Bank
shall promptly notify Aleris that it has ceased to be a Swiss Qualifying Bank.
If as a result of such event the number of Swiss Non-Qualifying Banks under this
Agreement exceeds the number ten (10), then, so long as no Significant Event of
Default is in existence, Aleris shall have the right to request that the
relevant Lender assign or transfer by novation all of its rights and obligations
under this Agreement to an Eligible Transferee qualifying as a Swiss Qualifying
Bank or another Lender qualifying as a Swiss Qualifying Bank, all in accordance
with Section 13.04. The Administrative Agent shall have no responsibility for
determining whether or not an entity is a Swiss Qualified Bank, but shall track
the number of Lenders from time to time that were unable to represent that

 

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they were Swiss Qualifying Banks in order to determine whether the number of
Swiss Non-Qualifying Banks under this Agreement exceeds the number ten (10);
provided that the Administrative Agent shall have no liability for any
determinations made hereunder unless such liability arises from its own gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a non-appealable decision).

SECTION 3. Letters of Credit.

3.01 Letters of Credit. (a) Subject to and upon the terms and conditions set
forth herein (including, without limitation, the conditions set forth in
Sections 7.01, 7.02, and 7.03) (i) the U.S. Borrowers may jointly and severally
request, (ii) the Canadian Borrower may request and (iii) the European Borrower
may request, in each case, that an Issuing Lender issue, at any time and from
time to time on and after the Closing Date and prior to the 30th day prior to
the Final Maturity Date, for the joint and several account of the U.S. Borrowers
(if requested by the U.S. Borrowers), for the account of the Canadian Borrower
(if requested by the Canadian Borrower) or for the account of the European
Borrower (if requested by the European Borrower) and for the benefit of (x) any
holder (or any trustee, agent or other similar representative for any such
holders) of L/C Supportable Obligations of the respective Account Parties or any
of their respective Subsidiaries, an irrevocable standby letter of credit, in a
form customarily used by such Issuing Lender or in such other form as is
reasonably acceptable to such Issuing Lender, and (y) sellers of goods to the
respective Account Parties or any of their respective Subsidiaries, an
irrevocable trade letter of credit, in a form customarily used by such Issuing
Lender or in such other form as has been approved by such Issuing Lender (each
such letter of credit and each Existing Letter of Credit, a “Letter of Credit”
and, collectively, the “Letters of Credit”). All Letters of Credit shall be
denominated in the respective Available Currency and shall be issued on a sight
basis only. Each Letter of Credit shall be deemed to constitute a utilization of
the Total Commitments (in the case of any Letters of Credit issued for the
account of any Borrower), the Total European Sub-Limit (in the case of any
Letters of Credit issued for the account of the European Borrower) or the Total
Canadian Sub-Limit (in the case of any Letters of Credit issued for the account
of the Canadian Borrower), as applicable, and shall be participated in (as more
fully described in following Section 3.04(a)) by the Lenders in accordance with
their respective Percentages. All Letters of Credit issued for the account of
the U.S. Borrowers (each, a “U.S. Letter of Credit” and collectively, the “U.S.
Letters of Credit”) shall be issued for the joint and several account of the
U.S. Borrowers. All Letters of Credit issued for the account of the Canadian
Borrower (each, a “Canadian Letter of Credit” and collectively, the “Canadian
Letters of Credit”) shall be issued, subject to Section 15.08, for the account
of the Canadian Borrower. As used herein, a “European Letter of Credit” and
collectively, the “European Letters of Credit”, shall mean any Letter of Credit
issued for the account of the European Borrower.

(b) Subject to and upon the terms and conditions set forth herein, each Issuing
Lender agrees that it will, at any time and from time to time on and after the
Closing Date and prior to the 30th day prior to the Final Maturity Date,
following its receipt of the respective Letter of Credit Request, issue for
account of the respective Account Party, one or more Letters of Credit as are
permitted to remain outstanding hereunder without giving rise to a Default or an
Event of Default, provided that the issuance of any Letter of Credit (including
the renewal of any Letter of Credit) by any Issuing Lender (other than the
Administrative Agent) shall be at the sole election of such Issuing Lender and
subject to the other terms and conditions hereunder, provided further that no
Issuing Lender shall be under any obligation to issue any Letter of Credit of
the types described above if at the time of such issuance:

(i) any order, judgment or decree of any Governmental Authority or arbitrator
shall purport by its terms to enjoin or restrain such Issuing Lender from
issuing such Letter of Credit or any requirement of law applicable to such
Issuing Lender or any request or directive (whether or not having the force of
law) from any Governmental

 

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Authority with jurisdiction over such Issuing Lender shall prohibit, or request
that such Issuing Lender refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon such
Issuing Lender with respect to such Letter of Credit any restriction or reserve
or capital requirement (for which such Issuing Lender is not otherwise
compensated hereunder) not in effect with respect to such Issuing Lender on the
date hereof, or any unreimbursed loss, cost or expense (for which such Issuing
Lender is not otherwise compensated hereunder) which was not applicable or in
effect with respect to such Issuing Lender as of the date hereof and which such
Issuing Lender reasonably and in good faith deems material to it; or

(ii) such Issuing Lender shall have received from any Borrower, any other Credit
Party or the Required Lenders prior to the issuance of such Letter of Credit
notice of the type described in the second sentence of Section 3.03(b).

Notwithstanding anything to the contrary contained in this Agreement, in the
event that one or more Lenders is a Defaulting Lender, no Issuing Lender shall
be required to issue any Letter of Credit or increase or extend any Letter of
Credit unless such Issuing Lender has entered into arrangements reasonably
satisfactory to it and the relevant Borrower (including, without limitation, the
arrangements described in Section 3.05(c)) to eliminate such Issuing Lender’s
risk with respect to the participation in Letters of Credit by the Defaulting
Lender or Defaulting Lenders, including by cash collateralizing (in U.S.
Dollars) such Defaulting Lender’s Percentage of the Letter of Credit
Outstandings (such arrangements, the “Letter of Credit Back-Stop Arrangements”).

(c) All letters of credit issued under the Existing Credit Agreement, including
any extension or renewal thereof in accordance with the terms thereof and hereof
(each, as amended from time to time in accordance with the terms thereof and
hereof, an “Existing Letter of Credit”) shall constitute “Letters of Credit” for
all purposes of this Agreement and shall be deemed issued hereunder.

3.02 Maximum Letter of Credit Outstandings; Final Maturities; etc.
Notwithstanding anything to the contrary contained in this Agreement, (i) no
Letter of Credit shall be issued the Stated Amount of which, when added to the
Letter of Credit Outstandings (for this purpose, using the Dollar Equivalent of
all amounts denominated in a currency other than U.S. Dollars) (exclusive of
Unpaid Drawings which are repaid on the date of, and prior to the issuance of,
the respective Letter of Credit) at such time would exceed $75,000,000, (ii) no
Letter of Credit shall be issued at any time when the Aggregate Exposure exceeds
(or would after giving effect to such issuance exceed) the Total Commitment at
such time, (iii) each Letter of Credit shall be denominated in the applicable
Available Currency, (iv) the issuance of any Letter of Credit shall be subject
to the conditions set forth in Sections 7.01, 7.02 and 7.03 and (v) each Letter
of Credit shall by its terms terminate on or before the earlier of (A) the date
which occurs twelve (12) months after the date of the issuance thereof (although
any standby Letter of Credit shall be extendible (including pursuant to an
automatic extension provision on terms satisfactory to the applicable Issuing
Lender) for successive periods of up to twelve (12) months for each such
extension and (B) the day that is five (5) Business Days prior to the Final
Maturity Date unless cash collateralized to the reasonable satisfaction of the
Administrative Agent and such Issuing Lender.

3.03 Letter of Credit Requests; Minimum Stated Amount. (a) Whenever the
respective Account Parties desire that a Letter of Credit be issued for their
account, the respective Account Parties shall give the Administrative Agent and
the relevant Issuing Lender at least two (2) Business Days’ (or such shorter
period as is acceptable to such Issuing Lender) written notice thereof
(including by way of facsimile). Each notice shall be in the form of Exhibit C,
appropriately completed (each, a “Letter of Credit Request”) to specify: (i) the
name of the relevant Issuing Lender thereof; (ii) whether such Letter of Credit
is to be a standby or trade Letter of Credit; (iii) the date of issuance of such
Letter of Credit

 

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(which shall be a Business Day); (iv) the initial Stated Amount of such Letter
of Credit; (v) the beneficiary of such Letter of Credit and the obligations to
be supported by such Letter of Credit; (vi) the stated expiration date of such
Letter of Credit and (vii) whether such Letter of Credit shall be U.S. Letter of
Credit, a Canadian Letter of Credit or a European Letter of Credit.

(b) The making of each Letter of Credit Request shall be deemed to be a
representation and warranty by the applicable Borrowers to the applicable
Lenders that such Letter of Credit may be issued in accordance with, and will
not violate the requirements of, Section 3.02. Unless the respective Issuing
Lender has received notice from any Borrower, any other Credit Party or the
Required Lenders before it issues a Letter of Credit that one or more of the
conditions specified in Section 6 or 7 are not then satisfied, or that the
issuance of such Letter of Credit would violate Section 3.02, then such Issuing
Lender shall, subject to the terms and conditions of this Agreement, issue the
requested Letter of Credit for the account of the respective Account Parties in
accordance with such Issuing Lender’s usual and customary practices. Upon the
issuance of or modification or amendment to any standby Letter of Credit, each
Issuing Lender shall promptly notify the respective Account Parties and the
Administrative Agent in writing of such issuance, modification or amendment and
such notice shall be accompanied by a copy of such Letter of Credit or the
applicable modification or amendment thereto, as the case may be. Promptly after
receipt of such notice the Administrative Agent shall notify the L/C
Participants, in writing, of such issuance, modification or amendment.

(c) On the first Business Day of each week, each Issuing Lender shall furnish
the Administrative Agent with a written (including via facsimile) report of the
daily aggregate Letter of Credit Outstandings issued by such Issuing Lender for
the immediately preceding week.

(d) The initial Stated Amount of each Letter of Credit shall not be less than
$25,000 (or the equivalent amount thereof in the applicable Available Currency)
or such lesser amount as is acceptable to the applicable Issuing Lender.

3.04 Letter of Credit Participations. (a) Immediately upon the issuance by an
Issuing Lender of any Letter of Credit, such Issuing Lender shall be deemed to
have sold and transferred to each Lender, and each such Lender (in its capacity
under this Section 3.04, each, an “L/C Participant”) shall be deemed irrevocably
and unconditionally to have purchased and received from such Issuing Lender,
without recourse or warranty, an undivided interest and participation, to the
extent of such L/C Participant’s Percentage in such Letter of Credit, each
Drawing or payment made thereunder and the obligations of the respective Account
Parties under this Agreement with respect thereto (although Letter of Credit
Fees shall be payable directly to the Administrative Agent for the account of
the respective Lenders as provided in Section 4.01(b) and the L/C Participants
shall have no right to receive any portion of any Facing Fees with respect to
any such Letters of Credit), and any security therefor or guaranty pertaining
thereto. Upon any change in the Commitments and, as a result thereof, the
Percentages, of the respective Lenders pursuant to Section 2.18 or 13.04, it is
hereby agreed that, with respect to all outstanding Letters of Credit and Unpaid
Drawings relating thereto, there shall be an automatic adjustment to the
participations pursuant to this Section 3.04 to reflect the new Percentages of
the respective Lenders. With respect to each Letter of Credit from time to time
outstanding, the percentage participations therein of the various Lenders
calculated as provided above in this Section 3.04(a) (including as provided in
the proviso to the immediately preceding sentence) are herein called the “L/C
Participation Percentages” of the various Lenders in such Letters of Credit.

(b) In determining whether to pay under any Letter of Credit, no Issuing Lender
shall have any obligation relative to the other Lenders other than to confirm
that any documents required to be delivered under such Letter of Credit appear
to have been delivered and that they appear to substantially comply on their
face with the requirements of such Letter of Credit. Any action taken or omitted
to be

 

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taken by an Issuing Lender under or in connection with any Letter of Credit
issued by it shall not create for such Issuing Lender any resulting liability to
the Account Parties, any other Credit Party, any Lender or any other Person
unless such action is taken or omitted to be taken with bad faith, gross
negligence, or willful misconduct on the part of such Issuing Lender (as
determined by a court of competent jurisdiction in a final and non-appealable
decision).

(c) In the event that an Issuing Lender makes any payment under any Letter of
Credit issued by it and the respective Account Parties shall not have reimbursed
such amount in full to such Issuing Lender pursuant to Section 3.05(a), such
Issuing Lender shall promptly notify the Administrative Agent, which shall
promptly notify each relevant L/C Participant of such failure, and each such L/C
Participant shall promptly and unconditionally pay to such Issuing Lender the
amount of such L/C Participant’s L/C Participation Percentage of such
unreimbursed payment in the relevant Available Currency in same day funds. If
the Administrative Agent so notifies, prior to 12:00 noon (New York time) on any
Business Day, any L/C Participant required to fund a payment under a Letter of
Credit, such L/C Participant shall make available to the applicable Issuing
Lender in the relevant Available Currency such L/C Participant’s L/C
Participation Percentage of the amount of such payment on such Business Day in
same day funds. If and to the extent such L/C Participant shall not have so made
its L/C Participation Percentage of the amount of such payment available to the
applicable Issuing Lender, such L/C Participant agrees to pay to such Issuing
Lender, forthwith on demand such amount, together with interest thereon, for
each day from such date until the date such amount is paid to such Issuing
Lender at the overnight Federal Funds Rate (or in the case of Canadian Letters
of Credit, at the Bank of Canada overnight rate) for the first three (3) days
and at the interest rate applicable to Revolving Loans that are maintained as
Base Rate Loans for each day thereafter (or in the case of Canadian Letters of
Credit, at the Canadian Prime Rate or Bank of Canada’s overnight rate). The
failure of any such L/C Participant to make available to an Issuing Lender its
L/C Participation Percentage of any payment under any Letter of Credit issued by
such Issuing Lender shall not relieve any such other L/C Participant of its
obligation hereunder to make available to such Issuing Lender its L/C
Participation Percentage of any payment under any Letter of Credit on the date
required, as specified above, but no such L/C Participant shall be responsible
for the failure of any such other L/C Participant to make available to such
Issuing Lender such other L/C Participant’s L/C Participation Percentage of any
such payment.

(d) Whenever an Issuing Lender receives a payment of a reimbursement obligation
(or interest thereon) as to which it has received any payments from the
respective L/C Participants pursuant to clause (c) above, such Issuing Lender
shall pay to each such L/C Participant which has paid its L/C Participation
Percentage thereof in the relevant Available Currency and in same day funds, an
amount (net of any interest owing to such Issuing Lender with respect to such
reimbursement obligation) equal to such L/C Participant’s share (based upon the
proportionate aggregate amount originally funded by such L/C Participant to the
aggregate amount funded by all such L/C Participants) of the principal amount of
such reimbursement obligation and interest thereon (accruing after the funding
of the respective participations) so received by the Issuing Lender.

(e) Upon the request of any L/C Participant, each Issuing Lender shall furnish
to such L/C Participant copies of any standby Letter of Credit issued by it and
such other documentation as may reasonably be requested by such L/C Participant.

 

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(f) The obligations of the L/C Participants to make payments to each Issuing
Lender with respect to Letters of Credit shall be irrevocable and not subject to
any qualification or exception whatsoever and shall be made in accordance with
the terms and conditions of this Agreement under all circumstances, including,
without limitation, any of the following circumstances:

(i) any lack of validity or enforceability of this Agreement or any of the other
Credit Documents;

(ii) the existence of any claim, setoff, defense or other right which Aleris or
any of its Subsidiaries may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), the Administrative Agent, any L/C
Participant, or any other Person, whether in connection with this Agreement, any
Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between Aleris or any
Subsidiary of Aleris and the beneficiary named in any such Letter of Credit);

(iii) any draft, certificate or any other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;

(iv) the surrender or impairment of any security for, the performance or
observance of any of the terms of any of the Credit Documents; or

(v) the occurrence of any Default or Event of Default.

3.05 Agreement to Repay Letter of Credit Drawings. (a) Subject to
Section 3.05(b), (i) the U.S. Borrowers hereby jointly and severally agree (with
respect to the U.S. Letters of Credit), (ii) the Canadian Borrower agrees (with
respect to the Canadian Letters of Credit) and (iii) the European Borrower
agrees (with respect to the European Letters of Credit) to reimburse each
Issuing Lender by making payment to the Administrative Agent in the relevant
Available Currency in immediately available funds at the Payment Office for any
payment or disbursement made by such Issuing Lender under any Letter of Credit
issued by it (each such amount, so paid until reimbursed by the applicable
Account Party, an “Unpaid Drawing”), not later than one (1) Business Day
following receipt by the applicable Account Party of notice of such payment or
disbursement (provided that no such notice shall be required to be given if a
Default or an Event of Default under Section 11.05 shall have occurred and be
continuing, in which case the Unpaid Drawing shall be due and payable
immediately without presentment, demand, protest or notice of any kind (all of
which are hereby waived by the Borrowers)), with interest on the amount so paid
or disbursed by such Issuing Lender, to the extent not reimbursed prior to
12:00 noon (New York time) on the date of such payment or disbursement, from and
including the date paid or disbursed to but excluding the date such Issuing
Lender was reimbursed by the respective Account Parties therefor at a rate per
annum equal to the Base Rate (or the Canadian Prime Rate in the case of Canadian
Letters of Credit) in effect from time to time plus the Applicable Margin as in
effect from time to time for Revolving Loans that are maintained as Base Rate
Loans (or Canadian Prime Rate Loans in the case of Canadian Letters of Credit);
provided, however, to the extent such amounts are not reimbursed prior to
12:00 noon (New York time) on the third Business Day following the receipt by
the respective Account Parties of notice of such payment or disbursement or
following the occurrence of a Default or an Event of Default under
Section 11.05, interest shall thereafter accrue on the amounts so paid or
disbursed by such Issuing Lender (and until reimbursed by the respective Account
Party) at a rate per annum equal to the rate otherwise applicable to the
respective Unpaid Drawing as provided above, plus 2%, with all such interest
payable pursuant to this Section 3.05 to be payable on demand. Notwithstanding
anything to the contrary in the preceding sentence, the relevant Account Party
may, subject to the conditions to borrowing set forth herein, request in
accordance with Section 2.03 that such payment be financed with a Revolving Loan
or a Swingline Loan, in an equivalent amount and, to the extent so financed,
such Account Party’s obligation to make such reimbursement shall be discharged
and replaced by the resulting Revolving Loan or Swingline Loan. Each Issuing
Lender shall give the respective Account Parties and the Administrative Agent
prompt written notice of each Drawing under any Letter of Credit issued by it,
provided that the failure to give any such notice shall in no way affect, impair
or diminish the Borrowers’ obligations hereunder.

 

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(b) The joint and several obligations of the U.S. Borrowers, the obligations of
the Canadian Borrower and the obligations of the European Borrower, as the case
may be, under this Section 3.05 to reimburse each Issuing Lender with respect to
drafts, demands and other presentations for payment under Letters of Credit
issued by it (each, a “Drawing”) (including, in each case, interest thereon, if
any) shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which Aleris or
any of its Subsidiaries may have or have had against any Lender (including in
its capacity as an Issuing Lender or as a L/C Participant), including, without
limitation, any defense based upon the failure of any drawing under a Letter of
Credit to conform to the terms of the Letter of Credit or any nonapplication or
misapplication by the beneficiary of the proceeds of such Drawing; provided,
however, that the Borrowers shall not be obligated to reimburse any Issuing
Lender for any wrongful payment made by such Issuing Lender under a Letter of
Credit issued by it as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of such Issuing Lender (as determined
by a court of competent jurisdiction in a final and non-appealable decision).

(c) If any Lender becomes a Defaulting Lender at any time that any Letter of
Credit is outstanding, such Defaulting Lender shall enter into Letter of Credit
Back-Stop Arrangements with the relevant Issuing Lender or Issuing Lenders no
later than two (2) Business Days after notice by the relevant Issuing Lender. If
such Defaulting Lender fails to timely enter into such Letter of Credit
Back-Stop Arrangements, then the relevant Borrower shall enter into Letter of
Credit Back-Stop Arrangements with the relevant Issuing Lender or Issuing
Lenders no later than two (2) Business Days after notice by the relevant Issuing
Lender or Issuing Lenders.

3.06 Increased Costs. (a) If at any time after the Closing Date, the
introduction of or any change in any applicable law, rule, regulation, order,
guideline or request or in the interpretation or administration thereof by the
NAIC or any Governmental Authority charged with the interpretation or
administration thereof, or compliance by any Issuing Lender or any L/C
Participant with any request or directive by the NAIC or by any such
Governmental Authority (whether or not having the force of law), shall either
(i) impose, modify or make applicable any reserve, deposit, capital adequacy or
similar requirement against Letters of Credit issued by any Issuing Lender or
participated in by any L/C Participant, or (ii) impose on any Issuing Lender or
any L/C Participant any other conditions relating, directly or indirectly, to
this Agreement or any Letter of Credit; and the result of any of the foregoing
is to increase the cost to any Issuing Lender or any L/C Participant of issuing,
maintaining or participating in any Letter of Credit, or reduce the amount of
any sum received or receivable by any Issuing Lender or any L/C Participant
hereunder or reduce the rate of return on its capital with respect to the
Letters of Credit (except for changes in the rate of tax on, or determined by
reference to, the net income or net profits (or any franchise or similar tax
imposed in lieu of a net income or net profits tax of such Issuing Lender or
such L/C Participant or, in the case of an Issuing Lender or L/C Participant
that is a flow-through entity for tax purposes, a member or a partner of such
Issuing Lender or L/C Participant, pursuant to the laws of the country or
national jurisdiction (or any political subdivision thereof) in which it is
organized or in which its principal office or applicable lending office is
located), then, upon the delivery of the certificate referred to below to the
Account Parties by any Issuing Lender or any L/C Participant (a copy of which
certificate shall be sent by such Issuing Lender or such L/C Participant to the
Administrative Agent), such Account Party agrees to pay to such Issuing Lender
or such L/C Participant such additional amount or amounts as will compensate
such Issuing Lender or such L/C Participant for such increased cost or reduction
in the amount receivable or reduction on the rate of return on its capital;
provided, that increased costs or reductions in the amounts received or
receivable with respect to Taxes and Swiss Withholding Taxes shall be dealt with
exclusively pursuant to Sections 5.04 and 5.05, respectively. Any Issuing Lender
or any L/C Participant, upon determining in good faith that any

 

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additional amounts will be payable pursuant to this Section 3.06, will give
prompt written notice thereof to the respective Account Party, which notice
shall include a certificate submitted to such Account Party by such Issuing
Lender or such L/C Participant (a copy of which certificate shall be sent by
such Issuing Lender or such L/C Participant to the Administrative Agent),
setting forth in reasonable detail the basis for and the calculation of such
additional amount or amounts necessary to compensate such Issuing Lender or such
L/C Participant. The certificate required to be delivered pursuant to this
Section 3.06 shall, absent manifest error, be final and conclusive and binding
on the Borrowers.

(b) Notwithstanding anything to the contrary set forth in this Section 3.06, no
Borrower shall be required to compensate any Issuing Lender or L/C Participant
for any increased costs or reductions incurred more than one hundred eighty
(180) days prior to the date on which such Issuing Lender or L/C Participant
notifies such Borrower of the change in applicable law or other circumstance
under Section 3.06(a) giving rise to such increased costs or reductions and the
intention of such Issuing Lender or L/C Participant to claim compensation
therefor; provided that if such change in applicable law or other circumstance
giving rise to such increased costs or reductions is retroactive, then the
180-day period referred to above shall be extended to include the period of
retroactive effect thereof.

SECTION 4. Commitment Commission; Fees; Reductions of Commitment.

4.01 Fees. (a) The U.S. Borrowers jointly and severally agree to pay to the
Administrative Agent for distribution to each Non-Defaulting Lender a commitment
commission (the “Commitment Commission”) for the period from and including the
Closing Date to but excluding the Final Maturity Date (or such earlier date on
which the Total Commitment has been terminated) computed at a rate per annum
equal to the Applicable Commitment Commission Percentage on the daily average
Unutilized Commitment of such Non-Defaulting Lender as in effect from time to
time. Accrued Commitment Commission shall be due and payable quarterly in
arrears on each Quarterly Payment Date and on the date upon which the Total
Commitment is terminated.

(b)(i) The U.S. Borrowers jointly and severally agree (with respect to the U.S.
Letters of Credit), (ii) the Canadian Borrower agrees (with respect to the
Canadian Letters of Credit) and (iii) the European Borrower agrees (with respect
to the European Letters of Credit) to pay to the Administrative Agent for
distribution to each Lender (based on each such Lender’s respective L/C
Participation Percentage as, from time to time in effect in each Letter of
Credit), a fee in respect of each Letter of Credit (the “Letter of Credit Fee”)
for the period from and including the date of issuance of such Letter of Credit
to but excluding the date of termination or expiration of such Letter of Credit,
computed at a rate per annum equal to the Applicable Margin as in effect from
time to time during such period with respect to Revolving Loans that are
maintained as Euro Rate Loans on the daily Stated Amount of each such Letter of
Credit. Accrued Letter of Credit Fees shall be due and payable quarterly in
arrears on each Quarterly Payment Date and on the first day on or after the
termination of the Total Commitment upon which no Letters of Credit remain
outstanding.

(c) The U.S. Borrowers jointly and severally agree (with respect to the U.S.
Letters of Credit), (ii) the Canadian Borrower agrees (with respect to the
Canadian Letters of Credit) and (iii) the European Borrower agrees (with respect
to the European Letters of Credit) to agree to pay to each Issuing Lender, for
its own account, a facing fee in respect of each Letter of Credit issued by it
(the “Facing Fee”) for the period from and including the date of issuance of
such Letter of Credit to but excluding the date of termination or expiration of
such Letter of Credit, computed at a rate per annum equal to 1/8 of 1% on the
daily Stated Amount of such Letter of Credit. Accrued Facing Fees shall be due
and payable quarterly in arrears on each Quarterly Payment Date and upon the
first day on or after the termination of the Total Commitment, upon which no
Letters of Credit remain outstanding.

 

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(d) Each Borrower agrees to pay to each Issuing Lender, for its own account,
upon each payment under, issuance of, or amendment to, any Letter of Credit
issued by it, such amount as shall at the time of such event be the
administrative charge and the reasonable expenses which such Issuing Lender is
generally imposing in connection with such occurrence with respect to Letters of
Credit.

(e) Each Borrower agrees to pay to the Administrative Agent such fees as may be
agreed to in writing from time to time by Aleris or any of its Subsidiaries and
the Administrative Agent.

4.02 Voluntary Termination of Unutilized Commitments. (a) Upon at least three
(3) Business Days’ prior written notice to the Administrative Agent at the
Notice Office (which notice the Administrative Agent shall promptly transmit to
each of the Lenders), Aleris shall have the right, at any time or from time to
time, without premium or penalty, to terminate the Total Unutilized Commitment
in whole, or reduce it in part in an amount of at least $5,000,000 and in an
integral multiple of $1,000,000 with the amount of each reduction pursuant to
this Section 4.02(a) to apply to reduce the Total Commitment. Each reduction to
the Total Commitment pursuant to this Section 4.02(a) shall apply to
proportionately and permanently reduce the Commitment of each Lender (based on
its relevant Percentage) and shall apply to reduce the Total Canadian Sub-Limit
and/or the Total European Sub-Limit if and as directed by Aleris.

(b) In the event (i) of a refusal by a Lender to consent to certain proposed
changes or waivers with respect to this Agreement which have been approved by
the Required Lenders as (and to the extent) provided in Section 13.12(d) but
which require the consent of each Lender or each directly affected Lender or
(ii) that any Lender becomes a Defaulting Lender, Aleris may, subject to its
compliance with the requirements of Section 13.12(d) (in the case of a
non-consenting Lender, but not a Defaulting Lender), upon five (5) Business
Days’ prior written notice to the Administrative Agent at the Notice Office
(which notice the Administrative Agent shall promptly transmit to each of the
Lenders) terminate all of the Commitments of such Lender (other than any such
Commitment which is being maintained by such Lender (and not being terminated by
Aleris) as provided in Section 13.12(d), so long as (x) all Loans (other than
any such Loans that are being maintained by such Lender (and not being repaid by
Aleris) as provided in Section 13.12(d)), together with accrued and unpaid
interest, Fees and all other amounts, owing to such Lender are repaid
concurrently with the effectiveness of such termination pursuant to
Section 5.01(b) (at which time Schedule I-A shall be deemed modified to reflect
such changed amounts) and (y) such Lender’s L/C Participation Percentage of all
outstanding Letters of Credit is cash collateralized by the respective Account
Parties in a manner reasonably satisfactory to the Administrative Agent and the
respective Issuing Lenders. After giving effect to the termination of the
Commitments of any Lender pursuant to this Section 4.02(b), such Lender shall no
longer constitute a “Lender” for purposes of this Agreement, except with respect
to indemnifications under this Agreement (including, without limitation,
Sections 2.10, 2.11, 3.06, 5.04, 12.06 and 13.01), which shall survive as to
such repaid Lender. In cases where any Commitment of any Lender is terminated
pursuant to this Section 4.02(b), except in cases where such Commitment is
replaced in full, after giving effect to the termination of any such Commitment
of a given Lender pursuant to this Section 4.02(b), there shall occur automatic
adjustments (as determined by the Administrative Agent) in the Percentages (and
as a result thereof in the related L/C Participation Percentages) of the
remaining Lenders.

 

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4.03 Mandatory Reduction of Commitments.

(a) The Total Commitments shall terminate in their entirety on the Final
Maturity Date.

(b) The termination of the Total Commitment pursuant to this Section 4.03 as
provided above (or pursuant to Section 4.02(a)) shall be applied to
proportionately reduce or terminate, as the case may be, the Commitment of each
Lender with a Commitment.

(c) Any mandatory or voluntary prepayments of any of the Loans shall not
constitute a reduction of the Total Commitments.

4.04 Extensions of Loans and Commitments.

(a) Notwithstanding anything to the contrary in this Agreement, subject to the
terms of this Section 4.04, the Borrowers may extend the maturity date, and
otherwise modify the terms of each of the revolving credit facility and the
swingline facility made available hereunder, or any portion thereof (including,
without limitation, by increasing the interest rate or fees payable in respect
of any Loans and/or Commitments, or any portion thereof (and related
outstandings) (the “Extension”) pursuant to a written offer (the “Extension
Offer”) made by Aleris to all Lenders, in each case on a pro rata basis (based
on the aggregate outstanding principal amount of the respective outstanding
Loans and unfunded Commitments) and on the same terms to each such Lender. In
connection with the Extension, Aleris will provide notification to the
Administrative Agent (for distribution to the Lenders), not earlier than
twenty-four (24) months and not later than three (3) months prior to the Final
Maturity Date then in effect. Subject to Section 4.04(b) and (c), the Extension
Offer shall become effective and binding upon each Lender that accepts the
Extension Offer in accordance with its terms regardless of whether or not other
Lenders accept the Extension Offer. In connection with the Extension, each
Lender, acting in its sole and individual discretion, wishing to participate in
the Extension shall, prior to the date (the “Extension Notice Date”) that is
thirty (30) days after delivery of notice by the Administrative Agent to such
Lender, provide the Administrative Agent with a written notice thereof in a form
reasonably satisfactory to the Administrative Agent. Any Lender that does not
respond to the Extension Offer by the Extension Notice Date shall be deemed to
have rejected such Extension. The Administrative Agent shall promptly notify
Aleris of each Lender’s determination under this Section 4.04. The election of
any Lender to agree to the Extension shall not obligate any other Lender to so
agree. After giving effect to the Extension, the Commitments so extended shall
cease to be a part of the facility they were a part of immediately prior to the
Extension and shall be a new facility hereunder.

(b) Aleris shall have the right to replace each Lender that shall have rejected
(or be deemed to have rejected) the Extension under Section 4.04(a) with, and
add as “Lenders” under this Agreement in place thereof, one or more replacement
Lenders as provided in Section 2.13; provided that each of such replacement
Lenders shall enter into an Assignment and Assumption Agreement pursuant to
which such replacement Lender shall, effective as of a closing date selected by
the Administrative Agent in consultation with Aleris (which shall occur no later
than thirty (30) days following the Extension Notice Date and shall occur on the
same date as the effectiveness of the Extension as to the Lenders which have
consented thereto pursuant to Section 4.04(a)), undertake the Commitment of such
replaced Lender (and, if any such replacement Lender is already a Lender, its
Commitment shall be in addition to such Lender’s Commitment hereunder on such
date).

(c) The Extension shall be subject to the following:

(i) no Default or Event of Default shall have occurred and be continuing at the
time any offering document in respect of the Extension Offer is delivered to the
Lenders and at the time of the Extension;

 

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(ii) except as to interest rates, commitment fees, and final maturity, the
Commitment of any Lender extended pursuant to the Extension (the “Extended
Commitment”), and the related outstandings, shall be a Commitment (or related
outstandings, as the case may be) with the same terms as the original
Commitments (and related outstandings); provided that, subject to the provisions
of Sections 4.05 and 2.01(c) to the extent dealing with Swingline Loans and
Letters of Credit which mature or expire after the Initial Maturity Date, all
Swingline Loans and Letters of Credit shall be participated in on a pro rata
basis by all Lenders with Commitments and/or Extended Commitments (and except as
provided in Sections 4.05 and 2.01(c), without giving effect to changes thereto
on the Initial Maturity Date with respect to Swingline Loans and Letters of
Credit theretofore incurred or issued) and all borrowings under Commitments and
repayments thereunder shall be made on a pro rata basis (except for (x) payments
of interest and fees at different rates on Extended Commitments (and related
outstandings) and (y) repayments required upon any Initial Maturity Date of any
Commitments or Extended Commitments); and

(iii) if the aggregate principal amount of Commitments in respect of which
Lenders shall have accepted the Extension Offer shall exceed the maximum
aggregate principal amount of Commitments offered to be extended by Aleris
pursuant to the Extension Offer, then the Commitments of such Lenders shall be
extended on a pro rata basis up to such maximum amount based on the respective
principal amounts (but not to exceed actual holdings of record) with respect to
which such Lenders have accepted the Extension Offer; and

(iv) all documentation in respect of the Extension shall be consistent with the
foregoing, and all written communications by the Borrowers generally directed to
the Lenders in connection therewith shall be in form and substance consistent
with the foregoing and otherwise reasonably satisfactory to the Administrative
Agent;

(v) the Minimum Extension Condition shall be satisfied; and

(vi) the Extension shall not become effective unless, on the proposed effective
date of the Extension, (x) the Borrowers shall deliver to the Administrative
Agent a certificate of a Responsible Officer of each Credit Party dated the
applicable date of the Extension and executed by a Responsible Officer of such
Credit Party certifying and attaching the resolutions adopted by such Credit
Party approving or consenting to such extension and (y) the conditions set forth
in Section 7 shall be satisfied (with all references in such Section to any
credit event being deemed to be references to the Extension on the applicable
date of the Extension) and the Administrative Agent shall have received a
certificate to that effect dated the applicable date of the Extension and
executed by a Financial Officer of Aleris.

(d) With respect to the Extension consummated by the Borrowers pursuant to this
Section 4.04, (i) the Extension shall not constitute voluntary or mandatory
payments or prepayments for purposes of Sections 5.01 and 5.02, (ii) the
Extension Offer shall contain a condition (a “Minimum Extension Condition”) to
consummating the Extension that at least 75% of the aggregate amount of the
Commitments in effect immediately prior to the Initial Maturity Date (unless
another amount is agreed to by the Administrative Agent and the Required
Lenders) shall be in effect immediately following the Initial Maturity Date,
(iii) if the amount extended is less than the maximum amount of the Letters of
Credit set forth in Section 3.02, the maximum amount of the Letters of Credit
shall be reduced upon the date that is five (5) Business Days prior to the
Initial Maturity Date (to the extent needed so that maximum amount of the
Letters of Credit does not exceed the aggregate Commitments which would be in
effect after the Initial Maturity Date), and, if applicable, the Borrowers shall
provide cash collateral for obligations under any issued Letters of Credit in an
amount equal to 105% of the greatest amount for which such Letter of Credit may
be drawn, (v) if the amount extended is less than the maximum amount of
Swingline loans, the maximum amount of Swingline Loans shall be reduced upon the
date that is five (5) Business Days prior to the Initial Maturity Date (to the
extent needed so that the maximum amount of the Swingline Loans does

 

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not exceed the aggregate Commitments which would be in effect after the Initial
Maturity Date), and, if applicable, the Borrowers shall prepay any outstanding
Swingline Loans. The Administrative Agent and the Lenders hereby consent to the
Extension and the other transactions contemplated by this Section 4.04
(including, for the avoidance of doubt, payment of any interest or fees in
respect of any Extended Commitments on the such terms as may be set forth in the
Extension Offer) and hereby waive the requirements of any provision of this
Agreement (including, without limitation, Sections 5.01 and 5.02) or any other
Credit Document that may otherwise prohibit the Extension or any other
transaction contemplated by this Section 4.04, provided that such consent shall
not be deemed to be an acceptance of the Extension Offer.

(e) The Lenders hereby irrevocably authorize the Administrative Agent to enter
into amendments to this Agreement and the other Credit Documents with the
Borrowers as may be necessary in order establish new facilities in respect of
Commitments so extended and such technical amendments as may be necessary in
connection with the establishment of such new facilities, in each case on terms
consistent with this Section 4.04. Notwithstanding the foregoing, the
Administrative Agent shall have the right (but not the obligation) to seek the
advice or concurrence of the Required Lenders with respect to any matter
contemplated by this Section 4.04 and, if the Administrative Agent seeks such
advice or concurrence, the Administrative Agent shall be permitted to enter into
such amendments with the Borrowers in accordance with any instructions actually
received by such Required Lenders and shall also be entitled to refrain from
entering into such amendments with the Borrowers unless and until it shall have
received such advice or concurrence; provided, however, that whether or not
there has been a request by the Administrative Agent for any such advice or
concurrence, all such amendments entered into with the Borrowers by the
Administrative Agent hereunder shall be binding and conclusive on the Lenders.

(f) In connection with the Extension, Aleris shall provide the Administrative
Agent at least ten (10) Business Days’ (or such shorter period as may be agreed
by the Administrative Agent) prior written notice thereof, and shall agree to
such procedures, if any, as may be reasonably established by, or reasonably
acceptable to, the Administrative Agent, in each case to accomplish the purposes
of this Section 4.04.

4.05 Extended Commitments. If the Initial Maturity Date shall have occurred at a
time when Extended Commitments are in effect, then such Letters of Credit shall
automatically be deemed to have been issued (including for purposes of the
obligations of the Lenders under the applicable Facility to purchase
participations therein and to make Revolving Loans, as the case may be, and
payments in respect thereof pursuant to Section 3.04) under (and participated in
by Lenders on a pro rata basis pursuant to) the Extended Commitments, up to an
aggregate amount not to exceed the aggregate principal amount of the unutilized
Extended Commitments thereunder at such time (it being understood that no
partial face amount of any Letter of Credit may be so reallocated). Except to
the extent of reallocations of participations pursuant to the prior sentence,
the occurrence of the Initial Maturity Date with respect to any given
Commitments shall have no effect upon (and shall not diminish) the percentage
participations of the Lenders in any Letter of Credit issued before the Initial
Maturity Date.

SECTION 5. Prepayments; Payments; Taxes.

5.01 Voluntary Prepayments. (a) Each Borrower shall have the right to prepay the
Loans made to such Borrower, without premium or penalty, in whole or in part at
any time and from time to time on the following terms and conditions: (i) such
Borrower shall give the Administrative Agent written notice (or telephonic
notice promptly confirmed in writing) (x) prior to 12:00 noon (New York time) at
the Notice Office on the date of such prepayment in the case of Base Rate Loans
(other than Swingline Loans) and (y) (A) prior to 12:00 noon (New York time) at
the Notice Office at least one (1) Business Day before the date of such
prepayment of its intent to prepay Canadian Prime Rate Loans (other than

 

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Swingline Loans), (B) prior to 2:00 p.m. (New York time) at the Notice Office on
the date of such prepayment in the case of Swingline Loans and (C) prior to 2:00
p.m. (New York time) at the Notice Office at least three (3) Business Days
before the date of such prepayment of its intent to prepay Euro Rate Loans or
B/A Equivalent Loans, which notice (in each case) shall specify whether U.S.
Borrower Revolving Loans, Canadian Revolving Loans, European Borrower Revolving
Loans, U.S. Borrower Swingline Loans, European Borrower Swingline Loans or
Canadian Borrower Swingline Loans shall be prepaid, the amount of such
prepayment and the Types of Loans to be prepaid and, in the case of Euro Rate
Loans and B/A Equivalent Loans, the specific Borrowing or Borrowings pursuant to
which such Euro Rate Loans and B/A Equivalent Loans were made, and which notice
the Administrative Agent shall, except in the case of Swingline Loans, promptly
transmit to each of the Lenders; (ii) (x) each partial prepayment of Revolving
Loans (other than Swingline Loans) pursuant to this Section 5.01(a) shall be in
an aggregate principal amount of at least $5,000,000 (or such lesser amount as
is acceptable to the Administrative Agent), provided that (x) if any partial
prepayment of Eurodollar Loans made pursuant to any Borrowing shall reduce the
outstanding principal amount of Eurodollar Loans or B/A Equivalent Loans made
pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount
applicable thereto, then such Borrowing may not be continued as a Borrowing of
Eurodollar Loans or B/A Equivalent Loans (and same shall automatically be
converted into a Borrowing of Base Rate Loans in the case of Eurodollar Loans
and Canadian Prime Rate Loans in the case of B/A Equivalent Loans) and any
election of an Interest Period with respect thereto given by such Borrower shall
have no force or effect and (y) in the case of partial prepayments of any
Borrowing of Euro Rate Loans, the European Borrower shall use reasonable efforts
to allocate such prepayments in a manner so that Borrowings do not remain
outstanding in amounts less than the Minimum Borrowing Amount applicable thereto
(and, to the extent such Borrowings would remain outstanding in amounts which
are less than the Minimum Borrowing Amount applicable thereto, in the case of
Euro Rate Loans, the European Borrower shall repay any Borrowings which are less
than the Minimum Borrowing Amount applicable thereto at the end of the then
current Interest Period, unless at such time the European Borrower combines
separate Borrowings into one Borrowing, which such Borrowing shall be greater
than or equal to the Minimum Borrowing Amount); and (iii) each prepayment
pursuant to this Section 5.01(a) in respect of any Loans made pursuant to a
Borrowing shall be applied pro rata among such Loans, provided that at such
Borrower’s election in connection with any prepayment of Revolving Loans
pursuant to this Section 5.01(a), such prepayment shall not, so long as no
Default or Event of Default then exists, be applied to any Revolving Loan of a
Defaulting Lender.

(b) In the event of (i) a refusal by a Lender to consent to certain proposed
changes or waivers with respect to this Agreement which have been approved by
the Required Lenders as (and to the extent) provided in Section 13.12(d) but
which require the consent of each Lender or each directly affected Lender or
(ii) any Lender becoming a Defaulting Lender, any Borrower may, upon five
(5) Business Days’ prior written notice to the Administrative Agent at the
Notice Office (which notice the Administrative Agent shall promptly transmit to
each of the Lenders) repay all Loans, together with accrued and unpaid interest,
Fees, and other amounts owing to such Lender so long as (1) in the case of the
repayment of Revolving Loans of any Lender pursuant to this Section 5.01(b),
(x) the Commitments of such Lender are terminated concurrently with such
repayment pursuant to Section 4.02(b) (at which time Schedule I-A shall be
deemed modified to reflect the changed Commitments) and (y) such Lender’s L/C
Participation Percentage of all outstanding Letters of Credit is cash
collateralized by such Borrower in a manner reasonably satisfactory to the
Administrative Agent and the Issuing Lenders and (2) in the case of any
non-consenting Lender, but not a Defaulting Lender, (x) the consents, if any,
required under Section 13.12(d) in connection with the repayment pursuant to
this Section 5.01(b) have been obtained and (y) the repayment of such Lender’s
Loans is otherwise made in accordance with, and subject to the requirements of,
said Section 13.12(d) to the extent applicable.

 

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5.02 Mandatory Repayments.

(a) (i) On any day on which any one or more of the following conditions shall
exist, the Borrowers shall repay the Loans and/or cash collateralize outstanding
Letters of Credit pursuant to clause (ii) below in such amount as may be
required to cause such conditions to cease to exist on such day:

(A) the Aggregate U.S. Borrower Exposure at such time exceeds 100% of the U.S.
Borrowing Base (or during an Agent Advance Period, 110%);

(B) the Aggregate European Borrower Exposure at such time exceeds 100% of the
European Borrowing Base (or during an Agent Advance Period, 110%);

(C) the Aggregate Canadian Exposure at such time exceeds 100% of the Canadian
Borrowing Base (or during an Agent Advance Period, 110%);

(D) the Aggregate Exposure at such time exceeds 100% of the Total Borrowing Base
(or during an Agent Advance Period, 110%);

(E) the Aggregate Exposure at such time exceeds the Total Commitment at such
time;

(F) the Aggregate Canadian Exposure at such time exceeds the Total Canadian
Sub-Limit at such time; and/or

(G) the Aggregate European Borrower Exposure at such time exceeds the Total
European Sub-Limit at such time.

For purposes of this Section 5.02(a)(i), the relevant Borrowing Bases will be
determined as of each day by Administrative Agent in connection with the
calculation of the Aggregate U.S. Borrower Exposure, Aggregate Canadian Borrower
Exposure, Aggregate European Borrower Exposure or Aggregate Exposure, as
applicable based upon the most recent Borrowing Base Certificate delivered by
Aleris, subject to adjustment by the Co-Collateral Agents in their Permitted
Discretion in accordance with this Agreement.

(ii) Subject to Section 2.11, the Borrowers may prepay U.S. Borrower Revolving
Loans, European Borrower Revolving Loans, Canadian Revolving Loans and Swingline
Loans and cash collateralize Letters of Credit pursuant to this Section 5.02(a)
as directed by Aleris.

(iii) If any condition set forth in sub-clauses (E), (F) or (G) of
Section 5.02(a)(i) exists solely as a result of currency fluctuations of
Non-Dollar Denominated Loans, then the repayments or cash collateralizations
required pursuant to Section 5.01(a)(i) shall only be required if the relevant
excess amount (for this purpose, using the Dollar Equivalent thereof) exceeds
105% of the relevant permitted maximum amount of the relevant Commitment as then
in effect as provided in Section 5.02(a)(i) for more than three consecutive
Business Days (at which time the excess over 100% shall be required to be
eliminated).

(b) In addition to any other mandatory repayments pursuant to this Section 5.02
(but subject to Sections 5.02(e) and (f), no later than the fifth Business Day
following each date on or after the Closing Date upon which Aleris or any of its
Subsidiaries receives any cash proceeds from any issuance or incurrence by
Aleris or any of its Subsidiaries of Indebtedness for borrowed money (other than
Indebtedness for borrowed money permitted to be incurred pursuant to
Section 10.04), an amount equal to 100% of the Net Debt Proceeds of the
respective issuance or incurrence of Indebtedness shall be applied in accordance
with the requirements of Sections 5.02(e) and (f).

 

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(c) In addition to any other mandatory repayments pursuant to this Section 5.02
(but subject to Sections 5.02(e) and (f)), on each Business Day during a
Dominion Period on or after the Closing Date upon which Aleris or any of its
Subsidiaries receives any Net Sale Proceeds from any Asset Sale with respect to
Collateral, an amount equal to 100% of the Net Sale Proceeds therefrom shall be
applied on such date in accordance with the requirements of Sections 5.02(e) and
(f), and in connection therewith, the Borrowers shall deliver to the
Administrative Agent an updated Borrowing Base Certificate reflecting the
occurrence of the applicable Asset Sale.

(d) In addition to any other mandatory repayments pursuant to this Section 5.02
(but subject to Sections 5.02(e) and (f)), on each Business Day during a
Dominion Period upon which Aleris or any of its Subsidiaries receives any cash
proceeds from any Recovery Event with respect to Collateral, an amount equal to
100% of the Net Insurance Proceeds from such Recovery Event shall be applied on
such date in accordance with the requirements of Sections 5.02(e) and (f), and
in connection therewith, the Borrowers shall deliver to the Administrative Agent
an updated Borrowing Base Certificate reflecting the occurrence of the
applicable Recovery Event.

(e) Notwithstanding anything to the contrary contained herein, any proceeds
received from the sale, disposition, realization or other exercise of remedies
on the Collateral pledged by the Canadian Credit Parties shall, pursuant to
Section 16.02 hereof, first be used to repay any Canadian Revolving Loans. In
the absence of a designation by the Borrowers as described in the preceding
sentence, the Administrative Agent shall, subject to the above, make such
designation in its sole discretion.

(f) Subject to Section 2.11, each repayment of any Loans made pursuant to a
Borrowing shall be applied pro rata among such Loans.

(g) Reserved.

(h) In addition to any other mandatory repayments pursuant to this Section 5.02,
all then outstanding Swingline Loans shall be settled and repaid in full no
later than the seventh day following the incurrence thereof; provided that, if
the seventh day is not a Business Day, such Swingline Loans shall be settled and
repaid on the next succeeding Business Day and (ii) all outstanding Swingline
Loans shall be repaid in full on the Final Maturity Date.

(i) Notwithstanding anything in this Section 5.02 to the contrary, but without
limiting the payment obligations under Sections 5.02(b) through (d) inclusive,
it is understood and agreed that none of Sections 5.02(b) through (d) inclusive,
shall require that amounts received by any Foreign Subsidiary or Foreign
Subsidiaries or a Domestic Subsidiary which is a Subsidiary of a Foreign
Subsidiary be used to repay Obligations owed by any U.S. Credit Parties. In
addition to any other mandatory repayments pursuant to this Section 5.02, no
later than the fifth (5th) Business Day following each date on or after the
Closing Date upon which Aleris or any of its Subsidiaries receives any cash
proceeds from any Asset Sale, Recovery Event with respect to assets included in
the Collateral or any collection, sale, foreclosure or other realization upon
any Collateral (after the application of the proceeds thereof in accordance with
Section 5.02(f)) received by a Foreign Subsidiary, Aleris or the applicable
Subsidiary will make the prepayments required under this Agreement.

 

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5.03 Payments and Computations; Maintenance of Accounts; Statement of Accounts.
(a) Except as otherwise specifically provided herein, all payments under this
Agreement and under any Note shall be made to the Administrative Agent for the
account of the Lender or Lenders entitled thereto not later than 1:00 p.m. (New
York time) on the date when due and shall be made in (w) U.S. Dollars in
immediately available funds at the Payment Office of the Administrative Agent in
respect of any obligation of the Borrowers under this Agreement except as
otherwise provided in the immediately following clauses (x), (y) and (z),
(x) subject to Section 2.14, Canadian Dollars in immediately available funds at
the Payment Office of the Administrative Agent, if such payment is made in
respect of (i) principal of, or interest on Canadian Dollar Denominated Loans or
(ii) any increased costs, indemnities or other amounts owing with respect to
Canadian Dollar Denominated Loans (or Commitments relating thereto) at any time
prior to the occurrence of a Conversion Event, in the case of this clause
(ii) to the extent the respective Lender which is charging the same denominates
the amounts owing in Canadian Dollars, (y) subject to Section 2.14, Euros in
immediately available funds at the Payment Office of the Administrative Agent,
if such payment is made in respect of (i) principal of or interest on Euro
Denominated Loans or (ii) any increased costs, indemnities or other amounts
owing with respect to Euro Denominated Loans (or Commitments relating thereto)
at any time prior to the occurrence of a Conversion Event and (z) subject to
Section 2.14, the applicable Available Currency, in immediately available funds
at the Payment Office of the Administrative Agent, if such payment is made in
respect of (i) principal of or interest on Other Foreign Currency Denominated
Loans or (ii) any increased costs, indemnities or other amounts owing with
respect to Other Foreign Currency Denominated Loans (or Commitments relating
thereto) at any time prior to the occurrence of a Conversion Event. Nothing in
the succeeding clauses of this Section 5.03 shall affect or alter the Borrowers’
obligations to the Administrative Agent, the Issuing Lenders and the Lenders
with respect to all payments otherwise required to be made by the Borrowers in
accordance with the terms of this Agreement and the other Credit Documents.
Whenever any payment to be made hereunder or under any Note shall be stated to
be due on a day which is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day and, with respect to payments of
principal, interest shall be payable at the applicable rate during such
extension.

(b)(i) (A) Each of Aleris and the other U.S. Credit Parties shall, along with
the Administrative Agent and certain financial institutions selected by Aleris
and reasonably acceptable to the Administrative Agent (the “U.S. Collection
Banks”), enter into on or before the Closing Date and thereafter maintain Cash
Management Control Agreements in respect of each of the U.S. Collection
Accounts. Aleris and each of the other U.S. Credit Parties shall instruct all
Account Debtors of Aleris and such U.S. Credit Parties to remit all payments to
the applicable “P.O. Boxes” or “Lockbox Addresses” of the applicable U.S.
Collection Bank with respect to all Accounts of such Account Debtor, which
remittances shall be collected by the applicable U.S. Collection Bank and
deposited in the applicable U.S. Collection Account. All amounts received by
Aleris, any of its Domestic Subsidiaries and any Collection Bank in respect of
any Account, in addition to all other cash received from any other source (other
than amounts permitted to be deposited or held in an Exempted Deposit Account),
shall upon receipt be deposited into a U.S. Collection Account or directly into
the Core U.S. Concentration Account.

(B) Each Canadian Credit Party shall, along with the Administrative Agent and
certain financial institutions selected by Aleris and reasonably acceptable to
the Administrative Agent (the “Canadian Collection Banks”), enter into on or
before the Closing Date and thereafter maintain Cash Management Control
Agreements in respect of each of the Canadian Collection Accounts. Each Canadian
Subsidiary shall instruct all Account Debtors of such Canadian Subsidiaries to
remit all payments to the applicable “P.O. Boxes” or “Lockbox Addresses” of the
applicable Canadian Collection Bank with respect to all Accounts of such Account
Debtor, which remittances shall be collected by the applicable Canadian
Collection

 

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Bank and deposited in the applicable Canadian Collection Account. All amounts
received by each Canadian Subsidiary and any Canadian Collection Bank in respect
of any Account, in addition to all other cash received from any other source
(other than amounts permitted to be deposited or held in an Exempted Deposit
Account), shall upon receipt be deposited into a Canadian Collection Account or
directly into the Core Canadian Concentration Account.

(C) The European Borrower, the U.K. Guarantor, and each European Distribution
Subsidiary shall, along with the Administrative Agent and certain financial
institutions selected by Aleris and reasonably acceptable to the Administrative
Agent (the “European Collection Banks”), enter into on or before the Closing
Date (or, in the case of European Distribution Subsidiaries organized after the
Closing Date, on the date which such European Distribution Subsidiary begins to
conduct business) and thereafter maintain Cash Management Control Agreements in
respect of each European Collection Account. Each European Distribution
Subsidiary shall instruct all Account Debtors of such Subsidiaries to remit all
payments to the applicable “P.O. Boxes”, “Lockbox Addresses” of the European
Borrower or a sub-account of the European Collection Account of the European
Borrower with the applicable European Collection Bank with respect to all
Accounts of such Account Debtor, which remittances shall be collected by the
applicable European Collection Bank and deposited in the applicable European
Collection Account. All amounts received by each European Distribution
Subsidiary, the U.K. Guarantor and any European Collection Bank in respect of
any Account, in addition to all other cash received from any other source (other
than amounts permitted to be deposited or held in an Exempted Deposit Account),
shall upon receipt be deposited into a European Collection Account or directly
into the Core European Concentration Account.

(ii) Aleris and the other U.S. Credit Parties shall, along with the
Administrative Agent and each of those banks in which the U.S. Disbursement
Accounts are maintained, enter into on or before the Closing Date and thereafter
maintain Cash Management Control Agreements with respect to each such U.S.
Disbursement Account (except with respect to Exempted Disbursement Accounts and
Exempted Deposit Accounts). Each Canadian Subsidiary shall, along with the
Administrative Agent and each of those banks in which the Canadian Disbursement
Accounts are maintained, enter into on or prior to the Closing Date and
thereafter maintain Cash Management Control Agreements with respect to each such
Canadian Disbursement Account (except with respect to Exempted Disbursement
Accounts and Exempted Deposit Accounts). The European Borrower, the U.K.
Guarantor, and each European Distribution Subsidiary shall, along with the
Administrative Agent and each of those banks in which the European Disbursement
Accounts are maintained, enter into on or prior to the Closing Date (or, in the
case of European Distribution Subsidiaries organized after the Closing Date, on
the date which such European Distribution Subsidiary begins to conduct business)
and thereafter maintain Cash Management Control Agreements with respect to each
such European Disbursement Account (except with respect to Exempted Disbursement
Accounts and Exempted Deposit Account).

(c) All amounts held in the U.S. Collection Accounts and U.S. Disbursement
Accounts (other than Exempted Disbursement Accounts) with respect to Aleris and
its Domestic Subsidiaries shall be wired by the close of business on each
Business Day into an account with a financial institution selected by Aleris and
reasonably acceptable to the Administrative Agent and subject to a Cash
Management Control Agreement (the “Core U.S. Concentration Account”) unless such
amounts are otherwise required or permitted to be applied pursuant to
Section 5.02. All amounts held in the Canadian Collection Accounts and Canadian
Disbursement Accounts (other than Exempted Disbursement Accounts) with respect
to the Canadian Subsidiaries shall be wired by the close of business on each
Business Day into an account with a financial institution selected by Aleris and
reasonably acceptable to

 

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the Administrative Agent and subject to a Cash Management Control Agreement (the
“Core Canadian Concentration Account”) unless such amounts are otherwise
required or permitted to be applied pursuant to Section 5.02. All amounts held
in all of the European Collection Accounts and European Disbursement Accounts
(other than Exempted Disbursement Accounts) with respect to the European
Subsidiaries shall be wired by the close of business on each Business Day into
one or more accounts with a financial institution selected by Aleris and
reasonably acceptable to the Administrative Agent and subject to a Cash
Management Control Agreement (the “Core European Concentration Accounts”) unless
such amounts are otherwise required or permitted to be applied pursuant to
Section 5.02. Notwithstanding anything to the contrary contained herein, each
European Distribution Subsidiary and each Specified European Manufacturing
Subsidiary (other than the U.K. Guarantor) shall use its commercially reasonable
efforts to notify prior to the Closing Date all of their customers to send all
payments to European Collection Accounts owned by European Borrower. During the
existence of a Dominion Period, the Administrative Agent may, at its option,
apply the payments received in such accounts to the repayment of the Obligations
in accordance with the terms of this Agreement, or remit such payments to the
applicable Borrowers. If no Dominion Period exists, European Borrower may remit
such proceeds to the European Subsidiaries in the ordinary course of business
and to the extent not inconsistent with this Agreement.

(d)(i) Each Cash Management Control Agreement relating to a Core U.S.
Concentration Account shall provide that during any Dominion Period, all
collected amounts held in the Core U.S. Concentration Account from and after the
date requested by the Administrative Agent, shall be sent by ACH or wire
transfer no less frequently than once per Business Day (unless the Commitments
have been terminated and the Obligations have been paid in full) to an account
maintained by the Administrative Agent at Bank of America, N.A. (the “Bank of
America Account”). After an Event of Default, all amounts received in the Bank
of America Account shall be applied (and allocated) by the Administrative Agent
on a daily basis in the following order (in each case, to the extent the
Administrative Agent has actual knowledge of the amounts owing or outstanding as
described below, and after giving effect to the application of any such amounts
(x) otherwise required to be applied pursuant to Sections 5.02(b), (c) or (d) or
(y) constituting proceeds from any Collateral): (1) first, to the payment (on a
ratable basis) of any outstanding Expenses actually due and payable to the
Administrative Agent under any of the Credit Documents and to repay or prepay
outstanding U.S. Borrower Swingline Loans advanced by the Swingline Lender;
(2) second, to the extent all amounts referred to in preceding clause (1) have
been paid in full, to pay (on a ratable basis) all outstanding Expenses actually
due and payable to each Issuing Lender under any of the Credit Documents and to
repay all outstanding Unpaid Drawings and all interest thereon; (3) third, to
the extent all amounts referred to in preceding clauses (1) and (2) have been
paid in full, to pay (on a ratable basis) all accrued and unpaid interest
actually due and payable on the U.S. Borrower Revolving Loans and all accrued
and unpaid Fees actually due and payable to the Administrative Agent, the
Issuing Lenders and the Lenders under any of the Credit Documents; (4) fourth,
to the extent all amounts referred to in preceding clauses (1) through (3),
inclusive, have been paid in full, to repay (on a ratable basis) the outstanding
principal of U.S. Borrower Revolving Loans (whether or not then due and
payable); (5) fifth, to the extent all amounts referred to in preceding clauses
(1) through (4), inclusive, have been paid in full, to pay or cash
collateralize, as the case may be, (on a ratable basis) Obligations (guaranteed
by the U.S. Borrowers) as selected by the U.S. Borrowers so long as no Default
or Event of Default then exists or, in the absence of such designation or if a
Default or Event of Default then exists, as determined by the Administrative
Agent (other than Obligations under Secured Hedging Agreements and Treasury
Services Agreements), (6) sixth, to the extent all amounts referred to in
preceding clauses (1) through (5), inclusive, have been paid in full, to pay (on
a ratable basis) all other outstanding Obligations then due and payable to the
Administrative Agent and the Lenders under any of the Credit Documents (other
than Obligations under Secured Hedging Agreements and Treasury Services
Agreements), (7) seventh, to

 

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Obligations under Secured Hedging Agreements and Treasury Services Agreements;
and (8) eighth, to the U.S. Borrowers. Each Credit Party agrees that it will not
cause any proceeds of any Core U.S. Concentration Account to be otherwise
redirected.

(ii) Each Cash Management Control Agreement relating to a Core Canadian
Concentration Account shall provide that during any Dominion Period, all
collected amounts held in the Core Canadian Concentration Account from and after
the date requested by the Administrative Agent, shall be sent by ACH or wire
transfer no less frequently than once per Business Day (unless the Commitments
have been terminated and the Canadian Borrower Obligations have been paid in
full) to an account maintained by the Administrative Agent at Bank of America,
N.A. (acting through its Canada branch) (the “Bank of America Canada Account”).
Subject to the terms of the Security Agreements, all amounts received in the
Bank of America Canada Account shall be applied (and allocated) by the
Administrative Agent on a daily basis in the following order (in each case, to
the extent the Administrative Agent has actual knowledge of the amounts owing or
outstanding as described below, and after giving effect to the application of
any such amounts (x) otherwise required to be applied pursuant to Sections
5.02(b), (c) or (d) or (y) constituting proceeds from any Collateral):
(1) first, to the payment (on a ratable basis) of any outstanding Expenses
actually due and payable by the Canadian Borrower to the Administrative Agent
under any of the Credit Documents and to repay or prepay outstanding Canadian
Borrower Swingline Loans advanced by the Swingline Lender; (2) second, to the
extent all amounts referred to in preceding clause (1) have been paid in full,
to pay (on a ratable basis) all accrued and unpaid interest actually due and
payable on the Canadian Revolving Loans and all accrued and unpaid Fees actually
due and payable by the Canadian Borrower to the Administrative Agent and the
Lenders under any of the Credit Documents; (3) third, to the extent all amounts
referred to in preceding clauses (1) through (2), inclusive, have been paid in
full, to repay (on a ratable basis) the outstanding principal of Canadian
Revolving Loans (whether or not then due and payable); (4) fourth, to the extent
all amounts referred to in preceding clauses (1) through (3), inclusive, have
been paid in full, to pay (on a ratable basis) all other outstanding Obligations
of the Canadian Borrower (including those Obligations guaranteed by the Canadian
Borrower) then due and payable to the Administrative Agent and the Lenders under
any of the Credit Documents (other than Obligations under Secured Hedging
Agreements and Treasury Services Agreements), (5) fifth, to Obligations under
Secured Hedging Agreements and Treasury Services Agreements; and (6) sixth, to
the Canadian Borrower. Each Credit Party agrees that it will not cause any
proceeds of any Core Canadian Concentration Account to be otherwise redirected.

(iii) Each Cash Management Control Agreement relating to a Core European
Concentration Account shall provide that all collected amounts held in the Core
European Concentration Account from and after the date requested by the
Administrative Agent, shall be sent by ACH or wire transfer no less frequently
than once per Business Day (unless the Commitments have been terminated and the
European Borrower Obligations have been paid in full) to an account maintained
by the Administrative Agent. After an Event of Default, all amounts received in
such account shall be applied (and allocated) by the Administrative Agent on a
daily basis in the following order (in each case, to the extent the
Administrative Agent has actual knowledge of the amounts owing or outstanding as
described below, and after giving effect to the application of any such amounts
(x) otherwise required to be applied pursuant to Sections 5.02(b), (c) or (d) or
(y) constituting proceeds from any Collateral): (1) first, to the payment (on a
ratable basis) of any outstanding Expenses actually due and payable by the
European Borrower to the Administrative Agent under any of the Credit Documents
and to repay or prepay outstanding European Borrower Swingline Loans advanced by
the Swingline Lender; (2) second, to the extent all amounts referred to in
preceding clause (1) have been paid in full, to pay (on a ratable basis)

 

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all accrued and unpaid interest actually due and payable on the European
Facility Revolving Loans and all accrued and unpaid Fees actually due and
payable by the European Borrower to the Administrative Agent and the Lenders
under any of the Credit Documents; (3) third, to the extent all amounts referred
to in preceding clauses (1) through (2), inclusive, have been paid in full, to
repay (on a ratable basis) the outstanding principal of European Borrower
Revolving Loans (whether or not then due and payable); (4) fourth, to the extent
all amounts referred to in preceding clauses (1) through (3), inclusive, have
been paid in full, to pay (on a ratable basis) all other outstanding Obligations
of the European Borrower then due and payable to the Administrative Agent
(including those Obligations guaranteed by the European Borrower), the
Administrative Agent and the Lenders under any of the Credit Documents (other
than Obligations under Secured Hedging Agreements and Treasury Services
Agreements), (5) fifth, to Obligations under Secured Hedging Agreements and
Treasury Services Agreements; and (6) sixth, to the European Borrower. Each
Credit Party agrees that it will not cause any proceeds of any Core European
Concentration Account to be otherwise redirected.

(e) Without limiting the provisions set forth in Section 13.15, the
Administrative Agent shall maintain an account on its books in the name of each
of the Borrowers (collectively, the “Credit Account”) in which each Borrower
will be charged with all loans and advances made by the Lenders to such Borrower
for such Borrower’s account, including the Loans, the Letter of Credit
Outstandings, and the Fees, Expenses and any other Obligations relating thereto.
Each Borrower will be credited, in accordance with this Section 5.03, with all
amounts received by the Lenders from such Borrower or from others for its
account, including, as set forth above, all amounts received by the
Administrative Agent and applied to the Obligations. In no event shall prior
recourse to any Accounts or other Collateral be a prerequisite to the
Administrative Agent’s right to demand payment of any Obligation upon its
maturity. Further, the Administrative Agent shall have no obligation whatsoever
to perform in any respect any of Aleris’ or any of its Subsidiaries’ contracts
or obligations relating to the Accounts.

(f) After the end of each month, the Administrative Agent shall send Aleris and
each Lender a statement accounting for the charges, loans, advances and other
transactions occurring among and between the Administrative Agent, the Lenders,
the Issuing Lenders and each Borrower during that month. The monthly statements
shall, absent manifest error, be final, conclusive and binding on each Borrower
and the Lenders.

5.04 Net Payments. (a) All payments made by or on behalf of any Credit Party
under any Credit Document (including, in the case of each Borrower, in its
capacity as a guarantor pursuant to Section 14) in each case will be made
without setoff, counterclaim or other defense. Except as provided in
Section 5.04(b), all such payments will be made free and clear of, and without
deduction or withholding for, any Taxes. If any Taxes are levied or imposed with
respect to such payment, the relevant Borrower (and any Credit Party making the
respective payment or which has guaranteed the obligations of the relevant
Borrower) agrees to pay the full amount of such Taxes to the appropriate taxing
authority, and shall pay to the applicable Section 5.04 Indemnitee such
additional amounts as may be necessary so that every payment of all amounts due
under this Agreement or under any other Credit Document, after withholding or
deduction for or on account of any Taxes (including, for the avoidance. of
doubt, withholding and deductions applicable to additional amounts payable under
this Section 5.04), will not be less than the amount provided for herein or in
such other Credit Document. The respective Borrowers will furnish to the
Administrative Agent within forty-five (45) days after the date the payment of
any Taxes is due pursuant to applicable law certified copies of tax receipts or
other evidence reasonably satisfactory to the Administrative Agent evidencing
such payment by such Borrowers or the respective Credit Party. The U.S.
Borrowers (jointly and severally), the Canadian Borrower and the European
Borrower (and any Credit Party making the respective payment or which has
guaranteed the obligations of the respective

 

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Borrower), as applicable, agree to indemnify and hold harmless each Section 5.04
Indemnitee and reimburse such Section 5.04 Indemnitee upon its written request
(which shall set forth the basis and calculation of such amount) for the amount
of any Taxes so levied or imposed and paid by such Section 5.04 Indemnitee.
Notwithstanding anything to the contrary in this Section 5.04(a), (i) any
payments required to be made pursuant to this Section 5.04(a) to an Indirect
Section 5.04 Indemnitee shall be made to the Related Pass Through Entity and
(ii) any request for reimbursement pursuant to this Section 5.04(a) that is to
be made by an Indirect Section 5.04 Indemnitee shall be made by the Related Pass
Through Entity.

(b) The Administrative Agent and each Lender (which, for purposes of this
sentence, the following four sentences, Section 5.04(c) and Section 5.04(d)
shall include an Issuing Lender) that is a Lender to the U.S. Borrowers and is
not a United States person (as such term is defined in Section 7701(a)(30) of
the Code) agrees to deliver to Aleris and the Administrative Agent on or prior
to the Closing Date or, in the case of a Lender that is an assignee or
transferee of an interest under this Agreement pursuant to Section 2.13 or
13.04(b) (unless the respective Lender was already a Lender hereunder
immediately prior to such assignment or transfer and is in compliance with the
provisions of this paragraph), on the date of such assignment or transfer to
such Lender or, in the case of a successor Issuing Lender, the date such Issuing
Lender becomes an Issuing Lender, (i) two accurate and complete original signed
copies of U.S. Internal Revenue Service Form W¬8ECI or Form W-8BEN (with respect
to a complete exemption from withholding under an income tax treaty) (or
successor forms) certifying to such Lender’s entitlement as of such date to a
complete exemption from United States withholding tax with respect to payments
to be made under this Agreement and under any Note, or (ii) if the Lender is not
a “bank” within the meaning of Section 881(c)(3)(A) of the Code and cannot
deliver forms described in clause (i) above, (x) a certificate substantially in
the form of Exhibit D (any such certificate, a “Section 5.04(b)(ii)
Certificate”) and (y) two accurate and complete original signed copies of U.S.
Internal Revenue Service Form W-8BEN (with respect to the portfolio interest
exemption) (or successor form) certifying to such Lender’s entitlement as of
such date to a complete exemption from United States withholding tax with
respect to payments of interest to be made under this Agreement and under any
Note or (iii) in the case of the Administrative Agent and each such Lender, if a
Lender or the Administrative Agent is a foreign intermediary or flow-through
entity for U.S. federal income tax purposes, two accurate and complete signed
copies of Internal Revenue Service Form W-8IMY (and all necessary attachments)
establishing a complete exemption from United States withholding tax with
respect to payments made to the Administrative Agent or the applicable Lender,
as the case may be, under this Agreement and under any Note. In addition, the
Administrative Agent and each Lender to the U.S. Borrowers agrees that from time
to time after the Closing Date, when a lapse in time or change in circumstances
or law renders the previous certification obsolete, invalid or inaccurate in any
material respect, the Administrative Agent or such Lender will deliver to Aleris
and the Administrative Agent two new accurate and complete original signed
copies of U.S. Internal Revenue Service Form W-8ECI, Form W-8BEN (with respect
to the benefits of any income tax treaty), or Form W-8BEN (with respect to the
portfolio interest exemption) and a Section 5.04(b)(ii) Certificate, or Form
W-8IMY (with respect to foreign intermediary or flow through entity), as the
case may be, and such other forms and necessary attachments as may be required
in order to confirm or establish the entitlement of such Person to a continued
exemption from United States withholding tax with respect to payments under this
Agreement and any Note, or the Administrative Agent and/or such Lender shall
immediately notify Aleris and the Administrative Agent of its inability to
deliver any such form or Section 5.04(b)(ii) Certificate, in which case the
Administrative Agent and/or such Lender shall not be required to deliver any
such new form or Section 5.04(b)(ii) Certificate pursuant to this
Section 5.04(b). Notwithstanding the foregoing, with respect to payments made by
any Credit Party under any Credit Document to or for the benefit of a
Participant, such Participant shall be required to provide forms and/or
certificates pursuant to the preceding sentences of this Section 5.04(b) only to
the extent that such Participant is legally entitled to do so. The
Administrative Agent and each Lender that is a Lender to the U.S. Borrowers and
is a United States person (as such term is defined in Section

 

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7701(a)(30) of the Code) for U.S. federal income tax purposes (other than an
Administrative Agent or Lender that may be treated as an exempt recipient based
on the indicators described in U.S. Treasury Regulation
Section 1.6049-4(c)(1)(ii) except to the extent required by Treasury Regulation
Section 1.1441-1(d)(4) (and any successor provision)) agrees to deliver (with
respect to itself only) to Aleris and the Administrative Agent, on or prior to
the Closing Date or, in the case of such an Administrative Agent appointed after
the Closing Date pursuant to Section 12.09 or a Lender that is an assignee or
transferee of an interest under this Agreement pursuant to Section 2.13 or
13.04(b) (unless the respective Lender was already a Lender to the U.S.
Borrowers hereunder immediately prior to such assignment or transfer and is in
compliance with the provisions of this paragraph), on the date of such
assignment or transfer to such Lender, two accurate and complete original signed
copies of U.S. Internal Revenue Service Form W-9 (or successor forms) certifying
to such Person’s entitlement as of such date to a complete exemption from United
States backup withholding tax with respect to payments to be made under this
Agreement and under any other Credit Document. Notwithstanding anything to the
contrary contained in Section 5.04(a), but subject to Section 13.04(b) and the
second succeeding sentence, (x) the U.S. Borrowers shall be entitled, to the
extent they are required to do so by law, to deduct or withhold Taxes imposed by
the United States (or any political subdivision or taxing authority thereof or
therein) from interest, Fees or other amounts payable hereunder for the account
of the Administrative Agent and/or any Lender, as the case may be, to the extent
that the Administrative Agent and/or such Lender, as the case may be, has not
provided to such Borrower U.S. Internal Revenue Service Forms or documentation
required pursuant to Section 5.04 that establish a complete exemption from
deduction or withholding and (y) no Borrower shall be obligated pursuant to
Section 5.04(a) to gross-up payments to be made to the Administrative Agent
and/or a Lender (other than a Participant following the occurrence of a
Conversion Event), as the case may be, in respect of withholdings, income or
similar taxes imposed by the United States federal government if (I) the
Administrative Agent and/or such Lender, as the case may be, has not provided to
such Borrower the U.S. Internal Revenue Service Forms required to be provided to
such Borrower pursuant to this Section 5.04(b) or documentation required
pursuant to Section 5.04 or (II) in the case of a payment, other than interest,
to the Administrative Agent and/or a Lender (other than a Participant following
the occurrence of a Conversion Event), as the case may be, described in clause
(ii) above, to the extent that such forms or documentation do not establish a
complete exemption from withholding of such taxes. Notwithstanding anything to
the contrary in Section 5.04(a), but subject to Section 13.04(b) and the
immediately succeeding sentence, (x) the Canadian Borrower shall be entitled, to
the extent it is required to do so by law, to deduct or withhold income or
similar Taxes imposed by Canada (or any political subdivision or taxing
authority thereof or therein) from interest, Fees or other amounts payable
hereunder for the account of the Administrative Agent, any Canadian Lender
and/or any Issuing Lender in respect of a Letter of Credit issued in favor of
the Canadian Borrower to the extent that the Administrative Agent and/or such
Canadian Lender or Issuing Lender, as the case may be, is not a Canadian
Resident or if the Administrative Agent or Canadian Lender or Issuing Lender (if
not a Canadian Resident) has not provided forms required by Section 2.17(a) that
establish a complete exemption from the withholding of such Taxes (or the
withholding of such Taxes at a reduced rate) and (y) the Canadian Borrower shall
not be obligated pursuant to Section 5.04(a) to gross-up payments to be made to
the Administrative Agent and/or a Canadian Lender or Issuing Lender, as the case
may be, in respect of withholdings, income or similar Taxes imposed by Canada
(or any political subdivision or taxing authority thereof or therein) if (I) the
Administrative Agent, such Canadian Lender and/or such Issuing Lender in respect
of a letter of credit issued in favor of the Canadian Borrower is not a Canadian
Resident or (II) the Administrative Agent or such Canadian Lender or such
Issuing Lender (if not a Canadian Resident) has not provided forms required by
Section 2.17(a) that establish a complete exemption from the withholding of such
Taxes (or the withholding of such Taxes at a reduced rate). Notwithstanding
anything to the contrary contained in the two preceding sentences or elsewhere
in this Section 5.04 and except as set forth in Section 13.04(b), the respective
U.S. Borrowers (jointly and severally), the Canadian Borrower and the European
Borrower (and any Credit Party making the respective payment or which has
guaranteed the obligations of the respective Borrower) agree to pay any

 

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additional amounts and to indemnify each Lender in the manner set forth in
Section 5.04(a) (without regard to the identity of the jurisdiction requiring
the deduction or withholding) in respect of any amounts deducted or withheld by
it as described in the two immediately preceding sentences as a result of any
changes after the Closing Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating to
the deducting or withholding of income or similar taxes; provided, however, that
(x) this sentence shall not apply to the portion of such amounts required to be
deducted or withheld by such Borrower or Borrowers to the extent such Borrower
or Borrowers would have been required to pay additional amounts pursuant to
Section 5.04(a) irrespective of such change in such applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, (y) this sentence shall not be read to permit the Administrative Agent
and/or a Lender to a U.S. Borrower to refuse to deliver any Form W-8ECI, Form
W-8BEN, Form W-8IMY, or Section 5.04(b)(ii) Certificate or documentation
required pursuant to Section 5.04, as the case may be, except where, as a result
of such change in law, treaty, governmental rule, regulation, guideline or
order, or in the interpretation thereof, relating to the deducting or
withholding of income or similar taxes, the Administrative Agent and/or such
Lender is unable to deliver such form, documentation or certificate as described
above, and (z) this sentence shall not apply to any withholding as a result of a
failure to comply with FATCA.

(c) Each Lender agrees to use reasonable efforts (consistent with legal and
regulatory restrictions and subject to overall policy considerations of such
Lender) to file any certificate or document or to furnish to the relevant
non-U.S. Borrower any information, in each case, as reasonably requested by such
non-U.S. Borrower that may be necessary to establish any available exemption
from, or reduction in the amount of, any Taxes; provided, however, that nothing
in this Section 5.04(c) shall require a Lender to disclose any confidential
information (including, without limitation, its tax returns or its
calculations).

(d) If a payment made to the Administrative Agent or any Lender hereunder or
under any other Credit Document would be subject to United States federal
withholding tax imposed by FATCA if the Administrative Agent or such Lender, as
applicable, fails to comply with applicable reporting and other requirements of
FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as
applicable), the Administrative Agent or such Lender, as applicable, shall use
commercially reasonable efforts to deliver to the applicable Borrower and the
Administrative Agent, at the time or times prescribed by applicable law or as
reasonably requested by such Borrower or the Administrative Agent, (A) two
accurate, complete and signed certifications prescribed by applicable law and/or
reasonably satisfactory to such Borrower and the Administrative Agent that
establish that such payment is exempt from United States federal withholding tax
imposed by FATCA and (B) any other documentation reasonably requested by such
Borrower or the Administrative Agent sufficient for such Borrower and the
Administrative Agent to comply with their obligations under FATCA and to
determine that the Administrative Agent or such Lender, as applicable, has
complied with such applicable reporting and other requirements of FATCA.

(e) If a Borrower pays any additional amount under this Section 5.04 to a
Section 5.04 Indemnitee, and such Section 5.04 Indemnitee determines in its
reasonable sole discretion that it has actually received or realized in
connection therewith any refund or any reduction of, or credit against
(including, for the avoidance of doubt, any foreign tax credit), its tax
liabilities in or with respect to the taxable year in which the additional
amount is paid (a “Tax Benefit”), such Section 5.04 Indemnitee shall pay to such
Borrower an amount (not to exceed the additional amounts paid by such Borrower
under this Section 5.04 with respect to Taxes giving rise to such Tax Benefit)
that the Section 5.04 Indemnitee shall, in its reasonable sole discretion,
determine is equal to the net benefit, after tax, which was obtained by such
Section 5.04 Indemnitee in such year as a consequence of such Tax Benefit;
provided, however, that (i) any Section 5.04 Indemnitee may determine, in its
sole discretion consistent with the policies of such

 

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Section 5.04 Indemnitee, whether to seek a Tax Benefit; (ii) any taxes that are
imposed on a Section 5.04 Indemnitee as a result of a disallowance or reduction
(including through the expiration of any tax credit carryover or carryback of
such Section 5.04 Indemnitee that otherwise would not have expired) of any Tax
Benefit with respect to which such Section 5.04 Indemnitee has made a payment to
such Borrower pursuant to this Section 5.04(e) shall be treated as a Tax for
which such Borrower is obligated to indemnify such Section 5.04 Indemnitee
pursuant to this Section 5.04 without any exclusions or defenses; (iii) nothing
in this Section 5.04(e) shall require any Section 5.04 Indemnitee to disclose
any confidential information to any Borrower (including, without limitation, its
tax returns or its calculations); and (iv) no Section 5.04 Indemnitee shall be
required to pay any amounts pursuant to this Section 5.04(e) at any time that a
Default or an Event of Default exists.

(f) If a Borrower determines in good faith that a reasonable basis exists for
contesting any Taxes for which additional amounts have been paid under this
Section 5.04 to a Section 5.04 Indemnitee, such Section 5.04 Indemnitee shall
cooperate with the Borrower in challenging such Taxes, at the Borrower’s
expense, if so requested by the Borrower in writing.

5.05 Minimum Interest Rates and Payments.

(a) The various rates of interests provided for in this Agreement (including,
without limitation, under Section 2.08) are minimum interest rates.

(b) When entering into this Agreement, each party hereto has assumed that the
payments required under this Agreement are not and will not become subject to
Swiss Withholding Tax. Notwithstanding that the parties hereto do not anticipate
that any payment will be subject to Swiss Withholding Tax, they agree that, in
the event that Swiss Withholding Tax should be imposed on interest or other
payments (the “Relevant Amount”) by a Swiss Obligor, any payment of interest due
by such Swiss Obligor shall, subject to the provisions of this Agreement, be
increased to an amount which (after making any deduction of the Swiss
Withholding Tax) results in a payment to each Lender entitled to such payment of
an amount equal to the payment which would have been due had no deduction of
Swiss Withholding Tax been required. For this purpose, the Swiss Withholding Tax
shall be calculated on the full grossed-up amount.

(c) The European Borrower shall not be required to make an increased payment to
any specific Lender (but without prejudice to the rights of all other Lenders
hereunder) under paragraph (b) above or under Section 5.04 in connection with a
Swiss Withholding Tax if the European Borrower has breached the Ten Non-Bank
Regulations and/or Twenty Non-Bank Regulations as a direct result of (i) the
incorrectness of the representation made by such Lender on the Closing Date
pursuant to the first sentence of Section 2.18 (if Schedule I-B specified that
such Lender was a Swiss Qualifying Lender) or (ii) such Lender, as assignee or
participant, breaches the requirements and limitations for transfers,
assignments or sub-participations (including Restricted Sub-Participations)
pursuant to Section 13.04.

(d) For the avoidance of doubt, the European Borrower shall be required to make
an increased payment to a specific Lender under paragraph (b) above in
connection with the imposition of a Swiss Withholding Tax if the European
Borrower has breached the Ten Non-Bank Regulations and/or the Twenty Non-Bank
Regulations as a result of its failure to comply with the provisions of
Section 10.10 or, if after a Significant Event of Default or Conversion Event,
lack of compliance with the Ten Non-Bank Regulations and/or the Twenty Non-Bank
Regulations as a result of assignments or participation effected in accordance
herewith.

 

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(e) If requested by the Administrative Agent, a Swiss Obligor shall provide to
the Administrative Agent those documents which are required by law and
applicable double taxation treaties to be provided by the payer of such tax for
each relevant Lender to prepare a claim for refund of Swiss Withholding Tax. In
the event Swiss Withholding Tax is refunded to the Lender by the Swiss Federal
Tax Administration, the relevant Lender shall forward, after deduction of costs,
such amount to the Swiss Obligor; provided, however, that (i) the relevant Swiss
Obligor has fully complied with its obligations under this Section 5.05;
(ii) the relevant Lender may determine, in its sole discretion, consistent with
the policies of such Lender, the amount of the refund attributable to Swiss
Withholding Tax paid by the relevant Swiss Obligor; (iii) nothing in
Section 5.05 shall require the Lender to disclose any confidential information
to the Swiss Obligor (including, without limitation, its tax returns); and
(iv) no Lender shall be required to pay any amounts pursuant to this
Section 5.05(e) at any time during which a Default or Event of Default exists.

SECTION 6. Conditions Precedent to Credit Events on the Closing Date. The
obligation of each Lender to make Loans, and the obligation of each Issuing
Lender to issue Letters of Credit, in each case on the Closing Date, are subject
at the time of the making or converting of such Loans or the issuance or deemed
issuance of such Letters of Credit to the satisfaction of the following
conditions (unless waived in accordance with Section 13.12):

6.01 Credit Documents. Each of the Credit Documents shall have been executed and
delivered by the Borrowers and the Guarantors.

6.02 Payment of Costs and Expenses. All costs, fees, expenses (including,
without limitation, legal fees and expenses) and other compensation contemplated
hereby, payable, on or prior to the Closing Date, to the Administrative Agent
and the Lenders shall have been paid to the extent due and invoiced at least two
(2) Business Days prior to the Closing Date.

6.03 Reserved.

6.04 Confirmation of Perfected Security Interest. The Guaranties and Security
Agreements required hereunder shall have been executed and delivered in form,
scope and substance customary for financings of this type and the Lenders shall
have a First Priority perfected security interest in the assets of the Borrowers
and the Guarantors as and to the extent required by this Agreement and the
Security Documents.

6.05 Legal Opinions; Solvency Certificate and Other Certificates. The
Administrative Agent and the Lenders shall have received (x) customary legal
opinions reasonably acceptable to Administrative Agent and Joint Lead Arrangers
of lead counsel to Borrowers and Guarantors and local counsel to Borrowers and
Guarantors in their jurisdictions of organization and in jurisdictions under
which Receivables Purchase Agreements and foreign guaranty or security documents
are governed and, in the case of Canadian Credit Parties, where Collateral is
located, (y) a customary consolidated solvency certificate from the chief
financial officer of Aleris, in form and substance reasonably satisfactory to
the Administrative Agent, and (z) customary certificates, resolutions and other
customary closing documentation.

6.06 Appraisal and Collateral Examination. The Lenders shall have received
(x) an appraisal of the inventory of Aleris and its Subsidiaries prepared by
Sector3 Appraisals as of December 31, 2010 and (y) a collateral examination of
the Accounts and Inventory and related assets and liabilities of Aleris and its
Subsidiaries prepared by FTI Consultants as of September 30, 2010, in each case
reasonably acceptable to the Agents.

 

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6.07 Financial Statements; Projections. The Lenders shall have received
(i) monthly financial statements for Aleris and its consolidated Subsidiaries
for the month most recently ended in the thirty (30) days prior to the Closing
Date, and (ii) the Projections.

6.08 No Material Adverse Effect. No change, effect, event, occurrence, state of
facts or development shall have occurred or exist since December 31, 2010 that,
individually or together with any one or more changes, effects, events,
occurrences, or states of facts or developments, has had or would reasonably be
expected to have a material adverse effect on the business, assets, liabilities,
condition (financial or otherwise) or results of operations of Aleris and its
consolidated Subsidiaries taken as a whole or on the ability of Aleris or a
Subsidiary, as the case may be, to consummate the transactions contemplated by
this Agreement, the other Credit Documents, or any other documents contemplated
hereby or thereby, other than an effect resulting from any act or omission of
the Borrowers, taken with the prior written consent of the Agents.

6.09 Accuracy of Representations and Warranties. The representations and
warranties set forth herein shall be true and correct in all material respects
(where not already qualified by materiality, otherwise in all respects) on and
as of the Closing Date.

6.10 Pro Forma Excess Availability. Excess Availability hereunder shall be no
less than $200,000,000, after giving effect to the transactions contemplated by
the Credit Documents on the Closing Date (including, without limitation, the
payment of all transaction costs and expenses in connection with the credit
facility provided for in this Agreement).

SECTION 7. Conditions Precedent to All Credit Events. The obligation of each
Lender to make Loans and the obligation of each Issuing Lender to issue Letters
of Credit (including Letters of Credit deemed issued on the Closing Date), are
subject, at the time of each such Credit Event (except as hereinafter
indicated), to the satisfaction of the following conditions (or the waiver
thereof in accordance with Section 13.12):

7.01 No Default; Representations and Warranties. At the time of each such Credit
Event and also after giving effect thereto (i) there shall exist no Default or
Event of Default (including any Default or Event of Default on the Closing Date
under (and as defined in) the Existing Credit Agreement), (ii) there shall exist
no Cure Period, and (iii) all representations and warranties contained herein
(including, without limitation, the certifications set forth in Section 18) and
in the other Credit Documents shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on the date of such Credit Event (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date, and that any representation or warranty which is subject to
any materiality qualifier shall be required to be true and correct in all
respects).

7.02 Notice of Borrowing; Letter of Credit Request.

(a) Prior to the making of each Loan (excluding Swingline Loans and Mandatory
Borrowings), the Administrative Agent shall have received a Notice of Borrowing
meeting the requirements of Section 2.03(a). Prior to the making of any
Swingline Loan, the respective Swingline Lender shall have received the notice
required by Section 2.03(b)(i) or (ii), as applicable.

(b) Prior to the issuance of each Letter of Credit, the Administrative Agent and
the respective Issuing Lender shall have received a Letter of Credit Request
meeting the requirements of Section 3.03(a).

 

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7.03 Borrowing Base Limitations. Notwithstanding anything to the contrary set
forth herein (but subject to Section 2.01(e)), it shall be a condition precedent
to each Credit Event that after giving effect thereto (and the use of the
proceeds thereof) that:

(i) the Aggregate U.S. Borrower Exposure would not exceed the U.S. Borrowing
Base at such time;

(ii) the Aggregate European Borrower Exposure would not exceed the European
Borrowing Base at such time;

(iii) the Aggregate Canadian Exposure would not exceed the Canadian Borrowing
Base at such time; and

(iv) the Aggregate Exposure at such time would not exceed the Total Borrowing
Base at such time.

For purposes of this Section 7.03, the relevant Borrowing Bases will be
determined based upon the most recent Borrowing Base Certificate delivered by
Aleris, subject to adjustment by the Co-Collateral Agents in their Permitted
Discretion in accordance with the terms of this Agreement, less the Aggregate
Exposure as determined by the Administrative Agent on the applicable date of
determination.

The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by Aleris and each of the Borrowers to the
Administrative Agent and each of the Lenders that all the conditions specified
in Section 6 (with respect to Credit Events on the Closing Date) and in this
Section 7 and applicable to such Credit Event are satisfied as of that time. All
of the Notes, certificates, legal opinions and other documents and papers
referred to in Section 6 and in this Section 7, unless otherwise specified,
shall be delivered to the Administrative Agent at the Notice Office for the
account of each of the Lenders and, except for the Notes, in sufficient
counterparts or copies for each of the Lenders and shall be in form and
substance reasonably satisfactory to the Administrative Agent and the Required
Lenders.

SECTION 8. Representations and Warranties. In order to induce the Lenders to
enter into this Agreement and to make the Loans and issue (or participate in)
the Letters of Credit, in each case as provided herein, each Borrower (with
respect to itself and its Subsidiaries) makes the following representations and
warranties, in each case after giving effect to the Transaction, all of which
shall survive the execution and delivery of this Agreement and the Notes and the
making of the Loans and the issuance of the Letters of Credit, with the
occurrence of each Credit Event on or after the Closing Date being deemed to
constitute a representation and warranty that the matters specified in this
Section 8 are true and correct in all material respects on and as of the Closing
Date and on the date of each such other Credit Event (it being understood and
agreed that any representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct in all material respects
only as of such specified date):

8.01 Organizational Status. Each of Aleris and each of its Subsidiaries (i) is a
duly organized and validly existing corporation, partnership or limited or
unlimited liability company, as the case may be, in good standing (if
applicable) under the laws of the jurisdiction of its organization, (ii) has the
corporate, partnership or limited or unlimited liability company power and
authority, as the case may be, to own its property and assets and to transact
the business in which it is engaged and (iii) is duly qualified and is
authorized to do business and is in good standing in each jurisdiction where the
ownership, leasing or operation of its property or the conduct of its business
requires such qualifications except for failures to be so qualified which,
either individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.

 

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8.02 Power and Authority. Each Credit Party has the corporate, partnership or
limited or unlimited liability company power and authority, as the case may be,
to execute, deliver and perform the terms and provisions of each of the Credit
Documents to which it is party and has taken all necessary corporate,
partnership or limited or unlimited liability company action, as the case may
be, to authorize the execution, delivery and performance by it of each of such
Credit Documents to which it is a party. Each Credit Party has duly executed and
delivered each of the Credit Documents to which it is party, and each of such
Credit Documents constitutes its legal, valid and binding obligation enforceable
in accordance with its terms, except to the extent that the enforceability
thereof may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws generally affecting
creditors’ rights and by equitable principles (regardless of whether enforcement
is sought in equity or at law).

8.03 No Violation. Neither the execution, delivery or performance by any Credit
Party of the Credit Documents to which it is a party, nor compliance by it with
the terms and provisions thereof, (i) will contravene any material applicable
law, statute, rule or regulation or any order, writ, injunction or decree of any
court or governmental instrumentality in any material respect, (ii) will
conflict with or result in any breach of any of the material terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any Lien
(except pursuant to the Security Documents) upon any of the property or assets
of any Credit Party or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement or loan agreement, or any
other material agreement, contract or instrument, in each case to which any
Credit Party or any of its Subsidiaries is a party or by which it or any its
property or assets is bound or to which it may be subject, or (iii) will violate
any provision of the certificate or articles of incorporation, certificate of
formation, limited or unlimited liability company agreement or by-laws (or
equivalent organizational documents), as applicable, of any Credit Party or any
of its Subsidiaries except, in each case other than with respect to the creation
of Liens, referred to in clause (ii) above), to the extent that any such
contravention, conflict or violation would not reasonably be expected to result
in a Material Adverse Effect.

8.04 Approvals. No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except for (w) those
that have otherwise been obtained or made on or prior to the Closing Date and
which remain in full force and effect on the Closing Date, (x) filings which are
necessary to perfect the security interests created under the Security
Documents, which filings will be made on or before the Closing Date, (y) filings
in connection with consummating the Transactions and (z) other than with respect
to the Credit Documents, those the failure to obtain which would not reasonably
be expected to have a Material Adverse Effect) or exemption by, any governmental
or public body or authority, or any subdivision thereof, is required to be
obtained or made by, or on behalf of, any Credit Party to authorize, or is
required to be obtained or made by, or on behalf of, any Credit Party in
connection with, (i) the execution, delivery and performance of any Document or
(ii) the legality, validity, binding effect or enforceability of any Document.

 

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8.05 Financial Statements; Financial Condition; Undisclosed Liabilities;
Projections; No Material Adverse Effect. (a) (I) The audited consolidated
balance sheets of Aleris for its fiscal year ended December 31, 2010 and the
related consolidated statements of income and cash flows and changes in
shareholders’ equity of Aleris for such periods furnished to the Lenders prior
to the Closing Date, present fairly in all material respects the consolidated
financial position of Aleris at the date of said financial statements and the
consolidated results for the respective periods covered thereby, and (II) the
unaudited consolidated balance sheet of Aleris for its fiscal quarter ended
March 31, 2011 and the related consolidated statements of income and cash flows
and of Aleris for the three-month period ended on such date, furnished to the
Lenders prior to the Closing Date, present fairly in all material respects the
consolidated financial condition of Aleris and its Subsidiaries at the date of
said financial statements and the results for the period covered thereby,
subject to normal year-end adjustments and the absence of footnotes. All such
financial statements have been prepared in accordance with IFRS or GAAP, as
applicable, consistently applied except to the extent provided in the notes to
said financial statements and subject, in the case of the unaudited financial
statements, to normal year-end audit adjustments (all of which, when taken as a
whole, would not be materially adverse) and the absence of footnotes.

(b) Aleris has heretofore furnished to the Joint Lead Arrangers and to the
Lenders its pro forma consolidated balance sheet as of April 30, 2011 prepared
giving effect to the Transactions as if the same had occurred on such date. Such
pro forma consolidated balance sheet (i) has been prepared in good faith based
on the same assumptions believed by Aleris to be reasonable as of the Closing
Date), (ii) accurately reflects all adjustments necessary to give effect to the
Transactions, and (iii) presents fairly, in all material respects, the pro forma
financial position of the Aleris and the Subsidiaries as of April 30, 2011 as if
the Transactions had occurred on such date.

(c) On and as of the Closing Date and after giving effect to the Transactions
and to all Indebtedness (including, without limitation, the Loans) being issued,
incurred or assumed and Liens created by the Credit Parties in connection
therewith, (i) the sum of the assets, at a fair valuation, of each of Aleris and
its Subsidiaries taken as a whole, the U.S. Borrowers taken together as a whole,
the U.S. Borrowers and their Subsidiaries taken as a whole, the Canadian
Borrower individually, the Canadian Borrower and its Subsidiaries taken as a
whole, the European Borrower individually and the European Borrower and its
Subsidiaries taken as a whole, as the case may be, will exceed its or their
respective debts, (ii) Aleris and its Subsidiaries taken as a whole, the U.S.
Borrowers taken together as a whole, the U.S. Borrowers and their Subsidiaries
taken as a whole, the Canadian Borrower, the Canadian Borrower and its
Subsidiaries taken as a whole, the European Borrower individually, and the
European Borrower and its Subsidiaries taken as a whole, as the case may be, has
or have not incurred and does or do not intend to incur, and does or do not
believe that it or they will incur, debts beyond its or their respective ability
to pay such debts as such debts mature, and (iii) Aleris and its Subsidiaries
taken as a whole, the U.S. Borrowers taken together as a whole, the U.S.
Borrowers and their Subsidiaries taken as a whole, the Canadian Borrower
individually, the Canadian Borrower and its Subsidiaries taken as a whole, the
European Borrower individually, and the European Borrower and its Subsidiaries
taken as a whole, as the case may be, will have sufficient capital with which to
conduct its or their respective businesses. For purposes of this
Section 8.05(c), “debt” shall mean any liability on a claim, and “claim” shall
mean (a) right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured or (b) right to an equitable
remedy for breach of performance if such breach gives rise to a payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or unsecured. The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

 

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(d) Except for the Existing Letters of Credit outstanding on the Closing Date or
as disclosed in the financial statements delivered pursuant to Section 8.05(a),
there were as of the Closing Date no liabilities or obligations with respect to
Aleris or any of its Subsidiaries of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not due, but not including
accounts payable, accrued liabilities incurred in the ordinary course of
business and contractual obligations of a type not required to be disclosed in
financial statements or footnotes thereto) which, either individually or in the
aggregate, would reasonably be expected to be material to Aleris and its
Subsidiaries taken as a whole.

(e) The Projections most recently delivered to the Administrative Agent and the
Lenders prior to the Closing Date have been prepared in good faith and are based
on assumptions which were believed by management of Aleris to be reasonable when
made (it being understood that actual results may vary materially from the
Projections).

(f) Since the Original Closing Date, there has been no change in the financial
condition, results of operations or business of Aleris and its Subsidiaries,
which individually or in the aggregate has had, or reasonably would be expected
to have, a Material Adverse Effect.

8.06 Litigation. There are no actions, suits or proceedings pending or, to- the
knowledge of Aleris or any Borrower, threatened in writing (i) with respect to
the Transaction or any Credit Document or (ii) that has had, or would reasonably
be expected to have, either individually or in the aggregate, a Material Adverse
Effect.

8.07 True and Complete Disclosure. All written information (taken as a whole),
other than the Projections, the pro forma financial statements and estimates and
information of a general economic nature, furnished by or on behalf of Aleris or
the Borrowers in writing to the Administrative Agent or any Lender (including,
without limitation, all factual information furnished by or on behalf of Aleris
and its Subsidiaries contained in the Confidential Information Memorandum
distributed to the Lenders prior to the Closing Date) for purposes of or in
connection with the Transaction, this Agreement and the other Credit Documents
is, and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of Aleris or the Borrowers in writing to the
Administrative Agent or any Lender will be true and accurate in all material
respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided.

8.08 Use of Proceeds; Margin Regulations. (a) All proceeds of the Revolving
Loans incurred on the Closing Date will be used by the Borrowers to pay the fees
and expenses incurred in connection with the Transaction and for working capital
and general corporate purposes of Aleris and its Subsidiaries.

(b) All proceeds of the Revolving Loans and Swingline Loans incurred after the
Closing Date will be used for the working capital, capital expenditures and
general corporate purposes of Aleris and its Subsidiaries; provided that the
proceeds of any U.S. Revolving Loan may only be loaned to a Canadian Subsidiary
or a European Subsidiary to the extent the Onlending Conditions are satisfied at
such time; provided further that no proceeds of the Loans shall be used to
consummate an acquisition which is not supported by the board of directors of
the target.

(c) All Letters of Credit will be used for the purposes described in
Section 3.01(a).

 

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(d) At the time of each Credit Event occurring on or after the Original Closing
Date, not more than 25% of the value of the assets of Aleris and its
Subsidiaries taken as a whole will constitute Margin Stock. Neither the making
of any Loan nor the use of the proceeds thereof nor the occurrence of any other
Credit Event will violate or be inconsistent with the provisions of Regulation
T, U or X of the Board of Governors of the Federal Reserve System.

8.09 Tax Returns and Payments. Except as set forth in Schedule VII, each of the
Borrowers and each of their Subsidiaries has (i) timely filed or caused to be
timely filed with the appropriate taxing authority all returns, statements,
forms and reports for taxes (the “Returns”) required to be filed by, or with
respect to the income, properties or operations of, the Borrowers and/or any of
their Subsidiaries and (ii) has paid, or has caused to be paid, all taxes and
assessments payable by them, except for (a) taxes contested in good faith by
appropriate proceedings and for which adequate reserves have been established in
accordance with GAAP and (b) to the extent the failure to have complied with
either of clause (i) or (ii) above, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.

8.10 Compliance with ERISA. (a) No ERISA Event has occurred in the five year
period prior to the date on which this representation is made or deemed made and
is continuing or is reasonably likely to occur that, when taken together with
all other such ERISA Events for which liability has occurred and is continuing,
would reasonably be expected to result in a Material Adverse Effect. Except as
would not reasonably be expected to have a Material Adverse Effect or as set
forth on Schedule XXII, the present value of all accumulated benefit obligations
under all Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed the fair market
value of the assets of such Plans, in the aggregate.

(b)(i) Each Foreign Plan has been established, registered, qualified, invested
and administered in substantial compliance with its terms and with the
requirements of any and all applicable laws, statutes, rules, regulations and
orders and has been maintained, where required, in good standing with applicable
regulatory authorities; (ii) all contributions required to be made with respect
to a Foreign Plan have been made in accordance with applicable laws and the
terms of such plan; (iii) neither Aleris nor any of its Subsidiaries has
incurred any obligation in connection with the termination of, or withdrawal
from, any Foreign Plan; (iv) all Foreign Plans which are funded or insured plans
are funded or insured at least to the extent required by any applicable laws;
(v) as of the Closing Date, no Foreign Pension Plan maintained by a Canadian
Credit Party is a defined benefit pension plan; and (vi) there are no
outstanding disputes pending or, to the best knowledge of Borrowers, threatened,
concerning the assets of any Foreign Plan (other than individual claims for the
payment of benefits), and no facts exist which would reasonably be expected to
give rise to such a dispute, except (with respect to any matter specified in
clauses (b)(i) through (v) above, either individually or in the aggregate) such
as would not reasonably be expected to have a Material Adverse Effect.

8.11 The Security Documents.

(a) The provisions of each U.S. Security Agreement are effective to create in
favor of the Administrative Agent for the benefit of the Secured Parties, a
legal, valid and enforceable security interest in all right, title and interest
of the Credit Parties in the Security Agreement Collateral described therein,
and, upon the proper filing of UCC financing statements, registrations,
recordings and other actions required by the U.S. Security Documents, necessary
or appropriate to create, preserve and perfect the security interest granted to
the extent contemplated by the U.S. Security Documents (which filings,
registrations, recordings and other actions have been accomplished), the
Administrative Agent, for the benefit of the Secured Parties, will have a fully
perfected security interest in all right, title and interest in

 

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all of the Security Agreement Collateral described therein, to the extent that
such Security Agreement Collateral consists of the type of property in which a
security interest may be perfected by possession or control (within the meaning
of the UCC as in effect on the Closing Date in the State of New York), by filing
a financing statement under the UCC as enacted in any relevant jurisdiction,
subject to the exceptions contained in the relevant U.S. Security Document,
superior to and prior to the rights of all third Persons, and subject to no
other Liens other than Permitted Liens.

(b) The provisions of each Canadian Security Agreement are effective to create
in favor of the Administrative Agent for the benefit of the Secured Parties, a
legal, valid and enforceable security interest in (or, in the province of
Quebec, a valid and enforceable hypothec on) all right, title and interest of
the Credit Parties in and on the Security Agreement Collateral described
therein, and, upon the proper filing of PPSA financing statements,
registrations, recordings and other actions required by the Canadian Security
Documents, necessary or appropriate to create, preserve and perfect the Lien
granted to the extent contemplated by the Canadian Security Documents (which
filings, registrations, recordings and other actions have been accomplished),
the Administrative Agent, for the benefit of the Secured Parties, will have a
fully perfected security interest in all right, title and interest in all of the
Security Agreement Collateral described therein, to the extent that such
Security Agreement Collateral consists of the type of property in which a
security interest may be perfected by filing a PPSA financing statement, subject
to the exceptions contained in the relevant Canadian Security Documents,
superior to and prior to the rights of all third Persons, and subject to no
other Liens other than Permitted Liens.

(c) The provisions of each European Security Agreement are effective to create
in favor of the Administrative Agent for the benefit of the Secured Parties, a
legal, valid and enforceable security interest in all right, title and interest
of the Credit Parties in the Security Agreement Collateral described therein,
and, upon the registrations, recordings and other actions required by the
European Security Documents necessary or appropriate to create, preserve and
perfect the security interest granted to the extent contemplated by the European
Security Documents (which filings, registrations, recordings and other actions
have been accomplished), the Administrative Agent, for the benefit of the
Secured Parties, will have a fully perfected security interest in all right,
title and interest in all of the Security Agreement Collateral described
therein, in each case, subject to the exceptions contained in the relevant
European Security Document, superior to and prior to the rights of all third
Persons, and subject to no other Liens other than Permitted Liens.

(d) On the Closing Date, each Receivables Purchase Agreement is in full force
and in effect.

8.12 Properties. All Real Property owned or leased by Aleris or any of its
Subsidiaries as of the Closing Date, and the nature of the interest therein, is
correctly set forth in Schedule V. Each of Aleris and each of its Subsidiaries
has good and indefeasible title to all Material Real Properties (and to all
buildings, fixtures and improvements located thereon) owned by it, except for
defects in title that do not materially interfere with its ability to conduct
its business as currently conducted or to utilize such Material Real Property
for its intended purposes and except where the failure to have such title would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. All Material Real Properties are owned by Aleris and its
Subsidiaries free and clear of all Liens, other than Permitted Liens.

8.13 Subsidiaries; etc. (a) Aleris has no Subsidiaries other than (i) those
Subsidiaries listed on Schedule VIII-A (which Schedule identifies the direct
owners of each such Subsidiary on the Closing Date and their percentage
ownership therein) and (ii) new Subsidiaries created or acquired after the
Closing Date in accordance with the terms of this Agreement.

 

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(b) The European Borrower has no Subsidiaries other than Wholly-Owned
Subsidiaries that constitute Distribution Subsidiaries.

(c) Schedule VIII-A also sets forth, as of the Closing Date, (A) the exact legal
name of each Credit Party and the type of organization of such Credit Party and
(B) whether or not such Credit Party is a registered organization in the case of
U.S. Credit Parties (within the meaning of the UCC), the jurisdiction of
organization of such Credit Party, the location (within the meaning of the UCC)
of such Credit Party or the location of its chief executive office (within the
meaning of the PPSA), and the organizational identification number (if any) of
such Credit Party.

8.14 Compliance with Statutes, etc. Each of Aleris and each of its Subsidiaries
is in compliance with all applicable statutes, regulations and orders of, and
all applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property, except such noncompliance as would not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

8.15 Investment Company Act. Neither Aleris nor any of its Subsidiaries is an
“investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as amended.

8.16 Environmental Matters. (a) Subject to subclause (b) hereof, (i) each of
Aleris and each of its Subsidiaries is in compliance with all applicable
Environmental Laws and the requirements of any permits issued under such
Environmental Laws; (ii) there are no pending or, to the knowledge of Aleris or
any of the Borrowers, threatened (in writing) Environmental Claims against
Aleris or any of its Subsidiaries (including any such claim arising out of the
ownership, lease or operation by Aleris or any of its Subsidiaries of any Real
Property formerly owned, leased or operated by Aleris or any of its
Subsidiaries); and (iii) there are no facts, circumstances, conditions or
occurrences (“Conditions”) with respect to the business or operations of Aleris
or any of its Subsidiaries, or any Real Property owned, leased or operated by
Aleris or any of its Subsidiaries (including any Real Property formerly owned,
leased or operated by Aleris or any of its Subsidiaries) that would be
reasonably expected to form the basis of an Environmental Claim against Aleris
or any of its Subsidiaries or any restriction on the use or transferability of
any Real Property owned, leased or operated by Aleris or any of its
Subsidiaries.

(b) Notwithstanding anything to the contrary in this Section 8.16, the
representations and warranties made in this Section 8.16 shall be untrue only if
the effect of any or all Conditions, Environmental Claims, and noncompliances of
the types described above would, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

8.17 Employment and Labor Relations. Neither Aleris nor any of its Subsidiaries
is engaged in any unfair labor practice that would reasonably be expected,
either individually or in the aggregate, to have a Material Adverse Effect.
There is (i) no unfair labor practice complaint pending against Aleris or any of
its Subsidiaries or, to the knowledge of Aleris or any of the Borrowers,
threatened in writing against any of them, before the National Labor Relations
Board or other applicable Governmental Authority, and no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against Aleris or any of its Subsidiaries or, to the
knowledge of Aleris or any of the Borrowers, threatened in writing against any
of them, (ii) no strike, labor dispute, slowdown or stoppage pending against
Aleris or any of its Subsidiaries or, to the knowledge of Aleris or any of the
Borrowers, threatened against Aleris or any of its Subsidiaries, (iii) no equal
employment opportunity charges or other claims of employment discrimination are
pending or, to Aleris’ knowledge, threatened in writing against Aleris or any of
its Subsidiaries and (iv) no wage and hour department or similar investigation
has been made of Aleris or any of its Subsidiaries, except (with respect to any
matter specified in clauses (i) through (iv) above, either individually or in
the aggregate) such as would not reasonably be expected to have a Material
Adverse Effect.

 

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8.18 Intellectual Property, etc. Each of Aleris and each of its Subsidiaries
owns or has the right to use all the patents; trademarks, domain names, service
marks, trade names, copyrights, licenses, franchises, inventions, trade secrets,
proprietary information and know-how of any type, whether or not written
(including, but not limited to, rights in computer programs and databases) and
formulas, or rights with respect to the foregoing, and has obtained licenses and
other rights of whatever nature, necessary for the present conduct of its
business, without any known conflict with the rights of others which, or the
failure to own or have which, as the case may be, would, either individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.

8.19 Indebtedness. Schedule IX sets forth a true and complete list of all
Indebtedness (including Contingent Obligations) of Aleris and its Subsidiaries
as of the Closing Date greater than $500,000 (but excluding the Obligations, the
“Existing Indebtedness”) and which is to remain outstanding after giving effect
to the Transaction, in each case showing the aggregate principal amount thereof
and the name of the respective borrower and any Credit Party or any of its
Subsidiaries which directly or indirectly guarantees such Indebtedness.

8.20 Insurance. Schedule X sets forth a true and complete listing of all
insurance maintained by Aleris and its Subsidiaries as of the Closing Date, with
the amounts insured (and any deductibles) set forth therein.

8.21 Ten Non-Bank Regulations and Twenty Non-Bank Regulations. The aggregate
number of Persons which are not Swiss Qualifying Banks to which the European
Borrower directly or indirectly (whether through a Restricted Sub-Participation
or other sub-participations under any other agreement) owes interest-bearing
borrowed money under all interest-bearing instruments taken together (other than
bond issues which are subject to Swiss Withholding Tax), except for any Swiss
Qualifying Banks or holders of any Restricted Sub-Participation under this
Agreement, does not, and will not, exceed ten (10) at any time and the European
Borrower is in compliance with the Twenty Non-Bank Regulations (other than, in
each case, any failure to comply arising from assignments and participations of
the Obligations following the occurrence of a Significant Event of Default or
Conversion Event). For such purpose, the European Borrower and Aleris may assume
that the number of Lenders to the European Borrower and holders of a Restricted
Sub-Participations in respect of extensions of credit to the European Borrower
under this Credit Agreement which are Swiss Non-Qualifying Banks from time to
time equals ten (10), but does not exceed ten.

SECTION 9. Affirmative Covenants. Each Borrower hereby covenants and agrees that
on and after the Closing Date and until the Total Commitment and all Letters of
Credit have terminated (or, in the case of Letters of Credit only, are supported
by backstop letters of credit or cash collateral, in either case in amounts and
on terms reasonably acceptable to the Administrative Agent and the respective
Issuing Lenders) and the Loans, Notes and Unpaid Drawings (in each case together
with interest thereon), Fees and all other Obligations (other than indemnities
described in Section 13.13 (and similar indemnities described in the other
Credit Documents, in each case) which are not then due and payable) incurred
hereunder and thereunder, are paid in full:

9.01 Information Covenants. Aleris will furnish to the Administrative Agent
(which will promptly furnish to each Lender):

(a) Annual Financial Statements. Within ninety (90) days after the end of each
Fiscal Year, the audited consolidated balance sheet of Holdings and its
Subsidiaries or, at Borrowers’

 

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option, Aleris and its Subsidiaries, in each case, and related statements of
income, stockholders’ equity and cash flows as of the end of and for such Fiscal
Year (together with unaudited consolidating financial information with respect
to Aleris and its Subsidiaries in such detail as reasonably deemed necessary by
the Administrative Agent in its discretion and including a reconciliation to
identify financial information specific to Credit Parties), setting forth in
each case in comparative form the figures for the previous Fiscal Year, all
reported on by Ernst & Young LLP or other independent public accountants of
recognized national standing and reasonably acceptable to the Administrative
Agent (without a “going concern” or like qualification or exception or exception
as to the scope of such audit) to the effect that such consolidated financial
statements present fairly, in all material respects, the financial condition and
results of operations of Holdings and its consolidated Subsidiaries or, at
Borrowers’ option, Aleris and its Subsidiaries, in each case, on a consolidated
basis in accordance with GAAP.

(b) Quarterly Financial Statements. Within forty-five (45) days after the end of
each of the first three Fiscal Quarters of each Fiscal Year, the consolidated
balance sheet of Holdings and its Subsidiaries or, at Borrowers’ option, Aleris
and its Subsidiaries, in each case, and related statements of income,
stockholders’ equity and cash flows as of the end of and for such Fiscal Quarter
and the then elapsed portion of the Fiscal Year (together with consolidating
financial information with respect to Aleris and its Subsidiaries in such detail
as reasonably deemed necessary by the Administrative Agent in its discretion and
including a reconciliation to identify financial information specific to Credit
Parties), setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous Fiscal Year, all certified by a Financial Officer of
Holdings as presenting fairly, in all material respects, the financial condition
and results of operations of Holdings and its consolidated Subsidiaries or, at
Borrowers’ option, Aleris and its Subsidiaries, in each case, on a consolidated
basis in accordance with GAAP, subject to normal year-end audit adjustments and
the absence of footnotes.

(c) Monthly Financial Statements. Within forty-five (45) days after the end of
each month which is not the last month of any Fiscal Quarter, the consolidated
balance sheet of Holdings and its Subsidiaries and related statements of income
and cash flows as of the end of and for such month and the then elapsed portion
of the Fiscal Year (together with, if the assets of Holdings not consisting of
the Equity Interests of Aleris and its Subsidiaries constitute more than 2.5% of
the Total Assets of Holdings, consolidating financial information with respect
to Aleris and its Subsidiaries in such detail as reasonably deemed necessary by
the Administrative Agent in its discretion), setting forth in each case in
comparative form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous Fiscal Year, all
certified by a Financial Officer of Holdings as presenting fairly, in all
material respects, the financial condition and results of operations of Holdings
and its consolidated Subsidiaries on a consolidated basis in accordance with
GAAP, subject to normal year-end audit adjustments and the absence of footnotes.

(d) Officer’s Certificates. Concurrently with any delivery of financial
statements under Sections 9.01(a), (b) and (c) (or, if earlier, the filing of
the 10-Q Report or the 10-K Report or similar report or filing), a certificate
of a Financial Officer of Aleris in substantially the form of Exhibit G
(i) certifying that no Event of Default or Default has occurred and, if an Event
of Default or Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, (ii) setting forth,
in the case of the financial statements delivered under Section 9.01(a) or (b),
reasonably detailed calculations of Aleris’s Fixed Charge Coverage Ratio
(whether or not a Compliance Period then exists) as of the end of the period to
which such financial statements relate and (iii) certifying, the case of the
financial statements delivered under

 

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clause (a), a list of names of all Immaterial Subsidiaries (if any) and
including a certification that each Subsidiary set forth on such list
individually qualifies as an Immaterial Subsidiary and that all Subsidiaries
listed as Immaterial Subsidiaries in the aggregate comprise less than 10% of
Total Assets of Aleris and its Subsidiaries at the end of the period to which
such financial statements relate.

(e) Accountants’ Certificate. Concurrently with any delivery of financial
statements under Section 9.01(a), a certificate of the accounting firm that
reported on such financial statements stating whether they obtained knowledge
during the course of their examination of such financial statements of any
Default or Event of Default (which certificate may be limited to the extent
required by accounting rules or guidelines and may be subject to such conditions
and qualifications as are customary).

(f) Consolidating Statements. Concurrently with any delivery of consolidated
financial statements under Sections 9.01(a) or (b), the related unaudited
consolidating financial statements reflecting the adjustments necessary to
eliminate the accounts of Unrestricted Subsidiaries (if any) from such
consolidated financial statements.

(g) Budgets. Within ninety (90) days after the beginning of each Fiscal Year, a
consolidated budget of Aleris and its Subsidiaries by month in reasonable detail
for such Fiscal Year (including a projected consolidated balance sheet and the
related consolidated statements of projected cash flows and projected income by
month), including in each case a summary of the underlying material assumptions
with respect thereto (collectively, the “Budget”), which Budget shall be
accompanied by the statement of a Financial Officer of Aleris to the effect
that, to the best of his knowledge, the Budget is a reasonable estimate for the
period covered thereby.

(h) Environmental Matters. Promptly after any senior officer (including any
Financial Officer) of Aleris obtains knowledge thereof, notice of one or more of
the following environmental matters listed in (i), (ii) or (iii) below
(“Environmental Matters”) to the extent that such Environmental Matters, either
individually or when aggregated with all other such Environmental Matters, would
reasonably be expected to have a Material Adverse Effect:

(i) any pending or threatened Environmental Claim against Aleris or any of its
Subsidiaries or any Real Property owned, leased or operated by Aleris or any of
its Subsidiaries;

(ii) any condition or occurrence on or arising from any Real Property owned,
leased or operated by Aleris or any of its Subsidiaries that (a) results in
noncompliance by Aleris or any of its Subsidiaries with any applicable
Environmental Law or (b) would reasonably be expected to form the basis of an
Environmental Claim against Aleris or any of its Subsidiaries or any restriction
on the use or transferability of any such Real Property; and

(iii) the taking of any Remedial Action in response to the actual or alleged
presence of any Hazardous Material on any Real Property owned, leased or
operated by Aleris or any of its Subsidiaries as required by any Environmental
Law or any Governmental Authority.

(i) Borrowing Base Certificate. (x) On the Closing Date, and (y) thereafter, on
or before the 15th day of each month (or if being reported weekly at
Administrative Agent’s request during an Enhanced Disclosure Period, on or
before, the 7th day following the preceding Friday)

 

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(or, in the case of clause (y), more frequently as Aleris may elect, so long as
the same frequency of delivery is maintained by Borrowers for the immediately
following 90 day period), a borrowing base certificate setting forth the U.S.
Borrowing Base, the Canadian Borrowing Base and the European Borrowing Base (in
each case with supporting calculations) substantially in the form of Exhibit H
(each, a “Borrowing Base Certificate”), which shall be prepared as of the last
Business Day of the preceding fiscal month (or week) of Aleris (or, in the case
of any voluntary delivery of a Borrowing Base Certificate at the election of
Aleris, a subsequent date), in the case of each subsequent Borrowing Base
Certificate; provided that during any Enhanced Disclosure Period, then at the
request of the Co-Collateral Agents, a Borrowing Base Certificate shall be
required to be delivered by Aleris to the Administrative Agent and the
Co-Collateral Agents on a more frequent basis (not to exceed weekly) during each
such Enhanced Disclosure Period; provided, further, that, if the Total
Commitments at any time exceed $750,000,000 (or such other amount as shall be
specified in Section 1011(b)(1)(i) of the Senior Notes Indenture from time to
time), Borrowers shall include such additional financial calculations reasonably
requested by Administrative Agent in order to confirm compliance with
Section 1011(b)(1) of the Senior Notes Indenture. Each such Borrowing Base
Certificate shall include such supporting information as may be reasonably
requested from time to time by the Co-Collateral Agents.

(j) Collateral. As soon as practicable upon the reasonable request of the
Administrative Agent, certify that there have been no changes to Annexes of the
U.S. Security Agreement, the Canadian Security Agreement and the corresponding
Annexes and Schedules to the European Security Documents, in each case since the
Closing Date or, if later, since the date of the most recent certificate
delivered pursuant to this Section 9.01(i), or if there have been any such
changes, a list in reasonable detail of such changes (but, in each case with
respect to this Section 9.01(i), only to the extent that such changes are
required to be reported to the Administrative Agent pursuant to the terms of
such Security Documents) and whether Aleris and the other Credit Parties have
otherwise taken all actions required to be taken by them pursuant to such
Security Documents in connection with any such changes.

(k) Other Reports and Filings. Promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements and other
materials publicly filed by Aleris or any Subsidiary with the Securities and
Exchange Commission, or with any national securities exchange, or, after an
initial public offering of shares of Equity Interests of Aleris, distributed by
Aleris to its shareholders generally, as the case may be.

(l) Management Letters. Promptly, a copy of any final “management letter”
received from Aleris’ independent public accountants to the extent such
independent public accountants have consented to the delivery of such management
letter to the Administrative Agent upon the request of Aleris.

(m) PATRIOT Act Information. Promptly following the Administrative Agent’s
request therefor, all documentation and other information that the
Administrative Agent reasonably requests on its behalf or on behalf of any
Lender in order to comply with its ongoing obligations under applicable “know
your customer” and anti-money laundering rules and regulations, including USA
PATRIOT ACT (Title 111 of Pub. L. 107-56 (signed into law October 26, 2001))
(the “PATRIOT Act”).

(n) Other Information. As promptly as reasonably practicable from time to time
following the Administrative Agent’s request therefor, such other information
regarding the operations, business affairs and financial condition of Aleris or
any of its Subsidiaries, or compliance with the terms of any Credit Document, as
the Administrative Agent may reasonably request (on behalf of itself or any
Lender).

 

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Notwithstanding the foregoing, the obligations in clauses (a) and (b) of this
Section 9.01 may be satisfied with respect to financial information of Aleris
and its Subsidiaries by furnishing (A) the applicable financial statements of
Holdings (or any direct or indirect parent of Holdings) or (B) Aleris’ or
Holdings’ (or any direct or indirect parent thereof), as applicable, Form 10-K
or 10Q, as applicable, filed with the Securities and Exchange Commission;
provided that, with respect to each of clauses (A) and (B), (i) to the extent
such information relates to Holdings (or a parent thereof), such information is
accompanied by consolidating information that explains in reasonable detail the
differences between the information relating to Holdings (or such parent), on
the one hand, and the information relating to Aleris and its Subsidiaries on a
standalone basis, on the other hand and (ii) to the extent such information is
in lieu of information required to be provided under clause (a) of this
Section 9.01, such, materials are accompanied by a report and opinion of Ernst &
Young LLP or other independent certified public accountants of recognized
national standing reasonably acceptable to the Administrative Agent, which
report and opinion shall be prepared in accordance with generally accepted
auditing standards and shall not be subject to any “going concern” or like
qualification or exception or any qualification or exception as to the scope of
such audit.

Documents required to be delivered pursuant to this Section 9.01 may be
delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which Aleris posts such documents, or provides a
link thereto on Aleris’ website on the Internet; or (ii) on which such documents
are posted on Aleris’ behalf on IntraLinks/IntraAgency or another relevant
website, if any, to which each Lender and the Administrative Agent have access
(whether a commercial, third-party website or whether sponsored by the
Administrative Agent); provided that: (i) upon written request by the
Administrative Agent, Aleris shall deliver paper copies of such documents to the
Administrative Agent for further distribution to each Lender until a written
request to cease delivering paper copies is given by the Administrative Agent
and (ii) Aleris shall notify (which may be by facsimile or electronic mail) the
Administrative Agent of the posting of any such documents and provide to the
Administrative Agent by electronic mail electronic versions (i.e., soft copies)
of such documents. Notwithstanding anything contained herein, in every instance
Aleris shall be required to provide paper copies of the compliance certificates
required by clause (d) of this Section 9.01, to the Administrative Agent.

9.02 Notice of Material Events. Aleris will furnish to the Administrative Agent
written notice of the following promptly after any Responsible Officer of Aleris
obtains knowledge thereof:

(i) the occurrence of any Event of Default or Default;

(ii) the filing or commencement of, or any written threat or notice of intention
of any person to file or commence, any action, suit or proceeding, whether at
law or in equity or by or before any Governmental Authority or in arbitration,
against Aleris or any of its Subsidiaries as to which an adverse determination
is reasonably probable and which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect;

(iii) any loss, damage, or destruction to the Collateral, in the amount of
$20,000,000, or more, whether or not covered by insurance, or any Asset Sale or
Recovery Event with respect to the Collateral, and in each case, together with
an updated Borrowing Base Certificate reflecting the occurrence of such loss
damage, destruction, or Asset Sale or Recovery Event with respect to the
Collateral;

 

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(iv) any and all default notices received under or with respect to any leased
location or public warehouse where any material Collateral is located;

(v) the occurrence of any ERISA Event or similar event in respect of a Foreign
Plan that, together with all other ERISA Events or similar events in respect of
a Foreign Plan that have occurred and are continuing, would reasonably be
expected to have a Material Adverse Effect; and

(vi) any other development that results in, or would reasonably be expected to
result in, a Material Adverse Effect.

Each notice delivered under this Section 9.02 shall be accompanied by a
statement of a Responsible Officer of Aleris setting forth the details of the
event or development requiring such notice and any action taken or proposed to
be taken with respect thereto.

9.03 Existence; Franchises. Aleris will, and will cause each of its Subsidiaries
to, do or cause to be done all things reasonably necessary to preserve, renew
and keep in full force and effect its legal existence and the rights,
qualifications, licenses, permits, franchises, governmental authorizations,
intellectual property rights, licenses and permits (except as such would
otherwise reasonably expire, be abandoned or permitted to lapse in the ordinary
course of business), necessary or desirable in the normal conduct of its
business, and maintain all requisite authority, to conduct its business in each
jurisdiction in which its business is conducted, except (i) other than with
respect to a Credit Party’s existence, to the extent such failure to do so would
not reasonably be expected to have a Material Adverse Effect or (ii) pursuant to
a transaction permitted by Section 10.02.

9.04 Payment of Taxes. Aleris will, and will cause each of its Subsidiaries to,
pay or discharge all material tax liabilities, before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) such Credit Party
or such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such
contest would not reasonably be expected to result in a Material Adverse Effect.

9.05 Maintenance of Properties. Aleris will, and will cause each of its
Subsidiaries to (i) at all times maintain and preserve all material property
necessary to the normal conduct of its business in good repair, working order
and condition, ordinary wear and tear excepted and casualty or condemnation
excepted and (ii) make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto as necessary in
accordance with prudent industry practice in order that the business carried on
in connection therewith, if any, may be properly conducted at all times, except,
in each case, where the failure to do so, individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect.

9.06 Books and Records; Inspection Rights; Appraisals; Field Examinations.

(a) Aleris will, and will cause each of its Subsidiaries to, (i) keep proper
books of record and account in accordance with GAAP in which full, true and
correct entries are made of all dealings and transactions in relation to its
business and activities and (ii) permit any representatives designated by the
Administrative Agent (including employees of the Administrative Agent or any
consultants, accountants, lawyers and appraisers retained by the Administrative
Agent), upon reasonable prior notice, to visit and inspect its properties, to
examine and make extracts from its books and records, including environmental
assessment reports and Phase I or Phase II studies, and to discuss its affairs,
finances and condition with its officers and independent accountants, all at
such reasonable times during normal business hours and as often as reasonably
requested.

 

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(b) (i) Up to once per year, and twice per year during any Enhanced Exam Period,
and at such other times as the Co-Collateral Agents may reasonably request when
any Event of Default exists, an appraisal of the Inventory of the U.S. Credit
Parties, the Canadian Credit Parties and the U.K. Guarantor, and (ii) up to once
per year, and twice per year during any Enhanced Exam Period, and at such other
times as the Co-Collateral Agents may reasonably request when any Event of
Default exists, a collateral examination of the Credit Parties, in each case, in
scope, and prepared by Administrative Agent’s personnel or a third-party
appraiser or a third-party consultant, as applicable, engaged by and reasonably
satisfactory to the Administrative Agent, and completed at the cost and expense
of Aleris; provided that if, after giving effect to the consummation of any
Permitted Acquisition, the Total Borrowing Base would increase in an amount
equal to or greater $10,000,000 as a result of such Permitted Acquisition during
an Enhanced Exam Period, and otherwise $30,000,000, as a result of the inclusion
of any Accounts and/or Inventory of the respective Acquired Business or Entity,
the Co-Collateral Agents may request, (x) an appraisal of such Inventory, if the
Inventory is not substantially similar to the Inventory used in the calculation
of the latest Net Liquidation Percentage, as determined by the Co-Collateral
Agents, and (y) a collateral examination of such Accounts and Inventory, in each
case, in scope, and from a third-party appraiser and a third-party consultant,
respectively, engaged by and reasonably satisfactory to the Co-Collateral Agents
and completed at the cost and expense of Aleris. Each collateral examination
shall be subject to a 10-Business Day review period by Aleris before delivery is
required to the Administrative Agent.

(ii) Upon the request of the Administrative Agent during each Fiscal Year,
Aleris will hold a meeting or a teleconference with all of the Lenders at which
meeting will be reviewed the financial results of Aleris and its Subsidiaries
for the previous Fiscal Year and the budgets presented for the current Fiscal
Year.

9.07 Compliance with Laws. Aleris will, and will cause each of its Subsidiaries
to, comply in all material respects with all Requirements of Law applicable to
it or its property, except where the failure to do so, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.

9.08 Use of Proceeds. The Borrowers will use the proceeds of the Loans and the
Letters of Credit only as provided in Section 8.08.

9.09 Insurance. (a) Aleris will, and will cause each of its Subsidiaries to,
maintain, with financially sound and reputable insurance companies insurance in
such amounts and against such risks, as are customarily maintained by similarly
situated companies engaged in the same or similar businesses operating in the
same or similar locations (after giving effect to any self-insurance reasonable
and customary for similarly situated companies). Aleris will furnish to the
Administrative Agent, upon request, information in reasonable detail as to the
insurance so maintained.

(b) Aleris will, and will cause each of the other Credit Parties to, at all
times keep its property which constitutes Collateral insured in favor of the
Administrative Agent, and all policies or certificates (or certified copies
thereof) with respect to such insurance (i) shall be endorsed to the
Administrative Agent’s reasonable satisfaction for the benefit of the
Administrative Agent (including, without limitation, by naming the
Administrative Agent as loss payee and/or additional insured) and (ii) shall
state that such insurance policies shall not be canceled without at least thirty
(30) days’ prior written notice thereof by the respective insurer to the
Administrative Agent (or at least ten (10) days’ prior written notice in the
case of non-payment of premium).

 

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(c) If Aleris or any of its Subsidiaries shall fail to maintain insurance in
accordance with this Section 9.09, or if Aleris or any of its Subsidiaries shall
fail to so endorse all policies or certificates with respect thereto, the
Administrative Agent shall have the right, upon ten (10) days’ prior notice to
Aleris (but shall be under no obligation), to procure such insurance and Aleris
agrees to reimburse the Administrative Agent for all reasonable costs and
expenses of procuring and maintaining such insurance.

(d) Section 9.09(b) and (c) shall only apply to insurance in respect of assets
included in the Collateral; provided, however, that Section 9.09(b) and
(c) shall not apply to credit insurance.

9.10 Compliance with Environmental Laws. Aleris will (i) comply, and will cause
each of its Subsidiaries to comply, with all Environmental Laws and permits
applicable to, or required by, the ownership, lease or operation of its Real
Property now or hereafter owned, leased or operated by Aleris or any of its
Subsidiaries, (ii) will promptly pay or cause to be paid all costs and expenses
incurred in connection with such compliance, and (iii) will keep or cause to be
kept all such Real Property free and clear of any Liens imposed pursuant to such
Environmental Laws, in each case, except, in the case of clauses (i), (ii) and
(iii), as would not, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

9.11 New Subsidiaries; Additional Security; Further Assurances; etc. (a) Subject
to applicable law and the provisions of this Section 9.11, Aleris shall, and
shall cause each of the Credit Parties to, cause (i) each of its Wholly-Owned
Subsidiaries (other than (1) any Immaterial Subsidiary (except as otherwise
provided in paragraph (d) of this Section 9.11), (2) any Unrestricted
Subsidiary, and (3) German Sub Holdco and any Subsidiary of German Sub Holdco)
formed or acquired after the date of this Agreement in accordance with the terms
of this Agreement and (ii) any such Subsidiary that was an Immaterial Subsidiary
but, as of the end of the most recently ended Fiscal Quarter has ceased to
qualify as an Immaterial Subsidiary, to become a Credit Party as promptly
thereafter as reasonably practicable by executing a Joinder Agreement in
substantially the form set forth as Exhibit J hereto (the “Joinder Agreement”).
Upon execution and delivery thereof, each party to a Joinder Agreement (i) shall
automatically become a Guarantor (or, to the extent requested by the
Administrative Agent or Aleris, a Borrower) hereunder and thereupon shall have
all of the rights, benefits, duties, and obligations in such capacity under the
Credit Documents; provided, however, that (A) only entities which are organized
under the laws of the United States or any state or territory thereof or the
laws of Canada or any province or territory thereof shall be permitted to become
a Borrower hereunder and (B) Lenders shall be given at least three (3) Business
Days prior notice (or, in the case of a Subsidiary becoming a Canadian Borrower,
five (5) Business Days prior notice) before such Subsidiary may become a
Borrower hereunder, and (ii) will simultaneously therewith or as soon as
practicable thereafter grant Liens to the Administrative Agent, for the benefit
of the Administrative Agent and the Lenders and each other Secured Party at such
time party to or benefiting from the Security Documents, on any property of such
Credit Party which constitutes Collateral, on such terms as may be required
pursuant to the terms of the Security Documents and in such priority as may be
required pursuant to the terms of this Agreement, in each case to the extent
required by the terms of this Section 9.11 and subject to any limitations set
forth in the Security Documents.

(b) Without limiting the foregoing, Aleris will, and will cause each of the
Credit Parties to, execute and deliver, or cause to be executed and delivered,
to the Administrative Agent such documents, agreements and instruments, and will
take or cause to be taken such further actions (including the filing and
recording of financing statements, fixture filings, mortgages, deeds of trust
and other

 

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documents and such other actions or deliveries of the type required by
Section 6, including opinions of counsel, as applicable), which may be required
by law or which the Administrative Agent may, from time to time, reasonably
request to carry out the terms and conditions of this Agreement and the other
Credit Documents and to ensure perfection and priority of the Liens created or
intended to be created by the Security Documents, all at the expense of the
Credit Parties; provided that, in no event will Aleris or any of its
Subsidiaries be required to take any action, other than using its commercially
reasonable efforts, to obtain consents from third parties with respect to its
compliance with this Section 9.11(b).

(c) Subject to the limitations set forth or referred to in this Section 9.11, if
any material assets of the type constituting Collateral are acquired by Aleris
or any Credit Party after the Closing Date (other than assets constituting
Collateral under the Security Documents that become subject to the Lien in favor
of the Administrative Agent upon acquisition thereof), Aleris will notify the
Administrative Agent and the Lenders thereof, and, if requested by the
Administrative Agent or the Required Lenders, Aleris will cause such assets to
be subjected to a Lien securing the Obligations of such Credit Party and will
take, and cause the Credit Parties to take, such actions as shall be necessary
or reasonably requested by the Administrative Agent to grant and perfect such
Liens, including actions described in paragraph (b) of this Section 9.11, all at
the expense of the Credit Parties.

(d) If, at any time and from time to time after the Closing Date, Subsidiaries
that are not Credit Parties because they are Immaterial Subsidiaries comprise in
the aggregate more than 10% of Total Assets as of the end of the most recently
ended Fiscal Quarter, then Aleris shall, not later than forty-five (45) days
after the date by which financial statements for such Fiscal Quarter are
required to be delivered pursuant to this Agreement, cause one or more such
Subsidiaries to become additional Credit Parties (notwithstanding that such
Subsidiaries are, individually, Immaterial Subsidiaries) such that the foregoing
condition ceases to be true; provided, however, that notwithstanding the
foregoing, unless otherwise designated as such by Aleris, no Subsidiary of
Aleris organized under the laws of the People’s Republic of China shall be
required to become a Credit Party.

(e) Notwithstanding anything to the contrary contained herein, neither Aleris
nor any Subsidiary of Aleris shall be required to:

(i) execute and deliver any Joinder Agreement, Guaranty or any other document or
grant a Lien in any Equity Interests or other property held by it if such action
(w) is restricted or prohibited by general statutory limitations, financial
assistance, corporate benefit, fraudulent preference, “thin capitalization”
rules or similar principles, (x) would result in adverse tax consequences,
(y) is not within the legal capacity of Aleris or such Subsidiary or would
conflict with the fiduciary duties of its directors or contravene any legal
prohibition or result in personal or criminal liability on the part of any
officer or (z) for reasons of cost, legal limitations or other matters is
unreasonably burdensome in relation to the benefits to the Secured Parties of
Aleris’ or such Subsidiary’s guaranty or security; or

(ii) pledge as Collateral any assets excluded therefrom pursuant to the relevant
Security Documents (including, for the avoidance of doubt, more than 65% of the
total combined voting power of all classes of the issued and outstanding Equity
Interests entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) in each Foreign Subsidiary directly owned by Aleris or
any of the Credit Parties which is a Domestic Subsidiary).

9.12 Ownership of Subsidiaries; etc. Except as otherwise contemplated by
Sections 10.02, 10.05 and 10.11, Aleris will cause each of its Subsidiaries to
be a Wholly-Owned Subsidiary. The sale or issuance of the Equity Interests of a
Subsidiary of Aleris to a Person other than Aleris or a Subsidiary of Aleris
shall constitute an Investment by Aleris therein at the date of designation in
an amount equal to the product of (x) percentage of Aleris’s Investment in such
Subsidiary (after giving effect to such sales or issuance) and (y) the fair
market value of the net assets of the respective Subsidiary at the time that the
Equity Interests in such Subsidiary as sold at issue.

 

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9.13 Permitted Acquisitions. (a) Subject to the provisions of Section 8.08(b)
and this Section 9.13 and the requirements contained in the definition of
Permitted Acquisition, Aleris and each of its Subsidiaries may from time to time
effect Permitted Acquisitions, so long as (in each case except to the extent the
Required Lenders otherwise specifically agree in writing in the case of a
specific Permitted Acquisition): either (i) the consideration for the respective
Permitted Acquisition shall consist solely of Qualified Equity Interests of
Aleris and no Default or Event of Default shall have occurred and be continuing
at the time of the proposed Permitted Acquisition and immediately after giving
effect thereto, (ii) the Acquisition Liquidity Conditions are satisfied (both
before and after giving effect to the respective Permitted Acquisition) at such
time or (iii) subject to the last sentence of this Section 9.13(a), the
aggregate consideration (excluding consideration in form of Qualified Equity
Interests, and treating any such consideration as if not paid under this clause
(iii) for purposes of determinations pursuant to Sections 10.05(xvi) and
10.08(i)(y)) for all Permitted Acquisitions made at any time when the
Acquisition Liquidity Conditions are not satisfied pursuant to this
Section 9.13(a)(iii) would not exceed $40,000,000 in the aggregate since the
Closing Date, less the sum of (1) the aggregate amount of Investments previously
made by Aleris or any of its Subsidiaries pursuant to Section 10.05(xvi) since
the Original Closing Date (determined as the amount originally advanced, loaned
or otherwise invested (without giving effect to any write-downs or write-offs
thereof), less any returns on the respective investment not to exceed the
original amount invested), and (2) the aggregate amount of payments, prepayments
and redemptions of Indebtedness previously made by Aleris or any of its
Subsidiaries pursuant to Section 10.08(i)(y) since the Original Closing Date. If
the aggregate consideration for such Permitted Acquisition (determined in
accordance with preceding clause (iii)) equals or exceeds $10,000,000 Aleris
shall have delivered to the Administrative Agent a certificate executed by one
of its Financial Officers certifying compliance with the requirements of
preceding clauses (i) through (iii) (to the extent applicable). In the event
that Aleris or a Subsidiary consummates an acquisition, makes an Investment,
pays a Dividend or pays, prepays or redeems Indebtedness (each an “Action”) in
reliance on the basket provided under Section 9.13(a)(iii), Section 10.05(xvi),
Section 10.04(xii), or Section 10.08(i)(y), as the case may be, and the
Acquisition Liquidity Conditions are thereafter satisfied, such Action shall be
deemed to have been made at a time when the Acquisition Liquidity Conditions are
satisfied and shall not be deemed to be a utilization of such basket.

(b) Aleris will cause each Subsidiary which is formed to effect, or is acquired
pursuant to, a Permitted Acquisition to comply with, and to execute and deliver
all of the documentation as and to the extent required by, Section 9.11, to the
reasonable satisfaction of the Administrative Agent.

9.14 Cash Management Control Agreements. (i) Aleris, its Subsidiaries, the
Administrative Agent and the applicable Collection Banks shall enter into one or
more Cash Management Control Agreements pursuant to Section 5.03 with respect to
each Collection Account listed on Part A of Schedule VI, (ii) Aleris and/or its
respective Subsidiaries, the Administrative Agent and the applicable banks shall
enter into one or more Cash Management Control Agreements with respect to each
Disbursement Account set forth on Part B of Schedule VI, (iii) Aleris, the
Administrative Agent and the applicable bank shall enter into a Cash Management
Control Agreement with respect to the Core U.S. Concentration Account, (iv) the
Canadian Borrower, the Administrative Agent and the applicable bank shall enter
into a Cash Management Control Agreement with respect to the Core Canadian
Concentration Account and (v) the European Borrower, the Administrative Agent
and the applicable bank shall enter into a Cash Management Control Agreement
with respect to the Core European Concentration Account.

 

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9.15 Designation of Subsidiaries. The board of directors of Aleris may at any
time designate any Subsidiary (other than a Material Subsidiary) as an
Unrestricted Subsidiary or any Unrestricted Subsidiary as a Subsidiary; provided
that (i) immediately before and after such designation, no Default or Event of
Default shall have occurred and be continuing, (ii) immediately after giving
effect to such designation, any Investment in such Unrestricted Subsidiary is
permitted pursuant to Section 10.05, and (iii) none of Aleris, the Canadian
Borrower, the European Borrower, any European Guarantor, any Specified European
Manufacturing Subsidiary, or any European Distribution Subsidiary or Transitory
European Subsidiary may be designated as an Unrestricted Subsidiary. The
designation of any Subsidiary as an Unrestricted Subsidiary shall constitute an
Investment by Aleris therein at the date of designation in an amount equal to
the product of (x) percentage of Aleris’s Investment in such Subsidiary and
(y) the net book value of the respective Subsidiary at the time that such
Subsidiary is designated an Unrestricted Subsidiary. The designation of any
Unrestricted Subsidiary as a Subsidiary shall constitute the incurrence at the
time of designation of any Indebtedness or Liens of such Subsidiary existing at
such time.

SECTION 10. Negative Covenants. Each Borrower hereby covenants and agrees that
on and after the Closing Date and until the Total Commitment and all Letters of
Credit have terminated or expired (or, in the case of Letters of Credit only,
are supported by backstop letters of credit or cash collateral, in either case
in amounts and on terms reasonably acceptable to the Administrative Agent and
the respective Issuing Lenders) and the Loans, Notes and Unpaid Drawings (in
each case, together with interest thereon), Fees and all other Obligations
(other than any indemnities described in Section 13.13 and similar indemnities
in the Credit Documents, in each case which are not then due and payable)
incurred hereunder and thereunder, are paid in full:

10.01 Liens. No Credit Party will, or will permit any of its Subsidiaries to,
create, incur, assume or suffer to exist any Lien upon or with respect to any
property or assets (real or personal, tangible or intangible) of such Credit
Party or any of its Subsidiaries, whether now owned or hereafter acquired, or
sell any such property or assets subject to an agreement, contingent or
otherwise, to repurchase such property or assets (including sales of accounts
receivable with recourse to such Credit Party or any of its Subsidiaries), or
assign any right to receive income; provided that the provisions of this
Section 10.01 shall not prevent the creation, incurrence, assumption or
existence of the following (Liens described below are herein referred to as
“Permitted Liens”):

(i) Liens for taxes, assessments or governmental charges or levies, not yet due
or being contested in good faith and by appropriate proceedings that are
diligently conducted, for which adequate reserves have been established in
accordance with GAAP or Local GAAP, as applicable, which taxes, assessments or
charges or levies in either case would not result in a Material Adverse Effect
and the non-payment of which taxes, assessments or charges or levies would not
result in forfeiture or sale of any assets included in the Collateral of any
Credit Party; provided, that, Liens for taxes which are not yet overdue for more
than thirty (30) days will be permitted hereunder so long as the taxes,
assessments, charges or levies secured by such Liens do not individually or in
the aggregate exceed $1,000,000;

(ii) statutory Liens of landlords, carriers, warehousemen, mechanics,
materialmen, repairmen, construction contractors or other like Liens arising in
the ordinary course of business which secure amounts not overdue for a period of
more than thirty (30) days, or if more than thirty (30) days overdue, are
unfiled and no other action has been taken to enforce such Lien or which are
being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the books
of the applicable Person in accordance with GAAP or Local GAAP or the
enforcement is stayed under the Bankruptcy Code or any other similar law;

 

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(iii) Liens in existence on the Closing Date which are listed, and the property
subject thereto described, in Schedule XI, and renewals, replacements and
extensions thereof, provided that (x) the aggregate principal amount of the
Indebtedness, if any, secured by such Liens does not increase from that amount
outstanding at the time of any such renewal, replacement or extension (except to
the extent permitted under Section 10.04(xiii)) and (y) any such renewal,
replacement or extension does not encumber any additional assets or properties
of Aleris or any of its Subsidiaries (other than after-acquired property affixed
or incorporated thereto and proceeds or products thereof);

(iv) Liens in favor of the Administrative Agent for the benefit of the Secured
Parties granted pursuant to the Security Documents, as in effect on the date
hereof and as amended, supplemented or modified from time to time, including
pursuant to any Secured Hedging Agreements and any Treasury Services Agreements;

(v) leases, licenses, subleases and sublicenses of assets (including, without
limitation, real property and intellectual property rights) in the ordinary
course of business which do not materially interfere with the ordinary conduct
of the business of Aleris or any of the Subsidiaries and do not secure any
Indebtedness;

(vi) Liens upon assets of Aleris or any of its Subsidiaries (other than the
European Distribution Subsidiaries) subject to Capitalized Lease Obligations and
Synthetic Lease Obligations permitted by Section 10.04(v), provided that any
Lien encumbering an asset giving rise to a Capitalized Lease Obligation or
Synthetic Lease Obligation does not encumber any other asset (except for
accessions to the asset giving rise to the Capitalized Lease Obligation or
Synthetic Lease Obligation) of Aleris or any Subsidiary of Aleris; provided,
further, that individual financings of property provided by one lender may be
cross collateralized to other financings of property provided by such lender;

(vii) purchase money security interests in fixed or capital assets acquired by
Aleris and its Subsidiaries (other than the European Distribution Subsidiaries)
after the Original Closing Date or with respect to any construction, replacement
or refinancing thereof, or repairs, renovations or improvements thereto, and
Liens placed upon equipment acquired after the Original Closing Date and used in
the ordinary course of business of Aleris or any of its Subsidiaries (other than
the European Distribution Subsidiaries) and (in each case) placed at the time of
such acquisition (or construction, replacement, refinancing, repair, renovation
or improvement) by Aleris or such Subsidiary or within two hundred seventy
(270) days thereafter to secure Indebtedness incurred to pay all or a portion of
the purchase or cost thereof or to secure Indebtedness incurred for the purpose
of financing the acquisition (or construction, replacement or refinancing of, or
repairs, renovations or improvements to) any such fixed or capital assets or
equipment, provided that (x) the Indebtedness secured by such Liens is permitted
by Section 10.04(v) and (y) in all events, the Lien encumbering such fixed or
capital assets (or improvements thereto) does not encumber any other asset of
Aleris or any Subsidiary of Aleris (other than accessions to such assets and any
proceeds or products thereof); provided, that individual financings of property
provided by one lender may be cross collateralized to other financings of
property provided by such lender;

(viii) easements, rights-of-way, servitudes, restrictions, encroachments,
municipal and zoning ordinances and other similar charges or encumbrances, and
minor title deficiencies, in each case not securing Indebtedness and not
materially interfering with the conduct of the business of Aleris or any of its
Subsidiaries taken as a whole (and any other Liens “insured over” by the
applicable title insurance company);

 

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(ix) Liens arising from precautionary UCC, PPSA or like personal property
security financing statement filings or registrations regarding operating leases
entered into by any Borrower or its Subsidiaries;

(x) Liens arising out of the existence of judgments or awards which do not
constitute an Event of Default pursuant to Section 11.09;

(xi) any interest or title of a lessor under leases, or secured by a lessor’s
interests under leases, to which Aleris or any of its Subsidiaries is a party in
the ordinary course of business;

(xii) Liens (x) incurred in the ordinary course of business in connection with
workers compensation claims, unemployment insurance, social security benefits
and other similar forms of governmental insurance benefits, (y) deposits
securing the performance of bids, tenders, leases (other than Capitalized Lease
Obligations) and contracts (other than Indebtedness) in the ordinary course of
business, statutory obligations, trade contracts, surety bonds, credit
insurance, performance bonds and other obligations of a like nature (including
those to secure health, safety and environmental obligations) incurred in the
ordinary course of business, and (z) Liens securing letters of credit and/or
bank guarantees permitted pursuant to Sections 10.04(xiii) or (xxi);

(xiii) Permitted Encumbrances;

(xiv) customary Liens in favor of banking institutions encumbering deposits
(including the right of set-off) held by such banking institutions incurred in
the ordinary course of business;

(xv) Liens on property or assets acquired pursuant to a Permitted Acquisition,
or on property or assets of a Subsidiary of Aleris in existence at the time such
Subsidiary is acquired pursuant to a Permitted Acquisition, provided that
(x) any Indebtedness that is secured by such Liens is permitted to exist under
Section 10.04, and (y) such Liens are not incurred in connection with, or in
contemplation or anticipation of, such Permitted Acquisition and do not attach
to (A) any asset of Aleris or any other asset of any Subsidiary of Aleris not
acquired in connection with such Permitted Acquisition or (B) any asset of the
European Borrower or its Subsidiaries;

(xvi) Liens securing Indebtedness of Foreign Subsidiaries (other than the
European Borrower) permitted pursuant to Section 10.04(xiii), and Liens on
assets or property of Foreign Subsidiaries, provided that such Liens only attach
to the assets of Foreign Subsidiaries (other than accounts receivables of the
European Credit Parties and the Specified European Manufacturing Subsidiaries
that are party to a Receivables Purchase Agreement);

(xvii) contractual options or rights to purchase Real Property and Equipment
from any Credit Party;

(xviii) pledges, deposit accounts or cash collateral in the ordinary course of
business securing liability for reimbursement or indemnification obligations to
(including obligations in respect of letters of credit or bank guarantees for
the benefit of) insurance carriers providing property, casualty or liability
insurance or any insurance required by statute or law to the Borrowers or any of
their Subsidiaries;

 

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(xix) Liens resulting from standard joint venture agreements or stockholder
agreements and other similar agreements’ applicable to joint ventures;

(xx) Liens in favor of customs and revenue authorities arising as a matter of
law to secure payment of customs duties in connection with the importation of
goods in the ordinary course of business;

(xxi) Liens (i) on cash advances in favor of the seller of any property to be
acquired in an Investment permitted pursuant to Section 10.05 to be applied
against the purchase price for such Investment, and (ii) consisting of an
agreement to transfer any property in a disposition permitted under
Section 10.02, in each case, solely to the extent such Investment or
disposition, as the case may be, would have been permitted on the date of the
creation of such Lien;

(xxii) Liens on property (i) of any Subsidiary that is not a Credit Party and
(ii) that does not constitute Collateral, which Liens secure Indebtedness of the
applicable Subsidiary permitted under Section 10.04;

(xxiii) Liens in favor of the Credit Parties or any of their Subsidiaries
securing Indebtedness permitted under Section 10.04, including Liens granted by
a Subsidiary that is not a Credit Party in favor of the Borrower or another
Credit Party in respect of Indebtedness owed by such Subsidiary;

(xxiv) Liens encumbering reasonable customary initial deposits and margin
deposits and similar Liens attaching to commodity trading accounts or other
brokerage accounts incurred in the ordinary course of business and not for
speculative purposes;

(xxv) Liens that are contractual rights of set-off relating to purchase orders
and other agreements entered into with customers of the Borrowers or any of
their Subsidiaries in the ordinary course of business;

(xxvi) Liens solely on any cash earnest money deposits made by the Borrowers or
any of their Subsidiaries in connection with any letter of intent or purchase
agreement permitted hereunder;

(xxvii) Liens arising out of Sale and Lease-Back Transactions permitted by
Section 10.02(xix);

(xxviii) Liens on goods or inventory the purchase, shipment or storage price of
which is financed by a documentary letter of credit or bankers’ acceptance
issued or created for the account of any Borrower or any of its Subsidiaries;
provided that such Lien secures only the obligations of the Borrower or such
Subsidiaries in respect of such letter of credit to the extent permitted under
Section 10.04;

(xxix) Liens encumbering any property (other than the Collateral) to secure or
support obligations under or in respect of Interest Rate Protection Agreements,
Other Hedging Agreements or other commodity trading accounts or other brokerage
accounts incurred in the ordinary course of business and not for speculative
purposes, including, without limitation, Liens that constitute or attach to any
initial deposit (howsoever described), initial margin or variation margin and
Liens or any Interest Rate Protection Agreement, Other Hedging Agreement,
commodity trading account or brokerage trading account and the property therein;

 

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(xxx) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for sale of goods entered into by any Borrower or its
Subsidiaries in the ordinary course of business or Liens arising by operation of
law under Article 2 of the UCC or under the PPSA in favor of a reclaiming seller
of goods or buyer of goods;

(xxxi) Liens of a collecting bank arising in the ordinary course of business
under Section 4-208 of the Uniform Commercial Code in effect in the relevant
jurisdiction covering only the items being collected upon;

(xxxii) Liens deemed to exist in connection with investments in repurchase
agreements under Section 10.05; provided that such Liens do not extend to any
assets other than those assets that are the subject of such repurchase
agreements;

(xxxiii) Liens on assets not included in the Collateral securing Hedging
Obligations which are not evidenced by a Secured Hedging Agreement;

(xxxiv) any security interest or set-off arrangements entered into by Aleris and
its Subsidiaries in the ordinary course of its banking arrangements in the
Netherlands with respect solely to fees and expenses of the applicable bank,
which arise from the general banking conditions (algemene bankvoorwaarden), and
which do not secure any Indebtedness;

(xxxv) Liens securing Indebtedness permitted pursuant to Section 10.04(vii),
(xii), (xxiv), and (xxx); provided that if such Liens are granted in respect of
assets constituting the Collateral, the Liens in respect of such assets shall be
junior to the Liens of the Administrative Agent pursuant to an intercreditor
agreement in respect of such assets and Liens reasonably acceptable to the
Administrative Agent;

(xxxvi) Liens as provided in clauses (D), (E) or (F) of the definition of
Exempted Deposit Accounts; and

(xxxvii) Liens not otherwise permitted by clauses (i) through (xxxvi) of this
Section 10.01 and with an aggregate fair value not in excess of, and securing
liabilities not in excess of, $25,000,000 in the aggregate at any time
outstanding; provided that if such Liens are granted in respect of assets
constituting the Collateral, the Liens in respect of such assets shall be junior
to the Liens of the Administrative Agent pursuant to an intercreditor agreement
in respect of such assets and Liens reasonably acceptable to the Administrative
Agent.

Notwithstanding the foregoing, Liens on assets of the European Borrower
permitted pursuant to clauses (vi), (vii) and (xxxvii) of this Section 10.01,
shall not secure Indebtedness or other liabilities in excess of $5,000,000 at
any time outstanding.

In connection with the granting or assumption of Liens of the type described in
clauses (vi), (vii) and (xv) of this Section 10.01 by Aleris of any of its
Subsidiaries (other than the European Distribution Subsidiaries), the
Administrative Agent shall be authorized to take any actions deemed appropriate
by it in connection therewith (including, without limitation, by executing
appropriate lien releases or lien subordination agreements in favor of the
holder or holders of such Liens, in either case solely with respect to the
property subject to such Liens).

10.02 Consolidation, Merger, Purchase or Sale of Assets, etc. No Credit Party
will, or will permit any of its Subsidiaries to, wind up, liquidate or dissolve
its affairs or enter into any partnership or joint venture, or merge, amalgamate
or consolidate, or convey, sell, lease or otherwise dispose of all or

 

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any part of its property or assets, or enter into any sale-leaseback
transactions, or purchase or otherwise acquire (in one or a series of related
transactions) any part of the property or assets (other than purchases or other
acquisitions of inventory, materials, equipment, intangible assets, goods and
Real Property in the ordinary course of business) of any Person, except that the
following shall be permitted:

(i) Capital Expenditures by Aleris and its Subsidiaries shall be permitted
(other than Capital Expenditures consisting of the acquisition of an Acquired
Entity or Business except to the extent otherwise permitted pursuant to
Section 10.05);

(ii) each of Aleris and its Subsidiaries may convey, sell or dispose of
Inventory and other assets in the ordinary course of business;

(iii) Investments may be made to the extent permitted by Section 10.05;

(iv) each of Aleris and its Subsidiaries may sell or otherwise dispose of
excess, used, obsolete, damaged or worn-out assets in the ordinary course of
business or property no longer used or useful in the conduct of their business;

(v) Aleris and its Subsidiaries may sell, transfer or otherwise dispose of
assets (other than the Equity Interests of any Subsidiary unless all of the
Equity Interests of such Subsidiary then owned by Aleris and its Subsidiaries
are sold in a sale permitted by this clause (v)), so long as (x) each such sale
is in an arm’s-length transaction and Aleris or the respective Subsidiary
receives at least fair market value (as determined in good faith by Aleris or
such Subsidiary, as the case may be), (y) the Net Sale Proceeds therefrom are
applied and/or reinvested as (and to the extent) required by Section 5.02(c) and
(z) the aggregate fair market value of the proceeds received from all assets
sold, transferred or disposed pursuant to this clause (v) shall not exceed
$25,000,000 in any fiscal year of Aleris;

(vi) each of Aleris and its Subsidiaries may lease (as lessee) or license (as
licensee) real or personal property (so long as any such lease or license does
not create a Capitalized Lease Obligation except to the extent permitted by
Section 10.04(v));

(vii) each of Aleris and its Subsidiaries may sell, discount, or otherwise
dispose of accounts receivable in connection with the compromise or collection
thereof, and not as part of any transaction, the primary purpose of which is to
provide financing for Aleris and its Subsidiaries, provided that such accounts
receivable were not included as Eligible Accounts in the Borrowing Base
Certificate most recently delivered or, if so included, the exclusion of such
accounts as Eligible Accounts (after giving effect to any concurrent prepayment
of the Loans) would not cause the Borrowing Base limitations described in
Section 5.02(a) to be exceeded;

(viii) each of Aleris and its Subsidiaries may grant licenses, sublicenses,
leases or subleases to other Persons not materially interfering with the conduct
of the business of Aleris or any of its Subsidiaries, in each case so long as no
such grant would adversely affect any Collateral or the Administrative Agent’s
rights or remedies with respect thereto;

(ix) any Person (other than the Canadian Borrower, the European Borrower or the
Distribution Subsidiaries) may merge, amalgamate or consolidate with and into,
or be dissolved or liquidated into, or transfer any of its assets to, Aleris or
any Domestic Subsidiary of Aleris so long as (i) in the case of any such merger,
amalgamation, consolidation, dissolution or liquidation involving Aleris, the
surviving or continuing corporation of any such merger, consolidation,
dissolution or liquidation is Aleris or another Person organized or existing
under

 

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the laws of the United States of America, any State thereof or the District of
Columbia and such Person (if not Aleris) expressly assumes in writing all
obligations of Aleris under the Credit Documents, in which event such Person
will succeed to, and be substituted for, Aleris, (ii) in the case of any such
merger, amalgamation, consolidation, dissolution or liquidation involving a
Wholly-Owned Domestic Subsidiary which is a U.S. Credit Party, a Canadian Credit
Party (other than the Canadian Borrower) or a European Credit Party (other than
the European Borrower or any Distribution Subsidiary), a Wholly-Owned Domestic
Subsidiary which is (or thereupon becomes) a U.S. Credit Party is the surviving
or continuing corporation of any such merger, amalgamation, dissolution or
liquidation, (iii) the security interests granted to the Administrative Agent
for the benefit of the Secured Parties pursuant to the Security Documents in the
assets of any party to such transaction (if any) shall remain or shall be
replaced such that they are in full force and effect and perfected to at least
the same extent as in effect immediately prior to such merger, amalgamation,
dissolution or liquidation, and (iv) at the time thereof and immediately after
giving effect thereto, no Event of Default shall have occurred and be
continuing;

(x) any Distribution Subsidiary may merge, amalgamate, or consolidate with and
into, or be dissolved or liquidated into, or transfer any of its assets to, the
European Borrower or any other Distribution Subsidiary;

(xi) any Person (other than a U.S. Credit Party or a Canadian Credit Party) may
merge or consolidate with and into, or be dissolved or liquidated into, or
transfer any of its assets to, the European Borrower or any of its Subsidiaries
so long as (i) in the case of any such merger, consolidation, dissolution or
liquidation involving the European Borrower, the European Borrower is the
surviving entity of any such merger, consolidation, dissolution or liquidation,
(ii) in the case of any such merger, consolidation, dissolution or liquidation
involving a European Subsidiary Guarantor, a Subsidiary of the European Borrower
which is (or thereupon becomes) a European Subsidiary Guarantor is the surviving
entity of such merger or corporation, (iii) the security interests granted to
the Administrative Agent for the benefit of the Secured Parties pursuant to the
Security Documents in the assets of any party to such transaction (if any) shall
remain or shall be replaced such that they are in full force and effect and
perfected to at least the same extent as in effect immediately prior to such
merger, dissolution or liquidation and (iv) at the time thereof and immediately
after giving effect thereto, no Event of Default shall have occurred and be
continuing;

(xii) any Person (other than a U.S. Credit Party, the European Borrower or the
Distribution Subsidiaries) may merge, amalgamate or consolidate with and into,
or be dissolved or liquidated into, or transfer any of its assets to, the
Canadian Borrower or any Canadian Subsidiary of Aleris so long as (i) in the
case of any such merger, amalgamation, consolidation, dissolution or liquidation
involving a Canadian Credit Party, the surviving or continuing corporation of
any such merger, amalgamation, consolidation, dissolution or liquidation is, or
concurrently therewith becomes a Canadian Credit Party, (ii) the security
interests and charges granted to the Administrative Agent for the benefit of the
Secured Parties pursuant to the Security Documents in the assets of any party to
such transaction (if any) shall remain or shall be replaced such that they are
in full force and effect and perfected to at least the same extent as in effect
immediately prior to such merger, amalgamation, dissolution or liquidation, and
(iii) at the time thereof and immediately after giving effect thereto, no Event
of Default shall have occurred and be continuing;

(xiii) any Person which is not a Credit Party may merge, amalgamate, or
consolidate with and into, or be dissolved or liquidated into, or transfer any
of its assets to any Subsidiary of Aleris so long as, in the case of mergers,
amalgamations, or consolidations with and into a Credit Party, such Credit Party
is the surviving or continuing entity of such merger or amalgamation;

 

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(xiv) any non Wholly-Owned Subsidiary which is a Credit Party may merge,
amalgamate, or consolidate into, or be dissolved or liquidated into, or transfer
any of its assets to any other Credit Party, so long as (i) if, after giving
effect to such merger, amalgamation, consolidation, dissolution or liquidation
the percentage ownership of Aleris and its Subsidiaries in any such Subsidiary
or its assets is reduced, the value of such reduction shall be permitted as a
Dividend pursuant to Section 10.03, (ii) the security interests and charges (if
any) granted to the Administrative Agent for the benefit of the Secured Parties
pursuant to the Security Documents in the assets of the Subsidiaries party to
such transaction shall remain in full force and effect and perfected (to at
least the same extent as in effect immediately prior to such merger, dissolution
or liquidation), and (iii) in the case of any such transaction pursuant to which
any consideration is paid to a Person that is not a Wholly-Owned Subsidiary of
Aleris, such consideration shall be permitted to be paid at such time only to
the extent that it could otherwise have been paid pursuant to (and Aleris shall
be required to satisfy the provisions of) Section 10.03;

(xv) if at the time thereof and immediately after giving effect thereto no Event
of Default shall have occurred and be continuing, (x) any Subsidiary of Aleris
(other than any Canadian Credit Party or the European Borrower) may liquidate or
dissolve if Aleris determines in good faith that such liquidation or dissolution
is in the best interests of Aleris and is not materially disadvantageous to the
Lenders, (y) any Subsidiary (other than any Canadian Credit Party or the
European Borrower) may merge with any Person to effect an investment permitted
under Section 10.05 and (z) any merger, dissolution or liquidation may be
effected for the purposes of effecting a transaction otherwise permitted under
this Section 10.02;

(xvi) sales, transfers and dispositions of (i) Investments (excluding the Equity
Interests of any Subsidiary) permitted by clauses (ii), (iv), (ix) and (xvii) of
Section 10.05 and (ii) other investments to the extent required by or made
pursuant to customary buy/sell arrangements made in the ordinary course of
business between the parties to agreements related thereto; provided, in each
case, that such sales, transfer or dispositions are made for fair value and for
at least 75% cash consideration;

(xvii) dispositions resulting from any casualty or other insured damage to, or
any taking under power of eminent domain or by condemnation or similar
proceeding of, any property or asset of any Borrower or its Subsidiaries;

(xviii) sales, transfers and dispositions effecting a transaction otherwise
permitted under this Section 10.02, Section 10.03, Section 10.08 and Liens
permitted by Section 10.01;

(xix) sales, transfers and dispositions pursuant to Sale and Lease-Back
Transactions if (A)(1) Aleris or such Subsidiary would be entitled to incur
Indebtedness in amount equal to the Attributable Debt with respect to such Sale
and Lease-Back Transaction pursuant to Section 10.04(xv), (2) the consideration
received by Aleris or any Subsidiary in connection with such Sale and Lease-Back
Transaction is at least equal to the fair market value (as determined in good
faith by Aleris) of such property and (3) to the extent applicable, Aleris
applies and or reinvests the proceeds of such transaction in compliance with
Section 5.02(c) and (B) the Administrative Agent shall have received from the
applicable purchaser or transferee a Collateral Access Agreement;

 

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(xx) each of Aleris and its Subsidiaries may sell or liquidate Cash Equivalents,
in each case for cash at fair market value (as determined in good faith by
Aleris or such Subsidiary);

(xxi) Aleris and its Subsidiaries may sell the assets described on Schedule XIV
so long as the Net Sale Proceeds therefrom are applied and/or reinvested as (and
to the extent) required by Section 5.02(c);

(xxii) transfers or sales of assets (s) among the U.S. Credit Parties, (t) among
Wholly-Owned Canadian Subsidiaries of Aleris which are Credit Parties, (u) among
the European Borrower and its Wholly-Owned Subsidiaries which are Credit
Parties, (v) among Wholly-Owned Foreign Subsidiaries (that are not Credit
Parties) of Aleris, (w) by any Subsidiary of Aleris to any U.S. Credit Party,
(x) by any Foreign Subsidiary of Aleris that is not a Credit Party to any
Wholly-Owned Foreign Subsidiary of Aleris, (y) by any U.S. Credit Party to any
Wholly-Owned Canadian Subsidiary or Wholly-Owned European Distribution
Subsidiary of Aleris that is a Credit Party, and (z) by any U.S. Credit Party to
any Wholly-Owned Foreign Subsidiary (that is not a Credit Party) of Aleris, so
long as, (I) in the case of any transfer from one Credit Party to another Credit
Party, any security interests granted to the Administrative Agent for the
benefit of the Secured Parties pursuant to the relevant Security Documents in
the assets so transferred shall (A) remain in full force and effect and
perfected and enforceable (to at least the same extent as in effect immediately
prior to such transfer) or (B) be replaced by security interests granted to the
relevant Administrative Agent for the benefit of the relevant Secured Parties
pursuant to the relevant Security Documents, which new security interests shall
be in full force and effect and perfected and enforceable (to at least the same
extent as in effect immediately prior to such transfer) and (II) in the case of
any transfer pursuant to preceding clause (z), either (A) (i) no Default or
Event of Default shall have occurred and be continuing, and (ii) the Excess
Availability shall have been equal to or greater than 20% of the lesser of
(A) the Total Commitments and (B) the Total Borrowing Base for each day in the
preceding 30 day period, and shall be at least 20% of the lesser of (A) the
Total Commitments and (B) the Total Borrowing Base after giving effect thereto,
or (B) such transfer of assets would otherwise be permitted under Section 10.05;

(xxiii) Permitted Acquisitions may be made to the extent permitted by
Section 9.13;

(xxiv) Aleris and its Subsidiaries may consummate Asset Swaps, so long as
(w) each such sale is an arm’s-length transaction and Aleris or the respective
Subsidiary receives at least fair market value (as determined in good faith by
Aleris or such Subsidiary, as the case may be), (x) the Net Sale Proceeds
therefrom (if any) are applied and/or reinvested as (and to the extent) required
by Section 5.02(c), (y) the Administrative Agent shall have a perfected Lien on
the assets acquired pursuant to such Asset Swap at least to the same extent for
the assets sold pursuant to such Asset Swap (immediately prior to giving effect
thereto) subject to no other Lien other than Permitted Liens and (z) the
aggregate fair market value of, all assets sold pursuant to this clause
(xxiv) shall not exceed $25,000,000 in the aggregate since the Original Closing
Date; provided that so long as the assets acquired by Aleris or any of its
Subsidiaries pursuant to the respective Asset Swap are located in the same
jurisdiction (or in the case of the United States, any State of the United
States) as the assets sold by Aleris or such Subsidiary neither the fair market
value limitation described in clause (w) above nor the $25,000,000 aggregate cap
on Asset Swaps described in clause (z) above will apply to such Asset Swap;

(xxv) the Transaction may be consummated on or about the Closing Date;

 

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(xxvi) each of Aleris and its Subsidiaries may sell or otherwise dispose of
Excluded Assets;

(xxvii) to the extent required by Law or any Governmental Authority in
connection with any Permitted Acquisition, each of Aleris and its Subsidiaries
may sell or otherwise dispose of assets (including assets constituting
Collateral) so long as (i) if such sale or disposition is made outside the
ordinary course of business of Aleris and involves assets with a Value in excess
of $20,000,000, then Aleris shall cause to be delivered to Administrative Agent
an updated Borrowing Base Certificate reflecting the sale of such assets, and
(ii) if a Dominion Period exists at the time of such sale or disposition, the
Net Sale Proceeds in respect of assets included in the Collateral received by
Aleris and its Subsidiaries shall be remitted to the Administrative Agent for
application to the Obligations in accordance with Section 5.02(c);

(xxviii) Specified European Manufacturing Subsidiaries, European Distribution
Subsidiaries and Transitory European Subsidiaries may sell Accounts to the
European Borrower pursuant to Receivables Purchase Agreements;

(xxix) any Wholly Owned Subsidiary which is a Credit Party may merge or
consolidate into, or be dissolved or liquidated into, or transfer any of its
assets to any other Credit Party; and

(xxx) any Permitted Lien;

provided, that, notwithstanding anything to the contrary set forth herein, the
European Borrower shall not merge or consolidate into, or be dissolved or
liquidated into, any other Person.

To the extent the Required Lenders waive the provisions of this Section 10.02
with respect to the sale of any Collateral, or any Collateral is sold (directly
or indirectly) as permitted by this Section 10.02 (other than to Aleris or a
Subsidiary thereof which is a Credit Party), such Collateral shall be sold free
and clear of the Liens created by the Security Documents, and the Administrative
Agent and the Administrative Agent shall be authorized to take any actions
deemed appropriate in order to effect the foregoing.

10.03 Dividends. No Credit Party will, or will permit any of its Subsidiaries
to, pay any Dividends except that:

(i) Aleris may declare and pay dividends or make other distributions with
respect to its Equity Interests payable solely in additional shares of its
Equity Interests; provided, that such Equity Interests are Qualified Equity
Interests;

(ii) Subsidiaries of Aleris may declare and pay dividends or make other
distributions ratably with respect to their Equity Interests;

(iii) Aleris and its Subsidiaries may, or may pay Dividends to Holdings the
proceeds of which are used to, (i) repurchase Equity Interests of Aleris (or any
direct or indirect parent thereof) in connection with the exercise of stock
options (including for purposes of paying tax withholding applicable to stock
option exercises) granted to officers, directors, consultants or employees of
Aleris, its Subsidiaries or any direct or indirect parent thereof and
(ii) redeem, repurchase or otherwise acquire for value, outstanding Equity
Interests of Aleris, or any direct or indirect parent thereof, (including
related stock appreciation rights or similar securities) following the death,
disability, retirement or termination of employment of officers, directors,
consultants or

 

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employees of Aleris, any of its Subsidiaries, or any direct or indirect parent
thereof or under the terms of any plan or any other agreement under which such
Equity Interests or related rights were issued, in each case so long as (x) the
aggregate amount paid by Aleris in cash in respect of all such redemptions or
purchases pursuant to preceding clauses (i) and (ii) shall not exceed $5,000,000
in respect of all such redemptions, purchases and payments made in any Fiscal
Year (plus the amount of net proceeds (x) received by Aleris during such Fiscal
Year from sales of Equity Interests of Aleris or, to the extent contributed to
Aleris, any of Aleris’ direct or indirect parents, to directors, consultants,
officers or employees of Aleris, any of its Subsidiaries or any direct or
indirect parent of Aleris in connection with permitted employee compensation and
incentive arrangements and (y) of any key-man life insurance policies received
during such Fiscal Year); provided that to the extent that any portion of such
annual limit on such redemptions, purchases and payments is not utilized in any
Fiscal Year, such unused portion will increase the annual limit applicable to
the immediately subsequent Fiscal Year;

(iv) Aleris and its Subsidiaries may make non-cash repurchases of Equity
Interests deemed to occur upon the exercise of stock options or warrants if such
Equity Interests represent a portion of the exercise price of such options or
warrants;

(v) [Reserved];

(vi) to the extent constituting Dividends, Aleris and its Subsidiaries may enter
into and consummate transactions expressly permitted by any provision of
Sections 10.02 or 10.06(xi), (xii) and (xiv);

(vii) Aleris and its Subsidiaries may pay Dividends to Holdings to finance
investments permitted pursuant to Section 10.05; provided, that (A) any such
Dividend shall be made substantially concurrently with the closing of such
investment and (B) Holdings shall, immediately following the closing thereof,
cause (i) all property acquired (whether assets or Equity Interests) to be
contributed to Aleris or its Subsidiaries or (ii) the merger (to the extent
permitted in Section 10.02) of the Person formed or acquired into Aleris or its
Subsidiaries in order to consummate such investment;

(viii) Aleris may pay Dividends (including in cash), so long as (a) the
Distribution Conditions are satisfied (both before and after giving effect to
any such Dividends), or (b) such Dividends are made with the proceeds of any
substantially contemporaneous issuance of Qualified Equity Interests by Aleris
or any direct or indirect parent of Aleris to the extent such proceeds shall
have actually been received by Aleris;

(ix) Aleris and its Subsidiaries may pay Dividends to Holdings and any other
direct or indirect parent of Aleris (x) in an amount (together with loans or
advances made pursuant to Section 10.05(xix)) not to exceed $1,500,000 in any
Fiscal Year, to the extent necessary to pay (or allow any direct or indirect
parent of Holdings to pay) general corporate and overhead expenses incurred by
Holdings (or any direct or indirect parent thereof) in the ordinary course of
business, plus the amount of any reasonable and customary indemnification claims
made by any director or officer of Holdings (or any direct or indirect parent
thereof), (y) to pay franchise taxes and other fees, taxes and expenses required
to maintain its (or any of its direct or indirect parents’) corporate existence
and (z) in an amount necessary to pay the tax liabilities of Holdings (or any
such direct or indirect parent) attributable to (or arising as a result of) the
operations of Aleris and its Subsidiaries; provided, however, that in the case
of clause (z), the amount of such dividends shall not exceed the amount that
Aleris and its Subsidiaries would be required to pay in respect of federal,
state and local taxes and any other taxes were Aleris and the Subsidiaries to
pay such taxes as stand alone taxpayers; and

 

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(x) so long as no Event of Default is in existence or would exist immediately
after giving effect thereto, Aleris may pay additional Dividends in an amount
not to exceed $30,000,000 during any calendar year.

10.04 Indebtedness. No Borrower will, or will permit any of its Subsidiaries to,
contract, create, incur, assume or suffer to exist any Indebtedness or Interest
Rate Protection Agreements or Other Hedging Agreements, except:

(i) the Obligations;

(ii) Existing Indebtedness (not constituting Capitalized Lease Obligations,
which shall be required to be justified under following clause (v)) outstanding
on the Closing Date and listed on Schedule IX;

(iii) Interest Rate Protection Agreements entered into with respect to other
Indebtedness permitted under this Section 10.04 so long as the entering into of
such Interest Rate Protection Agreements are bona fide hedging activities and
are not for speculative purposes;

(iv) Other Hedging Agreements providing protection to Aleris and its
Subsidiaries against fluctuations in currency values and commodity prices so
long as the entering into of such Other Hedging Agreements are bona fide hedging
activities and are not for speculative purposes;

(v) Indebtedness of Aleris and its Subsidiaries (other than the European
Distribution Subsidiaries) evidenced by Capitalized Lease Obligations and
Synthetic Lease Obligations (to the extent permitted by Section 10.01(vi)) and
purchase money Indebtedness secured by Liens described in Section 10.01(vii),
provided that in no event shall the sum of the aggregate principal amount of all
Capitalized Lease Obligations, Synthetic Lease Obligations and purchase money
Indebtedness permitted by this clause (v) exceed the greater of $175,000,000 or
10% of Consolidated Total Assets at any time outstanding;

(vi) intercompany Indebtedness among Aleris and its Subsidiaries to the extent
permitted by Sections 10.05(viii), (xiv) or (xvi);

(vii) Indebtedness under term loans or senior notes in an initial aggregate
principal amount not to exceed $25,000,000;

(viii) Indebtedness consisting of guaranties by Aleris and its Subsidiaries of
each other’s Indebtedness or other obligations of any such Persons permitted
under Section 10.05(viii), (xiv) or (xvi);

(ix) cash management obligations and other Indebtedness in respect of netting
services, overdraft protections and similar arrangements in each case in
connection with deposit accounts;

(x) Permitted Refinancing Indebtedness;

 

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(xi) to the extent that same constitutes Indebtedness, indemnification
obligations, purchase price or other similar adjustments in connection with
acquisitions and dispositions permitted hereunder;

(xii) Indebtedness of Aleris or any Subsidiary of Aleris (other than the
European Borrower and its Subsidiaries) acquired pursuant to a Permitted
Acquisition or other acquisition of an Acquired Business or Entity permitted
pursuant to Section 10.05 (or Indebtedness assumed at the time of a Permitted
Acquisition or such other acquisition permitted pursuant to Section 10.05),
provided that (x) such Indebtedness was not incurred in connection with, or in
anticipation or contemplation of, such Permitted Acquisition or other
acquisition permitted pursuant to Section 10.05, (y) the aggregate principal
amount of all Indebtedness permitted by this clause (xii) shall not exceed
$50,000,000 at any one time outstanding;

(xiii) Indebtedness in respect of letters of credit (other than Letters of
Credit issued pursuant to this Agreement) or bank guarantees; provided that the
aggregate face amount of any such letters of credit or bank guarantees that are
secured shall not exceed $10,000,000 outstanding at any one time, and any
security therefor shall be limited to cash collateral including by providing
security over an Exempted Deposit Account in accordance with clause (E) of the
definition thereof;

(xiv) unsecured Indebtedness of Aleris the net cash proceeds of which are used
to consummate one or more Permitted Acquisitions or other acquisitions of
Acquired Entities or Businesses permitted pursuant to Section 10.05.
(“Additional Debt”); provided that (x) (A) the terms of such Additional Debt
shall not contain any cross-default provisions (other than for material
non-payment at final maturity, and may include a cross-acceleration provision),
(B) the terms of the Additional Debt shall not contain any financial maintenance
covenants, (C) the Additional Debt shall not be secured by any asset of Aleris
or any of its Subsidiaries and shall not be guaranteed by Aleris or any
Subsidiary of Aleris other than another Credit Party, and (D) no portion of the
principal of the Additional Debt shall be scheduled to be redeemed, repurchased
or otherwise repaid or prepaid (other than as a result of a change of control,
customary offers upon asset sales, acceleration or such other provision as shall
be customary for comparable high-yield debt securities) prior to the date that
is six months after the Final Maturity Date and (y) solely at the time of the
incurrence of such Indebtedness after giving effect to the incurrence of such
Indebtedness, (I) the Fixed Charge Coverage Ratio is at least 1.0 to 1.0 for the
immediately preceding 12-month period as of the most recently ended Fiscal
Quarter for which Final Statements have been delivered pursuant to
Section 9.01(b), and (II) no Default or Event of Default shall exist or would
result therefrom; and

(xv) Attributable Debt incurred by Aleris or any Subsidiary pursuant to Sale and
Lease-Back Transactions of property (real or personal), equipment or other fixed
or capital assets owned by Aleris or any Subsidiary as of the Original Closing
Date or acquired by Aleris or any Subsidiary after the Original Closing Date in
exchange for, or with the proceeds of the sale of, such assets owned by Aleris
or any Subsidiary as of the Original Closing Date and any Refinancing
Indebtedness incurred to refund, replace or refinance any Indebtedness,
Disqualified Stock or Preferred Stock incurred pursuant to this clause (xv);
provided that the aggregate amount of Attributable Debt incurred under this
clause (xv) does not exceed $35,000,000;

(xvi) Indebtedness owed to any Person providing workers’ compensation, health,
disability or other employee benefits (including contractual and statutory
benefits) or property, casualty, liability or credit insurance, pursuant to
reimbursement or indemnification obligations to such Person, in each case
incurred in the ordinary course of business;

 

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(xvii) Indebtedness of any Borrower or any of its Subsidiaries in respect of
performance bonds, bid bonds, appeal bonds, surety bonds, performance and
completion guarantees and similar obligations, or obligations in respect of
letters of credit, bank guarantees or similar instruments related thereto, in
each case provided in the ordinary course of business;

(xviii) Indebtedness consisting of promissory notes issued by any Credit Party
to current or former officers, directors and employees, their respective
estates, spouses or former spouses to finance the purchase or redemption of
Equity Interests of Holdings (or any direct or indirect parent thereof) or of
Aleris (following a Qualified Public Offering of Aleris) permitted by
Section 10.03;

(xix) Indebtedness consisting of obligations of any Borrower or any of its
Subsidiaries under deferred compensation or other similar arrangements incurred
by such Person in connection with the Transaction, Permitted Acquisitions or any
other Investment expressly permitted hereunder;

(xx) Indebtedness consisting of (x) the financing of insurance premiums or
(y) take-or-pay obligations contained in supply arrangements, in each case, in
the ordinary course of business;

(xxi) Indebtedness incurred by any Borrower or any of its Subsidiaries in
respect of documentary letters of credit, bank guarantees, bankers’ acceptances
or similar instruments issued or created in the ordinary course of business;
provided that any such documentary letter of credit or other similar instrument
may be secured only by Liens attaching to the related documents of title and not
any Inventory represented thereby;

(xxii) Indebtedness supported by a Letter of Credit, in a principal amount not
to exceed the face amount of such Letter of Credit;

(xxiii) Unsecured Indebtedness under the IntermediateCo Notes in an aggregate
principal amount of up to $50,000,000, issued by Holdings;

(xxiv) Indebtedness in an aggregate principal amount at any time outstanding of
up to $50,000,000 solely to the extent the Net Cash Proceeds thereof are applied
to finance a Permitted Acquisition;

(xxv) unsecured senior notes in an aggregate principal amount at any time
outstanding of up to $50,000,000, or unsecured subordinated notes; provided that
in either case, such Indebtedness does not provide for annual amortization of
more than 1% and such debt matures more than 90 days after the Final Maturity
Date;

(xxvi) Indebtedness to finance the purchase of Inventory (other than U.K.
Inventory included in the Collateral) by European Subsidiaries of Aleris;

(xxvii) Indebtedness of Foreign Subsidiaries that are not Credit Parties (to the
extent such Indebtedness is not guaranteed by a Credit Party);

(xxviii) the New Senior Unsecured Notes;

 

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(xxix) Indebtedness pursuant to a declaration of joint and several liability
used for the purpose of Section 2:403 of the Dutch Civil Code (and any residual
liability under such declaration arising pursuant to section 2:404(2) of the
Dutch Civil Code);

(xxx)(A) secured Indebtedness of Aleris and its Subsidiaries (other than the
European Distribution Subsidiaries) in an aggregate principal amount at any time
outstanding of up to the greater of (i) $500,000,000; and (ii) an unlimited
principal amount if solely at the time of the incurrence of such Indebtedness
the Senior Secured Leverage Ratio determined on a Pro Forma Basis is not greater
than 3.5 to 1.0 on the date of such incurrence, and (B) unsecured Indebtedness
of Aleris and its Subsidiaries (other than the European Distribution
Subsidiaries) in an unlimited principal amount so long as no Default or Event of
Default exists or would be caused thereby; provided that, in either case, such
Indebtedness does not provide for annual amortization of more than 1% and such
debt matures more than 60 days after the Final Maturity Date; and

(xxxi) Indebtedness constituting an Investment permitted by Section 10.05.

Notwithstanding the foregoing, Indebtedness of the European Borrower permitted
pursuant to clauses (v), (xxiv), (xxv), (xvii), (xxi) and (xxx) of this
Section 10.04 shall not exceed $5,000,000 at any time outstanding.

The accrual of interest and the accretion or amortization of original issue
discount on Indebtedness and the payment of interest in the form of additional
Indebtedness originally incurred in accordance with this Section 10.04 will not
constitute an incurrence of Indebtedness.

10.05 Advances, Investments and Loans. No Credit Party will, or will permit any
of its Subsidiaries to, make any Investment except that the following shall be
permitted:

(i) Aleris and its Subsidiaries may acquire and hold accounts receivables or
notes receivable arising and trade credit granted in the ordinary course of
business and other credit to suppliers or vendors in the ordinary course of
business;

(ii) Aleris and its Subsidiaries may acquire and hold cash and Cash Equivalents;

(iii) Aleris and its Subsidiaries may hold the Investments held by them on the
Closing Date and described on Schedule XII and any modification, replacement,
renewal, reinvestment or extension thereof (provided that the amount of the
original Investment is not increased except as otherwise permitted by this
Section 10.05), and any Investments existing on the Closing Date by any Borrower
or any of its Subsidiaries in or to any Borrower or any Subsidiary of such
Borrower;

(iv) Aleris and its Subsidiaries may acquire and own Investments (including debt
obligations) received in connection with the bankruptcy or reorganization of
suppliers, trade debtors, licensors, licensees and customers or in good faith
settlement of delinquent obligations of, and other disputes with, customers,
trade debtors, licensors, licensees and suppliers arising in the ordinary course
of business;

(v) Aleris and its Subsidiaries may make loans and advances to officers,
directors and employees of Holdings, Aleris or any of its Subsidiaries (i) for
reasonable and customary business related travel, entertainment, relocation and
analogous ordinary business purposes and (ii) in connection with such Persons’
purchase of Equity Interests of Holdings or any direct or indirect parent
thereof (provided that the amount of such loans and advances shall be
contributed to Aleris in cash as common equity);

 

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(vi) Aleris and its Subsidiaries may enter into Interest Rate Protection
Agreements to the extent permitted by Section 10.04(iii);

(vii) Aleris and its Subsidiaries may enter into Other Hedging Agreements to the
extent permitted by Section 10.04(iv);

(viii)(i) Aleris and its Subsidiaries may make intercompany loans and advances
between and among one another and guarantee Indebtedness and other obligations
permitted under this Agreement of each other (collectively, “Intercompany
Loans”), it being understood that no Intercompany Loans (other than Intercompany
Loans made by the European Borrower to Foreign Subsidiaries of Aleris in the
ordinary course of business (“European Intercompany Loans”)) may be made by a
Credit Party to a Subsidiary of Aleris that is not a Credit Party (x) at a time
that any Event of Default exists and is continuing, or (y) if such Intercompany
Loans are made from the proceeds of Loans under this Agreement and the Onlending
Conditions are not satisfied at the time of and after giving effect to such
Intercompany Loans, and (ii) (x) each Intercompany Loan made by any Subsidiary
of Aleris that is not a Credit Party to any Credit Party and (y) each
Intercompany Loan made by a Subsidiary of Aleris to the European Borrower or any
of its Subsidiaries shall be subject to subordination provisions no less
favorable to the Administrative Agent and the Lenders than are provided on Part
B of Schedule XXIII attached hereto;

(ix) Aleris and its Subsidiaries may acquire and hold promissory notes and other
non-cash consideration issued by the purchaser of assets in connection with a
sale of such assets to the extent permitted by Section 10.02;

(x) Aleris and its Subsidiaries may own and acquire the capital stock of, or
other equity interests in, their respective Subsidiaries in each case so long as
otherwise created or acquired in accordance with the terms of this Agreement;

(xi) Investments constituting guaranties permitted by Section 10.04;

(xii) Permitted Acquisitions permitted by Section 9.13;

(xiii) notes from employees of Aleris and its Subsidiaries in connection with
such employees’ acquisition of shares of Aleris Common Stock so long as no cash
is actually advanced by Aleris or any of its subsidiaries in connection with the
acquisition of such Aleris Common Stock;

(xiv) additional Investments by Aleris and its Subsidiaries, so long as (a) the
Acquisition Liquidity Conditions are satisfied (both before and after giving
effect to such Investment) or (b) such Investments are made with the proceeds of
any substantially contemporaneous issuance of Qualified Equity Interests by
Aleris or any direct or indirect parent of Aleris to the extent such proceeds
shall have actually been received by Aleris;

(xv) the Transactions shall be permitted;

(xvi) other Investments so long as the aggregate amount thereof (determined as
the amount originally advanced, loaned or otherwise invested (without giving
effect to any write- downs

 

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or write-offs thereof), less any returns on the respective investment not to
exceed the original amount invested) at any time outstanding pursuant to this
Section 10.05(xvi) would not exceed $40,000,000 (subject to the last sentence of
Section 9.13(a)), less the sum of (i) the aggregate amount of payments,
prepayments and redemptions of Indebtedness pursuant to Section 10.08(i)(y)
previously made by Aleris or any of its Subsidiaries pursuant to
Section 10.08(i)(y) since the Closing Date and (ii) the aggregate amount of
Permitted Acquisitions previously made by Aleris or any of its Subsidiaries
pursuant to Section 9.13(a)(iii) since the Closing Date;

(xvii) investments of any Person existing at the time such Person becomes a
Subsidiary of Aleris or consolidates or merges or amalgamates with Aleris or any
of its Subsidiaries (including in connection with a Permitted Acquisition) so
long as such investments were not made in contemplation of such Person becoming
a Subsidiary or of such merger;

(xviii) investments constituting deposits permitted under clauses (xii) and
(xviii) of Section 10.01;

(xix) loans and advances to Holdings (or any direct or indirect parent thereof)
in lieu of, and not in excess of the amount of (after giving effect to any other
loans, advances or Dividends in respect thereof), Dividends to the extent
permitted to be made to Holdings in accordance with Section 10.03(ix);

(xx) advances of payroll payments to employees in the ordinary course of
business;

(xxi) guarantees by Aleris or its Subsidiaries of leases (other than capitalized
leases) or other obligations of Aleris or any of its Subsidiaries that do not
constitute Indebtedness, in each case entered into in the ordinary course of
business; and

(xxii) investments in the ordinary course of business consisting of Article 3
endorsements for collection or deposit and Article 4 customary trade
arrangements with customers consistent with past practices.

10.06 Transactions with Affiliates. No Credit Party will, or will permit any of
its Subsidiaries to, enter into any transaction or series of related
transactions with any Affiliate of Aleris or any of its Subsidiaries, other than
in the ordinary course of business and on terms and conditions substantially as
favorable to Aleris or such Subsidiary as would reasonably be obtained by Aleris
or such Subsidiary at that time in a comparable arm’s-length transaction with a
Person other than an Affiliate, provided that the following shall not be
prohibited by this Section 10.06:

(i) Dividends may be paid to the extent provided in Section 10.03;

(ii) loans may be made and other transactions may be entered into by Aleris and
its Subsidiaries to the extent permitted by Sections 10.02, 10.04, 10.05, 10.08
and 10.11;

(iii) the payment of reasonable fees and out-of-pocket costs to directors of
Holdings (or any direct or indirect parent thereof), Aleris or any of its
Subsidiaries, and compensation and employee benefit arrangements paid to, and
indemnities provided for the benefit of, directors, officers or employees of
Holdings (or any direct or indirect parent thereof), Aleris or its Subsidiaries
in the ordinary course of business;

(iv) Aleris may issue Qualified Equity Interests;

 

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(v) Aleris and its Subsidiaries may enter into, and may make payments under,
employment agreements, employee benefits plans, stock option plans,
indemnification provisions, severance arrangements, and other similar
compensatory arrangements with officers, employees and directors of Aleris and
its Subsidiaries in the ordinary course of business;

(vi) periodic allocations of overhead expenses among Aleris and its Subsidiaries
may be made;

(vii) each of Aleris and its Subsidiaries may grant licenses or sublicenses,
leases or subleases to other Persons not materially interfering with the conduct
of the business of Aleris or any of its Subsidiaries, in each case so long as no
such grant otherwise restricts any Credit Party’s right to grant a Lien on such
assets or property in favor of the Administrative Agent (or the Administrative
Agent’s rights and remedies with respect, or access, thereto);

(viii) transactions among Credit Parties or Aleris and its Wholly-Owned
Subsidiaries which are otherwise permitted pursuant to this Agreement;

(ix) the European Borrower may enter into the Tolling Agreements with the
European Manufacturing Subsidiaries and other Subsidiaries of Aleris and make
payments thereunder;

(x) the European Borrower, the Specified European Manufacturing Subsidiaries and
the Distribution Subsidiaries may enter into the Receivables Purchase
Agreements, and perform their respective obligations thereunder;

(xi) Aleris may pay (A) management or monitoring or similar fees to the Sponsors
and Sponsors termination fees, (B) transaction advisory services fees with
respect to transactions in respect of which the Sponsors provide any
transaction, advisory or other similar services and (C) indemnities and
reasonable expenses related to the foregoing; provided that in the case of
preceding clauses (A), (B) and (C), (x) no Event of Default has occurred and is
continuing or would result after giving effect to such payment and (y) the
Borrowers shall have Excess Availability of at least $65,000,000 after giving
effect to such payment;

(xii) payments by Aleris and its Subsidiaries pursuant to the tax sharing
agreements among Holdings (and any direct or indirect parent thereof), Aleris
and its Subsidiaries on customary terms to the extent attributable to the
ownership or operation of Aleris and its Subsidiaries;

(xiii) the Transaction shall be permitted;

(xiv) any issuances of securities or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment agreements,
stock options and stock ownership plans approved by Aleris’s board of directors;
and

(xv) transactions pursuant to permitted agreements in existence on the Closing
Date and set forth on Schedule XXI or any amendment thereto to the extent such
an amendment is not adverse to the Lenders in any material respect.

Notwithstanding anything to the contrary set forth above, for purposes of this
Section 10.06 there shall be no restriction on the payment of expenses and
indemnities to the Sponsors.

 

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10.07 Fixed Charge Coverage Ratio. (a) During each Compliance Period, the
Borrowers shall not permit, on a Pro Forma Basis, (i) the Fixed Charge Coverage
Ratio for the last Test Period ended prior to the beginning of such Compliance
Period for which financial statements are available to be less than 1.00:1.00,
(ii) the Fixed Charge Coverage Ratio for any Test Period for which financial
statements first become available during such Compliance Period to be less than
1.00:1.00 or (iii) the Fixed Charge Coverage Ratio for any Test Period ending
during such Compliance Period to be less than 1.00:1.00. Within three
(3) Business Days after the beginning of a Compliance Period (or if the deadline
for delivery of the financial statements for the applicable Fiscal Quarter in
accordance with Section 9.01(a) or (b) has not expired, within three
(3) Business Days of such deadline), Aleris shall provide to Administrative
Agent a compliance certificate (whether or not a Compliance Period is in effect
on the date such compliance certificate is required to be delivered) calculating
the Fixed Charge Coverage Ratio for the Test Period ended immediately prior to
the beginning of such Compliance Period based on the most recent financial
statements delivered pursuant to Section 9.01(a) or (b).

(b) Notwithstanding anything to the contrary contained in Section 11, in the
event that the Borrowers fail (or, but for the operation of this
Section 10.07(b), would fail) to comply with the requirements of the Fixed
Charge Coverage Ratio set forth in Section 10.07(a) (the “Financial Performance
Covenant”), until the expiration of the 10th day subsequent to the date the
certificate calculating compliance with this Section 10.07 is required to be
delivered pursuant to Section 9.01(c) (or, in the case of the initial
calculation of the Financial Performance Covenant during a Compliance Period,
the 10th day subsequent to the commencement of such Compliance Period) (such
period to the extent Aleris is not in compliance with the Financial Performance
Covenant, a “Cure Period”), Aleris shall have the right to issue Equity
Interests for cash or otherwise receive cash contributions to its capital
(collectively, the “Cure Right”), and upon the receipt by Aleris of such cash
(the “Cure Amount”) pursuant to the exercise of such Cure Right, the Financial
Performance Covenant shall be recalculated giving effect to the following pro
forma adjustments: (i) Consolidated EBITDA shall be increased for the last
Fiscal Quarter of the applicable Test Period, solely for the purpose of
measuring the Financial Performance Covenant and not for any other purpose under
this Agreement, by an amount equal to the Cure Amount and (ii) if, after giving
effect to the foregoing recalculations, the Borrowers shall then be in
compliance with the requirements of the Financial Performance Covenant, then the
Borrowers shall be deemed to have satisfied the requirements of the Financial
Performance Covenant as of the relevant date of determination with the same
effect as though there had been (or would have been) no failure to comply
therewith at such date, and the applicable breach or default of the Financial
Performance Covenant that had occurred (or would have occurred) shall be deemed
cured for the purposes of this Agreement. The Cure Amount shall be applied to
such Fiscal Quarter in each subsequent Test Period that includes such Fiscal
Quarter.

Notwithstanding anything herein to the contrary, (i) in each period of four
Fiscal Quarters there shall be at least two Fiscal Quarters in which the Cure
Right is not exercised, (ii) there shall not be more than four Cure Rights
during the term of this Agreement, and (iii) for purposes of this
Section 10.07(b), the Cure Amount in respect of any Fiscal Quarter shall be no
greater than the lesser of (A) the amount required for purposes of complying
with the Financial Performance Covenant, and (B) $75,000,000.

10.08 Limitations on Payments of Certain Indebtedness; Modifications of Certain
Indebtedness Documents, Certificate of Incorporation, By-Laws and Certain Other
Agreements, etc. Aleris will not, and will not permit any of its Subsidiaries
to:

(i) make (or give any notice in respect of) any voluntary or optional payment or
voluntary or optional prepayment on or voluntary or optional redemption or
voluntary or optional acquisition for value of, any other Material Indebtedness
(other than Intercompany Loans), in each case unless, both before and after
giving effect thereto, either (x) the Restricted Payment Conditions have been
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Event of Default exists or would exist immediately after giving effect thereto
and the amount of any such payments, prepayments and redemptions (other than any
such payment, prepayment or redemption made pursuant to clause (x)) made
pursuant to this clause (y) would not exceed $40,000,000 in the aggregate since
the Closing Date (subject to the last sentence of Section 9.13(a)), less the sum
of (i) the aggregate amount of Investments previously made by Aleris or any of
their Subsidiaries pursuant to Section 10.05(xvi) since the Closing Date
(determined as the amount originally advanced, loaned or otherwise invested
(without giving effect to any write-downs or write-offs thereof), less any
returns on the respective investment not to exceed the original amount
invested), and (ii) the aggregate amount of Permitted Acquisitions previously
made by Aleris or any of its Subsidiaries pursuant to Section 9.13(a)(iii) since
the Closing Date (determined as the amount originally advanced, loaned or,
otherwise invested (without giving effect to any write-downs or write-offs
thereof), less any returns on the respective investment not to exceed the
original amount invested);

(ii) Reserved;

(iii) amend, modify or change its certificate or articles of incorporation
(including, without limitation, by the filing or modification of any certificate
or articles of designation), certificate of formation, limited liability company
agreement or by-laws (or the equivalent organizational documents), as
applicable, unless such amendments, modifications, changes or other actions
contemplated by this clause (iii) (taken as a whole) would not reasonably be
expected to be adverse to the interests of the Lenders in any material respect;
or

(iv) after the entering into thereof, amend or modify, or permit the amendment
or modification of, any Receivables Purchase Agreement or any Tolling Agreement
(or the subordination provisions relating to the Tolling Agreements) in each
case without the prior written consent of the Administrative Agent; unless such
amendment, modification change or other action contemplated by this clause
(iv) would not reasonably be expected to be adverse to the interests of the
Lenders in any material respect.

10.09 Limitation on Certain Restrictions on Subsidiaries. Aleris will not permit
any of its Subsidiaries that is not a Credit Party to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective any encumbrance
or restriction on the ability of any such Subsidiary to (a) pay dividends or
make any other distributions on its Equity Interests owned by Aleris or any of
its Subsidiaries, or pay any Indebtedness owed to Aleris or any of its
Subsidiaries, (b) make loans or advances to Aleris or any of its Subsidiaries or
(c) transfer any of its properties or assets to Aleris or any of its
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of (i) applicable law or any applicable regulation, rule, order,
approval, license or other restrictions issued by any Governmental Authority,
(ii) this Agreement and the other Credit Documents, in accordance with the terms
of this Agreement so long as the terms of any restrictions described in clauses
(a) through (c) above are no more restrictive on Aleris or its Subsidiaries in
any material respect (taken as a whole) than those terms as in effect on the
Closing Date), (iii) customary provisions restricting subletting or assignment
of any lease governing any leasehold interest of Aleris or any of its
Subsidiaries, (iv) customary provisions restricting assignment of any licensing
agreement (in which Aleris or any of its Subsidiaries is the licensee) or other
contract entered into by Aleris or any of its Subsidiaries in the ordinary
course of business, (v) restrictions on the transfer of any asset pending the
close of the sale of such asset, (vi) restrictions on the transfer of any asset
subject to a Lien permitted by Section 10.01 (iii), (vi), (vii), (viii), (xv),
(xvi), (xvii), (xix), (xxii), or (xxxv), (vii) customary restrictions in the
respective Subsidiary’s industry imposed by customers under contractual
arrangements entered into in the ordinary course of business with respect to
cash or other deposits or minimum net worth or similar requirements,
(viii) restrictions on conditions imposed by any agreement relating to secured
Indebtedness permitted to be incurred hereunder if such restrictions apply only
to the property or assets securing such Indebtedness,

 

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(ix) customary restrictions in joint venture agreements and other similar
agreements applicable to joint ventures to the extent such joint ventures are
permitted hereunder, (x) any agreement or other instrument of a Person acquired
in a Permitted Acquisition or other Investment or acquisition permitted
hereunder in existence at the time of such Permitted Acquisition or other
Investment or acquisition (but not created in connection therewith or in
contemplation thereof), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than the Person, or
the property or assets of the Person so acquired, (xi) customary restrictions in
any Indebtedness incurred pursuant to Section 10.04(xii), (xiv), (xxiv),
(xxvii) and (xxx), and (xii) provisions contained in agreements related to or
instruments evidencing Indebtedness incurred pursuant to Section 10.04(ii).

10.10 Business, etc. (a) Aleris will not, and will not permit any of its
Subsidiaries to, engage to any material extent directly or indirectly in any
material line of business substantially different from the businesses engaged in
by Aleris and its Subsidiaries as of the Closing Date and reasonable extensions
thereof and businesses ancillary or complimentary thereto.

(b) Notwithstanding anything to the contrary contained herein, the European
Borrower shall not incur any Indebtedness or other material liabilities, conduct
any material operations or business or own or acquire any material assets or
properties other than Indebtedness incurred pursuant to the Credit Documents and
other Indebtedness permitted by Section 10.04 and activities which constitute
Permitted European Borrower Activities; provided that in no event shall the
European Borrower permit the aggregate number of Persons which are not Swiss
Qualifying Banks to which the European Borrower directly or indirectly (whether
through a Restricted Sub-Participation or other sub-participations under any
other agreement) owes interest-bearing borrowed money under all interest-bearing
instruments taken together (other than bond issues which are subject to Swiss
Withholding Tax), except for any Swiss Non-Qualifying Banks or holders of any
Restricted Sub-Participation, to exceed 10 (ten) at any time and the European
Borrower will comply with the Twenty Non-Bank Regulations (other than, in each
case, any failure to comply arising from assignments and participations of the
Obligations following the occurrence of a Significant Event of Default or
Conversion Event). For such purpose, the European Borrower and Aleris may assume
that the number of Lenders or holders of a Restricted Sub-Participations under
this Agreement which are Swiss Qualifying Banks from time to time equals ten,
but does not exceed ten (10).

(c) Notwithstanding anything to the contrary contained herein, the Borrowers
shall not permit the Distribution Subsidiaries to incur any Indebtedness or
other material liabilities, conduct any material operations or business or own
or acquire any material assets or properties other than activities which
constitute Permitted Distribution Subsidiary Activities.

(d) The Borrowers will not permit any Subsidiary, other than the European
Borrower, the Distribution Subsidiaries, the Specified European Manufacturing
Subsidiaries and the Transitory European Subsidiaries to generate, originate or
otherwise own any Accounts relating to the European business of Aleris and its
Subsidiaries except any such accounts which, in the aggregate, are immaterial to
the business of Aleris and its Subsidiaries taken as a whole. Aleris will, and
will cause its Subsidiaries to, cause all Permitted European Borrower Activities
and Permitted Distribution Subsidiary Activities to be conducted by the
Specified European Manufacturing Subsidiaries, the European Borrower and its
Subsidiaries rather than by Aleris or any of its other Subsidiaries.

(e) Aleris will not permit any European Parent Guarantor to engage in any
business or activity other than the ownership of all the outstanding Equity
Interests of the European Borrower, U.K. Guarantor, the other European Parent
Guarantor or any other Subsidiary owned on the Original Closing Date after
taking into account the Transaction or acquired pursuant to a Permitted
Acquisition of an Acquired Entity or Business or in any transaction permitted by
Section 10.05 hereof and activities incidental thereto and (ii) no European
Parent Guarantor will own or acquire any assets (other than Equity

 

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Interests of its Subsidiaries in accordance with Section 10.10(e) and the cash
proceeds of any Dividends permitted by Section 10.03) or incur any liabilities;
provided, however, that the foregoing shall not apply to (A) liabilities
incidental to the conduct of the Parent Guarantors’ business as a holding
company, (B) the maintenance of such Parent Guarantor’s organizational
existence, (C) the execution and delivery of the agreements to which such Parent
Guarantor is a party in connection with the Credit Documents or the Transaction,
and the performance of such Parent Guarantor’ obligations thereunder, (D) the
sale and issuance of equity interests of a Parent Guarantor and the maintenance
and investment of any proceeds thereof, and the incurrence of any liabilities,
costs and expenses reasonably related thereto, whether or not such equity
issuance is consummated, (E) the imposition of Permitted Liens, (F) opening and
maintaining bank and deposit accounts in accordance with Section 10.13,
(G) other activities of Parent Guarantor that are expressly contemplated or
permitted in any Credit Document, and (H) activities incidental to the business
or activities described in this Section 10.10(e).

(f) No Canadian Credit Party shall maintain a Foreign Pension Plan that is a
defined benefit pension plan.

10.11 Limitation on Issuance of Equity Interests. (a) Aleris will not, and will
not permit any of its Subsidiaries to, issue (i) any preferred stock or other
preferred equity interests other than (x) Qualified Equity Interests of Aleris
and any other preferred stock or other preferred equity interests of Aleris
issued pursuant to Section 10.04 or (y) any preferred stock or other preferred
equity interests issued by a Subsidiary of Aleris to the extent that such
preferred stock or preferred equity interest are held by Aleris or a
Wholly-Owned Subsidiary thereof or (ii) any redeemable common stock or other
redeemable common equity interests other than common stock or other redeemable
common equity interests that (x) is redeemable at the sole option of Aleris or
such Subsidiary or (y) consists solely of Qualified Equity Interests.

(b) Aleris will not permit any of its Subsidiaries to issue any Equity Interests
(including by way of sales of treasury stock) or any options or warrants to
purchase, or securities convertible into, Equity Interests, except (i) for
transfers and replacements of then outstanding shares of Equity Interests,
(ii) for stock splits, stock dividends and issuances which do not decrease the
percentage ownership of Aleris or any of its Subsidiaries in any class of the
Equity Interests of such Subsidiary, (iii) in the case of Foreign Subsidiaries,
to qualify directors and other nominal amounts required to be held by local
nationals in each case to the extent required by applicable law, (iv) for
issuances by newly created or acquired Subsidiaries in accordance with the terms
of this Agreement, (v) for Equity Interests held by Aleris or a Wholly-Owned
Subsidiary thereof and (vi) for issuances of Qualified Equity Interests of any
Subsidiary of Aleris.

10.12 Changes to Legal Names, Organizational Identification Numbers,
Jurisdiction or Type or Organization. Aleris will not, and will not permit any
of the other Credit Parties to, change its legal name until (i) it shall have
given to the Administrative Agent not less than fifteen (15) days prior written
notice of its intention so to do, clearly describing such new name and providing
other information in connection therewith as the Administrative Agent may
reasonably request, and (ii) with respect to such new name, it shall have taken
all action reasonably requested by the Administrative Agent to maintain the
security interests of the Administrative Agent in the Collateral intended to be
granted pursuant to the applicable Security Documents at all times fully
perfected and in full force and effect. In addition, to the extent that any
Credit Party does not have an organizational identification number on the
Closing Date and later obtains one, or if there is any change in the
organizational identification number of any Credit Party, Aleris or such other
Credit Party shall promptly notify the Administrative Agent of such new or
changed organizational identification number and shall take all actions
reasonably satisfactory to the Administrative Agent to the extent necessary to
maintain the security interests of the Administrative Agent in the Collateral
intended to be granted pursuant to the applicable Security Documents fully

 

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perfected and in full force and effect. Furthermore, Aleris will not, and will
not permit any of the other Credit Parties to, change its jurisdiction of
organization or its type of organization (or in the case of any of Canadian
Credit Parties, its chief executive office) until (x) it shall have given to the
Administrative Agent not less than fifteen (15) days prior written notice of its
intention so to do, clearly describing such new jurisdiction of organization
and/or type of organization (or new location of chief executive office) and
providing such other information in connection therewith as the Administrative
Agent may reasonably request (although no change pursuant to this Section 10.12
shall be permitted to the extent that it involves (i) a U.S. Credit Party
ceasing to be organized in the United States, except to a transaction otherwise
permitted pursuant to Section 10.02, (ii) a Canadian Credit Party ceasing to be
organized in Canada or (iii) the European Borrower ceasing to be organized in
Switzerland) and (y) with respect to such new jurisdiction and/or type of
organization and/or chief executive office, it shall have taken all actions
reasonably requested by the Administrative Agent to maintain the security
interests of the Administrative Agent in the Collateral intended to be granted
pursuant to the Security Documents at all times fully perfected and in full
force and effect.

10.13 No Additional Deposit Accounts; etc. Aleris will not, and will not permit
any Credit Parties to, directly or indirectly, open, maintain or otherwise have
any checking, savings, deposit, securities or other accounts at any bank or
other financial institution where cash or Cash Equivalents are or may be
deposited or maintained with any Person, other than (i) the Core U.S.
Concentration Account, (ii) the Core Canadian Concentration Account, (iii) the
Core European Concentration Account, (iv) the Collection Accounts set forth on
Part A of Schedule VI, (v) the Disbursement Accounts set forth on Part B of
Schedule VI and (vi) the Exempted Disbursement Accounts and Exempted Deposit
Accounts listed on Part C of Schedule VI in which only Restricted cash and Cash
Equivalents may be deposited and/or maintained as described in said Part C;
provided that Aleris or any of the Credit Parties may open a new Collection
Account, Disbursement Account, Core U.S. Concentration Account, Core Canadian
Concentration Account or Core European Concentration Account, Disbursement
Accounts, Exempted Disbursement Accounts and Exempted Deposit Accounts not set
forth in such Schedule VI, so long as promptly following opening of any such
account (i) Aleris has delivered an updated Schedule VI to the Administrative
Agent listing such new account and (ii) except with respect to (x) a Deposit
Account that is an Exempted Deposit Account and (y) a Disbursement Account that
is an Exempted Disbursement Account, the financial institution with which such
account is opened, together with Aleris or its respective Subsidiary which has
opened such account and the Administrative Agent have executed and delivered to
the Administrative Agent a Cash Management Control Agreement; provided further,
that at no time may the aggregate amount of cash and Cash Equivalents on deposit
in all Exempted Disbursement Accounts exceed $5,000,000 (or the Dollar
Equivalent thereof) at the end of each Business Day in respect of such Exempted
Disbursement Accounts.

10.14 Negative Covenants of Non-U.S. Credit Parties. The parties hereto agree
that the covenants and agreements made pursuant to this Section 10 by the
European Credit Parties or the Canadian Credit Parties (but, for the avoidance
of doubt, not the covenants and agreements of other Credit Parties in respect of
the European Credit Parties or the Canadian Credit Parties) are made solely in
support of the Loans to the European Borrower or the Canadian Borrower and shall
be solely for the benefit of the Lenders in their capacity as Lenders to the
European Borrower or the Canadian Borrower.

SECTION 11. Events of Default. Upon the occurrence of any of the following
specified events (each an “Event of Default”):

11.01 Payments. Any Borrower shall (i) default in the payment when due of any
principal of any Loan or any Note or any Unpaid Drawing or (ii) default, and
such default shall continue unremedied for five (5) or more Business Days, in
the payment when due of any interest or Fees or any other amounts owing
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11.02 Representations, etc. Any representation or warranty made or deemed made
by any Credit Party herein or in any other Credit Document or in any certificate
delivered to the Administrative Agent or any Lender pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which made or
deemed made; or

11.03 Covenants. Any Credit Party shall (i) default in the due performance or
observance by it of any term, covenant or agreement contained in Section 10
(other than Section 10.07(a) during a Cure Period), (ii) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 9.01(i) and such default shall continue unremedied for a period of one
(1) Business Day after written notice thereof to the defaulting party by the
Administrative Agent or the Required Lenders (or two (2) Business Days of
Borrowing Base Certificates that are then required to be delivered on a monthly
basis) or (iii) default in the due performance or observance by it of any term,
covenant or agreement contained in Section 5.03(d), 9.02(i), 9.03 (but only with
respect to Aleris), 9.06(b), 9.08 or 9.09 (provided that if (A) any such default
described in this clause (iii) is of a type that can be cured within five
(5) Business Days and (B) such default could not materially adversely impact the
Administrative Agent’s Liens on the Collateral, such default shall not
constitute an Event of Default for five (5) Business Days after the occurrence
of such default so long as the Credit Parties are diligently pursuing the cure
of such default) or (iv) default in the due performance or observance by it of
any other term, covenant or agreement contained in this Agreement or in any
other Credit Document (other than those set forth in Sections 11.01 and 11.02)
and such default shall continue unremedied for a period of thirty (30) days
after written notice thereof to the defaulting party by the Administrative Agent
or the Required Lenders; or

11.04 Default Under Other Agreements. (i) Aleris or any of its Subsidiaries
shall (x) default in any payment of any Indebtedness (other than the
Obligations) beyond the period of grace, if any, provided in an instrument or
agreement under which such Indebtedness was created or (y) default in the
observance or performance of any agreement or condition relating to any
Indebtedness (other than the Obligations) or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause (determined
without regard to whether any notice is required), any such Indebtedness to
become due prior to its stated maturity, (ii) any Indebtedness (other than the
Obligations) of Aleris or any of its Subsidiaries shall be declared to be (or
shall become) due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment, prior to the stated maturity thereof,
provided that (1) it shall not be a Default or an Event of Default under this
Section 11.04 unless the aggregate principal amount of all Indebtedness as
described in preceding clauses (i) and (ii) is at least $30,000,000, and
(2) clauses (i) and (ii) shall not apply to secured Indebtedness that becomes
due as a result of the voluntary sale or transfer of the property or assets
securing such Indebtedness if such sale or transfer is permitted hereunder and
under the documents providing for such Indebtedness, or (iii) there occurs under
any Interest Rate Protection Agreement or Other Hedging Agreement an early
termination date (as defined in such agreement) resulting from (A) any event of
default under such Interest Rate Protection Agreement or Other Hedging Agreement
as to which any Credit Party is the defaulting party or (B) any termination
event as to which Aleris or any Subsidiary is an affected party and which occurs
by reason of a default by Aleris or any of its Subsidiaries, and, in either
event, the termination value owed by Aleris or any Subsidiary as a result
thereof is greater than $30,000,000; or

11.05 Bankruptcy, etc. Aleris or any of its Subsidiaries shall commence a
voluntary case or proceeding concerning itself under Title 11 of the United
States Code entitled “Bankruptcy,” as now or hereafter in effect, or any
successor thereto (the “Bankruptcy Code”) or under the Bankruptcy and Insolvency
Act (Canada) or the Companies’ Creditors Arrangement Act (Canada) or similar
bankruptcy or insolvency legislation; or an involuntary case or proceeding is
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Subsidiaries, and the petition is not dismissed or stayed within sixty
(60) days, after commencement of the case; or a custodian (as defined in the
Bankruptcy Code) or a trustee, receiver, interim receiver, national receiver,
receiver-manager, monitor, liquidator or similar custodian is appointed for, or
takes charge of, all or substantially all of the property of Aleris or any of
its Subsidiaries, or Aleris or any of its Subsidiaries commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency, bankruptcy, winding up or liquidation or
similar law of any jurisdiction whether now or hereafter in effect relating to
Aleris or any of its Subsidiaries, or there is commenced against Aleris or any
of its Subsidiaries any such proceeding which remains undismissed and unstayed
for a period of sixty (60) days, or Aleris or any of its Subsidiaries is
adjudicated insolvent or bankrupt; or any order of relief or other order sought
in or approving any such case or proceeding is entered; or Aleris or any of its
Subsidiaries suffers any appointment of any trustee, receiver, interim receiver,
national receiver, receiver-manager, monitor, liquidator or similar custodian
for it or any substantial part of its property (which, continues undischarged
and unstayed for a period of sixty (60) days or is consented to by Aleris or
such Subsidiary); or Aleris or any of its Subsidiaries makes a general
assignment for the benefit of creditors or an assignment in bankruptcy; or any
corporate, limited or unlimited liability company or similar action is taken by
Aleris or any of its Subsidiaries for the purpose of effecting any of the
foregoing.

11.06 ERISA. An ERISA Event (or similar event with respect to a Foreign Plan)
shall have occurred that, when taken together with all other ERISA Events (and
such similar events) that have occurred and are continuing would reasonably be
expected to result in a Material Adverse Effect; or

11.07 Security Documents. (i) After the execution and delivery thereof, any
Security Document shall for any reason, other than pursuant to the terms
hereunder or thereunder (including as a result of a transaction permitted under
Section 10.02), fail to create a valid and perfected security interest with the
priority required by this Agreement or the Security Documents in any Collateral
purported to be covered thereby, except to the extent that any such loss of
perfection or priority results from the failure of the Administrative Agent or
Administrative Agent to maintain possession of certificates actually delivered
to it representing securities pledged under the Security Documents or to file
Uniform Commercial Code continuation statements and except as to Collateral
consisting of real property to the extent that such losses are covered by a
lender’s title insurance policy and such insurer has been notified and has not
denied coverage, or (ii) any Security Document shall fail to remain in full
force or effect or any action shall be taken by any Credit Party to discontinue
or to assert the invalidity or unenforceability of any Security Document; or

11.08 Guaranties. Any Guaranty at any time after its execution and delivery and
for any reason, other than as expressly permitted hereunder or thereunder, shall
fail to remain in full force or effect, or any action shall be taken by any
Credit Party to discontinue or to assert the invalidity or unenforceability of
any Guaranty, or any Guarantor shall deny or disaffirm in writing that it has
any further liability under the Guaranty to which it is a party; or

11.09 Judgments. One or more final judgments for the payment of money in an
aggregate amount in excess of $25,000,000 (in each case to the extent not
covered by third-party insurance as to which the insurer has been notified of
such judgment and does not deny coverage), shall be rendered against any Credit
Party or any combination of Credit Parties and the same shall remain
undischarged for a period of twenty (20) consecutive days during which execution
shall not be effectively stayed, satisfied or bonded; or

11.10 Subordination Provisions. Under any document or instrument evidencing any
permitted Subordinated Indebtedness, the Obligations do not constitute
indebtedness that is senior in right of payment to such Subordinated
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Indebtedness or such subordination provision shall be invalidated or otherwise
cease, for any reason, to be valid, binding and enforceable obligations of the
parties thereto; provided that the foregoing shall not apply to the extent
Aleris or its Subsidiaries would be permitted to incur such Indebtedness as
Indebtedness not constituting Subordinated Indebtedness pursuant to
Section 10.04; or

11.11 Change of Control. A Change of Control shall occur;

then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written request of
the Required Lenders, shall by written notice to Aleris, take any or all of the
following actions, without prejudice to the rights of the Administrative Agent,
any Lender or the holder of any Note to enforce its claims against any Credit
Party (provided that, if an Event of Default specified in Section 11.05 shall
occur with respect to any Borrower, the result which would occur upon the giving
of written notice by the Administrative Agent as specified in clauses (i) and
(ii) below shall occur automatically without the giving of any such notice):
(i) declare the Total Commitment terminated, whereupon all Commitments of each
Lender shall forthwith terminate immediately and any Commitment Commission shall
forthwith become due and payable without any other notice of any kind;
(ii) declare the principal of and any accrued interest in respect of all
Revolving Loans and the Notes evidencing such Revolving Loans and all other
Obligations owing with respect thereto hereunder and thereunder to be, whereupon
the same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by each
Credit Party; (iii) terminate any Letter of Credit which may be terminated in
accordance with its terms; (iv) direct the U.S. Borrowers to pay (and the U.S.
Borrowers jointly and severally agree that upon receipt of such notice, or upon
the occurrence of an Event of Default specified in Section 11.05 with respect to
any Borrower, it will pay) to the Administrative Agent at the Payment Office
such additional amount of cash or Cash Equivalents, to be held as security by
the Administrative Agent, as is equal to the aggregate Stated Amount of all
Letters of Credit issued for the account of the Borrowers and then outstanding;
(v) enforce, as Administrative Agent, all of the Liens and security interests
created pursuant to the Security Documents securing Obligations owing to the
Secured Parties; and (vi) apply any cash collateral held by the Administrative
Agent pursuant to Section 5.02 to the repayment of the Obligations owing to the
Lenders.

Solely for the purposes of determining whether an Event of Default has occurred
under Section 11.04, Section 11.05, Section 11.06, and Section 11.09, any
reference in any such paragraph to any Subsidiary shall be deemed not to include
any Immaterial Subsidiary affected by any event or circumstance referred to in
such Section; provided that if it is necessary to exclude more than one
Subsidiary from Section 11.04, Section 11.05, Section 11.06 and Section 11.09,
as the case may be, pursuant to this paragraph in order to avoid an Event of
Default thereunder, all excluded Subsidiaries shall be considered to be a single
consolidated Subsidiary for purposes of determining whether the condition
specified above is satisfied.

SECTION 12. The Administrative Agent.

12.01 Appointment. (a) The Lenders hereby irrevocably designate and appoint Bank
of America, N.A., as Administrative Agent. Each Lender hereby irrevocably
authorizes, and each holder of any Note by the acceptance of such Note shall be
deemed irrevocably to authorize, the Administrative Agent to take such action on
its behalf under the provisions of this Agreement, the other Credit Documents
and any other instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Administrative Agent by the terms
hereof and thereof and such other powers as are reasonably incidental thereto.
The Administrative Agent may perform any of its duties hereunder by or through
its officers, directors, agents, employees or Affiliates (it being understood
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and without limiting the generality of the foregoing, that the Administrative
Agent shall be permitted to designate one of its Affiliates to perform the
duties to be performed by the Administrative Agent hereunder (x) with respect to
Loans and Letters of Credit denominated in a currency other than U.S. Dollars,
(y) for purposes of holding any security granted by the Canadian Borrower or by
any Affiliate or Subsidiary of the Canadian Borrower on property pursuant to the
laws of any province of Canada to secure obligations of the Canadian Borrower or
such Affiliate or Subsidiary, and the provisions of this Section 12 shall apply
to any such Affiliates mutatis mutandis), and (z) for purposes of holding any
security granted by the European Borrower or the U.K. Guarantor or by any
Affiliate or Subsidiary of the European Borrower or the U.K. Guarantor or on
property pursuant to the laws of any European jurisdiction to secure obligations
of the European Borrower, the U.K. Guarantor, or such Affiliate or Subsidiary,
and the provisions of this Section 12 shall apply to any such Affiliates mutatis
mutandis).

(b) For the purposes of creating a solidarité active in accordance with Article
1541 of the Civil Code of Quebec between each Secured Party, taken individually,
on the one hand, and the Administrative Agent, on the other hand, the Credit
Parties and each such Secured Party acknowledge and agree with the
Administrative Agent that such Secured Party and the Administrative Agent are
hereby conferred the legal status of solidary creditors of the Credit Parties in
respect of all Obligations owed by the Credit Parties to the Administrative
Agent and such Secured Party hereunder and under the other Credit Documents
(collectively, the “Solidary Claim”) and that, accordingly, but subject (for the
avoidance of doubt) to Article 1542 of the Civil Code of Quebec, the Credit
Parties are irrevocably bound towards the Administrative Agent and each such
Secured Party in respect of the entire Solidary Claim of the Administrative
Agent and such Secured Party. As a result of the foregoing, the parties hereto
acknowledge that the Administrative Agent and each Secured Party shall at all
times have a valid and effective right of action for the entire Solidary Claim
of the Administrative Agent and such Secured Party and the right to give full
acquittance for it. Accordingly, and without limiting the generality of the
foregoing, the Administrative Agent, as solidary creditor with each Secured
Party, shall at all times have a valid and effective right of action in respect
of the Solidary Claim and the right to give a full acquittance for same. The
parties further agree and acknowledge that such Liens (hypothecs) under the
Security Documents and the other Credit Documents shall be granted to the
Administrative Agent, for its own benefit and for the benefit of the applicable
Secured Parties, as solidary creditor as hereinabove set forth.

12.02 Nature of Duties. (a) The Administrative Agent and the Co-Collateral
Agents shall have no duties or responsibilities except those expressly set forth
in this Agreement and in the other Credit Documents. Neither the Administrative
Agent, nor any Co-Collateral Agent nor any of their respective officers,
directors, agents, employees or Affiliates shall be liable for any action taken
or omitted by it hereunder or under any other Credit Document or in connection
herewith or therewith, unless caused by its gross negligence or willful
misconduct (as determined by a court of competent jurisdiction in a final and
non-appealable decision). The duties of the Administrative Agent and the
Co-Collateral Agents shall be mechanical and administrative in nature; the
Administrative Agent and the Co-Collateral Agents shall not have by reason of
this Agreement or any other Credit Document a fiduciary relationship in respect
of any Lender or the holder of any Note; and nothing in this Agreement or in any
other Credit Document, expressed or implied, is intended to or shall be so
construed as to impose upon the Administrative Agent or the Co-Collateral Agents
any obligations in respect of this Agreement or any other Credit Document except
as expressly set forth herein or therein.

(b) Notwithstanding any other provision of this Agreement or any provision of
any other Credit Document, the Syndication Agent, the Co-Documentation Agents,
the Senior Managing Agents, the Joint Lead Arrangers and the Joint Book Runners
are named as such for recognition purposes only, and in their respective
capacities as such shall have no powers, duties, responsibilities or liabilities
with respect to this Agreement or the other Credit Documents or the transactions
contemplated hereby and thereby; it being understood and agreed that the
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the Joint Lead Arrangers and the Joint Book Runners shall each be entitled to
all indemnification and reimbursement rights in favor of the Administrative
Agent (to the same extent as provided for the Administrative Agent) as, and to
the extent, provided for under Sections 12.06 and 13.01 (which provisions shall
be deemed incorporated by reference herein). Without limitation of the
foregoing, neither the Syndication Agent, the Co-Documentation Agents, the
Senior Managing Agents, the Joint Lead Arrangers, nor the Joint Book Runners
shall, solely by reason of this Agreement or any other Credit Documents, have
any fiduciary relationship in respect of any Lender or any other Person.

12.03 Lack of Reliance on the Administrative Agent. Independently and without
reliance upon the Administrative Agent or any Co-Collateral Agent, each Lender
and the holder of each Note, to the extent it deems appropriate, has made and
shall continue to make (i) its own independent investigation of the financial
condition and affairs of Aleris and its Subsidiaries in connection with the
making and the continuance of the Loans and Letters of Credit and the taking or
not taking of any action in connection herewith and (ii) its own appraisal of
the creditworthiness of Aleris and its Subsidiaries and, except as expressly
provided in this Agreement, the Administrative Agent and the Co-Collateral
Agents shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender or the holder of any Note with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or the issuance of any Letter of Credit or at any time or
times thereafter. The Administrative Agent and the Co-Collateral Agents shall
not be responsible to any Lender or the holder of any Note for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or for
the execution, effectiveness, genuineness, validity, enforceability, perfection,
collectability, priority or sufficiency of this Agreement or any other Credit
Document or the financial condition of Aleris or any of its Subsidiaries or be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement or any other Credit
Document, or the financial condition of Aleris or any of its Subsidiaries or the
existence or possible existence of any Default or Event of Default.

12.04 Certain Rights of the Administrative Agent. If the Administrative Agent
requests instructions from the Required Lenders with respect to any act or
action (including failure to act) in connection with this Agreement or any other
Credit Document, the Administrative Agent shall be entitled to refrain from such
act or taking such action unless and until the Administrative Agent shall have
received instructions from the Required Lenders; and the Administrative Agent
shall not incur liability to any Lender by reason of so refraining. Without
limiting the foregoing, neither any Lender nor the holder of any Note shall have
any right of action whatsoever against the Administrative Agent as a result of
the Administrative Agent acting or refraining from acting hereunder or under any
other Credit Document in accordance with the instructions of the Required
Lenders.

12.05 Reliance. The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any Person that the Administrative Agent believed to be the proper Person, and,
with respect to all legal matters pertaining to this Agreement and any other
Credit Document and its duties hereunder and thereunder, upon advice of counsel
selected by the Administrative Agent.

12.06 Indemnification. To the extent the Administrative Agent (or any Affiliate
thereof) is not reimbursed and indemnified by the Borrowers, the Lenders will
reimburse and indemnify the Administrative Agent (and any Affiliate thereof) in
proportion to their respective “percentage” as used in determining the Required
Lenders (determined as if there were no Defaulting Lenders) for and against any
and all liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, costs, expenses or disbursements of whatsoever kind or nature which
may be imposed on, asserted against or incurred by the Administrative Agent (or
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Credit Document (including, without limitation, any account control agreements
entered into pursuant to any Security Agreement) or in any way relating to or
arising out of this Agreement or any other Credit Document (including, without
limitation, any account control agreements entered into pursuant to any Security
Agreement); provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent’s (or such Affiliate’s) gross negligence or willful
misconduct (as determined by a court of competent jurisdiction in a final and
non-appealable decision).

12.07 The Administrative Agent in its Individual Capacity. With respect to its
obligation to make Loans, or issue or participate in Letters of Credit, under
this Agreement, the Administrative Agent shall have the rights and powers
specified herein for a “Lender” and may exercise the same rights and powers as
though it were not performing the duties specified herein; and the term
“Lender,” “Required Lenders,” “holders of Notes” or any similar terms shall,
unless the context clearly indicates otherwise, include the Administrative Agent
in its individual capacity. The Administrative Agent and its Affiliates may
accept deposits from, lend money to, and generally engage in any kind of
banking, investment banking, trust or other business with, or provide debt
financing, equity capital or other services (including financial advisory
services) to any Credit Party or any Affiliate of any Credit Party (or any
Person engaged in a similar business with any Credit Party or any Affiliate
thereof) as if they were not performing the duties specified herein, and may
accept fees and other consideration from any Credit Party or any Affiliate of
any Credit Party for services in connection with this Agreement and otherwise
without having to account for the same to the Lenders.

12.08 Holders. The Borrowers and the Administrative Agent shall deem and treat
the payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment, transfer or endorsement thereof, as
the case may be, together with the relevant Assignment and Assumption Agreement
shall have been filed with the Administrative Agent. Any request, authority or
consent of any Person who, at the time of making such request or giving such
authority or consent, is the holder of any Note shall be conclusive and binding
on any subsequent holder, transferee, assignee or endorsee, as the case may be,
of such Note or of any Note or Notes issued in exchange therefor.

12.09 Resignation by the Administrative Agent. (a) The Administrative Agent may
resign from the performance of all its functions and duties hereunder and/or
under the other Credit Documents at any time by giving twenty (20) Business
Days’ prior written notice to the Lenders and, unless an Event of Default under
Section 11.05 then exists, Aleris. Any such resignation of the Administrative
Agent hereunder shall also constitute its resignation as an Issuing Lender and
Swingline Lender, in which case the Administrative Agent (x) shall not be
required to issue any further Letters of Credit or make any additional Swingline
Loans hereunder and (y) shall maintain all of its rights as Issuing Lender or
Swingline Lender, as the case may be, with respect to any Letter of Credit
issued by it, or Swingline Loans made by it, prior to the date of such
resignation. Such resignation shall take effect upon the appointment of a
successor Administrative Agent pursuant to clauses (b) and (c) below or as
otherwise provided below.

(b) Upon any such notice of resignation by the Administrative Agent, the
Required Lenders shall appoint a successor Administrative Agent hereunder or
thereunder who shall be a commercial bank or trust company reasonably acceptable
to Aleris, which acceptance shall not be unreasonably withheld or delayed
(provided that Aleris’ approval shall not be required if an Event of Default
then exists).

(c) If a successor Administrative Agent shall not have been so appointed within
such twenty (20) Business Day period, the resigning Administrative Agent, on
behalf of the Lenders and with the consent of Aleris (which consent shall not be
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consent shall not be required if an Event of Default then exists), shall then
appoint a successor Administrative Agent who shall serve as Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
Administrative Agent as provided in clause (b) above.

(d) If no successor Administrative Agent has been appointed pursuant to clause
(b) or (c) above by the 45th Business Day after the date on which such notice of
resignation was given by the resigning Administrative Agent, the Administrative
Agent’s resignation shall become effective and the Required Lenders shall
thereafter perform all the duties of the Administrative Agent hereunder and/or
under any other Credit Document until such time, if any, as the Required Lenders
appoint a successor Administrative Agent as provided in clause (b) above.

(e) Upon the resignation of the Administrative Agent pursuant to this
Section 12.09, the Administrative Agent shall remain indemnified to the extent
provided in this Agreement and the other Credit Documents and the provisions of
this Section 12 shall continue in effect for the benefit of the Administrative
Agent for all of its actions and inactions while serving as the Administrative
Agent.

12.10 Collateral Matters. (a) Notwithstanding the provisions in Section 13.23
(Special Appointment of Administrative Agent for German Security) below, each
Lender authorizes and directs the Administrative Agent to enter into the
Security Documents for the benefit of the Lenders and the other Secured Parties.
Each Lender hereby agrees, and each holder of any Note by the acceptance thereof
will be deemed to agree, that, except as otherwise set forth herein, any action
taken by the Required Lenders in accordance with the provisions of this
Agreement or the Security Documents, and the exercise by the Lenders (or any
authorized sub-group thereof) of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Lenders. The Administrative Agent is
hereby authorized on behalf of all of the Lenders, without the necessity of any
notice to or further consent from any Lender, from time to time prior to an
Event of Default, to take any action with respect to any Collateral or Security
Documents which may be necessary to perfect and maintain perfected the security
interest in and liens upon the Collateral granted pursuant to the Security
Documents.

(b) The Lenders hereby authorize the Administrative Agent to release and
discharge any Lien granted to or held by the Administrative Agent or granted to
and held by any of the Lenders themselves upon any Collateral (i) upon
termination of the Commitments and payment and satisfaction of all of the
Obligations at any time arising under or in respect of this Agreement or the
Credit Documents or the transactions contemplated hereby or thereby,
(ii) constituting property being sold or otherwise disposed of (to Persons other
than any Credit Party) upon the sale or other disposition thereof in compliance
with Section 10.02, (iii) upon the request of the Borrowers, so long as the fair
market value of any Collateral released in any Fiscal Year pursuant to this
Section 12.10(b)(iii) does not exceed $5,000,000, (iv) if approved, authorized
or ratified in writing by the Required Lenders (or all of the Lenders hereunder,
to the extent required by Section 13.12), (v) as otherwise may be expressly
provided in the relevant Security Documents or (vi) to the extent the property
constituting such Collateral is owned by any Guarantor, upon the release of the
Guarantor from its obligations under its Guaranty in accordance with the terms
of this Agreement. Upon request by the Administrative Agent at any time, the
Lenders will confirm in writing the Administrative Agent’s authority to release
particular types or items of Collateral pursuant to this Section 12.10(b),

(c) The Administrative Agent shall have no obligation whatsoever to the Lenders
or to any other Person to assure that the Collateral exists or is owned by any
Credit Party or is cared for, protected or insured or that the Liens granted to
the Administrative Agent herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise or to continue exercising at
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care, disclosure or fidelity any of the rights, authorities and powers granted
or available to the Administrative Agent in this Section 12.10 or in any of the
Security Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the Administrative
Agent may act in any manner it may deem appropriate, in its sole discretion,
given the Administrative Agent’s own interest in the Collateral as one of the
Lenders and that the Administrative Agent shall have no duty or liability
whatsoever to the Lenders, except for its gross negligence or willful misconduct
(as determined by a court of competent jurisdiction in a final and
non-appealable decision).

(d) In no event will the Administrative Agent be replaced hereunder (or under
any of the other Credit Documents) unless agreed to by the Co-Collateral Agents
and the Administrative Agent.

(e) Each Lender authorizes and directs the Administrative Agent to enter into
the intercreditor agreements and related documents in respect of Secured Hedging
Agreements and to enter into any intercreditor agreement contemplated by this
Agreement.

12.11 Resignation of the Co-Collateral Agents. (a) A Co-Collateral Agent may
resign from the performance of all its functions and duties hereunder and/or
under the other Credit Documents at any time by giving 20 Business Days’ prior
written notice to the Lenders and such resignation shall take effect upon the
appointment of a successor Co-Collateral Agent, pursuant to clauses (b) and
(c) below or as otherwise provided below:

(b) Upon any such notice of resignation by the Co-Collateral Agent the Required
Lenders shall appoint a successor Co-Collateral Agent hereunder or thereunder
who shall be a commercial bank or trust company reasonably acceptable to Aleris
(provided, that Aleris’ approval shall not be required if a Significant Event of
Default then exists).

(c) If a successor Co-Collateral Agent shall not have been so appointed within
such 20 Business Day period, the resigning Co-Collateral Agent on behalf of the
Lenders, shall then appoint a successor Co-Collateral Agent reasonably
acceptable to Aleris (provided, that Aleris’ approval shall not be required if a
Significant Event of Default exists) who shall serve as a Co-Collateral Agent
hereunder until such time, if any, the Required Lenders appoint a successor
Co-Collateral Agent as provided in clause (b) above.

(d) If no successor Co-Collateral Agent has been appointed pursuant to clause
(b) or (c) above by the 45th Business Day after the date on which such notice of
resignation was given by a resigning Co-Collateral Agent, such Co-Collateral
Agent’s resignation shall become effective and Aleris may appoint a successor
Co-Collateral Agent until such time, if any, as the Required Lenders appoint a
successor Co-Collateral Agent as provided in clause (b) above.

(e) Upon the resignation of a Co-Collateral Agent pursuant to this
Section 12.11, such Co-Collateral Agent shall remain indemnified to the extent
provided in this Agreement and the other Credit Documents and the provisions of
this Section 12 shall continue in effect for the benefit of such Co-Collateral
Agent for all of its actions and inactions while serving as a Co-Collateral
Agent.

12.12 Delivery of Information. The Administrative Agent shall not be required to
deliver to any Lender originals or copies of any documents, instruments,
notices, communications or other information received by the Administrative
Agent from any Credit Party, any Subsidiary, the Required Lenders, any Lender or
any other Person under or in connection with this Agreement or any other Credit
Document except (i) as specifically provided in this Agreement or any other
Credit Document and (ii) as specifically requested from time to time in writing
by any Lender with respect to a specific document, instrument, notice or other
written communication received by and in the possession of the Administrative
Agent at the time of receipt of such request and then only in accordance with
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SECTION 13. Miscellaneous.

13.01 Payment of Expenses, etc. The U.S. Credit Parties hereby jointly and
severally agree to: (i) pay all reasonable documented out-of-pocket costs and
expenses of the Administrative Agent and Co-Collateral Agents and their
respective Affiliates (including, without limitation, the reasonable fees and
disbursements of Parker Hudson Rainer & Dobbs LLP on behalf of the
Administrative Agent and the Co-Collateral Agents and one reasonable and
necessary special counsel for the Administrative Agent and the Co-Collateral
Agents, up to one local counsel in each applicable jurisdiction) in connection
with the preparation, execution, delivery and administration of this Agreement
and the other Credit Documents and the documents and instruments referred to
herein and therein and any amendment, waiver or consent relating hereto or
thereto, and of the Administrative Agent and the Co-Collateral Agents and their
respective Affiliates in connection with its or their syndication efforts with
respect to this Agreement; (ii) pay all reasonable documented out-of-pocket
costs and expenses of the Administrative Agent and Co-Collateral Agents and,
after the occurrence of an Event of Default, each of the Issuing Lenders and
Lenders in connection with the enforcement of this Agreement and the other
Credit Documents, appraisals and field examinations conducted hereunder, and the
documents and instruments referred to herein and therein or in connection with
any refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a “work-out” or pursuant to any insolvency or
bankruptcy proceedings (including, in each case without limitation, the
reasonable fees and disbursements of counsel and consultants for the
Administrative Agent and Co-Collateral Agents and, after the occurrence of an
Event of Default, no more than one outside law firm (in addition to any
reasonably necessary special counsel and up to one local counsel in each
applicable local jurisdiction) retained by the Issuing Lenders and Lenders
unless, in the reasonable opinion of those Lenders seeking enforcement of any of
the Credit Documents, representation of all Lenders would be inappropriate due
to the existence of an actual or potential conflict of interest, in which case,
the Borrowers shall reimburse the legal fees and expenses of no more than such
number of additional outside counsel for the Lenders as is necessary to avoid
such actual or potential conflict of intent; (iii) pay and hold the
Administrative Agent, each of the Co-Collateral Agents, each of the Issuing
Lenders and each of the Lenders harmless from and against any and all present
and future stamp, documentary transfer, sales and use, value added, excise and
other similar taxes with respect to the foregoing matters, the performance of
any obligation under this Agreement or any other Credit Document or any payment
thereunder, and save the Administrative Agent, each of the Co-Collateral Agents,
each of the Issuing Lenders and each of the Lenders harmless from and against
any and all liabilities with respect to or resulting from any delay or omission
(other than to the extent attributable to the Administrative Agent, such
Co-Collateral Agent, such Issuing Lender or such Lender) to pay such taxes; and
(iv) indemnify each Agent, each Issuing Lender and each Lender, and each of
their respective officers, directors, employees, representatives, agents,
Affiliates, trustees and investment advisors (each, an “Indemnitee”, and
collectively, the “Indemnitees”) from and hold each of them harmless against any
and all liabilities, obligations (including Remedial Actions), losses, damages,
penalties, claims, actions, judgments, suits, costs, expenses and disbursements
(including reasonable attorneys’ and consultants’ fees and disbursements)
incurred by, imposed on or assessed against any of them as a result of, or
arising out of, or in any way related to, or by reason of, (a) any
investigation, litigation or other proceeding (whether or not any Indemnitee is
a party thereto and whether or not such investigation, litigation or other
proceeding is brought by or on behalf of any Credit Party) related to the
entering into and/or performance of this Agreement or any other Credit Document
or the use of any Letter of Credit or the proceeds of any Loans hereunder or the
consummation of the Transaction or any other transactions contemplated herein or
in any other Credit Document or the exercise of any of their rights or remedies
provided herein or in the other Credit Documents (but excluding any losses,
liabilities, claims, damages or expenses relating to (v) the matters referred to
in Sections 2.10, 2.11, 3.06, 5.04 and 5.05

 

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(which shall be the sole remedy in respect of the matters set forth therein),
(w) incurred by reason of the gross negligence, bad faith or willful misconduct
of the applicable Indemnitee (as determined by a court of competent jurisdiction
in a final and non-appealable decision), (x) brought solely by an Affiliate of
such Indemnitee, (y) resulting from a breach of the Credit Documents by such
Indemnitee or (z) relating solely to disputes among Indemnitees and not
involving the Sponsors, the Borrower or any of their Affiliates, or (b) the
actual or alleged presence of Hazardous Materials in the air, surface water or
groundwater or on the surface or subsurface of any Real Property at any time
owned, leased or operated by Aleris or any of its Subsidiaries, the generation,
storage, transportation, handling or disposal of Hazardous Materials by Aleris
or any of its Subsidiaries at any location, whether or not owned, leased or
operated by Aleris or any of its Subsidiaries, the non-compliance by Aleris or
any of its Subsidiaries with any Environmental Law (including applicable permits
thereunder) applicable to any Real Property, or any Environmental Claim asserted
against Aleris, any of its Subsidiaries or any Real Property at any time owned,
leased or operated by Aleris or any of its Subsidiaries, including, in each
case, without limitation, the reasonable fees and disbursements of one counsel
for the Administrative Agent and the Co-Collateral Agents and no more than one
outside law firm retained by the Issuing Lenders and the Lenders and other
consultants incurred in connection with any such investigation, litigation or
other proceeding (but excluding any losses, liabilities, claims, damages or
expenses to the extent (w) incurred by reason of the gross negligence, bad faith
or willful misconduct of the applicable Indemnitee (as determined by a court of
competent jurisdiction in a final and non-appealable decision), (x) brought
solely by an Affiliate of such Indemnitee, (y) resulting from a breach of the
Credit Documents by such Indemnitee, or (z) relating solely to disputes among
Indemnitees and not involving the Sponsors, the Borrowers or any of their
Affiliates. To the extent that the undertaking to indemnify, pay or hold
harmless the Administrative Agent, any Co-Collateral Agent, any Issuing Lender
or any Lender set forth in the preceding sentence may be unenforceable because
it is violative of any law or public policy, the Borrowers shall make the
maximum contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under applicable law. No party to this
Agreement shall be responsible or liable to any other party to this Agreement
(or any such party’s Affiliates, officers, directors, employees,
representatives, Agents or investment advisors) for (and each such party hereby
waives) any indirect, special, punitive or consequential damages (including,
without limitation, any loss of profits, business or anticipated savings) which
may be alleged as a result of the Credit Documents or the transactions
contemplated hereby and thereby.

13.02 Right of Setoff. In addition to any rights now or hereafter granted under
applicable law or otherwise, and not by way of limitation of any such rights,
upon the occurrence and during the continuance of an Event of Default, the
Administrative Agent, each Issuing Lender and each Lender is hereby authorized
at any time or from time to time, without presentment, demand, protest or other
notice of any kind to any Credit Party or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and apply any and
all deposits (general or special) and any other Indebtedness at any time held or
owing by the Administrative Agent, such Issuing Lender or such Lender
(including, without limitation, by Affiliates, branches and agencies of the
Administrative Agent, such Issuing Lender or such Lender wherever located) to or
for the credit or the account of Aleris or any of its Subsidiaries against and
on account of the Obligations and liabilities of the Credit Parties to the
Administrative Agent, such Issuing Lender or such Lender under this Agreement or
under any of the other Credit Documents, including, without limitation, all
interests in Obligations purchased by such Lender pursuant to Section 13.06(b),
and all other claims of any nature or description arising out of or connected
with this Agreement or any other Credit Document, irrespective of whether or not
the Administrative Agent, such Issuing Lender or such Lender shall have made any
demand hereunder and although said Obligations, liabilities or claims, or any of
them, shall be contingent or unmatured, provided, however, that none of the
Administrative Agent, any Issuing Lender or any Lender may offset amounts
(i) owed by it to the Canadian Credit Parties (or any of their Subsidiaries)
against amounts owed to such Person by the U.S. Credit Parties (except in
respect of the U.S. Credit Parties’ guaranties of the Canadian Credit Parties)
or

 

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the European Credit Parties and (ii) owed by it to the European Credit Parties
(or any of their Subsidiaries) against amounts owed to such Person by the U.S.
Credit Parties (except in respect of the U.S. Credit Parties’ guaranties of the
European Credit Parties) or the Canadian Credit Parties.

13.03 Notices. Except as otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be in writing (including
telegraphic, telex, telecopier or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered: if to any Credit Party, to such Credit
Party c/o Aleris at 25825 Science Park Drive, Suite 400, Beachwood, OH 41122,
Attention: General Counsel, Telephone No.: (216) 910-3400, Telecopier:
(216) 910-3650, at the address specified opposite its signature below or in the
other relevant Credit Documents; if to any Lender or any Issuing Lender, at its
address specified on Schedule II; and if to the Administrative Agent, at the
Notice Office. All such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective when deposited in the mails, delivered to the telegraph company, cable
company or overnight courier, as the case may be, or sent by telex or
telecopier, except that notices and communications to the Administrative Agent
and Aleris shall not be effective until received by the Administrative Agent or
Aleris, as the case may be. Each party hereto may change its information for
notices and other communications hereunder by providing notice of such change to
each other party hereto in accordance with this Section 13.03.

13.04 Benefit of Agreement; Assignments; Participations. (a) This Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns permitted hereby of the parties hereto;
provided, however, that no Borrower may assign or transfer any of its rights,
obligations or interest hereunder without the prior written consent of all of
the Lenders and, no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section 13.04 (or as
provided in Section 2.13). Any Lender may grant participations in its rights
hereunder, provided that (A) such Lender’s obligations under this Agreement
shall remain unchanged, (B) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (C) the applicable
Borrower, the Agents, and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement, (D) the participant shall not constitute a
“Lender” hereunder, (E) any agreement or instrument pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement, and (F) no Lender shall transfer or grant any
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend or postpone the final
scheduled maturity or any date fixed for any scheduled repayment of principal
of, or interest on, the Commitments and/or Loans (or Letters of Credit) that are
being participated in by such participant, (ii) reduce the rate or extend the
time of payment of interest or Fees thereon (except in connection with a waiver
of applicability of any post-default increase in interest rates) or reduce the
principal amount thereof, or increase the amount of the participant’s
participation over the amount thereof then in effect (it being understood that
waivers or modifications of conditions precedent, covenants, Defaults or Events
of Default or of a mandatory prepayment or mandatory reduction in the Total
Commitment shall not constitute a change in the terms of such participation, and
that an increase in any Commitment (or the available portion thereof) or Loan
shall be permitted without the consent of any participant if the participant’s
participation is not increased as a result thereof), (iii) consent to the
assignment or transfer by any Borrower of any of its rights and obligations
under this Agreement or (iv) release all or substantially all of the Collateral
under all of the Security Documents (except as expressly provided in the Credit
Documents) supporting the Loans or Letters of Credit hereunder in which such
participant is participating. In the case of any such participation, (A) the
participant shall not have any rights under this Agreement or any of the other
Credit Documents (the participant’s rights against such Lender in respect of
such participation to be those set forth in the agreement executed by such
Lender in favor of the participant relating thereto) and all amounts payable by
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such Lender had not sold such participation and (B) following a Conversion Event
each Participant shall be entitled to receive from relevant Borrowers any
incremental costs and indemnities (including, without limitation, pursuant to
Section 2.10, 2.11 and 3.06, and 5.04) directly from the Borrowers to the same
extent as if it were the direct Lender as to which its interests were assigned
after the occurrence of a Conversion Event as opposed to a participant therein,
which incremental costs shall be calculated without regard to Section 2.12. A
participant shall not be entitled to receive any greater payment under
Section 2.10, 2.11, 3.06 or 5.04 than what the applicable Lender would have been
entitled to receive with respect to the participation sold to such participant.
A participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 5.04 unless the relevant Borrower is
notified of the participation sold to such participant and such participant
agrees, for the benefit of such Borrower, to comply with Section 5.04 as though
it were a Lender.

(b) Subject to clauses (c) and (d) below, any Lender (or any Lender together
with one or more other Lenders) may (x) assign all or a portion of its
Commitments and related outstanding Obligations (or, if the Commitments have
terminated, outstanding Obligations) hereunder to (i)(A) its parent company
and/or any Affiliate of such Lender which is at least 50% owned by such Lender
or its parent company or (B) to one or more other Lenders or any Affiliate of
any such other Lender which is at least 50% owned by such other Lender or its
parent company (provided that any fund that invests in loans and is managed or
advised by the same investment advisor of another fund which is a Lender (or by
an Affiliate of such investment advisor) shall be treated as an Affiliate of
such other Lender for the purposes of this sub-clause (x)(i)(B)), or (ii) in the
case of any Lender that is a fund that invests in loans, any other fund that
invests in loans and is managed or advised by the same investment advisor of any
Lender or by an Affiliate of such investment advisor or (y) assign all, or if
less than all, a portion equal to at least $5,000,000 (for such purposes, using
the Dollar Equivalent of any Non-Dollar Denominated Loans), in each case in the
aggregate for the assigning Lender or assigning Lenders of such Commitments and
related outstanding Obligations (or, if the Commitments have terminated,
outstanding Obligations) hereunder to one or more Eligible Transferees (treating
any funds that invest in loans and are managed or advised by the same investment
advisor or by an Affiliate of such investment advisor as a single Eligible
Transferee), each of which Eligible Transferees shall become a party to this
Agreement as a Lender by execution of an Assignment and Assumption Agreement,
provided that (i) so long as no Significant Event of Default then exists and no
Conversion Event has occurred, any assignment of all or any portion of the
Commitment of any Canadian Lender pursuant to clause (x) or (y) above shall be
only to a Person who is a Canadian Resident complying with the relevant
requirements of Section 2.17, (ii) at such time, Schedule I-A shall be deemed
modified to reflect the Commitments and/or outstanding Loans, as the case may
be, of such new Lender and of the existing Lenders, (iii) upon the surrender of
the relevant Notes by the assigning Lender (or, upon such assigning Lender’s
indemnifying the respective Borrower or Borrowers for any lost Note pursuant to
a customary indemnification agreement) new Notes will be issued, at the relevant
Borrower’s expense, to such new Lender and to the assigning Lender upon the
request of such new Lender or assigning Lender, such new Notes to be in
conformity with the requirements of Section 2.05 (with appropriate
modifications) to the extent needed to reflect the revised Commitments and/or
outstanding Loans, as the case may be, (iv) so long as no Specified Event of
Default with respect to Aleris then exists the prior written consent of Aleris
in each case shall be required in connection with any such assignment (each of
which consents shall not be unreasonably withheld or delayed), (v) the consent
of the Administrative Agent, each Swingline Lender and each Issuing Lender shall
be required in connection with any assignment of a Commitment to an Eligible
Transferee pursuant to clause (y) above (which consents shall not be
unreasonably withheld or delayed), (vi) the Administrative Agent shall receive
at the time of each such assignment, from the assigning or assignee Lender, the
payment of a non-refundable assignment fee of $3,500, (vii) no such transfer or
assignment will be effective until recorded by the Administrative Agent on the
Register pursuant to Section 13.15, and (viii) unless Aleris provides its prior
written consent in its sole discretion, no Lender may assign its Commitments or
Loans to a Disqualified Lender. To the extent of any assignment pursuant to this

 

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Section 13.04(b), the assigning Lender shall be relieved of its obligations
hereunder with respect to its assigned Commitments and outstanding Loans. At the
time of each assignment pursuant to this Section 13.04(b) to a Person which is
not already a Lender hereunder (other than a Canadian Lender in its capacity
solely as a Lender to the Canadian Borrower), the respective assignee Lender
shall, to the extent legally entitled to do so, provide to Aleris the
appropriate Internal Revenue Service Forms and necessary attachments (and, if
applicable, a Section 5.04(b)(ii) Certificate) described in Section 5.04(b) and
other documentation required pursuant to Section 5.04(d). At the time of each
assignment pursuant to this Section 13.04(b) to a Person which is not already a
Canadian Lender hereunder, the respective assignee shall, to the extent legally
entitled to do so, provide the documents required by Section 2.17(a) and shall,
to the extent it is legally entitled to do so, represent that it is a Canadian
Resident. To the extent that prior to the occurrence of a Conversion Event an
assignment of all or any portion of a Lender’s Commitments and related
outstanding Obligations pursuant to Section 2.13 or this Section 13.04(b) would,
at the time of such assignment, result in amounts payable under Section 2.10,
3.06 or 5.04 (other than excess costs paid in respect of Canadian Borrower
Obligations or European Borrower Obligations under Section 5.04 with respect to
assignments effected when a Specified Event of Default exists, or after a
Conversion Event has occurred) that exceed the respective amounts that would be
payable by the Borrowers at such time to the respective assigning Lender under
such Sections in the absence of such assignment, then the Borrowers shall not be
obligated to pay such excess amount (although the Borrowers, in accordance with
and pursuant to the other provisions of this Agreement, shall be obligated to
pay any other excess amounts or increased costs of the type described above
resulting from changes in any applicable law, treaty, governmental rule,
regulation, guidelines or order, or in the interpretation thereof, after the
date of the respective assignment; provided, however, that the preceding clause
shall not apply to the portion of such excess amounts or increased costs
required to be paid by the Borrowers to the extent the Borrowers would have been
required to pay additional amounts pursuant to Section 2.10, 3.06 or 5.04,
irrespective of such change in such applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof). Any
assignment or transfer by a Lender of its rights or obligations under this
Agreement that does not comply with this Section 13.04 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with Section 13.04(a). In determining
whether or not to give its consent to any proposed assignment hereunder pursuant
to clause (iv) of the proviso of Section 13.04(b), Aleris may, in its reasonable
good faith judgment, consider various factors with respect to any such proposed
Eligible Transferee, including the financial strength of such proposed Eligible
Transferee and the experience of such proposed Eligible Transferee in the asset
based lending market; provided, that in no event shall Aleris be required to
consent to a proposed assignment to a proposed Eligible Transferee that is a
competitor of Aleris or any of its Subsidiaries.

(c) In the event of an assignment or transfer of Commitments including
Restricted Sub-Participations (but not including participations that are not
Restricted Sub-Participations), so long as no Significant Event of Default then
exists and no Conversion Event has theretofore occurred, the assignee Lender
shall make the representations in the Assignment and Assumption Agreement as to
whether it is a Swiss Qualifying Bank on the effective date of the respective
assignment, and if it represents that it is a Swiss Qualifying Bank and if such
assignee Lender is not incorporated in an OECD country at such time, so long as
no Significant Event of Default then exists and no Conversion Event has
theretofore occurred, Aleris has the right prior to the transfer to request that
such new Lender provide to it a written confirmation signed by the Swiss Federal
Tax Administration that it is a bank as per explanatory note of the Swiss
Federal Tax Administration No. S-02.123(9.86) as amended from time to time. If
the assignee Lender is not a Swiss Qualifying Bank and there is reasonable doubt
as to whether such assignee Lender counts as one or several Lenders, Aleris has
the right (unless a Significant Event of Default then exists or a Conversion
Event has theretofore occurred) prior to the transfer to request that such
assignee Lender provide to it a written confirmation signed by the Swiss Federal
Tax Administration that such assignee Lender counts as one (or several, as the
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that the respective assignee (or participant pursuant to a Restricted
Sub-Participation) in respect of Commitments (or related outstandings to the
European Borrower) is unable or unwilling to represent that it is a Swiss
Qualifying Bank, then, unless a Significant Event of Default is in existence or
a Conversion Event has occurred, the consent of the Administrative Agent and
Aleris shall be required to effect the respective assignment or Restricted
Sub-Participation (which consents shall not be unreasonably withheld or
delayed); provided that no such consent shall be given by Aleris if, after
giving effect to the respective assignment or Restricted Sub-Participation, the
number of Lenders to the European Borrower or holders of Restricted
Sub-Participations pursuant to extensions of credit to European Borrower under
this Agreement which are Swiss Non-Qualifying Banks would exceed ten (10).

(d) Any Lender which enters into an assignment, transfer or Restricted
Sub-Participation (but not including (x) assignments effected in accordance with
the relevant requirements of Sections 13.04(b) and (c), and (y) participations
that are not Restricted Sub-Participations) of its Commitment or outstanding
pursuant thereto shall ensure that:

        (i) the terms of such assignment, transfer or sub-participation
agreement prohibit the new Lender or sub-participant from entering into further
assignment, transfer or sub-participation agreements (in relation to the rights
between it and such Lender) and assigning or granting any interest over the
assignment, transfer or sub-participation agreement, except in each case to a
person who is a Swiss Qualifying Bank;

        (ii) the new Lender or sub-participant enters into a unilateral
undertaking in favor of each Lender and each Credit Party incorporated in
Switzerland to abide by the terms included in the assignment, transfer or
sub-participation agreement to reflect sub-clause (i) above;

        (iii) the terms of such assignment, transfer or sub-participation
agreement oblige the new Lender or sub-participant, in respect of any further
assignment, transfer or sub-participation, assignment or grant, to include a
term identical to the provisions of this Sections 13.04(c) and (d) mutatis
mutandis, including a requirement that any further new Lender or
sub-participant, assignee or grantee enters into such undertaking; and

        (iv) the identity of the new Lender or sub-participant is permitted to
be disclosed to the Swiss Federal Tax Administration by the European Borrower
(if requested by the Swiss Federal Tax Administration to do so).

(e) Nothing in this Agreement shall prevent or prohibit any Lender from pledging
its Loans and Notes (other than Canadian Revolving Loans and/or Revolving Notes
evidencing any Canadian Revolving Loans) hereunder to a Federal Reserve Bank in
support of borrowings made by such Lender from such Federal Reserve Bank and,
with prior notification to the Administrative Agent (but without the consent of
the Administrative Agent or Aleris), any Lender which is a fund may pledge all
or any portion of its Loans and Notes to its trustee or to a collateral agent
providing credit or credit support to such Lender in support of its obligations
to such trustee, such collateral agent or a holder of such obligations, as the
case may be. No pledge pursuant to this clause (e) shall release the transferor
Lender from any of its obligations hereunder or substitute any such pledgee for
such Lender as a party hereto.

(f) In the event that any Lender shall become a Defaulting Lender or S&P,
Moody’s and Thompson’s BankWatch (or InsuranceWatch Ratings Service, in the case
of Lenders that are insurance companies (or Best’s Insurance Reports, if such
insurance company is not rated by Insurance Watch Ratings Service)) shall
downgrade the long term certificate deposit ratings of such Lender, and the
resulting ratings shall be below BBB-, Baa3 and C (or BB, in the case of a
Lender that is an insurance company (or B, in the case of an insurance company
not rated by InsuranceWatch Ratings Service)) (or,

 

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with respect to any Lender that is not rated by any such ratings service or
provider, the Issuing Lenders, the Swingline Lenders or Bank of America, N.A.
(in the case of any Specified Foreign Currency Loans) shall have reasonably
determined that there has occurred a material adverse change in the financial
condition of any such Lender, or a material impairment of the ability of any
such Lender to perform its obligations hereunder, as compared to such condition
or ability as of the date that any such Lender became a Lender) then an Issuing
Lender, a Swingline Lender or Bank of America, N.A. (in the case of any
Specified Foreign Currency Loans) shall have the right, but not the obligation,
at its own expense, upon notice to such Lender and the Administrative Agent, to
replace such Lender with an assignee (in accordance with and subject to the
restrictions contained in Section 13.04(b)), and such Lender hereby agrees to
transfer and assign without recourse (in accordance with and subject to the
restrictions contained in Section 13.04(b)) all its interests, rights and
obligations in respect of its Commitments and Loans to such assignee; provided,
however, that (i) no such assignment shall conflict with any law, rule and
regulation or order of any Governmental Authority and (ii) such Issuing Lender
or Swingline Lender, Bank of America, N.A. (in the case of any Specified Foreign
Currency Loans) or such assignee, as the case may be, shall pay to such Lender
in immediately available funds on the date of such assignment the principal of
and interest accrued to the date of payment on the Loans made by such Lender
hereunder and all other amounts accrued for such Lender’s account or owed to it
hereunder.

13.05 No Waiver; Remedies Cumulative. No failure or delay on the part of the
Administrative Agent, any Issuing Lender or any Lender in exercising any right,
power or privilege hereunder or under any other Credit Document and no course of
dealing between any Borrower or any other Credit Party and the Administrative
Agent, any Issuing Lender or any Lender shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights, powers and remedies herein or in any other Credit
Document expressly provided are cumulative and not exclusive of any rights,
powers or remedies which the Administrative Agent, any Issuing Lender or any
Lender would otherwise have. No notice to or demand on any Credit Party in any
case shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent, any Issuing Lender or any Lender to any other or further
action in any circumstances without notice or demand.

13.06 Payments Pro Rata. (a) Except as otherwise provided in this Agreement, the
Administrative Agent agrees that promptly after its receipt of each payment from
or on behalf of any Borrower in respect of any Obligations hereunder, the
Administrative Agent shall distribute such payment to the Lenders entitled
thereto (other than any Lender that has consented in writing to waive its pro
rata share of any such payment) pro rata based upon their respective shares, if
any, of the Obligations with respect to which such payment was received.

(b) Each of the Lenders agrees that, if it should receive any amount hereunder
(whether by voluntary payment, by realization upon security, by the exercise of
the right of setoff or banker’s lien, by counterclaim or cross action, by the
enforcement of any right under the Credit Documents, or otherwise), which is
applicable to the payment of the principal of, or interest on, the Loans, Unpaid
Drawings, Commitment Commission or Letter of Credit Fees, of a sum which with
respect to the related sum or sums received by other Lenders is in a greater
proportion than the total of such Obligation then owed and due to such Lender
bears to the total of such Obligations then owed and due to all of the Lenders
immediately prior to such receipt, then such Lender receiving such excess
payment shall purchase for cash without recourse or warranty from the other
Lenders an interest in the Obligations of the respective Credit Party to such
Lenders in such amount as shall result in a proportional participation by all
the Lenders in such amount; provided that if all or any portion of such excess
amount is thereafter recovered from such Lenders, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.

 

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(c) Notwithstanding anything to the contrary contained herein, the provisions of
the preceding Sections 13.06(a) and (b) shall be subject to the express
provisions of this Agreement which require, or permit, differing payments to be
made to Non-Defaulting Lenders as opposed to Defaulting Lenders.

13.07 Calculations; Computations. (a) The financial statements to be furnished
to the Lenders pursuant hereto shall be made and prepared in accordance with
GAAP consistently applied throughout the periods involved (except as set forth
in the notes thereto or as otherwise disclosed in writing by Aleris to the
Lenders); provided that (i) if at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Credit
Document, and either Aleris or the Required Lenders shall so request, the
Administrative Agent, the Lenders and Aleris shall negotiate in good faith to
amend such ratio or requirement to preserve the original intent thereof in light
of such change in GAAP (subject to the approval of the Administrative Agent or
the Required Lenders); provided that, until so amended, (A) such ratio or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and (B) Aleris shall provide to the Administrative Agent and the
Lenders financial statements and any other documents required under this
Agreement or as reasonably requested hereunder setting forth a reconciliation
between calculations of such ratio or requirement made before and after giving
effect to such change in GAAP and (ii) to the extent expressly provided herein,
certain calculations shall be made on a Pro Forma Basis.

(b) All computations of interest, Commitment Commission and other Fees hereunder
shall be made on the basis of a year of 360 days (or in the case of Canadian
Prime Rate Loans and B/A Equivalent Loans (and other amounts owing hereunder or
under any other Credit Document determined by reference to the Canadian Prime
Rate or B/A Equivalent Rate is applicable) 365 days, as the case may be) for the
actual number of days (including the first day but excluding the last day;
except that in the case of Letter of Credit Fees and Facing Fees, the last day
shall be included) occurring in the period for which such interest, Commitment
Commission or Fees are payable.

13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE PROVIDED IN
CERTAIN OF THE OTHER CREDIT DOCUMENTS, BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO
CONFLICTS OF LAWS RULES AND PRINCIPLES THEREUNDER). ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF
NEW YORK AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT. EACH BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. EACH OF THE EUROPEAN BORROWER AND THE CANADIAN BORROWER HEREBY
IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS ALERIS, WITH OFFICES ON THE DATE
HEREOF AT THE ADDRESS SPECIFIED OPPOSITE ITS SIGNATURE BELOW, AS ITS AUTHORIZED
DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS
BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS,
SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR

 

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PROCEEDING. IF FOR ANY REASON SUCH AUTHORIZED DESIGNEE, APPOINTEE AND AGENT
SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH OF THE EUROPEAN BORROWER AND
THE CANADIAN BORROWER AGREES TO DESIGNATE A NEW AUTHORIZED DESIGNEE, APPOINTEE
AND AGENT IN NEW YORK CITY ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION
REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT. EACH
BORROWER HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK
PERSONAL JURISDICTION OVER ANY BORROWER, AND AGREES NOT TO PLEAD OR CLAIM, IN
ANY LEGAL ACTION PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT BROUGHT IN ANY OF THE’ AFOREMENTIONED COURTS, THAT SUCH COURTS LACK
PERSONAL JURISDICTION OVER ANY BORROWER. EACH BORROWER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH BORROWER AT ITS ADDRESS SET FORTH
OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH MAILING. EACH BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH
SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT
DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT, ANY LENDER OR THE
HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY BORROWER IN ANY
OTHER JURISDICTION.

(b) EACH CREDIT PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.

(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

13.09 Counterparts. This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which when
so executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with Aleris and the Administrative Agent.

13.10 Effectiveness. This Agreement shall become effective on the date (the
“Closing Date”) on which (i) each Credit Party, the Administrative Agent, each
Lender with a Commitment, (which shall include the Required Lenders (determined
immediately before the occurrence of the Closing Date and without giving effect
thereto)) shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered the same (including by way of facsimile
transmission) to the Administrative Agent at the Notice Office (or, in the case
of the Lenders, shall have given to the Administrative Agent telephonic
(confirmed in writing), written or telex notice (actually received) at the

 

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Notice Office that the same has been signed and mailed to it); it being
understood that any Existing Lender which does not execute a counterpart hereof
shall be replaced in accordance with the provisions of Section 13.12(d) and
(ii) the conditions contained in Section 6 are met to the reasonable
satisfaction of the Administrative Agent. Unless the Administrative Agent has
received actual notice from any Lender that the conditions contained in
Section 6 have not been met to its satisfaction, upon the satisfaction of the
condition described in clause (i) of the immediately preceding sentence and upon
the Administrative Agent’s good faith determination that the conditions
described in clause (ii) of the immediately preceding sentence have been met,
then the Closing Date shall have been deemed to have occurred, regardless of any
subsequent determination that one or more of the conditions thereto had not been
met (although the occurrence of the Closing Date shall not release the Borrowers
from any liability for failure to satisfy one or more of the applicable
conditions contained in Section 7). The Administrative Agent will give each
Lender prompt written notice of the occurrence of the Closing Date.

13.11 Headings Descriptive. The headings of the several sections and subsections
of this Agreement are inserted for convenience only and shall not in any way
affect the meaning or construction of any provision of this Agreement.

13.12 Amendment or Waiver; etc. (a) Subject to Section 2.15, neither this
Agreement nor any other Credit Document nor any terms hereof or thereof may be
changed or waived unless such change or waiver is in writing signed by the
respective Credit Parties party hereto or thereto and the Required Lenders
(although additional parties may be added to (and annexes may be modified to
reflect such additions), and Subsidiaries of Aleris (other than the U.S.
Borrowers, the European Borrower, the U.K. Guarantor, and the Canadian Borrower)
may be released from, this Agreement, the Guaranties and the Security Documents
in accordance with the provisions hereof and thereof without the consent of the
other Credit Parties party thereto or the Required Lenders), provided that no
such change or waiver shall, without the consent of each Lender (other than a
Defaulting Lender) (or in the case of clause (i), each Lender with Obligations
being directly affected, including, without limitation, any Defaulting Lender
with Obligations being directly affected), (i) except to the extent provided in
Section 4.04, extend or postpone the final scheduled maturity or any date fixed
for any scheduled repayment of principal of any Loan or Note, extend the
duration of any Interest Period for a Euro Rate Loan or an Other Foreign
Currency Denominated Loan beyond six months or extend the stated expiration date
of any Letter of Credit beyond the Final Maturity Date, or reduce the rate or
extend the time of payment of interest or Fees thereon (except in connection
with the waiver of applicability of any post-default increase in interest
rates), or reduce the principal amount thereof, (ii) release all or
substantially all of the Collateral (except as expressly provided in the Credit
Documents) under all the Security Documents or all or substantially all of the
Guaranties (except as expressly provided in the Credit Documents) under this
Agreement and the other Credit Documents, (iii) amend, modify or waive
Section 13.06 or any provision of this Section 13.12(a) (except for technical
amendments with respect to additional extensions of credit pursuant to this
Agreement which afford the protections to such additional extensions of credit
of the type provided to the Commitments on the Closing Date), (iv) reduce the
percentage specified in the definition of Required Lenders or Supermajority
Lenders (it being understood that additional extensions of credit pursuant to
this Agreement shall be included in the determination of the Required Lenders
and Supermajority Lenders on substantially the same basis as the extensions of
Commitments are included on the Closing Date), or (v) consent to the assignment
or transfer by any Borrower of any of its rights and obligations under this
Agreement; provided further, that no such change or waiver shall (1) increase
the Commitments of any Lender over the amount thereof then in effect without the
consent of such Lender (it being understood that waivers or modifications of
conditions precedent, covenants, Defaults or Events of Default or of a mandatory
prepayment or mandatory reduction in the Total Commitment shall not constitute
an increase of the Commitment of any Lender, and that an increase in the
available portion of any Commitment of any Lender shall not constitute an
increase of the Commitment of such Lender), (2) without the consent of each
Issuing Lender, amend, modify or waive any provision of Section 3, or

 

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alter its rights or obligations with respect to Letters of Credit, (3) without
the consent of the Administrative Agent, amend, modify or waive any provision of
Section 12 or any other provision of this Agreement as same relates to the
rights or obligations of the Administrative Agent, (4) without the consent of
the Administrative Agent, amend, modify or waive any provision relating to the
rights or obligations of the Administrative Agent, (5) without the consent of
each Swingline Lender, alter its rights or obligations with respect to Swingline
Loans, (6) without the consent of the Syndication Agent, the Co-Collateral
Agents, either Co-Documentation Agent, or the Joint Lead Arrangers, amend,
modify or waive any provision relating to the rights or obligations of the
Syndication Agent, any Co-Collateral Agent, either Co-Documentation Agent or the
Joint Lead Arrangers, as the case may be, (7) without the consent of the
Supermajority Lenders, amend the definition of U.S. Borrowing Base, Canadian
Borrowing Base or European Borrowing Base (or any defined terms as used therein)
as such definitions are set forth herein on the Closing Date (or as same may be
amended from time to time pursuant to this clause (7)) in a manner which would
have the effect of increasing availability thereunder as determined in good
faith by the Administrative Agent, or (8) without the consent of the
Supermajority Lenders, increase the percentage of the Borrowing Base for which
Agent Advances may be made pursuant to Section 2.01(e). Notwithstanding the
foregoing, Schedules XVI, XVII and XVIII may be amended by the Co-Collateral
Agents in their Permitted Discretion.

(b) Notwithstanding anything to the contrary in this Section 13.12, (i) a
Guarantor or a Borrower (other than Aleris, the European Borrower, the U.K.
Guarantor, or the Canadian Borrower) shall automatically be released from its
obligations hereunder and its Guaranty shall be automatically released upon the
consummation of any transaction permitted hereunder and the application of the
proceeds therefrom in accordance with the provisions of this Agreement as a
result of which such Guarantor or Borrower ceases to be a Subsidiary of Aleris
and (ii) so long as no Event of Default has occurred and is continuing and a
Responsible Officer of Aleris certifies in an officer’s certificate to the
Administrative Agent that such Guarantor (A) is an Immaterial Subsidiary, and
the release or such Guarantor would not result in any Immaterial Subsidiary
being required pursuant to Section 9.12(e) to become a Credit Party hereunder
(except to the extent that on and as of the date of such release, one or more
other Immaterial Subsidiaries become Guarantors hereunder and the provisions of
Section 9.12(e) are satisfied upon giving effect to all such additions and
releases), or (B) is a Restricted Subsidiary which has been redesignated as an
Unrestricted Subsidiary in accordance with Section 9.15, then in the case of
each of clauses (A) and (B), the Administrative Agent shall promptly release
such Guarantor from its obligations hereunder and its Guaranty. In connection
with any such release, the Administrative Agent shall execute and deliver to any
Guarantor or Borrower, at such Guarantor’s or Borrower’s expense, all documents
that such Guarantor or Borrower shall reasonably request to evidence such
termination or release. Any execution and delivery of documents pursuant to the
preceding sentence of this Section 13.12(b) shall be without recourse to or
warranty by the Administrative Agent.

(c) Notwithstanding anything to the contrary in this Section 13.12, guarantees,
collateral security documents and related documents executed by Foreign
Subsidiaries in connection with this Agreement may be in a form reasonably
determined by the Administrative Agent and may be amended and waived with the
consent of the Administrative Agent at the request of Aleris without the need to
obtain the consent of any other Lenders if such amendment or waiver is delivered
in order (i) to reflect local law or advice of local counsel, (ii) to cure
ambiguities or defects or (iii) to cause such guarantee, collateral security
document or other document to be consistent with this Agreement and the other
Credit Documents.

(d) If, in connection with any proposed change or waiver of any of the
provisions of this Agreement as contemplated by clauses (i) through (v),
inclusive, of the first proviso to Section 13.12(a), the consent of the Required
Lenders, each Lender or each affected Lender is obtained but the consent of one
or more of such other Lenders whose consent is required is not obtained, then
Aleris shall

 

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have the right, so long as all non-consenting Lenders whose individual consent
is required are treated as described in either clauses (A) or (B) below, to
either (A) subject to compliance with Sections 2.17 and 2.18, replace each such
non-consenting Lender or Lenders with one or more Replacement Lenders pursuant
to Section 2.13 so long as at the time of such replacement, each such
Replacement Lender consents to the proposed change or waiver or (B) cash
collateralize its applicable L/C Participation Percentage of the Letter of
Credit Outstandings, in accordance with Sections 4.02(b) and/or 5.01(b),
provided that, unless the Commitments that are terminated and Loans that are
repaid pursuant to preceding clause (B) are immediately replaced in full at such
time through the addition of new Lenders or the increase of the Commitments
and/or outstanding Loans of existing Lenders (who must have consented thereto),
then in the case of any action pursuant to preceding clause (B) the Required
Lenders (determined after giving effect to the proposed action) shall
specifically consent thereto, provided further, that in any event Aleris shall
not have the right to replace a Lender, terminate its Commitments or repay its
Loans solely as a result of the exercise of such Lender’s rights (and the
withholding of any required consent by such Lender) pursuant to the second
proviso to Section 13.12(a).

13.13 Survival. All indemnities set forth herein including, without limitation,
in Sections 2.10, 2.11, 3.06, 5.04, 12.06 and 13.01 shall survive the execution,
delivery and termination of this Agreement and the Notes and the making and
repayment of the Obligations.

13.14 Domicile of Loans. Each Lender may, subject to Sections 2.17 and 2.18,
transfer and carry its Loans and/or participations in outstanding Letters of
Credit at, to or for the account of any office, Subsidiary or Affiliate of such
Lender. Notwithstanding anything to the contrary contained herein, to the extent
that a transfer of Loans and/or participations in outstanding Letters of Credit
pursuant to this Section 13.14 would, at the time of such transfer, result in
amounts payable under Section 2.10, 2.11, 3.06 or 5.04 that exceed the amounts
that would be payable by Borrowers under such sections to the relevant Lender
prior to such transfer, then the Borrowers shall not be obligated to pay such
increased costs (although the Borrowers shall be obligated to pay any other
excess amounts of the type described above resulting from changes in any
applicable law, treaty, governmental rule, regulation, guidelines or order, or
in the interpretation thereof, after the date of the respective transfer).

13.15 Register. Each Borrower hereby designates the Administrative Agent to
serve as its agent, solely for purposes of this Section 13.15, to maintain a
register (the “Register”) on which it will record the Commitments from time to
time of each of the Lenders, the Loans made by each of the Lenders, the amount
of any principal or interest due and payable with respect to such Loans and each
repayment in respect of the principal amount, and related interest amounts of
the Loans of each Lender. Failure to make any such recordation, or any error in
such recordation, shall not affect the Borrowers’ obligations in respect of such
Loans. With respect to any Lender, the transfer of the Commitments of such
Lender and the rights to the principal of, and interest on, any Loan made
pursuant to such Commitments shall not be effective until such transfer is
recorded on the Register maintained by the Administrative Agent with respect to
ownership of such Commitments and Loans and prior to such recordation all
amounts owing to the transferor with respect to such Commitments and for Loans
shall remain owing to the transferor. The registration of assignment or transfer
of all or part of any Commitments and Loans shall be recorded by the
Administrative Agent on the Register only upon the acceptance by the
Administrative Agent of a properly executed and delivered Assignment and
Assumption Agreement pursuant to Section 13.04(b). Coincident with the delivery
of such an Assignment and Assumption Agreement to the Administrative Agent for
acceptance and registration of assignment or transfer of all or part of a Loan,
or as soon thereafter as practicable, the assigning or transferor Lender shall
surrender the Note (if any) evidencing such Loan, and thereupon one or more new
Notes in the same aggregate principal amount shall be issued to the assigning or
transferor Lender and/or the new Lender at the request of any such Lender. The
Borrowers jointly and severally agree to indemnify the Administrative Agent from
and against any and all losses, claims, damages and liabilities of whatsoever
nature which may be imposed on, asserted against or incurred by the
Administrative Agent in performing its duties under this Section 13.15.

 

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13.16 Confidentiality. (a) Each Lender agrees that it will not disclose without
the prior written consent of Aleris (other than to Affiliates of such Lender,
its employees, auditors, advisors or counsel or to another Lender if such Lender
or such Lender’s holding or parent company in its reasonable discretion
determines that any such party should have access to such information, provided
such Persons shall be subject to the provisions of this Section 13.16 to the
same extent as such Lender) any information with respect to the Transaction, the
Permitted Holders, Aleris or any of its Subsidiaries which is now or in the
future furnished pursuant to this Agreement or any other Credit Document (other
than information that is available to such Lender on a nonconfidential basis
prior to such disclosure), provided that any Lender may disclose any such
information (i) as is or has become generally available to the public other than
by virtue of a breach of this Section 13.16(a) by the respective Lender, (ii) as
may be required in any report, statement or testimony required to be submitted
to any municipal, state or Federal regulatory body having jurisdiction over such
Lender or to the Federal Reserve Board or the Federal Deposit Insurance
Corporation or similar regulatory organizations (whether in the United States or
elsewhere) or their successors, (iii) as may be required with respect to any
summons or subpoena or in connection with any litigation, (iv) in order to
comply with any law, order, regulation or ruling applicable to such Lender,
(v) to the Administrative Agent or the Co-Collateral Agents, (vi) to any direct
or indirect contractual counterparty in any swap, hedge or similar agreement (or
to any such contractual counterparty’s professional advisor), so long as such
contractual counterparty (or such professional advisor) agrees to be bound by
the provisions of this Section 13.16, (vii) to any pledgee under
Section 13.04(e) or any prospective or actual transferee or participant in
connection with any contemplated transfer or participation of any of the Notes
or Commitments or any interest therein by such Lender, provided that such
prospective transferee or participant agrees to be bound by the confidentiality
provisions contained in, or provisions no less restrictive than, this
Section 13.16, (viii) in connection with any action or proceeding involving a
Credit Party or an Affiliate or a Credit Party, or other exercise of rights or
remedies against a Credit Party or an Affiliate of a Credit Party, relating to
any Credit Documents or Obligations, and (ix) to any rating agency when required
by it, provided that prior to any such disclosure, such rating agency shall
undertake to preserve the confidentiality of any Information received by it from
such Lender. Any person required to maintain the confidentiality of information
as provided in this Section 13.16 shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such information as such Person would accord its
own confidential information.

(b) Each Borrower hereby acknowledges and agrees that each Lender may share with
any of its Affiliates, and such Affiliates may share with such Lender, any
information related to Aleris or any of its Subsidiaries (including, without
limitation, any non-public customer information regarding the creditworthiness
of Aleris and its Subsidiaries), if such Lender or such Lender’s holding or
parent company in its reasonable discretion determines that any such party
should have access to such information provided such Persons shall be subject to
the provisions of this Section 13.16 to the same extent as such Lender ;
provided, however, that all such information shall in any event only be used for
the purposes of administrative matters directly related to this Agreement and
matters directly incidental thereto and for no other purposes.

13.17 Aleris as Agent for the Borrowers. Each Credit Party hereby irrevocably
appoints Aleris as its agent and attorney-in-fact for all purposes under this
Agreement and each other Credit Document, which appointment shall remain in full
force and effect unless and until the Administrative Agent shall have received
prior written notice signed by the applicable appointing Credit Party that such
appointment has been revoked. Each Credit Party hereby irrevocably appoints and
authorizes Aleris (i) to provide the Administrative Agent with all notices with
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of any Credit Party and all other notices and instructions under this Agreement
or any other Credit Document and (ii) to take such action as Aleris deems
appropriate on its behalf to obtain Loans and Letters of Credit and to exercise
such other powers as are reasonably incidental thereto to carry out the purposes
of this Agreement and the other Credit Documents.

13.18 Special Provisions Regarding Pledges of Promissory Notes Owed by, Persons
Not Organized in the United States. The parties hereto acknowledge and agree
that the provisions of the various Security Documents executed and delivered by
the Credit Parties require that, among other things, promissory notes executed
by various Persons owned by the applicable Credit Party be pledged, and
delivered for pledge, pursuant to the Security Documents. The parties hereto
further acknowledge and agree that each Credit Party shall be required to take
all actions under the laws of the jurisdiction in which such Credit Party is
organized to create and perfect all security interests granted pursuant to the
various Security Documents and to take all actions under the laws of the United
States, Canada, Switzerland, Germany, France, Denmark, Belgium and England and
any State, province or territory thereof to perfect the security interests in
the promissory notes issued by, any Person organized under the laws of said
jurisdictions (in each case, to the extent said promissory notes are owned by
any Credit Party). Except as provided in the immediately preceding sentence, to
the extent any Security Document requires or provides for the pledge of
promissory notes issued by any Person organized under the laws of a jurisdiction
other than those specified in the immediately preceding sentence, it is
acknowledged that, as of the Closing Date, no actions have been required to be
taken to perfect, under local law of the jurisdiction of the Person who issued
the respective promissory notes, Aleris hereby agrees that, following any
request by the Administrative Agent or Required Lenders to do so, Aleris shall,
and shall cause its Subsidiaries to, take such actions under the local law of
any jurisdiction with respect to which such actions have not already been taken
as are determined by the Administrative Agent or Required Lenders to be
necessary or desirable in order to fully perfect, preserve or protect the
security interests granted pursuant to the various Security Documents under the
laws of such jurisdictions. If requested to do so pursuant to this
Section 13.18, all such actions shall be taken in accordance with the provisions
of this Section 13.18 and Section 9.11 and within the time periods set forth
therein. All conditions and representations contained in this Agreement and the
other Credit Documents shall be deemed modified to the extent necessary to
effect the foregoing and so that same are not violated by reason of the failure
to take actions under local law (but only with respect to promissory notes
issued by, Persons organized under laws of jurisdictions other than the United
States, Canada, Switzerland, Germany, France, Denmark, Belgium and England and
any State, province or territory thereof) not required to be taken in accordance
with the provisions of this Section 13.18, provided that to the extent any
representation or warranty would not be true because the foregoing actions were
not taken, the respective representation of warranties shall be required to be
true and correct in all material respects at such time as the respective action
is required to be taken in accordance with the foregoing provisions of
Section 9.11 and this Section 13.18.

13.19 Post-Closing Actions. Notwithstanding anything to the contrary contained
in this Agreement or the other Credit Documents, the parties hereto acknowledge
and agree that Aleris and its Subsidiaries shall be required to take the actions
(if any) specified in Schedule XV as promptly as practicable, and in any event
within the time periods set forth in Schedule XV. The provisions of Schedule XV
shall be deemed incorporated by reference herein as fully as if set forth herein
in its entirety.

13.20 The PATRIOT Act . Each Lender subject to the USA PATRIOT ACT (Title 1113
of Pub, L. 107-56 (signed into law October 26, 2001)) (the “PATRIOT Act”) hereby
notifies the Borrowers that pursuant to the requirements of the PATRIOT Act, it
is required to obtain, verify and record information that identifies the
Borrowers and the other Credit Parties and other information that will allow
such Lender to identify the Borrowers and the other Credit Parties in accordance
with the PATRIOT Act.

 

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13.21 Judgment Currency. (a) If, for purposes of obtaining judgment in any
court, it is necessary to convert a sum from the currency provided under a
Credit Document for such sum (“Obligation Currency”) into another currency, the
Spot Exchange Rate shall be used as the rate of exchange. Notwithstanding any
judgment in a currency (“Judgment Currency”) other than the Obligation Currency,
a Credit Party shall discharge its obligation in respect of any sum due under a
Credit Document only if, on the Business Day following receipt by the
Administrative Agent of payment in the Judgment Currency, the Administrative
Agent can use the amount paid to purchase the sum originally due in the
Obligation Currency. If the purchased amount is less than the sum originally
due, such Borrower agrees, as a separate obligation and notwithstanding any such
judgment, to pay, or cause to be paid, to the Administrative Agent the
difference in such amounts. If the purchased amount is greater than the sum
originally due, the Administrative Agent shall return the excess amount to such
Credit Party (or to the Person legally entitled thereto).

(b) For purposes of determining any rate of exchange for this Section, such
amounts shall include any premium and costs payable in connection with the
purchase of the Obligation Currency.

13.22 Parallel Debt. (a) Notwithstanding any other provision of this Agreement,
and solely for the purpose of security granted under German law pursuant to any
Security Document, each Borrower and the other Credit Parties hereby irrevocably
and unconditionally undertakes to pay to the Administrative Agent as creditor in
its own right and not as a representative of the other Secured Parties amounts
equal to any amounts owing from time to time by that Credit Party to any Secured
Parties under any Secured Debt Agreement as and when those amounts are due for
payment under the relevant Secured Debt Agreement.

(b) Each Borrower and the other Credit Parties acknowledge that the obligations
of each Credit Party under Section 13.22(a) are several and are separate and
independent from, and shall not in any way limit or affect, the corresponding
obligations of that Credit Party to any Secured Party under any Secured Debt
Agreement (its “Corresponding Debt”) nor shall the amounts for which each Credit
Party is liable under Section 13.22(a) (its “Parallel Debt”) be limited or
affected in any way by its Corresponding Debt provided that (A) the Parallel
Debt of each Credit Party shall be decreased to the extent that its
Corresponding Debt has been irrevocably paid or (in the case of Guaranteed
Obligations) discharged; and (B) the Corresponding Debt of each Credit Party
shall be decreased to the extent that its Parallel Debt has been irrevocably
paid or (in the case of the Obligations) discharged.

(c) The Administrative Agent acts in its own name and not as a trustee, and its
claims in respect of the Parallel Debt shall not be held in trust. The security
interest granted under the Secured Debt Agreements to the Administrative Agent
to secure the Parallel Debt is granted to the Collateral Agent in its capacity
as creditor of the Parallel Debt and shall not be held in trust.

(d) All monies received or recovered by the Administrative Agent pursuant to
this Section 13.22, and all amounts received or recovered by the Administrative
Agent from or by the enforcement of any security interest granted to secure the
Parallel Debt, shall be applied in accordance with this Agreement.

(e) Without limiting or affecting the Administrative Agent’s rights against the
Credit Parties (whether under this Section 13.22 or under any other provision of
the Secured Debt Agreements) each Credit Party acknowledges that (A) nothing in
this Section 13.22 shall impose any obligation on the Administrative Agent to
advance any sum to any Credit Party or otherwise under any Secured Debt
Agreement, except in its capacity as Lender; and (B) for the purpose of any vote
taken under any Secured Debt Agreements, the Administrative Agent shall not be
regarded as having any participation or commitment other than those which it has
in its capacity as a Lender.

 

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13.23 Special Appointment of Administrative Agent for German Security. For the
purposes of German Security (as defined below), in addition to the provisions
set out in Section 12.10, the specific provisions set out in this Section 13.23
shall prevail:

(a) With respect to German Security, the Administrative Agent shall in case of
German Security constituted by non-accessory (nicht akzessorische) security
interests, hold, administer and, as the case may be, enforce or release such
German Security in its own name, but for the account of the Secured Parties.

(b) In the case of German Security constituted by accessory (akzessorische)
security interests created by way of pledge or other accessory instruments, the
Administrative Agent shall hold (with regard to its own rights under
Section 13.22), administer and, as the case may be, enforce or release such
German Security in the name of and for and on the behalf of the Secured Parties,
and in its own name on the basis of the abstract acknowledgement of indebtedness
pursuant to Section 13.22.

(c) For the purposes of performing its rights and obligations as Administrative
Agent under any accessory (akzessorische) German Security, each Secured Party
hereby authorizes the Administrative Agent to act as its agent (Stellvertreter),
and releases the Administrative Agent from the restrictions imposed by
Section 181 of the German Civil Code (Bürgerliches Gesetzbuch). At the request
of the Administrative Agent, each Secured Party shall provide the Administrative
Agent with a separate written power of attorney (Spezialvollmacht) for the
purposes of executing any relevant agreements and documents on their behalf.
Each Secured Party hereby ratifies and approves all acts previously done by the
Administrative Agent on such Secured Party’s behalf.

(d) The Administrative Agent accepts its appointment as administrator of the
German Security on the terms and subject to the conditions set out in this
Agreement, and the Secured Parties (other than the Administrative Agent), the
Administrative Agent and all other parties to this Agreement agree that, in
relation to the German Security, no Secured Party (other than the Administrative
Agent) shall exercise any independent power to enforce any German Security or
take any other action in relation to the enforcement of the German Security, or
make or receive any declarations in relation thereto.

(e) Each Secured Party (other than the Administrative Agent) hereby instructs
the Administrative Agent (with the right of sub-delegation) to enter into any
documents evidencing the German Security and to make and accept all declarations
and take all actions it considers necessary or useful in connection with any
German Security on behalf of such Secured Party (other than the Administrative
Agent). The Administrative Agent shall further be entitled to rescind, release,
amend and/or execute new and different documents securing the German Security.

13.24 Conflicting Provisions in Security Documents. In the event that any
provisions of this Agreement conflict with any Security Document, the provisions
of this Agreement shall govern.

13.25 Co-Collateral Agents. Each Co-Collateral Agent hereby agrees and
acknowledges that all decisions to be made by the Co-Collateral Agents shall be
made after each Co-Collateral Agent has been consulted by the other
Co-Collateral Agents. In the event of a disagreement among Co-Collateral Agents
in respect of matters to be determined pursuant to this Agreement and the other
Credit Documents, the consenting vote of a majority of the Co-Collateral Agents
shall be required.

13.26 Participant Register. The applicable Lender, acting solely for this
purpose as a non-fiduciary agent of the applicable Borrower, shall maintain a
register on which it enters the name and address of each participant and the
amount of each participant’s interest in the Obligations owing to such

 

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Lender (the “Participant Register”), provided that such Lender shall have no
obligation to disclose all or any portion of the Participant Register to any
Person (including the identity of any participant or any information relating to
a participant’s interest in any Commitment, Loan or Letter of Credit or its
other obligations under any Credit Document) except to the extent that such
disclosure is necessary to establish that such Commitment, Loan, Letter of
Credit or other obligation are in registered form under Section 5f.103-1(c) of
the United States Treasury Regulations. The entries in the Participant Register
shall be conclusive, absent manifest error, and such Lender shall treat each
Person whose name is recorded in the Participant Register as the owner of the
related Obligation.

SECTION 14. U.S. Borrowers Guaranty.

14.01 Guaranty. In order to induce the Administrative Agent, the Co-Collateral
Agents, the Issuing Lenders and the Lenders to enter into this Agreement and to
extend credit hereunder, and to induce the other Guaranteed Creditors to enter
into Interest Rate Protection Agreements, Other Hedging Agreements and Treasury
Services Agreements and in recognition of the direct benefits to be received by
each U.S. Borrower from the proceeds of the Loans, the issuance of the Letters
of Credit and the entering into of such Interest Rate Protection Agreements,
Other Hedging Agreements and Treasury Services Agreements, each U.S. Borrower
hereby agrees with the Guaranteed Creditors as follows: each U.S. Borrower
hereby jointly and severally, unconditionally and irrevocably guarantees the
full and prompt payment when due, whether upon maturity, acceleration or
otherwise, of any and all of the Relevant Guaranteed Obligations to the
Guaranteed Creditors. If any or all of the Relevant Guaranteed Obligations to
the Guaranteed Creditors becomes due and payable hereunder, each U.S. Borrower,
jointly and severally, unconditionally and irrevocably, promises to pay such
indebtedness to the Administrative Agent and/or the other Guaranteed Creditors,
or order, on demand, together with any and all expenses which may be incurred by
the Administrative Agent and the other Guaranteed Creditors in collecting any of
the Relevant Guaranteed Obligations.

14.02 Reinstatement. If a claim is ever made upon any Guaranteed Creditor for
repayment or recovery of any amount or amounts received in payment or on account
of any of the Relevant Guaranteed Obligations and any of the aforesaid payees
repays all or part of said amount by reason of (i) any judgment, decree or order
of any court or administrative body having jurisdiction over such payee or any
of its property or (ii) any settlement or compromise of any such claim effected
by such payee with any such claimant (including any Guaranteed Party), then and
in such event each U.S. Borrower agrees that any such judgment, decree, order,
settlement or compromise shall be binding upon such U.S. Borrower,
notwithstanding any revocation of this U.S. Borrower Guaranty or other
instrument evidencing any liability of any other Guaranteed Party, and such U.S.
Borrower shall be and remain liable to the aforesaid payees hereunder for the
amount so repaid or recovered to the same extent as if such amount had never
originally been received by any such payee.

14.03 Bankruptcy. Additionally, each U.S. Borrower jointly and severally,
unconditionally and irrevocably guarantees the payment of any and all of the
Relevant Guaranteed Obligations to the Guaranteed Creditors whether or not due
or payable by the Borrowers upon the occurrence of any of the events specified
in Section 11.05, and irrevocably and unconditionally promises to pay such
indebtedness to the Guaranteed Creditors; or order, on demand, in lawful money
of the United States.

14.04 Nature of Liability. The liability of each U.S. Borrower hereunder is
primary, absolute and unconditional, exclusive and independent of any security
for or other guaranty of the Relevant Guaranteed Obligations, whether executed
by any other guarantor or by any other party, and the liability of each U.S.
Borrower hereunder shall not be affected or impaired by (a) any direction as to
application of payment by any Guaranteed Party or by any other party, or (b) any
other continuing or other guaranty, undertaking or maximum liability of a
guarantor or of any other party as to the Relevant Guaranteed

 

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Obligations, or (c) any payment on or in reduction of any such other guaranty or
undertaking, or (d) any dissolution, termination or increase, decrease or change
in personnel by any Guaranteed Party, or (e) any payment made to any Guaranteed
Creditor on the Relevant Guaranteed Obligations which any such Guaranteed
Creditor repays to any Guaranteed Party pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and each U.S. Borrower waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding, or
(f) any action or inaction by the Guaranteed Creditors as contemplated in
Section 14.06, or (g) any invalidity, irregularity or enforceability of all or
any part of the Relevant Guaranteed Obligations or of any security therefor. To
the extent more than one U.S. Borrower guarantees the same Relevant Guaranteed
Obligations hereunder, the liabilities of such U.S. Borrower with respect
thereto shall be joint and several.

14.05 Independent Obligation. The obligations of each U.S. Borrower hereunder
are independent of the obligations of any other guarantor, any other party or
any Guaranteed Party, and a separate action or actions may be brought and
prosecuted against each U.S. Borrower whether or not action is brought against
any other guarantor, any other party or any Guaranteed Party and whether or not
any other guarantor, any other party or any Guaranteed Party be joined in any
such action or actions. Each U.S. Borrower waives, to the fullest extent
permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof Any payment by any Guaranteed
Party or other circumstance which operates to toll any statute of limitations as
to any Guaranteed Party shall operate to toll the statute of limitations as to
each U.S. Borrower.

14.06 Authorization. Each U.S. Borrower authorizes the Guaranteed Creditors
without notice or demand (except as shall be required by applicable statute and
cannot be waived), and without affecting or impairing its liability hereunder,
from time to time to:

(i) change the manner, place or terms of payment of, and/or change or extend the
time of payment of, renew, increase, accelerate or alter, any of the Relevant
Guaranteed Obligations (including any increase or decrease in the principal
amount thereof or the rate of interest or fees thereon), any security therefor,
or any liability incurred directly or indirectly in respect thereof, and this
U.S. Borrower Guaranty shall apply to the Relevant Guaranteed Obligations as so
changed, extended, renewed or altered;

(ii) take and hold security for the payment of the Relevant Guaranteed
Obligations and sell, exchange, release, impair, surrender, realize upon or
otherwise deal with in any manner and in any order any property by whomsoever at
any time pledged or mortgaged to secure, or howsoever securing, the Relevant
Guaranteed Obligations or any liabilities (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and/or any offset
there against;

(iii) exercise or refrain from exercising any rights against any Guaranteed
Party or others or otherwise act or refrain from acting;

(iv) release or substitute any one or more endorsers, guarantors, any Guaranteed
Party or other obligors;

(v) settle or compromise any of the Relevant Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether due
or not) of any Guaranteed Party to its creditors other than the Guaranteed
Creditors;

 

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(vi) apply any sums by whomsoever paid or howsoever realized to any liability or
liabilities of any Guaranteed Party to the Guaranteed Creditors regardless of
what liability or liabilities of such Guaranteed Party remain unpaid;

(vii) consent to or waive any breach of, or any act, omission or default under,
this Agreement, any other Credit Document, any other Secured Debt Agreement or
any of the instruments or agreements referred to herein or therein, or otherwise
amend, modify or supplement this Agreement, any other Credit Document, or any
other Secured Debt Agreement or any of such other instruments or agreements;
and/or

(viii) take any other action which would, under otherwise applicable principles
of common law, give rise to a legal or equitable discharge of such Borrower from
its liabilities under this U.S. Borrower Guaranty.

14.07 Reliance. It is not necessary for any Guaranteed Creditor to inquire into
the capacity or powers of any U.S. Borrower or any of its respective
Subsidiaries or the officers, directors, partners or agents acting or purporting
to act on their behalf, and any Relevant Guaranteed Obligations made or created
in reliance upon the professed exercise of such powers shall be guaranteed
hereunder.

14.08 Waiver. (a) Each U.S. Borrower waives any right (except as shall be
required by applicable statute and cannot be waived) to require any Guaranteed
Creditor to (i) proceed against any Guaranteed Party, any other guarantor or any
other party, (ii) proceed against or exhaust any security held from any
Guaranteed Party, any other guarantor or any other party or (iii) pursue any
other remedy in any Guaranteed Creditor’s power whatsoever, Each U.S. Borrower
waives any defense based on or arising out of any defense of any Guaranteed
Party, any other guarantor or any other party, other than payment of the
Relevant Guaranteed Obligations to the extent of such payment, based on or
arising out of the disability of any Guaranteed Party, any U.S. Borrower, any
other guarantor or any other party, or the validity, legality or
unenforceability of the Relevant Guaranteed Obligations or any part thereof from
any cause, or the cessation from any cause of the liability of any Guaranteed
Party other than payment of the Relevant Guaranteed Obligations to the extent of
such payment. The Guaranteed Creditors may, at their election, foreclose on any
security held by the Administrative Agent, or any other Guaranteed Creditor by
one or more judicial or nonjudicial sales, whether or not every aspect of any
such sale is commercially reasonable (to the extent such sale is permitted by
applicable law), or exercise any other right or remedy the Guaranteed Creditors
may have against any Guaranteed Party or any other party, or any security,
without affecting or impairing in any way the liability of any U.S. Borrower
hereunder except to the extent the Relevant Guaranteed Obligations have been
paid. Each U.S. Borrower waives any defense arising out of any such election by
the Guaranteed Creditors, even though such election operates to impair or
extinguish any right of reimbursement or subrogation or other right or remedy of
such U.S. Borrower against any Guaranteed Party or any other party or any
security.

(b) Each U.S. Borrower waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this U.S.
Borrower Guaranty, and notices of the existence, creation or incurring of new or
additional Relevant Guaranteed Obligations. Each U.S. Borrower assumes all
responsibility for being and keeping itself informed of each Guaranteed Party’s
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Relevant Guaranteed Obligations and the nature, scope
and extent of the risks which such U.S. Borrower assumes and incurs hereunder,
and agrees that neither the Administrative Agent nor any of the other Guaranteed
Creditors shall have any duty to advise such U.S. Borrower of information known
to them regarding such circumstances or risks.

 

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(c) Each Borrower warrants and agrees that each of the waivers set forth above
is made with full knowledge of its significance and consequences and that if any
of such waivers are determined to be contrary to any applicable law or public
policy, such waivers shall be effective only to the maximum extent permitted by
law.

14.09 Maximum Liability. It is the desire and intent of each U.S. Borrower and
the Guaranteed Creditors that this U.S. Borrower Guaranty shall be enforced
against each U.S. Borrower to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought. If,
however, and to the extent that, the obligations of any U.S. Borrower under this
U.S. Borrower Guaranty shall be adjudicated to be invalid or unenforceable for
any reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers), then the amount of
each U.S. Borrower obligations under this U.S. Borrower Guaranty shall be deemed
to be reduced and such U.S. Borrower shall pay the maximum amount of the
Relevant Guaranteed Obligations which would be permissible under applicable law.

SECTION 15. Nature of U.S. Borrower Obligations; Limitation on Canadian Borrower
Obligations and European Borrower Obligations.

15.01 Nature of U.S. Borrower Obligations, Canadian Borrower Obligations and
European Borrower Obligations. Notwithstanding anything to the contrary
contained elsewhere in this Agreement, it is understood and agreed by the
various parties to this Agreement that

(i) all U.S. Borrower Obligations to repay principal of, interest on, and all
other amounts with respect to, all Revolving Loans, Letter of Credit
Outstandings and all other U.S. Borrower Obligations pursuant to this Agreement
and under any U.S. Borrower Revolving Note (including, without limitation, all
fees, indemnities, taxes and other U.S. Borrower Obligations in connection
therewith or in connection with the related Commitments) shall constitute the
joint and several obligations of each of the U.S. Borrowers. In addition to the
direct (and joint and several) obligations of the U.S. Borrowers with respect to
U.S. Borrower Obligations as described above, all such U.S. Borrower Obligations
shall be guaranteed pursuant to, and in accordance with the terms of, the U.S.
Borrower Guaranty and the U.S. Subsidiaries Guaranty;

(ii) all Canadian Borrower Obligations to repay principal of, interest on, and
all other amounts with respect to, all Canadian Revolving Loans and all other
Canadian Borrower Obligations pursuant to this Agreement and under any Revolving
Note (including, without limitation, all fees, indemnities, taxes and other
Canadian Borrower Obligations in connection therewith or in connection with the
related Commitments) shall constitute the obligations of the Canadian Borrower.
In addition to the direct obligations of the Canadian Borrower with respect to
Canadian Borrower Obligations as described above, all such Canadian Borrower
Obligations shall be guaranteed pursuant to, and in accordance with the terms
of, this Agreement, the Canadian Subsidiaries Guaranty and the U.S. Subsidiaries
Guaranty; and

(iii) all European Borrower Obligations to repay principal of, interest on, and
all other amounts with respect to, all European Borrower Revolving Loans and all
other European Borrower Obligations pursuant to this Agreement and under any
European Revolving Note (including, without limitation, all fees, indemnities,
taxes and other European Borrower Obligations in connection therewith or in
connection with the related Commitments) shall constitute the obligations of the
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European Borrower with respect to European Borrower Obligations as described
above, all such European Borrower Obligations shall be guaranteed pursuant to,
and in accordance with the terms of, this Agreement, the Canadian Subsidiaries
Guaranty and the U.S. Subsidiaries Guaranty.

15.02 Independent Obligation. The obligations of each U.S. Borrower with respect
to the U.S. Borrower Obligations are independent of the obligations of each
other U.S. Borrower or any Guarantor under its guaranty of such U.S. Borrower
Obligations, and a separate action or actions may be brought and prosecuted
against each U.S. Borrower, whether or not any other U.S. Borrower or any such
Guarantor is joined in any such action or actions. Each U.S. Borrower waives, to
the fullest extent permitted by law, the benefit of any statute of limitations
affecting its liability hereunder or the enforcement thereof. Any payment by any
U.S. Borrower or other circumstance which operates to toll any statute of
limitations as to any U.S. Borrower shall, to the fullest extent permitted by
law, operate to toll the statute of limitations as to each U.S. Borrower.

15.03 Authorization. Each of the U.S. Borrowers authorizes the Administrative
Agent and the Lenders without notice or demand (except as shall be required by
applicable statute and cannot be waived), and without affecting or impairing its
liability hereunder, from time to time to:

(i) exercise or refrain from exercising any rights against any other U.S.
Borrower or any Guarantor or others or otherwise act or refrain from acting;

(ii) release or substitute any other U.S. Borrower, endorsers, Guarantors or
other obligors;

(iii) settle or compromise any of the U.S. Borrower Obligations of any other
U.S. Borrower or any other Credit Party, any security therefor or any liability
(including any of those hereunder) incurred directly or indirectly in respect
thereof or hereof, and may subordinate the payment of all or any part thereof to
the payment of any liability (whether due or not) of any U.S. Borrower to its
creditors other than the Lenders;

(iv) apply any sums paid by any other U.S. Borrower or any other Person,
howsoever realized or otherwise received to or for the account of such U.S.
Borrower to any liability or liabilities of such other U.S. Borrower or other
Person regardless of what liability or liabilities of such other Borrower or
other Person remain unpaid; and/or

(v) consent to or waive any breach of, or act, omission or default under, this
Agreement or any of the instruments or agreements referred to herein, or
otherwise, by any other Borrower or any other Person.

15.04 Reliance. It is not necessary for the Administrative Agent or any other
Lender to inquire into the capacity or powers of any U.S. Borrower or any of its
Subsidiaries or the officers, directors, members, partners or agents acting or
purporting to act on its behalf, and any U.S. Borrower Obligations made or
created in reliance upon the professed exercise of such powers shall constitute
the joint and several obligations of the U.S. Borrowers hereunder.

15.05 Contribution; Subrogation. No U.S. Borrower shall have any rights of
contribution or subrogation with respect to any other U.S. Borrower as a result
of payments made by it hereunder, in each case unless and until the Total
Commitment has been terminated and all U.S. Borrower Obligations have been paid
in full.

 

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15.06 Waiver. Each U.S. Borrower waives any right to require the Administrative
Agent or the other Lenders to (i) proceed against any other U.S. Borrower, any
Guarantor or any other party, (ii) proceed against or exhaust any security held
from any U.S. Borrower, any Guarantor or any other party or (iii) pursue any
other remedy in the Administrative Agent’s or the Lenders’ power whatsoever.
Each U.S. Borrower waives any defense based on or arising out of suretyship or
any impairment of security held from any U.S. Borrower, any Guarantor or any
other party or on or arising out of any defense of any other U.S. Borrower, any
Guarantor or any other party other than payment in full in cash of the U.S.
Borrower Obligations, including, without limitation, any defense based on or
arising out of the disability of any other U.S. Borrower, any Guarantor or any
other party, or the unenforceability of the U.S. Borrower Obligations or any
part thereof from any cause, or the cessation from any cause of the liability of
any other U.S. Borrower, in each case other than as a result of the payment in
full in cash of the U.S. Borrower Obligations.

15.07 Limitation on Canadian Borrower Obligations and European Borrower
Obligations. Notwithstanding anything to the contrary herein or in any other
Credit Document (including provisions that may override any other provision), in
no event shall the Canadian Borrower or any other Canadian Subsidiary of any
Borrower, the European Borrower, any other European Distribution Subsidiary of
the European Borrower, any other Foreign Subsidiary of Aleris or any Domestic
Subsidiary of a Foreign Subsidiary of Aleris guarantee or be deemed to have
guaranteed or become liable or obligated on a joint and several basis or
otherwise for, or to have pledged any of its assets to secure, any Obligation of
a U.S. Credit Party under this Agreement or any of the other Credit Documents.
All provisions contained in any Credit Document shall be interpreted
consistently with this Section 15.07 to the extent possible, and where such
other provisions conflict with the provisions of this Section 15.07, the
provisions of this Section 15.07 shall govern.

15.08 Maximum Liability. It is the desire and intent of (i) each U.S. Borrower
and the Lenders and (ii) the Canadian Borrower and the Lenders, that, in each
case, their respective joint and several liability shall be enforced against
each U.S. Borrower or the Canadian Borrower, as applicable, to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. If, however, and to the extent
that, the obligations of any U.S. Borrower or the Canadian Borrower under any
Credit Document shall be adjudicated to be invalid or unenforceable for any
reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers), then the amount of
each U.S. Borrower’s obligations (in the case of any invalidity or
unenforceability with respect to a U.S. Borrower’s obligations) or the Canadian
Borrower’s obligations (in the case of any invalidity or unenforceability with
respect to the Canadian Borrower’s obligations) under the Credit Documents shall
be deemed to be reduced and such U.S. Borrower or the Canadian Borrower, as
applicable, shall pay the maximum amount of the Obligations which would be
permissible under applicable law.

SECTION 16. Revolving Loans; Intra-Lender Issues. In connection with the funding
of Specified Foreign Currency Loans (as defined below), Lenders shall have no
obligation under this Agreement to sell any Specified Foreign Currency
Participations (as defined below) but may elect to do so subject to the consent
of the Administrative Agent and the Joint Book Runners. If the Administrative
Agent and the Joint Book Runners consent to the sales of any Specified Foreign
Currency Participations, then such sales shall be governed by the terms of this
Section 16.

16.01 Specified Foreign Currency Participations. Notwithstanding anything to the
contrary contained herein, all Revolving Loans which are denominated in a
Specified Foreign Currency (each, a “Specified Foreign Currency Loan”) shall be
made solely by the applicable Lenders (including Bank of America, N.A. or its
branches or Affiliates) who are not Participating Specified Foreign Currency
Lenders (as defined below). Each applicable Lender acceptable to the
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have Specified Foreign Currency Funding Capacity (a “Participating Specified
Foreign Currency Lender”) shall irrevocably and unconditionally purchase and
acquire and shall be deemed to irrevocably and unconditionally purchase and
acquire from either (i) Bank of America, N.A. and each other Lender, or (ii) if
agreed to by Bank of America, N.A., Bank of America, N.A., in its capacity as
the sole fronting bank, subject to Bank of America N.A.’s receipt of an
acceptable indemnity from the Joint Book Runners (in the case of either (i) or
(ii), such Lender or Lenders hereafter referred to as the “Designated Fronting
Bank”), and the Designated Fronting Bank shall sell and be deemed to sell to
each such Participating Specified Foreign Currency Lender, without recourse or
any representation or warranty whatsoever, an undivided interest and
participation (a “Specified Foreign Currency Participation”) in each Revolving
Loan which is a Specified Foreign Currency Loan funded by the Designated
Fronting Bank in an amount equal to such Participating Specified Foreign
Currency Lender’s Percentage of the Borrowing that includes such Revolving Loan.
Such purchase and sale of a Specified Foreign Currency Participation shall be
deemed to occur automatically upon the making of a Specified Foreign Currency
Loan by the Designated Fronting Bank, without any further notice to any
Participating Specified Foreign Currency Lender. The purchase price payable by
each Participating Specified Foreign Currency Lender to the Designated Fronting
Bank for each Specified Foreign Currency Participation purchased by it from the
Designated Fronting Bank shall be equal to 100% of the principal amount of such
Specified Foreign Currency Participation (i.e., the product of (i) the amount of
the Borrowing that includes the relevant Revolving Loan and (ii) such
Participating Specified Foreign Currency Lender’s Percentage), and such purchase
price shall be payable by each Participating Specified Foreign Currency Lender
to the Designated Fronting Bank in accordance with the settlement procedure set
forth in Section 16.02 below. The Designated Fronting Bank and the
Administrative Agent shall record on their books the amount of the Revolving
Loans made by such Designated Fronting Bank and each Participating Specified
Foreign Currency Lender’s Specified Foreign Currency Participation and Funded
Specified Foreign Currency Participation therein, all payments in respect
thereof and interest accrued thereon and all payments made by and to each
Participating Specified Foreign Currency Lender pursuant to this Section 16.01.

16.02 Settlement Procedures for Specified Foreign Currency Participations. Each
Participating Specified Foreign Currency Lender’s Specified Foreign Currency
Participation in the Specified Foreign Currency Loans shall be in an amount
equal to its Percentage of all such Specified Foreign Currency Loans. However,
in order to facilitate the administration of the Specified Foreign Currency
Loans made by the Designated Fronting Bank and the Specified Foreign Currency
Participations, settlement among the Designated Fronting Bank and the
Participating Specified Foreign Currency Lenders with regard to the
Participating Specified Foreign Currency Lenders’ Specified Foreign Currency
Participations shall take place in accordance with the following provisions:

(i) The Designated Fronting Bank and the Participating Specified Foreign
Currency Lenders shall settle (a “Specified Foreign Currency Participation
Settlement”) by payments in respect of the Specified Foreign Currency
Participations as follows: So long as any Specified Foreign Currency Loans are
outstanding, Specified Foreign Currency Participation Settlements shall be
effected upon the request of the Designated Fronting Bank through the
Administrative Agent on such Business Days as requested the Designated Fronting
Bank and as the Administrative Agent shall specify by a notice by telecopy,
telephone or similar form of notice to each Participating Specified Foreign
Currency Lender requesting such Specified Foreign Currency Participation
Settlement (each such date on which a Specified Foreign Currency Participation
Settlement occurs herein called a “Specified Foreign Currency Participation
Settlement Date”), such notice to be delivered no later than 2:00 p.m. (New York
time) at least one (1) Business Day prior to the requested Specified Foreign
Currency Participation Settlement Date; provided that the Designated Fronting
Bank shall have the option but not the obligation to request a Specified Foreign
Currency Participation Settlement Date and, in any event, shall not request a
Specified Foreign Currency Participation Settlement Date prior to the occurrence
of an

 

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Event of Default; provided further, that if (x) such Event of Default is cured
or waived in writing in accordance with the terms hereof, (y) no Obligations
have yet been declared due and payable under Article 11 and (z) the
Administrative Agent has actual knowledge of such cure or waiver, all prior to
the Administrative Agent’s giving notice to the Participating Specified Foreign
Currency Lenders of the first Specified Foreign Currency Participation
Settlement Date under this Agreement, then the Administrative Agent shall not
give notice to the Participating Specified Foreign Currency Lenders of a
Specified Foreign Currency Participation Settlement Date based upon such cured
or waived Event of Default. If on any Specified Foreign Currency Participation
Settlement Date the total principal amount of the Specified Foreign Currency
Loans made or deemed made by the Designated Fronting Bank during the period
ending on (but excluding) such Specified Foreign Currency Participation
Settlement Date and commencing on (and including) the immediately preceding
Specified Foreign Currency Participation Settlement Date (or the Closing Date in
the case of the period ending on the first Specified Foreign Currency
Participation Settlement Date) (each such period herein called a “Specified
Foreign Currency Participation Settlement Period”) is greater than the principal
amount of Specified Foreign Currency Loans repaid during such Specified Foreign
Currency Participation Settlement Period to the Designated Fronting Bank, each
Participating Specified Foreign Currency Lender shall pay to the Designated
Fronting Bank (through the Administrative Agent), no later than 11:00 a.m. (New
York time) on such Specified Foreign Currency Participation Settlement Date, an
amount equal to such Participating Specified Foreign Currency Lender’s ratable
share of the amount of such excess. If in any Specified Foreign Currency
Participation Settlement Period the outstanding principal amount of the
Specified Foreign Currency Loans repaid to the Designated Fronting Bank in such
period exceeds the total principal amount of the Specified Foreign Currency
Loans made or deemed made by the Designated Fronting Bank during such period,
the Designated Fronting Bank shall pay to each Participating Specified Foreign
Currency Lender (through the Administrative Agent) on such Specified Foreign
Currency Participation Settlement Date an amount equal to such Participating
Specified Foreign Currency Lender’s ratable share of such excess. Specified
Foreign Currency Participation Settlements in respect of Specified Foreign
Currency Loans shall be made in the respective Available Currency in which such
Specified Foreign Currency Loan was funded on the Specified Foreign Currency
Participation Settlement Date for such Specified Foreign Currency Loans.

(ii) If any Participating Specified Foreign Currency Lender fails to pay to the
Designated Fronting Bank on any Specified Foreign Currency Participation
Settlement Date the full amount required to be paid by such Participating
Specified Foreign Currency Lender to the Designated Fronting Bank on such
Specified Foreign Currency Participation Settlement Date in respect of such
Participating Specified Foreign Currency Lender’s Specified Foreign Currency
Participation (such Participating Specified Foreign Currency Lender’s “Specified
Foreign Currency Participation Settlement Amount”) with the Designated Fronting
Bank, the Designated Fronting Bank shall be entitled to recover such unpaid
amount from such Participating Specified Foreign Currency Lender, together with
interest thereon (in the same respective currency or currencies as the relevant
Specified Foreign Currency Loans) at the Base Rate plus 2.00%. Without limiting
the Designated Fronting Bank’s rights to recover from any Participating
Specified Foreign Currency Lender any unpaid Specified Foreign Currency
Participation Settlement Amount payable by such Participating Specified Foreign
Currency Lender to the Designated Fronting Bank, the Administrative Agent shall
also be entitled to withhold from amounts otherwise payable to such
Participating Specified Foreign Currency Lender an amount equal to such
Participating Specified Foreign Currency Lender’s unpaid Specified Foreign
Currency Participation Settlement Amount owing to the Designated Fronting Bank
and apply such withheld amount to the payment of any unpaid Specified Foreign
Currency Participation Settlement Amount owing by such Participating Specified
Foreign Currency Lender to the Designated Fronting Bank.

 

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If any Specified Foreign Currency Loans convert to U.S. Dollars pursuant to
Section 2.14, a Specified Foreign Currency Participation Settlement Date shall
be deemed to automatically occur on the date of such conversion and the
Designated Fronting Bank shall receive an amount expressed in the respective
Available Currency immediately prior to such conversion.

16.03 Obligations Irrevocable. The obligations of each Participating Specified
Foreign Currency Lender to purchase from the Designated Fronting Bank. a
participation in each Specified Foreign Currency Loan made by the Designated
Fronting Bank and to make payments to the Designated Fronting Bank with respect
to such participation, in each case as provided herein, shall be irrevocable and
not subject to any qualification or exception whatsoever, including any of the
following circumstances:

(i) any lack of validity or enforceability of this Agreement or any of the other
Credit Documents or of any Loans, against the Borrowers or any other Credit
Party;

(ii) the existence of any claim, setoff, defense or other right which the
Borrowers or any other Credit Party may have at any time against the
Administrative Agent, any Participating Specified Foreign Currency Lender, or
any other Person, whether in connection with this Agreement, any Specified
Foreign Currency Loans, the transactions contemplated herein or any unrelated
transactions;

(iii) any application or misapplication of any proceeds of any Specified Foreign
Currency Loans;

(iv) the surrender or impairment of any security for any Specified Foreign
Currency Loans;

(v) the occurrence of any Default or Event of Default;

(vi) the commencement or pendency of any events specified in Section 11.05, in
respect of the Borrowers or any of its Subsidiaries or any other Person; or

(vii) the failure to satisfy the applicable conditions precedent set forth in
Section 6 or 7.

16.04 Recovery or Avoidance of Payments. In the event any payment by or on
behalf of any Borrower or any other Credit Party received by the Administrative
Agent with respect to any Specified Foreign Currency Loan made by the Designated
Fronting Bank is thereafter set aside, avoided or recovered from the
Administrative Agent in connection with any insolvency proceeding or due to any
mistake of law or fact, each Participating Specified Foreign Currency Lender
shall, upon written demand by the Administrative Agent, pay to the Designated
Fronting Bank (through the Administrative Agent) such Participating Specified
Foreign Currency Lender’s Percentage of such amount set aside, avoided or
recovered, together with interest at the rate and in the currency required to be
paid by the Designated Fronting Bank or the Administrative Agent upon the amount
required to be repaid by it.

16.05 Indemnification by Lenders. Each Participating Specified Foreign Currency
Lender agrees to indemnify the Designated Fronting Bank (to the extent not
reimbursed by the Borrowers and without limiting the obligations of the
Borrowers hereunder or under any other Credit Document) ratably for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,

 

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expenses (including attorneys’ fees) or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against the
Designated Fronting Bank in any way relating to or arising out of any Specified
Foreign Currency Loans or any action taken or omitted by the Designated Fronting
Bank in connection therewith; provided that no Participating Specified Foreign
Currency Lender shall be liable for any of the foregoing to the extent it arises
from the gross negligence or willful misconduct of the Designated Fronting Bank
(as determined by a court of competent jurisdiction in a final non-appealable
judgment). Without limiting the foregoing, each Participating Specified Foreign
Currency Lender agrees to reimburse the Designated Fronting Bank promptly upon
demand for such Participating Specified Foreign Currency Lender’s ratable share
of any costs or expenses payable by the Borrowers to the Designated Fronting
Bank in respect of the Specified Foreign Currency Loans to the extent that the
Designated Fronting Bank is not promptly reimbursed for such costs and expenses
by the Borrowers. The agreement contained in this Section 16.05 shall survive
payment in full of all Specified Foreign Currency Loans.

16.06 Specified Foreign Currency Loan Participation Fee. In consideration for
each Participating Specified Foreign Currency Lender’s participation in the
Specified Foreign Currency Loans made by the Designated Fronting Bank, the
Designated Fronting Bank agrees to pay to the Administrative Agent for the
account of each Participating Specified Foreign Currency Lender, as and when the
Designated Fronting Bank receives payment of interest on its Specified Foreign
Currency Loans, a fee (the “Specified Foreign Currency Participation Fee”) at a
rate per annum equal to the Applicable Margin on such Specified Foreign Currency
Loans minus 0.50% on the Unfunded Specified Foreign Currency Participation of
such Participating Specified Foreign Currency Lender in such Specified Foreign
Currency Loans of the Designated Fronting Bank. The Specified Foreign Currency
Participation Fee in respect of any unfunded Specified Foreign Currency
Participation in a Specified Foreign Currency Loan shall be payable to the
Administrative Agent in the Available Currency in which the respective Specified
Foreign Currency Loan was funded when interest on such Specified Foreign
Currency Loan is received by the Designated Fronting Bank. If the Designated
Fronting Bank does not receive payment in full of such interest, the Specified
Foreign Currency Participation Fee in respect of the unfunded Specified Foreign
Currency Participation in such Specified Foreign Currency Loans shall be reduced
proportionately. Any amounts payable under this Section 16.06 by the
Administrative Agent to the Participating Specified Foreign Currency Lenders
shall be paid in the Available Currency in which the respective Specified
Foreign Currency Loan was funded (or, if different, the currency in which such
interest payments are actually received).

16.07 Defaulting Lenders; etc. Notwithstanding anything to the contrary
contained above, (x) no Lender may become a Participating Specified Foreign
Currency Lender at any time it is a Defaulting Lender, and (y) if any
Participating Specified Foreign Currency Lender at any time becomes a Defaulting
Lender or if the Designated Fronting Bank reasonably determines that the credit
quality of any then existing Participating Specified Foreign Currency Lender has
suffered a material adverse change, the Designated Fronting Bank shall have the
right to, by notice to the affected Lender, (i) terminate such Lender’s status
as a Participating Specified Foreign Currency Lender for Revolving Loans,
(ii) declare a Specified Foreign Currency Participation Settlement Date to occur
with respect to such affected Lender and (iii) require such Participating
Specified Foreign Currency Lender to cash collateralize (in the relevant
Available Currency) such Lender’s Percentage of outstanding European Borrower
Revolving Loans and/or Canadian Revolving Loans as the case may be and if such
Lender fails to cash collateralize such Loans, upon two (2) days’ notice require
the European Borrower and/or the Canadian Borrowers to cash-collateralize (in
the relevant Available Currency) such Lender’s percentage of outstanding
European Borrower Revolving Loans and/or Canadian Revolving Loans, as the case
may be.

 

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SECTION 17. Limitation on European Borrower Obligations. If and to the extent
that the European Borrower is liable under the Credit Documents, including,
without limitation, under Section 13.01 (the “Indemnity”) for obligations of its
Affiliates and that complying with such obligations would constitute a repayment
of capital (Einlagerückgewähr) (including by way of a violation of the legally
protected reserves (gesetzlich geschützte Reserven)) or the payment of a
(constructive) dividend (Gewinnausschüttung) by the European Borrower (the
“Restricted Obligations”), the following shall apply:

(a) The aggregate liability of the European Borrower for Restricted Obligations
shall from time to time be limited to the Swiss Available Amount existing at
that time; provided that such limitation (as may apply from time to time or not)
shall not (generally or definitively) affect the Indemnity granted by the
European Borrower in excess thereof, but merely postpone the time of using such
proceeds from enforcement of the Indemnity until such times as application
towards discharging the Restricted Obligations is again permitted
notwithstanding such limitation.

(b) for the purposes of paragraph (a): “Swiss Available Amount” means the
maximum amount of the European Borrower’s profits and reserves available from
time to time for distribution as a dividend under applicable Swiss law. The
Swiss Available Amount shall from time to time be calculated in accordance with,
without limitation, article 675 of the Swiss Code of Obligations and shall
include the equity capital surplus (including any unrestricted portion of legal
general reserves, restricted reserves, retained earnings and current net
profits) which is freely available (as the case may be after conversion) for
distribution as a dividend to shareholders under Swiss law at the time payment
is sought hereunder.

(c) Immediately after having been requested to perform Restricted Obligations
under the Credit Documents, the European Borrower shall provide the Collateral
Agent, as soon as possible, with (a) an interim balance sheet audited by the
statutory auditors of the European Borrower, (b) the determination by the
statutory auditors of the Swiss Available Amount based on such interim audited
balance sheet (such Swiss Available Amount to reflect, as the case may be, the
conversion of restricted reserves into distributable reserves) and (c) a
confirmation from the statutory auditors of the European Borrower that the Swiss
Available Amount complies with the terms of this Section 17 (Limitations on
European Borrower Obligations) and with the provisions of Swiss corporate law
which are aimed at protecting the share capital and legal reserves.

(d) In respect of Restricted Obligations, each European Borrower shall:

(i) if and to the extent required by applicable law in force at the relevant
time: (i) subject to any applicable double tax treaties, deduct the Swiss
Withholding Tax at the rate of 35 per cent. (or such other rate as in force at
that time) from any payment made by it in respect of Restricted Obligations;
(ii) pay any such deduction to the Swiss Federal Tax Administration; and
(iii) notify and provide evidence to the Agent that the Swiss Withholding Tax
has been paid to the Swiss Federal Tax Administration.

(ii) to the extent such deduction is made, not be required to make a gross-up,
indemnify or otherwise hold harmless the Credit Parties for the deduction of the
Swiss Withholding Tax, notwithstanding anything to the contrary contained in the
Credit Documents, unless grossing-up is permitted under the laws of Switzerland
then in force provided that this shall not in any way limit any obligations of
any Credit Party (other than that European Borrower) under the Credit Documents.
The European Borrower shall use its reasonable efforts to ensure that any member
of Aleris and its group companies which is, as a result of a payment under the
Credit Documents, entitled to a full or partial refund of the Swiss Withholding
Tax, will, as soon as possible after the deduction of the Swiss Withholding Tax,
(A) request a refund of the Swiss Withholding Tax under any applicable law
(including double tax treaties) and (B) pay to the Agent upon receipt any amount
so refunded. The European Borrower shall procure that

 

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any other action is taken as shall be reasonably required by the Administrative
Agent including, without limitation, the passing of any shareholders’
resolutions to approve any payment or other performance of Restricted
Obligations under the Credit Documents by European Borrowers and the receipt of
any confirmations from the relevant European Borrower’s auditors, which may be
required as a matter of Swiss law in force at the time to make a payment or
perform other obligations under the Credit Documents with a minimum of
limitations.

SECTION 18. Certifications Regarding Indentures. Each Credit Party further
certifies to Agents and Lenders that (i) all of the Commitments hereunder
constitute a “Credit Facility” (or the equivalent term defined in the Senior
Notes Indenture) under the Senior Notes Indenture, and (ii) that all Obligations
hereunder collectively constitute “Senior Indebtedness” (or the equivalent term
defined in the IntermediateCo Note Indenture) under the IntermediateCo Note
Indenture.

SECTION 19. Amendment and Restatement.

(a) This Agreement and the other Credit Documents amend and restate the Existing
Credit Agreement and the “Credit Documents” (as defined in the Existing Credit
Agreement). All rights, benefits, indebtedness, interests, liabilities and
obligations of the parties to the Existing Credit Agreement and the agreements,
documents and instruments executed and delivered in connection with the Existing
Credit Agreement (collectively, the “Existing Credit Documents”) are hereby
renewed, amended, restated and superseded in their entirety according to the
terms and provisions set forth herein and in the other Credit Documents (except
to the extent otherwise set forth in the Credit Documents). This Agreement does
not constitute, nor shall it result in, a waiver of or release, discharge or
forgiveness of any amount payable pursuant to the Existing Credit Documents or
any indebtedness, liabilities or obligations of the Credit Parties thereunder,
all of which are renewed and continued and are hereafter payable and to be
performed in accordance with this Agreement and the other Credit Documents
(except to the extent otherwise set forth in the Credit Documents). Neither this
Agreement nor any other Credit Document extinguishes any Loans, Letters of
Credit or other indebtedness or liabilities outstanding in connection with the
Existing Credit Documents, nor do they constitute a novation with respect
thereto.

(b) All security interests, pledges, assignments and other Liens and Guaranties
previously granted by any Credit Party pursuant to the Existing Credit Documents
are hereby renewed and continued (except to the extent otherwise set forth in
the Credit Documents), and all such security interests, pledges, assignments and
other Liens and Guaranties shall remain in full force and effect as security for
the Obligations in the manner set forth in the Credit Documents. Notwithstanding
the terms of any European Security Agreement or the order in which any European
Security Agreement is executed, dated or registered, or notice of which is given
to any Person, the ranking and priority of the Secured Parties shall be governed
by this Agreement and the U.S. Security Agreement.

(c) Amounts in respect of interest, fees and other amounts payable to or for the
account of the Administrative Agent, the Issuing Lenders and the Lenders shall
be calculated (i) in accordance with the provisions of the Existing Credit
Agreement with respect to any period (or a portion of any period) ending prior
to the Closing Date, and (ii) in accordance with the provisions of this
Agreement with respect to any period (or a portion of any period) commencing on
or after the Closing Date.

SECTION 20. No Advisory or Fiduciary Responsibility. In connection with all
aspects of each transaction contemplated by any Credit Document, the Borrowers
acknowledge and agree that (a)(i) this credit facility and any related arranging
or other services by the Administrative Agent, any Lender, any of their
Affiliates or any other Agent are arm’s-length commercial transactions between
Borrowers and such Person; (ii) the Borrowers have consulted their own legal,
accounting, regulatory and tax advisors to the

 

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extent they have deemed appropriate; and (iii) the Borrowers are capable of
evaluating, and understand and accept, the terms, risks and conditions of the
transactions contemplated by the Credit Documents; (b) each of the
Administrative Agent, the Lenders, their Affiliates and any other Agent is and
has been acting solely as a principal and, except as expressly agreed in writing
by the relevant parties, has not been, is not, and will not be acting as an
advisor, agent or fiduciary for the Borrowers, any of their Affiliates or any
other Person, and has no obligation with respect to the transactions
contemplated by the Credit Documents except as expressly set forth therein; and
(c) the Administrative Agent, the Lenders, their Affiliates and any other Agent
may be engaged in a broad range of transactions that involve interests that
differ from those of the Borrowers and their Affiliates, and have no obligation
to disclose any of such interests to the Borrowers or their Affiliates. Each
Credit Party agrees that it will not claim that any of the Administrative Agent,
the Lenders, their Affiliates or any other Agent has rendered advisory services
of any nature or respect, or owes a fiduciary or similar duty to such Credit
Party, in connection with such transactions.

*    *    *

 

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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Agreement as of the date first above
written.

 

ALERIS INTERNATIONAL, INC., AS A BORROWER BY:  

/S/ SEAN M. STACK

  SEAN M. STACK, EXECUTIVE VICE   PRESIDENT AND CHIEF FINANCIAL OFFICER

ALERIS ROLLED PRODUCTS, INC.,

AS A BORROWER

BY:  

/S/ SEAN M. STACK

  SEAN M. STACK, PRESIDENT

ALERIS ROLLED PRODUCTS, LLC,

AS A BORROWER

BY:  

/S/ SEAN M. STACK

  SEAN M. STACK, PRESIDENT

ALERIS ROLLED PRODUCTS SALES CORPORATION,

AS A BORROWER

BY:  

/S/ SEAN M. STACK

  SEAN M. STACK, PRESIDENT

IMCO RECYCLING OF OHIO, LLC,

AS A BORROWER

BY:  

/S/ SEAN M. STACK

  SEAN M. STACK, PRESIDENT

ALERIS RECYCLING, INC.,

AS A BORROWER

BY:  

/S/ SEAN M. STACK

  SEAN M. STACK, PRESIDENT

ALERIS SPECIFICATION ALLOYS, INC.,

AS A BORROWER

BY:  

/S/ SEAN M. STACK

  SEAN M. STACK, PRESIDENT

[Remainder of page intentionally left blank; Signatures continue on the
following page.]

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ALERIS SPECIALTY PRODUCTS, INC.,

AS A BORROWER

BY:  

/S/ SEAN M. STACK

SEAN M. STACK, PRESIDENT

ALERIS RECYCLING BENS RUN, LLC,

AS A BORROWER

BY:  

/S/ SEAN M. STACK

SEAN M. STACK, PRESIDENT

ETS SCHAEFER, LLC,

AS A BORROWER

BY:  

/S/ SEAN M. STACK

SEAN M. STACK, PRESIDENT

ALERIS OHIO MANAGEMENT, INC.,

AS A BORROWER

BY:  

/S/ SEAN M. STACK

SEAN M. STACK, PRESIDENT

ALERIS SPECIFICATION ALLOY

PRODUCTS CANADA COMPANY,

A NOVA SCOTIA UNLIMITED LIABILITY

COMPANY

AS CANADIAN BORROWER

BY:  

/S/ SEAN M. STACK

SEAN M. STACK, PRESIDENT

ALERIS SWITZERLAND GMBH,

A SWISS LIMITED LIABILITY COMPANY

AS EUROPEAN BORROWER

BY:  

/S/ SEAN M. STACK

SEAN M. STACK, MANAGING

DIRECTOR

[Remainder of page intentionally left blank; Signatures continue on the
following page.]

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Accepted and Agreed to:

 

BANK OF AMERICA, N.A.,
AS ADMINISTRATIVE AGENT, A CO-COLLATERAL AGENT AND A LENDER

BY:  

/S/ JOHN YANKAUSKAS

  NAME:   JOHN YANKAUSKAS   TITLE:   SENIOR VICE PRESIDENT

 

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BANK OF AMERICA, N.A. (ACTING THROUGH ITS CANADA BRANCH), AS A LENDER

BY:  

/S/ MEDINA SALES DE ANDRADE

  NAME:   MEDINA SALES DE ANDRADE   TITLE:   VICE PRESIDENT

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JPMORGAN CHASE BANK, N.A.,
AS A CO-COLLATERAL AGENT AND A LENDER

BY:  

/S/ KATHERINE CLIFFEL

  NAME:   KATHERINE CLIFFEL   TITLE:   VICE PRESIDENT

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J.P. MORGAN SECURITIES LLC,
AS SYNDICATION AGENT

BY:  

/S/ JOSEPH J. VIRZI

  NAME:   JOSEPH J. VIRZI   TITLE:   MANAGING DIRECTOR

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JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, AS A LENDER

BY:  

/S/ JOHN FREEMAN

  NAME:   JOHN FREEMAN   TITLE:   SENIOR VICE PRESIDENT

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JPMORGAN CHASE BANK, N.A. (LONDON BRANCH), AS A LENDER

BY:  

/S/ TIM JACOB

  NAME:   TIM JACOB   TITLE:   SENIOR VICE PRESIDENT

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DEUTSCHE BANK AG NEW YORK BRANCH, AS A CO-COLLATERAL AGENT, A CO-DOCUMENTATION
AGENT AND A LENDER

BY:  

/S/ MARCUS M. TURKINGTON

  NAME:   MARCUS M. TURKINGTON   TITLE:   DIRECTOR BY:  

/S/ EVELYN THIERRY

  NAME:   EVELYN THIERRY   TITLE:   DIRECTOR

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BARCLAYS BANK PLC,

    AS A CO-DOCUMENTATION AGENT AND A LENDER

BY:  

/S/ MICHAEL J. MOZER

  NAME:   MICHAEL J. MOZER   TITLE:   VICE PRESIDENT

 

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UBS AG, STAMFORD BRANCH,

    AS A LENDER

BY:  

/S/ MARY E. EVANS

  NAME:   MARY E. EVANS   TITLE:   ASSOCIATE DIRECTOR BY:  

/S/ TRJA R. OTSA

  NAME:   TRJA R. OTSA   TITLE:   ASSOCIATE DIRECTOR

 

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UBS SECURITIES LLC,

    AS A CO-DOCUMENTATION AGENT

BY:  

/S/ MARY E. EVANS

  NAME:   MARY E. EVANS   TITLE:   ATTORNEY-IN-FACT BY:  

/S/ TRJA R. OTSA

  NAME:   TRJA R. OTSA   TITLE:   ASSOCIATE DIRECTOR

 

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UBS AG CANADA BRANCH,     AS A LENDER BY:  

/S/ MARY E. EVANS

  NAME:   MARY E. EVANS   TITLE:   ASSOCIATE DIRECTOR BY:  

/S/ TRJA R. OTSA

  NAME:   TRJA R. OTSA   TITLE:   ASSOCIATE DIRECTOR

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RBS BUSINESS CAPITAL, A DIVISION OF RBS ASSET
FINANCE, A SUBSIDIARY OF RBS CITIZENS, NA,

    AS A LENDER AND A SENIOR MANAGING AGENT

BY:  

/S/ JAMES G. ZAMBORSKY

  NAME:   JAMES G. ZAMBORSKY   TITLE:   VICE PRESIDENT

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PNC BANK, NATIONAL ASSOCIATION,

    AS A LENDER

BY:  

/S/GREGORY J. HALL

  NAME:   GREGORY J. HALL   TITLE:   VICE PRESIDENT

--------------------------------------------------------------------------------

PNC BANK CANADA BRANCH,     AS A LENDER BY:  

/S/ MIKE DANBY

  NAME: MIKE DANBY   TITLE: ASSISTANT VICE PRESIDENT

 

--------------------------------------------------------------------------------

KEYBANK NATIONAL ASSOCIATION     AS A LENDER BY:  

/S/ TIMOTHY W. KENEALY

  NAME: TIMOTHY W. KENEALY   TITLE: VICE PRESIDENT

 

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CREDIT SUISSE AG, CAYMAN ISLAND BRANCH,     AS A LENDER BY:  

/S/ ARI BRUGER

  NAME: ARI BRUGER   TITLE: VICE PRESIDENT BY:  

/S/ RAHUL PARMAR

  NAME: RAHUL PARMAR   TITLE: ASSOCIATE

 

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WELLS FARGO BANK, N.A. (INCLUDING ACTING THROUGH ITS LONDON BRANCH)     AS A
LENDER

BY:  

/S/ ROBERT H. MILHORAT

  NAME: ROBERT H. MILHORAT   TITLE: DIRECTOR

 

--------------------------------------------------------------------------------

WELLS FARGO CAPITAL FINANCE CORPORATION CANADA, AS A LENDER BY:  

/S/ DOMENIC CASENTINO

  NAME: DOMENIC CASENTINO   TITLE: VICE PRESIDENT

 

--------------------------------------------------------------------------------

GOLDMAN SACHS BANK USA,     AS A LENDER BY:  

/S/ MARK WALTON

  NAME: MARK WALTON   TITLE: AUTHORIZED SIGNATORY

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SCHEDULE I-A

COMMITMENTS

 

LENDER

   COMMITMENT  

BANK OF AMERICA, N.A. (ACTING

THROUGH BANK OF AMERICA, N.A., AND

THROUGH ITS CANADA BRANCH)

   $ 110,000,000   

JPMORGAN CHASE BANK, N.A. (ACTING

THROUGH JPMORGAN CHASE BANK,

N.A., JPMORGAN CHASE BANK, N.A.,

TORONTO BRANCH, AND JPMORGAN

CHASE BANK, N.A. (LONDON BRANCH))

   $ 100,000,000   

BARCLAYS BANK PLC

   $ 55,000,000   

DEUTSCHE BANK AG NEW YORK

BRANCH

   $ 55,000,000   

UBS AG, STAMFORD BRANCH (ACTING

THROUGH UBS AG, STAMFORD BRANCH

AND UBS AG CANADA BRANCH)

   $ 55,000,000   

RBS BUSINESS CAPITAL, A DIVISION OF

RBS ASSET FINANCE, A SUBSIDIARY OF

RBS CITIZENS, NA

   $ 45,000,000   

PNC BANK, NATIONAL ASSOCIATION

(ACTING THROUGH PNC BANK,

NATIONAL ASSOCIATION AND PNC BANK

CANADA BRANCH)

   $ 45,000,000   

KEYBANK NATIONAL ASSOCIATION

   $ 40,000,000   

WELLS FARGO BANK, N.A. (ACTING

THROUGH WELLS FARGO BANK, N.A.,

WELLS FARGO CAPITAL FINANCE

CORPORATION CANADA AND WELLS

FARGO BANK, N.A. (LONDON BRANCH))

   $ 45.000,000   

CREDIT SUISSE AG, CAYMAN ISLAND

BRANCH

   $ 25,000,000   

GOLDMAN SACHS BANK USA

   $ 25,000,000   

TOTAL

   $ 600,000,000   

 

Signature Page to Amended and Restated Credit Agreement (Aleris)

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SCHEDULE I-B

Swiss Qualifying Banks

 

SWISS QUALIFYING BANKS

  

SWISS NON-QUALIFYING BANKS

BANK OF AMERICA, N.A.    NONE. JPMORGAN CHASE BANK, N.A.    BARCLAYS BANK PLC   
DEUTSCHE BANK AG NEW YORK BRANCH    UBS AG, STAMFORD BRANCH    RBS BUSINESS
CAPITAL, A DIVISION OF
RBS ASSET FINANCE, A SUBSIDIARY OF
RBS CITIZENS, NA    KEYBANK NATIONAL ASSOCIATION    PNC BANK, NATIONAL
ASSOCIATION    WELLS FARGO BANK, NATIONAL ASSOCIATION    CREDIT SUISSE AG,
CAYMAN ISLAND BRANCH    GOLDMAN SACHS BANK USA   

 

Signature Page to Amended and Restated Credit Agreement (Aleris)

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SCHEDULE II

LENDER ADDRESSES

 

Lender  

Address

Bank of America, N.A.   300 Galleria Parkway   Suite 800   Atlanta, Georgia
30339   Attention: John Yankauskas   Telephone No.: (404) 607-3234   Facsimile
No.: (404) 607-3277 Bank of America, N.A.   300 Galleria Parkway (acting through
its Canada branch)   Suite 800   Atlanta, Georgia 30339   Attention: John
Yankauskas   Telephone No.: (404) 607-3234   Facsimile No.: (404) 607-3277
JPMorgan Chase Bank, N.A.   10 South Dearborn, Floor 22   Chicago, Illinois
60603   Attention: Adam Endsley   Telephone: (216) 781-4507   Facsimile: (216)
781-2071 JPMorgan Chase Bank, N.A., Toronto Branch   200 Bay Street   Royal Bank
Plaza, South Tower, Suite 1800   Toronto, Ontario, M5J 2J2   Attention: Indrani
Lazarus   Telephone: (416) 981-9218 (Canadian number)   Facsimile: (416)
981-9174 (Canadian number) JPMorgan Chase Bank, N.A. (London Branch)   125
London Wall   London EC2Y 5AT   United Kingdom   Attention: Helen Mathie/Tim
Jacob   Facsimile: 44 20 7325 6813 Barclays Bank PLC   Barclays Bank PLC   745
7th Avenue, 26th Floor   New York, New York 10019   Attention: Michael Mozer  
Telephone: (212) 526-1456   Facsimile: (212) 526-5115   michael.mozer@barcap.com

--------------------------------------------------------------------------------

Deutsche Bank AG New York Branch   60 Wall Street, NYC60-4305   New York, New
York 10005-2858   Attention: Marus Turkington   Telephone: (212) 250-6153  
Facsimile: (212) 797-5690 UBS AG , Stamford Branch   677 Washington Boulevard  
Stamford, Connecticut 06901   Attention: Al Scoyni   Telephone: (203) 719-5208  
Facsimile: (203) 719-1099 RBS Business Capital   53 State Street, Exchange Place
  Boston, Massachusetts 01209   Attention: John Bobbin   Telephone: (617)
994-7357   Facsimile: (617) 227-7995 KeyBank National Association   127 Public
Square   Cleveland, OH 44114   Attention: Timothy Kenealy   Telephone: (216)
689-3608   Facsimile: (216) 689-8470 PNC Bank, National Association   2 North
Lake Avenue, Suite 440   Pasadena, CA 91101   Attn: Gregory g. Hall   Telephone:
(626) 432-6103   Facsimile: (626) 432-4589   Two Tower Center Blvd.   21st Floor
  East Brunswick, NJ 08816   Attn: Nisa Deai / Mei Zhu   Telephone: (732)
220-4489 / (732) 220-3287   Facsimile: (732) 220-3268 / (732) 220-4395 PNC Bank
Canada Branch   130 King Street West   Suite 2140   P.O. Box 462   Toronto, ON
MSX 1E4 Wells Fargo Bank, National Association   2450 Colorado Avenue, Suite
3000 West   Santa Monica, CA 90404   Attn: Krista Wade   Telephone: (310)
453-7218   Facsimile: (866) 615-7803

 

- 2 -

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Wells Fargo Capital Finance Corporation Canada    40 King Street West    Toronto
ON M5H 3Y2    Attn: Domenic Cosentino    Telephone: 416-775-2908    Facsimile:
416-775-2908    Domenic.cosentino@wellsfargo.com Wells Fargo Bank, N.A. (London
Branch)    One Plantation Place    30 Fenchurch Street    London, EC3M 3BD   
Attn: Michelle Clark   

VP - European Loans Support & Global Trade

Support Manager

   Telephone: 011 +44 (0) 20 7956 4310    Facsimile: 011 +44 (0) 20 7929 4645 /
2131    michelle.clark1@wellsfargo.com    One Plantation Place    30 Fenchurch
Street    London, EC3M 3BD    Attn: Ian King    European Loan and Global Trade
Support    Telephone: 011 +44 (0) 20 7956 4316 (direct)    Facsimile: 011 +44
(0) 207929 4645    ian.king@wachovia.com Credit Suisse AG, Cayman Islands Branch
   Eleven Madison Avenue    New York, NY 10010    Attn: Ari Bruger    Telephone:
(212) 538-5577    Facsimile: (646) 935-8075 Goldman Sachs Bank USA    30 Hudson
Street, 38th Floor    Jersey City, NJ 07302    Attn: Lauren Day    Telephone:
(212) 934-3921    Facsimile: (917) 977-3966    Gsd.link@gs.com    133 Fleet St.
   London EC4A2BB    Telephone: 44(0)20 7051 0935    Facsimile: 44(0)20 7552
7070

 

- 3 -

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SCHEDULE III

RESERVED

--------------------------------------------------------------------------------

SCHEDULE IV

RESERVED

 

- 2 -

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SCHEDULE XV

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

         Page  

SECTION 1. Defined Terms

     3   

SECTION 2. Amount and Terms of Credit

     59   

2.01

  The Commitments      59   

2.02

  Minimum Amount of Each Borrowing; Limitation on Euro Rate Loans      63   

2.03

  Notice of Borrowing      64   

2.04

  Disbursement of Funds      65   

2.05

  Notes      66   

2.06

  Conversions      66   

2.07

  Pro Rata Borrowings      67   

2.08

  Interest      67   

2.09

  Interest Periods for Euro Rate Loans and B/A Equivalent Loans      68   

2.10

  Increased Costs, Illegality, etc.      69   

2.11

  Compensation      72   

2.12

  Change of Lending Office      73   

2.13

  Replacement of Lenders      73   

2.14

  Special Provisions Applicable to Lenders Upon the Occurrence of a Conversion
Event      74   

2.15

  Incremental Commitments      74   

2.16

  Interest Act (Canada); Criminal Rate of Interest; Nominal Rate of Interest   
  76   

2.17

  Canadian Lenders      77   

2.18

  European Lenders      77   

SECTION 3. Letters of Credit

     78   

3.01

  Letters of Credit      78   

3.02

  Maximum Letter of Credit Outstandings; Final Maturities; etc.      79   

3.03

  Letter of Credit Requests; Minimum Stated Amount      79   

3.04

  Letter of Credit Participations      80   

3.05

  Agreement to Repay Letter of Credit Drawings      82   

3.06

  Increased Costs      83   

SECTION 4. Commitment Commission; Fees; Reductions of Commitment

     84   

4.01

  Fees      84   

4.02

  Voluntary Termination of Unutilized Commitments      85   

4.03

  Mandatory Reduction of Commitments      86   

4.04

  Extensions of Loans and Commitments      86   

4.05

  Extended Commitments      88   

SECTION 5. Prepayments; Payments; Taxes

     88   

5.01

  Voluntary Prepayments      88   

5.02

  Mandatory Repayments      90   

 

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5.03

   Payments and Computations; Maintenance of Accounts; Statement of Accounts   
  92   

5.04

   Net Payments      96   

5.05

   Minimum Interest Rates and Payments      100   

SECTION 6. Conditions Precedent to Credit Events on the Closing Date

     101   

6.01

   Credit Documents      101   

6.02

   Payment of Costs and Expenses      101   

6.03

   Reserved      101   

6.04

   Confirmation of Perfected Security Interest      101   

6.05

   Legal Opinions; Solvency Certificate and Other Certificates      101   

6.06

   Appraisal and Collateral Examination      101   

6.07

   Financial Statements; Projections      102   

6.08

   No Material Adverse Effect      102   

6.09

   Accuracy of Representations and Warranties      102   

6.10

   Pro Forma Excess Availability      102   

SECTION 7. Conditions Precedent to All Credit Events

     102   

7.01

   No Default; Representations and Warranties      102   

7.02

   Notice of Borrowing; Letter of Credit Request      102   

7.03

   Borrowing Base Limitations      103   

SECTION 8. Representations and Warranties

     103   

8.01

   Organizational Status      103   

8.02

   Power and Authority      104   

8.03

   No Violation      104   

8.04

   Approvals      104   

8.05

   Financial Statements; Financial Condition; Undisclosed Liabilities;
Projections; No Material Adverse Effect      105   

8.06

   Litigation      106   

8.07

   True and Complete Disclosure      106   

8.08

   Use of Proceeds; Margin Regulations      106   

8.09

   Tax Returns and Payments      107   

8.10

   Compliance with ERISA      107   

8.11

   The Security Documents      107   

8.12

   Properties      108   

8.13

   Subsidiaries; etc.      108   

8.14

   Compliance with Statutes, etc.      109   

8.15

   Investment Company Act      109   

8.16

   Environmental Matters      109   

8.17

   Employment and Labor Relations      109   

8.18

   Intellectual Property, etc.      110   

8.19

   Indebtedness      110   

8.20

   Insurance      110   

8.21

   Ten Non-Bank Regulations and Twenty Non-Bank Regulations      110   

 

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SECTION 9. Affirmative Covenants

     110   

9.01

   Information Covenants      110   

9.02

   Notice of Material Events      114   

9.03

   Existence; Franchises      115   

9.04

   Payment of Taxes      115   

9.05

   Maintenance of Properties      115   

9.06

   Books and Records; Inspection Rights; Appraisals; Field Examinations      115
  

9.07

   Compliance with Laws      116   

9.08

   Use of Proceeds      116   

9.09

   Insurance      116   

9.10

   Compliance with Environmental Laws      117   

9.11

   New Subsidiaries; Additional Security; Further Assurances; etc.      117   

9.12

   Ownership of Subsidiaries; etc.      118   

9.13

   Permitted Acquisitions      119   

9.14

   Cash Management Control Agreements      119   

9.15

   Designation of Subsidiaries      120   

SECTION 10. Negative Covenants

     120   

10.01

   Liens      120   

10.02

   Consolidation, Merger, Purchase or Sale of Assets, etc.      124   

10.03

   Dividends      129   

10.04

   Indebtedness      131   

10.05

   Advances, Investments and Loans      134   

10.06

   Transactions with Affiliates      136   

10.07

   Fixed Charge Coverage Ratio      138   

10.08

   Limitations on Payments of Certain Indebtedness; Modifications of Certain
Indebtedness Documents, Certificate of Incorporation, By-Laws and Certain Other
Agreements, etc.      138   

10.09

   Limitation on Certain Restrictions on Subsidiaries      139   

10.10

   Business, etc.      140   

10.11

   Limitation on Issuance of Equity Interests      141   

10.12

   Changes to Legal Names, Organizational Identification Numbers, Jurisdiction
or Type or Organization      141   

10.13

   No Additional Deposit Accounts; etc.      142   

10.14

   Negative Covenants of Non-U.S. Credit Parties      142   

SECTION 11. Events of Default

     142   

11.01

   Payments      142   

11.02

   Representations, etc.      143   

11.03

   Covenants      143   

11.04

   Default Under Other Agreements      143   

11.05

   Bankruptcy, etc.      143   

11.06

   ERISA      144   

11.07

   Security Documents      144   

11.08

   Guaranties      144   

11.09

   Judgments      144   

11.10

   Subordination Provisions      144   

11.11

   Change of Control      145   

 

 

iii

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SECTION 12. The Administrative Agent

     145   

12.01

   Appointment      145   

12.02

   Nature of Duties      146   

12.03

   Lack of Reliance on the Administrative Agent      147   

12.04

   Certain Rights of the Administrative Agent      147   

12.05

   Reliance      147   

12.06

   Indemnification      147   

12.07

   The Administrative Agent in its Individual Capacity      148   

12.08

   Holders      148   

12.09

   Resignation by the Administrative Agent      148   

12.10

   Collateral Matters      149   

12.11

   Resignation of the Co-Collateral Agents      150   

12.12

   Delivery of Information      150   

SECTION 13. Miscellaneous

     151   

13.01

   Payment of Expenses, etc.      151   

13.02

   Right of Setoff      152   

13.03

   Notices      153   

13.04

   Benefit of Agreement; Assignments; Participations      153   

13.05

   No Waiver; Remedies Cumulative      157   

13.06

   Payments Pro Rata      157   

13.07

   Calculations; Computations      158   

13.08

   GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL     
158   

13.09

   Counterparts      159   

13.10

   Effectiveness      159   

13.11

   Headings Descriptive      160   

13.12

   Amendment or Waiver; etc.      160   

13.13

   Survival      162   

13.14

   Domicile of Loans      162   

13.15

   Register      162   

13.16

   Confidentiality      163   

13.17

   Aleris as Agent for the Borrowers      163   

13.18

   Special Provisions Regarding Pledges of Promissory Notes Owed by, Persons Not
Organized in the United States      164   

13.19

   Post-Closing Actions      164   

13.20

   The PATRIOT Act      164   

13.21

   Judgment Currency      165   

13.22

   Parallel Debt      165   

13.23

   Special Appointment of Administrative Agent for German Security      166   

13.24

   Conflicting Provisions in Security Documents      166   

13.25

   Co-Collateral Agents      166   

13.26

   Participant Register      166   

SECTION 14. U.S. Borrowers Guaranty

     167   

14.01

   Guaranty      167   

14.02

   Reinstatement      167   

 

iv

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14.03

   Bankruptcy      167   

14.04

   Nature of Liability      167   

14.05

   Independent Obligation      168   

14.06

   Authorization      168   

14.07

   Reliance      169   

14.08

   Waiver      169   

14.09

   Maximum Liability      170   

SECTION 15. Nature of U.S. Borrower Obligations; Limitation on Canadian Borrower
Obligations and European Borrower

                         Obligations

     170   

15.01

   Nature of U.S. Borrower Obligations, Canadian Borrower Obligations and
European Borrower Obligations      170   

15.02

   Independent Obligation      171   

15.03

   Authorization      171   

15.04

   Reliance      171   

15.05

   Contribution; Subrogation      171   

15.06

   Waiver      172   

15.07

   Limitation on Canadian Borrower Obligations and European Borrower Obligations
     172   

15.08

   Maximum Liability      172   

SECTION 16. Revolving Loans; Intra-Lender Issues

     172   

16.01

   Specified Foreign Currency Participations      172   

16.02

   Settlement Procedures for Specified Foreign Currency Participations      173
  

16.03

   Obligations Irrevocable      175   

16.04

   Recovery or Avoidance of Payments      175   

16.05

   Indemnification by Lenders      175   

16.06

   Specified Foreign Currency Loan Participation Fee      176   

16.07

   Defaulting Lenders; etc.      176   

SECTION 17. Limitation on European Borrower Obligations

     177   

SECTION 18. Certifications Regarding Indentures

     178   

SECTION 19. Amendment and Restatement

     178   

SECTION 20. No Advisory or Fiduciary Responsibility

     178   

 

v

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SCHEDULES

 

SCHEDULE I-A

   —    COMMITMENTS

SCHEDULE I-B

   —    SWISS QUALIFYING BANKS

SCHEDULE II

   —    LENDER ADDRESSES

SCHEDULE III

   —    RESERVED

SCHEDULE IV

   —    RESERVED

SCHEDULE V

   —    REAL PROPERTY

SCHEDULE VI

   —    DEPOSIT ACCOUNTS

SCHEDULE VII

   —    CERTAIN TAX MATTERS

SCHEDULE VIII-A

   —    SUBSIDIARIES

SCHEDULE VIII-B

   —    EUROPEAN MANUFACTURING SUBSIDIARIES

SCHEDULE IX

   —    EXISTING INDEBTEDNESS

SCHEDULE X

   —    INSURANCE

SCHEDULE XI

   —    EXISTING LIENS

SCHEDULE XII

   —    EXISTING INVESTMENTS

SCHEDULE XIII

   —    ELIGIBLE INVENTORY LOCATIONS

SCHEDULE XIV

   —    DESIGNATED ASSETS

SCHEDULE XV

   —    POST CLOSING ACTIONS

SCHEDULE XVI

   —    TIER I COUNTRIES

SCHEDULE XVII

   —    TIER II COUNTRIES

SCHEDULE XVIII

   —    APPLICABLE JURISDICTION REQUIREMENTS

SCHEDULE XIX

   —    IMMATERIAL SUBSIDIARIES

SCHEDULE XX

   —    RESERVED

SCHEDULE XXI

   —    AFFILIATE TRANSACTIONS

SCHEDULE XXII

   —    ERISA

SCHEDULE XXIII

   —    SUBORDINATION TERMS

 

-vi-

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EXHIBITS

 

EXHIBIT A-1

   —    NOTICE OF BORROWING

EXHIBIT A-2

   —    NOTICE OF CONVERSION/CONTINUATION

EXHIBIT B-1

   —    FORM OF REVOLVING NOTE

EXHIBIT B-2

   —    FORM OF SWINGLINE NOTE

EXHIBIT C

   —    LETTER OF CREDIT REQUEST

EXHIBIT D

   —    SECTION 5.04(B)(II) CERTIFICATE

EXHIBIT E-1

   —    U.S. SUBSIDIARIES GUARANTY

EXHIBIT E-2

   —    CANADIAN SUBSIDIARIES GUARANTY

EXHIBIT E-3

   —    EUROPEAN SUBSIDIARIES GUARANTY

EXHIBIT E-4

   —    EUROPEAN PARENT GUARANTY

EXHIBIT F

   —    U.S. SECURITY AGREEMENT

EXHIBIT G

   —    COMPLIANCE CERTIFICATE

EXHIBIT H

   —    BORROWING BASE CERTIFICATE

EXHIBIT I

   —    INCREMENTAL REVOLVING LOAN COMMITMENT AGREEMENT

EXHIBIT J

   —    JOINDER AGREEMENT

EXHIBIT K

   —    RECEIVABLES PURCHASE AGREEMENT

 

vii