Term Loan Agreement, Dated August 1, 2006

Exhibit 10.2

CONFORMED AS EXECUTED

TERM LOAN AGREEMENT

among

ALERIS INTERNATIONAL, INC., ALERIS DEUTSCHLAND HOLDING GMBH,

VARIOUS LENDERS,

DEUTSCHE BANK AG NEW YORK BRANCH,

as ADMINISTRATIVE AGENT,

and

CITICORP NORTH AMERICA, INC.,

as SYNDICATION AGENT and as COLLATERAL AGENT,

Dated as of August 1, 2006


DEUTSCHE BANK SECURITIES INC.

and CITIGROUP GLOBAL MARKETS INC.,

as JOINT LEAD ARRANGERS and

JOINT BOOK RUNNING MANAGERS

SECTION 1.

Defined Terms 2

SECTION 2.

Amount and Terms of Credit 38

2.01

The Commitments 38

2.02

Minimum Amount of Each Borrowing; Limitation on Euro Rate Loans 38

2.03

Notice of Borrowing 39

2.04

Disbursement of Funds 39

2.05

Notes 40

2.06

Conversions 41

2.07

Pro Rata Borrowings 42

2.08

Interest 42

2.09

Interest Periods for Euro Rate Loans 43

2.10

Increased Costs, Illegality, etc. 44

2.11

Compensation 47

2.12

Change of Lending Office 47

2.13

Replacement of Lenders 48

2.14

Special Provisions Applicable to Lenders Upon the Occurrence of a Conversion Event 49

SECTION 3.

Fees; Reductions of Commitment 49

3.01

Fees 49

3.02

Commitments 49

3.03

Mandatory Reduction of Commitments 49

SECTION 4.

Prepayments; Payments; Taxes 50

4.01

Voluntary Prepayments 50

4.02

Mandatory Repayments 51

4.03

Payments and Computations; Maintenance of Accounts; Statement of Accounts 57

4.04

Net Payments 57

SECTION 5.

Conditions Precedent to Loans on the Borrowing Date 61

5.01

Execution of Agreement; Notes 61

5.02

Opinions of Counsel 61

5.03

Corporate Documents; Proceedings; etc. 61

5.04

Consummation of the Acquisition; Receivables Purchase Agreements, etc. 62

5.05

Senior Bridge Loans, Notes, Revolving Loans, etc. 63

5.06

Tender Offer and Consent Solicitation; Existing Notes Defeasance 63

5.07

Refinancing, etc. 64

5.08

Adverse Change, Approvals 64

5.09

Pledge Agreements 65

5.10

Guarantees 66


(i)

5.11

Security Agreements 66

5.12

Mortgage; Title Insurance; Survey; Landlord Waivers; etc. 68

5.13

Intercreditor Agreement 70

5.14

Financial Statements; Projections 70

5.15

Solvency Certificate; Insurance Certificates 70

5.16

Fees, etc. 70

SECTION 6.

Additional Conditions Precedent to the Incurrence of Loans on the Borrowing Date 70

6.01

No Default; Representations and Warranties 70

6.02

Notice of Borrowing 70

SECTION 7.

Representations and Warranties 71

7.01

Organizational Status 71

7.02

Power and Authority 71

7.03

No Violation 71

7.04

Approvals 72

7.05

Financial Statements; Financial Condition; Undisclosed Liabilities; Projections; No Material Adverse Effect 72

7.06

Litigation 74

7.07

True and Complete Disclosure 74

7.08

Use of Proceeds; Margin Regulations 74

7.09

Tax Returns and Payments 74

7.10

Compliance with ERISA 75

7.11

The Security Documents 76

7.12

Properties 77

7.13

Subsidiaries; etc. 78

7.14

Compliance with Statutes, etc. 78

7.15

Investment Company Act 78

7.16

Environmental Matters 78

7.17

Employment and Labor Relations 79

7.18

Intellectual Property, etc. 79

7.19

Indebtedness 79

7.20

Insurance 79

SECTION 8.

Affirmative Covenants 79

8.01

Information Covenants 80

8.02

Books, Records and Inspections; Annual Meetings 83

8.03

Maintenance of Property; Insurance 83

8.04

Existence; Franchises 84

8.05

Compliance with Statutes, etc. 84

8.06

Compliance with Environmental Laws 84

8.07

ERISA 85

8.08

End of Fiscal Years; Fiscal Quarters 87


(ii)

8.09

Performance of Obligations 87

8.10

Payment of Taxes 87

8.11

Use of Proceeds 87

8.12

New Subsidiaries; Additional Security; Further Assurances; etc. 87

8.13

Ownership of Subsidiaries; etc. 89

8.14

Permitted Acquisitions 90

8.15

Existing Senior Secured Note Indenture Discharge 91

SECTION 9.

Negative Covenants 91

9.01

Liens 91

9.02

Consolidation, Merger, Purchase or Sale of Assets, etc. 94

9.03

Dividends 98

9.04

Indebtedness 100

9.05

Advances, Investments and Loans 102

9.06

Transactions with Affiliates 105

9.07

Limitations on Payments of Certain Indebtedness; Modifications of Certain Indebtedness Documents, Certificate of Incorporation, By-Laws and Certain Other Agreements, etc. 106

9.08

Limitation on Certain Restrictions on Subsidiaries 107

9.09

Business, etc. 107

9.10

Limitation on Creation of Subsidiaries 107

9.11

Limitation on Issuance of Equity Interests 108

9.12

Changes to Legal Names, Organizational Identification Numbers, Jurisdiction or Type or Organization 108

9.13

Negative Covenants of Non U.S. Credit Parties 109

SECTION 10.

Events of Default 109

10.01

Payments 109

10.02

Representations, etc. 109

10.03

Covenants 109

10.04

Default Under Other Agreements 109

10.05

Bankruptcy, etc. 110

10.06

ERISA 110

10.07

Security Documents 111

10.08

Guaranties 112

10.09

Judgments 112

10.10

Change of Control 112

10.11

Intercreditor Agreement 112

SECTION 11.

The Administrative Agent and Collateral Agent 113

11.01

Appointment 113

11.02

Nature of Duties 113

11.03

Lack of Reliance on the Facility Agents 114

11.04

Certain Rights of the Facility Agents 114


(iii)

11.05

Reliance 114

11.06

Indemnification 114

11.07

The Facility Agents in their Individual Capacities 115

11.08

Holders 115

11.09

Resignation by the Facility Agents 115

11.10

Collateral Matters 116

11.11

Delivery of Information 117

SECTION 12.

Miscellaneous 117

12.01

Payment of Expenses, etc. 117

12.02

Right of Setoff 119

12.03

Notices 120

12.04

Benefit of Agreement; Assignments; Participations 120

12.05

No Waiver; Remedies Cumulative 122

12.06

Payments Pro Rata 123

12.07

Calculations; Computations 123

12.08

GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL 124

12.09

Counterparts 125

12.10

Effectiveness 125

12.11

Headings Descriptive 125

12.12

Amendment or Waiver; etc. 125

12.13

Survival 127

12.14

Domicile of Loans 127

12.15

Register 127

12.16

Confidentiality 128

12.17

INTERCREDITOR AGREEMENT 128

12.18

Aleris as Agent for the German Borrowers 130

12.19

Special Provisions Regarding Pledges of Equity Interests in, and Promissory Notes Owed by, Persons Not Organized in the United States 130

12.20

Post-Closing Actions 131

12.21

The Patriot Act 131

12.22

Judgment Currency 132

12.23

Lender Acknowledgment 132

12.24

European Sales Offices 132

12.25

Pledges of Bank Accounts Under General Terms and Conditions 133

12.26

Abstract Acknowledgement of Indebtedness and Joint Creditorship 133

12.27

Special Appointment of Collateral Agent for German Security 134

12.28

Absence of Back-to-Back Financing 134

SECTION 13.

U.S. Borrower Guaranty 136

13.01

Guaranty 136

13.02

Reinstatement 137

13.03

Bankruptcy 137

13.04

Nature of Liability 137


(iv)

13.05

Independent Obligation 138

13.06

Authorization 138

13.07

Reliance 139

13.08

Subordination 139

13.09

Waiver 139

13.10

Maximum Liability 141

SECTION 14.

Limitation on German Borrower Obligations 141

SCHEDULES

SCHEDULE I - Commitments

SCHEDULE II - Lender Addresses

SCHEDULE III - Real Property

SCHEDULE IV - European Security Documents and Local Law Pledge Agreements

SCHEDULE V - Certain Tax Matters

SCHEDULE VI - Subsidiaries

SCHEDULE VII - Existing Indebtedness

SCHEDULE VIII - Insurance

SCHEDULE IX - Existing Liens

SCHEDULE X - Existing Investments

SCHEDULE XI - Designated Assets

SCHEDULE XII - Post-Closing Actions

EXHIBITS

EXHIBIT A-1 - Notice of Borrowing

EXHIBIT A-2 - Notice of Conversion/Continuation

EXHIBIT B-1 - U.S. Term Note

EXHIBIT B-2 - German Term Note

EXHIBIT C - Section 4.04(b)(ii) Certificate

EXHIBIT D-1 - Opinion of Fried, Frank, Harris, Shiver & Jacobson

EXHIBIT D-2 - Opinion of Fried, Frank, Harris, Shiver & Jacobson

EXHIBIT E - Officers' Certificate

EXHIBIT F-1 - U.S. Pledge Agreement

EXHIBIT F-2 - European Parent Pledge Agreement

EXHIBIT G-1 - U.S. Subsidiaries Guaranty

EXHIBIT G-2 - European Subsidiaries Guaranty

EXHIBIT G-3 - European Parent Guaranty

EXHIBIT H - U.S. Security Agreement

EXHIBIT I - Solvency Certificate

EXHIBIT J - Compliance Certificate

EXHIBIT K - Assignment and Assumption Agreement

EXHIBIT L - Term Creditor Mortgage

EXHIBIT M - Intercreditor Agreement

EXHIBIT N - Certification for presentation to the Tax Office for purposes of Section 8a of Germany' s Corporation Tax Law


(v)

CONFORMED AS EXECUTED

TERM LOAN AGREEMENT, dated as of August 1, 2006, among ALERIS INTERNATIONAL, INC., a Delaware corporation (" Aleris" or the " U.S. Borrower" ), ALERIS DEUTSCHLAND HOLDING GMBH, a company with limited liability formed under the laws of Germany (the " German Borrower" and, together with the U.S. Borrower, each a " Borrower" and, collectively, the " Borrowers" ), the Lenders party hereto from time to time, CITICORP NORTH AMERICA, INC., as Collateral Agent and DEUTSCHE BANK AG NEW YORK BRANCH, as administrative agent (in such capacity, the " Administrative Agent" ). W I T N E S S E T H : 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 (i) the facility evidenced by the German Commitments (and the loans made pursuant thereto), which loans shall be made to the German Borrower and (ii) the facility evidenced by the U.S. Commitments (and the loans made pursuant thereto), which loans shall be made to the U.S. Borrower; and

WHEREAS, the loans to the German Borrower hereunder shall be guaranteed by the U.S. Credit Parties, the European Parent Guarantors and Subsidiaries of the German Borrower (but shall not be guaranteed by the Swiss CE and the Distribution Subsidiaries); 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 (x) First Priority security interests be granted to secure the Term Obligations in all Term Priority Collateral of the U.S. Credit Parties and (y) Second Priority security interests be granted to secure the Term Obligations in all ABL Priority Collateral of the U.S. Credit Parties; and

WHEREAS, all obligations of the European Credit Parties (whether as borrowers or guarantors) shall be secured by First Priority security interest in all Collateral provided by the German Borrower and certain European Subsidiary Guarantors; and

WHEREAS, all Equity Interests in the European Parent Guarantors and any Collateral provided by them pursuant to the Security Documents entered into and delivered by them will be shared (with the creditors pursuant to the ABL Credit Agreement and any refinancing thereof as permitted pursuant to the Intercreditor Agreement) on the basis provided in the Intercreditor Agreement; and

WHEREAS, the ABL Credit Agreement is being entered into substantially concurrently with this Agreement, and all Collateral provided by the U.S. Credit Parties is intended to provide the ABL Secured Creditors pursuant to the ABL Credit Agreement with second priority security interests in the Term Priority Collateral, and with first priority security interests in the ABL Priority Collateral, granted pursuant to the relevant security documents securing the ABL Obligations; and

WHEREAS, a portion of the loans made available pursuant to the ABL Credit Agreement shall be borrowed directly by the Swiss CE, which, as of the Borrowing Date, shall be a sister subsidiary of the German Borrower (with each of the German Borrower and the Swiss

CE being owned by a common parent which is a European Parent Guarantor), and the ABL Obligations may be secured by assets of the Swiss CE and the Distribution Subsidiaries, which assets shall not secure the Term Obligations; and

WHEREAS, this Agreement (and all Lenders from time to time party hereto) shall be subject to the terms and conditions of the Intercreditor Agreement, which more fully describes the sharing arrangements referenced above (and which in the event of any conflict with this Agreement, including the above description, shall be binding); and

WHEREAS, subject to the terms and conditions of this Agreement and the other Credit Documents, and subject to the terms of the Intercreditor Agreement, the Lenders are willing to make available to the Borrowers the respective credit facilities provided for herein;

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):

" ABL Collateral Agent" shall mean the " Collateral Agent" as defined in the ABL Credit Agreement.

" ABL Credit Agreement" shall mean the Credit Agreement, dated as of the date hereof, by and among Aleris, each other U.S. Borrower party thereto, Aleris Holding Canada Limited, each other Canadian Borrower party thereto, the Swiss CE, the lenders party thereto from time to time, Citicorp North America, Inc., as Collateral Agent, Deutsche Bank AG New York Branch, as Administrative Agent and Deutsche Bank AG, Canada Branch, as Canadian Administrative Agent, as it may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof; provided that any Permitted Refinancing (as defined in the Intercreditor Agreement) of the ABL Credit Agreement (or any then outstanding ABL Credit Agreement) shall be included as an " ABL Credit Agreement" (in each case as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof) so long as it has substantially the same (or no greater) obligors, guarantors and security as the ABL Credit Agreement then in effect at the time of such Permitted Refinancing.

" ABL Obligations" shall mean the ABL Obligations under (and as defined in) the ABL Credit Agreement.

" ABL Priority Collateral" shall mean and shall include all " ABL Priority Collateral" as defined in the Intercreditor Agreement. " ABL Secured Parties" shall have the meaning assigned in the Intercreditor Agreement. " ABL Security Documents" shall mean " Security Documents" as defined in the ABL Credit Agreement.

-2-

" Account" shall mean an " account" (as such term is defined in Article 9 of the UCC), and any and all supporting obligations (as such term is defined in Article 9 of the UCC) in respect thereof.

" Acquired Business" shall mean the Canadian Acquired Business and the European Acquired Business.

" Acquired Entity or Business" shall mean either (x) the assets constituting a business, division or product line of any Person not already a Subsidiary of Aleris or (y) the assets or business of a Person who shall, as a result of the respective acquisition, become a 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 of Aleris).

" Acquisition Agreements" shall mean, collectively, the Canadian Acquisition Agreement and the European Acquisition Agreement.

" Acquisition Documents" shall mean, collectively, the Canadian Acquisition Documents and the European Acquisition Documents.

" Acquisitions" shall mean, collectively, the Canadian Acquisition and the European Acquisition.

" Additional Debt" shall have the meaning provided in Section 9.04(xv) . " Additional Security Documents" shall have the meaning provided in Section 8.12 . " Administrative Agent" shall mean DBNY, in its capacity as Administrative Agent for the Lenders hereunder, and shall include any successor to the Administrative Agent appointed pursuant to Section 11.09 .

" Affected Loans" shall have the meaning provided in Section 4.02(j) .

" Affiliate" shall mean, with respect to any Person, any other Person directly or indirectly controlling (including, but not limited to, all directors and executive officers of such Person), 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 (i) for purposes of Section 9.06 only, to vote 10% or more of the securities having ordinary voting power for the election of directors (or equivalent governing body) of such Person or (ii) 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.

" Agents" shall mean each Facility Agent, the Syndication Agent and each Joint Lead Arranger.


-3-

" Agreement" shall mean this Credit Agreement, as modified, supplemented, amended, restated (including any 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.

" Applicable Excess Cash Flow Repayment Percentage" shall mean 50%; provided , however , so long as no Event of Default exists on the respective Excess Cash Flow Payment Date, if the Total Leverage Ratio of Aleris and its Subsidiaries as of the last day of the respective Excess Cash Flow Payment Period is less than 2.50:1.00, then the Applicable Excess Cash Flow Repayment Percentage instead shall be 25%.

" Applicable Margin" initially shall mean a percentage per annum equal to in the case of (I) U.S. Loans maintained as (A) Base Rate Loans, 1.50% and (B) Eurodollar Loans, 2.50% and (II) German Loans maintained as Euro Rate Loans, 2.75%. " Asset Sale" shall mean any sale, transfer or other disposition by Aleris or any of its Subsidiaries to any Person (including by way of redemption by such Person) other than to Aleris or a Wholly-Owned Subsidiary of Aleris of any asset (including, without limitation, any Equity Interests in, or other securities of, another Person) other than (x) sales of assets pursuant to Sections 9.02(ii) , (iv) , (vii) , (viii) , (ix) , (x) , (xi) , (xii) , (xiii) , ( xiv) , (xvi) and (xix) and (y) other sales and dispositions or series of related sales and dispositions that generate Net Sale Proceeds of less than $5,000,000.

" Asset Swap" shall mean the substantially concurrent purchase and sale or exchange of Related Business Assets between Aleris or any of its Subsidiaries and another Person.

" Assignment and Assumption Agreement" shall mean an Assignment and Assumption Agreement substantially in the form of Exhibit K (appropriately completed). " Attributable Debt" shall mean, as of any date of determination thereof, without duplication, (i) in connection with a Sale and Leaseback Transaction entered into after the Borrowing Date, the net present value (discounted according to GAAP at the cost of debt implied in the lease) of the obligations of the lessee for rental payments during the then remaining term of any applicable lease, and (ii) the principal balance outstanding under any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing (including an off-balance sheet receivables financing) product to which such Person is a party.

" Available Currency" shall mean (i) with respect to U.S. Loans, U.S. Dollars and (ii) with respect to German Loans, Euros.

" Bank Certificate" shall have the meaning provided in Section 12.28(a) .

" Bankruptcy Code" shall have the meaning provided in Section 10.05 .


-4-

" Base Rate" shall mean, at any time, the higher of (i) the Prime Lending Rate at such time and (ii) 1/2 of 1% in excess of the overnight Federal Funds Rate at such time.

" Base Rate Loan" shall mean each Loan designated or deemed designated as such by the U.S. Borrower at the time of the incurrence thereof or conversion thereto.

" Borrowers" shall have the meaning provided in the first paragraph of this Agreement. Unless the context otherwise requires, each reference in this Agreement to " each Borrower" or " the respective Borrower" shall be deemed to be a reference to (x) the U.S. Borrower or (y) the German Borrower, as the case may be.

" Borrowing" shall mean the borrowing of one Type of Loan of a single Tranche by either the U.S. Borrower or the German Borrower, from all the Lenders having Commitments of the respective Tranche on the Borrowing Date (or resulting from a conversion or conversions on a given date) having in the case of 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.

" Borrowing Date" shall mean the date occurring on or after the Effective Date on which the incurrence of Loans occurs.

" Business Day" shall mean (i) for all purposes other than as covered by clause (ii) 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, and (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) in the case of Eurodollar Loans, a day for trading by and between banks in deposits in U.S. Dollars in the London interbank market and (B) in relation to any transaction in Euros, a day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open.

" 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 Acquired Business" shall mean all of the limited partnership interests in Corus L.P., a limited partnership organized under the laws of Quebec and all of the shares of Corus Aluminum Inc., a corporation organized under the laws of Quebec and each of their respective Subsidiaries.

" Canadian Acquisition" shall mean the acquisition by Aleris of the Canadian Acquired Business pursuant to the Canadian Acquisition Agreement.

" Canadian Acquisition Agreement" shall mean the Share Purchase Agreement, dated May 23, 2006, between Aleris International, Inc., Corus Group plc. and Socie9te9 ge9ne9rale de financement du Que9bec, as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof.


-5-

" Canadian Acquisition Documents" shall mean the Canadian Acquisition Agreement, and each Transaction Document (as defined in the Canadian Acquisition Agreement) and each other agreement, document or instrument related to any of the foregoing.

" Canadian LOI" shall mean the Letter of Intent among Aleris, Socie9te9 ge9ne9rale de financement du Que9bec and Corus Group plc dated March 16, 2006. " Capital Expenditures" shall mean, with respect to any Person, 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.

" Capitalized Lease Obligations" shall mean, with respect to any Person, all rental obligations of such Person which, under GAAP, are or will be 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 one year from the date of acquisition, (ii) U.S. Dollar denominated time deposits, certificates of deposit, overnight bank deposits and bankers' acceptances having maturities within 180 days from the date of acquisi ...