Annual Report for the Fiscal Year Ended December 31, 2006

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R37DAqf/Xhd1hsxxygkreTiC6aBPHWLJB0uQ1vuFn4w695XQ+fFGbn6Kw0m06cVh WMGaNhdhlwdT3OPDvstFIA== 0001193125-07-082992.txt : 20070417 0001193125-07-082992.hdr.sgml : 20070417 20070417172729 ACCESSION NUMBER: 0001193125-07-082992 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 20061231 FILED AS OF DATE: 20070417 DATE AS OF CHANGE: 20070417 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Wise Metals Group LLC CENTRAL INDEX KEY: 0001297014 STANDARD INDUSTRIAL CLASSIFICATION: ROLLING DRAWING & EXTRUDING OF NONFERROUS METALS [3350] IRS NUMBER: 522160047 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-117622 FILM NUMBER: 07771769 BUSINESS ADDRESS: STREET 1: 857 ELKRIDGE LANDING RD STREET 2: SUITE 600 CITY: LINTHICUM STATE: MD ZIP: 21090 BUSINESS PHONE: 410-636-6500 MAIL ADDRESS: STREET 1: 857 ELKRIDGE LANDING RD STREET 2: SUITE 600 CITY: LINTHICUM STATE: MD ZIP: 21090 10-K 1 d10k.htm ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006 Annual Report for the Fiscal Year Ended December 31, 2006

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Fiscal Year Ended December 31, 2006

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

WISE METALS GROUP LLC

(Exact name of Registrant as specified in its charter)

Delaware

52-2160047

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.)

857 Elkridge Road, Suite 600

Linthicum, Maryland 21090

(Address of principal executive offices and zip code)

(410) 636-6500

(Registrant’s telephone number, including area code)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

TABLE OF CONTENTS


		Page
	PART I

Item 1.	Business	4
Item 1A.	Risk Factors	12
Item 1B.	Unresolved Staff Comments	17
Item 2.	Properties	17
Item 3.	Legal Proceedings	18
Item 4.	Submission of Matters to a Vote of Security Holders	19

	PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
Item 6.	Selected Financial Data	20
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	21
Item 7A.	Qualitative and Quantitative Disclosures About Market Risk	31
Item 8.	Financial Statements and Supplementary Data	31
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	48
Item 9A.	Controls and Procedures	49
Item 9B.	Other Information	49

	PART III

Item 10.	Directors, Executive Officers and Corporate Governance	49
Item 11.	Executive Compensation	52
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	52
Item 13.	Certain Relationships and Related Transactions, and Director Independence	52
Item 14.	Principal Accounting Fees and Services	52

	PART IV

Item 15.	Exhibits, Financial Statement Schedules	53
Signatures		59

FORWARD-LOOKING STATEMENTS

Our forward-looking statements are subject to a variety of factors that could cause actual results to differ significantly from current beliefs.

Some statements and information contained in this Form 10-K are not historical facts, but are “forward-looking statements,” as such term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of forward-looking words such as “believes,” “expects,” “plans,” “may,” “will,” “would,” “could,” “should,” or “anticipates” or the negative of these words or other variations of these words or other comparable words, or by discussions of strategy that involve risks and uncertainties. Forward-looking statements may differ from actual future results due to, but not limited to, those factors referenced under “Risk Factors” and/or any of the following factors:

•

sales to our major customers,

•

competition from non-aluminum sources of packaging,

•

our relationship with our employees and labor unions,

•

general economic conditions, including those affecting our ability to obtain financing,

•

conditions in the capital markets, or in industry conditions, including those affecting our customers and suppliers,

•

technological developments,

•

aluminum demand and prices, and the market for scrap aluminum,

•

changes in consumer tastes and preferences,

•

cost and availability of raw materials and energy,

•

environmental regulations to which our operations are subject,

•

changes in our credit rating or in the rating of our indebtedness,

•

changes in accounting policies or practices adopted voluntarily or as required by regulations or generally accepted accounting principles, and

•

our ability to attract and retain executives and other key personnel.

We have no obligation to update or revise these forward-looking statements.

Part I

Item 1.

Business

As used in this Form 10-K, all references to “Wise Metals,” “Wise Group,” “us,” “the Company” and all similar references are to Wise Metals Group LLC, a Delaware limited liability company and its subsidiaries as a consolidated entity, unless otherwise expressly stated or the context otherwise requires. As used herein, all references to “Wise Alloys” or “Alloys” refer to Wise Alloys LLC, a Delaware limited liability company that is our wholly-owned operating company. All references to “Wise Recycling” or “Recycling” refer to Wise Recycling LLC, a Maryland limited liability company that is our wholly-owned subsidiary. All references to “Listerhill Total Maintenance Center” or “TMC” refer to Listerhill Total Maintenance Center LLC, a Delaware limited liability company that is our wholly-owned subsidiary.

Overview

Wise Metals Group, LLC, headquartered in Linthicum, MD, is a Delaware limited liability company. Information about our reportable operating segments is provided below. Financial information about our reportable operating segments is set forth in our Consolidated Financial Statements and the Notes in Item 8 of this Report.

Wise Alloys

Wise Alloys is the third largest producer of aluminum beverage can stock in the world and contributed 87% of the total revenue of Wise Metals Group in 2006. Beverage can stock is aluminum sheet specifically designed and engineered for the production of aluminum beverage cans. In 2006, we supplied an estimated 14% of the North American market for aluminum beverage can stock as measured by volume, and we own one of only five beverage can stock facilities in North America, which provides valuable capacity to a consolidated industry. Our can stock customers include, Ball Corporation, Crown Holdings, Inc. and Rexam PLC, the three largest beverage can manufacturers in the world. Our beverage can stock customers produce aluminum cans for the largest brewers and carbonated soft drink bottlers in North America. In addition, we produce food can stock and semi-fabricated aluminum sheet for building and construction, transportation and other markets. In 2006, we did not derive a material percentage of our revenues from customers outside the United States.

The aluminum beverage can industry is a consolidated and mature industry which has experienced consistent historical stability. Four principal competitors, Ball, Crown, Rexam and Metal Container Corporation, the can-making subsidiary of Anheuser-Busch Companies, Inc., account for nearly all of the production volumes of aluminum beverage cans in North America. Over the past ten years, the compounded annual growth rate for the United States beverage can market has been stable. In addition to our Listerhill facility in Muscle Shoals, Alabama, the only other facilities in the world that have the capability to produce aluminum beverage can stock are operated by two companies, Alcoa, Inc. and Novelis, Inc. which was spun off by Alcan, Inc. in January 2005. The newest of these facilities was built in the mid-1980’s and we are unaware of any plans to build additional facilities in North America to serve the can stock industry. Factors that have led to the consolidation in the industry and our expectation of limited new entrants include substantial capital requirements, lengthy customer qualification procedures and Food and Drug Administration regulations concerning beverage can coatings for bottlers. Most importantly, customers’ stringent requirements for thinner gauge can stock and higher quality can stock have surpassed the technical capabilities of most rolling mill operators. Furthermore, there historically have been virtually no foreign shipments of aluminum beverage can stock to North America primarily due to product quality requirements.

As our primary manufacturing operation, Wise Alloys converts aluminum feedstock into beverage can stock, food container stock and semi-fabricated aluminum sheet. Unlike Alcoa, we do not manufacture aluminum from bauxite. Instead, we process aluminum scrap and prime aluminum manufactured by third parties. Our production takes place at our Listerhill facility, which we purchased in 1999 as part of Reynolds’ divestiture of its integrated can-making infrastructure. Ball purchased Reynolds’ can-making assets in 1998 and since that time has remained a major customer of our Listerhill facility. The Listerhill facility is a four million square foot plant with 1.8 billion pounds of annual casting capability, 1.4 billion pounds of annual hot mill capacity and 1.1 billion pounds of annual finishing capacity. The facility has been well-maintained and modernized with more than $670 million spent on capital improvements since a major modernization process was begun by Reynolds in 1986. We believe the facility is one of the most technologically advanced and lowest cost aluminum processing mills in North America.

Aluminum feedstock purchases comprised approximately 74% of our cost of sales in 2006 for our Alloys operations, with scrap comprising 69% of those total aluminum purchases. Historically, scrap has been a lower cost input for the production of our products than prime aluminum because our scrap reclamation assets are integrated into our production process and because scrap has generally been sold at a discount to prime aluminum. We have scrap purchase arrangements with our key customers through which we purchase scrap aluminum generated by their can production processes. These scrap purchase arrangements provided us with approximately 26% of our scrap aluminum requirements in 2006. We also obtain scrap from our scrap collection subsidiary, Wise Recycling, which provided us with approximately 21% of our scrap aluminum requirements in 2006. Our remaining scrap aluminum

requirements are met by independent suppliers and brokers. We believe that we are one of the largest purchasers of used beverage containers, or UBCs, in North America, and we believe that our purchasing power provides us with the ability to negotiate favorable terms and conditions with our suppliers and enhance our operating margins.

Wise Metals’ subsidiary, Listerhill Total Maintenance Center, or TMC, provides maintenance, repairs and fabrication to manufacturing and industrial plants worldwide ranging from small on-site repairs to complete turn-key maintenance as well as providing machine shop services to Wise Alloys. TMC specializes in servicing and repairing electric turbines for the Tennessee Valley Authority (“TVA”) and others. TMC is actively expanding the business outside of the power generation into mining equipment and other large-scale projects.

Market Overview and Competitive Environment

Wise Alloys competes principally in the rolled aluminum sheet product market. This market in North America is believed to consist of approximately 10 billion pounds of aluminum shipments annually in segments such as packaging, automotive, building and construction and original equipment manufacturing. The rolled aluminum market is somewhat fragmented, with numerous domestic competitors serving a number of different markets according to industry data. We principally serve the packaging segment, which represents approximately 40% of rolled aluminum sheet products.

The aluminum beverage can stock market is highly concentrated and competitive. We estimate that the top manufacturers of aluminum beverage cans in North America in 2006 were Ball with a 35% market share (including 2% attributable to Ball’s interest in a joint venture with Coors Brewing Company), Crown with a 21% market share, Metal Container with a 23% market share and Rexam with a 21% market share. These manufacturers are supplied with aluminum beverage can stock (aluminum sheet for body stock, tab and ends) by four principal suppliers: Novelis (formerly Alcan’s aluminum rolled products business), Alcoa, ARCO and ourselves. We estimate that within this highly concentrated market, Alcoa and Novelis each hold about a one-third market share and we hold a 14% market share. The remainder of the capacity is provided by ARCO, which shares with Novelis the ownership of a facility in Logan County, Kentucky. Alcan spun off its rolled aluminum products business as a separate publicly traded company, Novelis, in January 2005.

The beverage can stock industry also faces competition from non-aluminum sources of packaging such as glass and HDPE and PET packaging producers. The main factors influencing competition in our industry are quality and price. Competition is also affected by each customer’s requirement that suppliers complete a qualification process to supply their plants.

The spin off of Novelis did not change the capacity of the overall can sheet business. Unlike its predecessor, Novelis has no North American reduction capability and is viewed primarily as a conversion company for flat rolling sheet product similar to Wise, but with a much larger and diverse product line.

Aluminum beverage containers are sold primarily to makers and fillers of carbonated soft drinks, beer and other beverages. The principal aluminum beverage container purchasers in the United States are Anheuser-Busch Companies Inc., The Coca-Cola Company and PepsiCo, Inc. Given the highly concentrated and integrated nature of the aluminum can supply chain (from can stock supplier to ultimate purchaser), customer relationships tend to be long-term and highly interdependent in nature. For example, our customers require prospective can stock suppliers to undergo a rigorous qualification process at their individual manufacturing facilities of up to twelve months before the prospective supplier is approved.

The aluminum can stock market is driven by factors associated with the aluminum beverage can industry. The United States aluminum beverage market is recognized as a mature market that has experienced slow but stable growth. Total U.S. producer can stock shipments grew an estimated 2.3% in 2006. Aluminum can stock demand is influenced by end-market retail strategies and consumer sentiment while can stock pricing is influenced by aluminum commodity prices and industry capacity.

Products

Beverage Can Sheet Products

Wise Alloys processes prime aluminum, scrap and alloying agents into sheet products primarily for use in the manufacturing of aluminum beverage can containers. We produce different sheet products for each of the three components of an aluminum beverage can: the body, the end and the tab, which represent 78.5%, 18.6%, and 2.9%, respectively, of an average beverage can’s weight.

The beverage can stock industry market in which we participate has been driven by increasingly demanding product specifications in the last decade. In 1993, the average can stock gauges were 0.01140” for body stock and 0.01080” for end stock. At these relatively heavy thicknesses, the requirements for the uniformity of flatness and thickness across the entire width of the coil were achievable by all seven producers then making can stock. Similarly, at those gauges, inclusions, impurities and other imperfections in can stock were far less critical. However, as a result of the struggle for market share and an excess of capacity in the industry, can makers dramatically improved their product and lowered their costs. Their suppliers, can stock makers, had to adapt to these changes in order to survive. By the end of 2000, there were only three can stock makers still existing in North America: Alcoa, Alcan and Wise Alloys. Participants left the industry because they were unable to produce the thinner gauge stock can makers requested and also meet their more stringent quality requirements. Can stock gauges dropped significantly, to 0.01080” for body stock and 0.0086” for end stock, a decline of 5.3% and 20.4%, respectively. It was especially arduous for can stock makers to meet new specifications profitably because the gauges were most significantly reduced in the end and not the body. They had trouble in achieving extremely tight tolerances in a very hard alloy of aluminum and magnesium. Coincident with this change, can makers increased their quality requirements. For example, while in 1996 a rejection rate of 1 in 10,000 cans was acceptable, the level today is 2 in 100,000, representing an 80% decrease in the acceptable rejection rate. Today, the three remaining can stock makers have reduced their costs and raised their quality levels to where they are now shipping 0.0080” gauge end stock. We believe that the can stock we produce for everyday orders is equal to or superior in quality to that of our competitors, Alcoa and Novelis, and that the quality of our can stock for special orders is superior.

Other Aluminum Sheet Products

The remainder of Alloys’ aluminum sheet products include rigid container stock for food container manufacturers and fin stock (light gauge alloy) for air conditioners, refrigeration sheets and commercial coolers. We produce small volumes of extra wide aluminum sheeting for truck trailer roofing and for unique architectural projects and aluminum tread for use in tool boxes in truck beds and linings. In 2005, we also began more significant levels of production of aluminum sheet for the building and construction products segment and that trend continued into 2006.

The following table sets forth our rolled aluminum product distribution for the past three years:


	Year ended December 31,
	2006		2005		2004
Body Stock	61	%	66	%	70	%
End Stock	15		17		14
Tab Stock	2		2		3

Beverage Can Stock	78		85		87
Food Container	6		6		6
Trailer Roofing	3		2		2
Other	13		7		5

Total	100	%	100	%	100	%

Total pounds billed (in millions)	636	(a)	661	(a)	653	(a)

(a)	Total pounds billed do not include Wise Recycling shipments to third parties of 121.0 million pounds in 2006, 103.2 million pounds in 2005, and 83.4 million pounds in 2004.

Customers

Ball

Ball is the largest beverage can manufacturer in the United States with a 35% market share (including 2% attributable to Ball’s interest in a joint venture with Coors). In 2006, we supplied Ball with approximately 62% of our Listerhill facility’s total plant output. Our Listerhill facility has served selected Ball manufacturing facilities since 1965. We were the largest supplier of aluminum beverage can stock to Ball in 2006. Shipments to Ball decreased approximately 4% from 2005 to 2006.

Our supply agreement with Ball provides that Ball will buy from us all of the aluminum beverage can stock requirements of the beverage can manufacturing facilities Ball purchased from Reynolds. Ball also has the option to have other can stock producers supply aluminum body stock to its can manufacturing plants located in Hawaii and Puerto Rico.

The Ball supply agreement provides for Ball to order minimum shipment amounts in each year of the contract. While Ball has the right to reduce these specified minimum shipment amounts, it generally can only do so contractually in proportion to reductions in the beverage can stock requirements of all of its can manufacturing facilities in North America and not merely on the basis of reductions in the requirements of the Ball facilities we supply. In addition, Ball may also reduce these minimum shipment amounts in the event our products fail to meet agreed quality levels.

Crown

In 2006, we supplied approximately 18% of our Listerhill facility’s total plant output to Crown. Shipments were approximately 11% lower than shipments for 2005.

On August 11, 2006 the Company filed a lawsuit against Crown Cork and Seal (USA), Inc. in state court in Alabama for breach of contract on our beverage can sheet contract and seeking a declaratory judgment on our food sheet contracts. The lawsuit alleges damages because of breaches by Crown of the beverage can sheet contract, and asks the court to interpret certain pricing provisions of the food contract.

On September 8, 2006, Crown entered a counter claim asserting breaches to the beverage can contract. The Company intends to vigorously contest this counterclaim and at this time is unable to determine the reasonable likely outcome of both the Company’s and Crown’s claims.

Other Customers

We finished the qualification process with Rexam at five of its locations by the end of 2005. In 2006, we shipped approximately 5% of our can stock to Rexam down from approximately 10% of our can stock from 2005. Rexam is the third major independent can manufacturer in the U.S. and our relationship with them represents an important step in our diversification strategy.

We have a growing number of customers for common alloy products for the commercial distributor and building and construction markets. For example, General Electric Company purchases fin stock from us and recently we have begun also selling lamp base products to them. We are increasing our marketing efforts in order to develop and diversify our customer base in these high value-added products. In particular, we seek new customers who have not traditionally purchased from our Listerhill facility because of its former affiliation with Reynolds. We have built our own independent marketing staff to serve this market and have built a depot stock to service this very strong market. We have a growing number of contracts for these new products with continued positive interest from market participants.

Wise Recycling currently sells non-ferrous scrap to third parties including Alsco Metals Corporation, formerly Owens Corning Metals Systems, Howell Metal Company and Maxwell Metals Group.

Operations

Aluminum Sheet Operations

We believe that our Listerhill facility is one of the most technologically advanced and flexible manufacturing facilities in the United States aluminum sheet industry. Our Listerhill facility has benefited from over $670 million

of capital improvements and upgrades since a major modernization process was begun by Reynolds in 1986. The facility’s features include state-of-the-art gauge control and closed-loop shape control systems, as well as state-of-the-art surface inspection systems. Our Listerhill facility’s hot-mill rolling speed is equal to industry standards, while the cold-mill rolling speed is competitive with that of our leading competitors. One of our four coating lines can coat wide-width aluminum sheet at a high speed. These investments strengthened our facility’s competitive position by improving its product quality, increasing its processing capacity and reducing its operating costs. Since 2000, we have incurred maintenance expenditures ranging from approximately $32 to $47 million annually, comprising between $14 million and $24 million in part replacements and contractor costs and between $18 million and $23 million in employment costs. In addition, our annual capital expenditures, primarily for equipment and related upgrades, have averaged $12 million since 2002. In 2006, we spent $15 million in part replacements and contractor costs and $20 million in employment costs. Our facility’s features include a technologically advanced electromagnetic cast house, which is the only multiple station unit in the industry; a pusher furnace; hot mills with 116-inch width capability; four cold mills; an annealing line; a coating line and inspection and gauge control systems; and surface inspection systems. Our rolling capabilities have allowed us to meet our customers’ increasing demands for thinner gauge aluminum sheets and their increasingly stringent quality controls, unlike some of our former competitors. For instance, Listerhill is one of only two North American facilities capable of rolling the widths necessary for trailer roofs. In addition, our electromagnetic casting facilities and cold mills also give us superior flexibility to produce customized runs of limited quantity products with shorter production lead times in a cost effective manner. These shorter runs enable us not only to meet our can stock customers’ demands for special seasonal or promotional products or innovative new products with a limited initial market, such as energy drinks, but also efficiently produce common alloy products, such as StarBright^™, an aluminum tread product used in truck beds and linings.

We are in the process of converting and qualifying our end stock material from our three stand operation, where we have to make two passes to roll aluminum coil to proper gauge, to our five stand operation, where a coil only has to make one pass. This will increase our efficiencies in producing end stock while maintaining improved surface quality. This process change will also result in improved capacity on our three-stand that will allow for increased volume. While we are currently qualified at all of our customer locations, any time a major process change such as this is undertaken, each customer plant location that we serve must re-qualify our product to ensure proper specification. Trial shipments are sent to each customer location and if the plant location and their respective customers all accept the product, then the process change is considered qualified and the change can then be implemented on all product sold to that customer location.

Suppliers and Materials

The raw materials used by our aluminum sheet business are generally available from several sources. We utilize a mix of scrap aluminum and prime aluminum. Our supply of raw materials satisfies our current production requirements. One of our key competitive advantages in the production of can stock is our use of scrap aluminum for a large portion of our aluminum requirements. Aluminum can body stock can be manufactured with UBCs comprising up to 95% of the metal used. As we are capable of processing and recycling UBCs in an efficient manner and the use of scrap is nearly always less expensive than utilizing primary aluminum to produce the alloy required for producing can sheet, we believe that our high utilization of scrap provides us with a cost advantage over our competitors. In 2006, we satisfied approximately 69% of our raw material requirements from scrap aluminum, of which approximately 54% was composed of UBCs, 26% was scrap purchased from our customers and 21% was all other scrap including recycled sheet ingot and electric cable. In 2006, approximately 21% of our scrap aluminum requirements were supplied through our scrap collection segment, Wise Recycling. We expect that a significant amount of our scrap aluminum requirements will continue to be sourced through scrap purchase arrangements with our can sheet customers, and purchases through Wise Recycling and third party suppliers. We expect to obtain the balance of our scrap aluminum requirements from our established network of independent scrap dealers and brokers throughout the United States. We believe we are the largest purchaser of UBCs in North America, and as a result, we enjoy considerable leverage with our vendor base. We obtain prime aluminum from brokers throughout the United States and directly from foreign and domestic producers.

We purchase our electrical requirements from the TVA. Effective in January 2005, we began purchasing our natural gas from Atmos Energy Marketing and successfully negotiated a reduction in the cost of delivery with another pipeline.

Intellectual Property

We have acquired certain intellectual property rights under licenses from others for use in our business. In particular, we are a licensee under a technology license agreement with Alcoa that grants us a non-exclusive, perpetual, royalty-free, fully paid-up license to use the technology employed at our Listerhill facility. The license covers the processes, methods, practices and techniques for systems used and products produced at Listerhill. It includes the rights to change and further develop the technology and worldwide non-exclusive rights to offer for sale and sell products produced at the Listerhill facility.

In addition, the Alcoa technology license agreement grants us the right throughout North America to make products using licensed technology at the Listerhill facility or using technology used at other facilities that were owned by Reynolds at the time of the Listerhill facility acquisition or which were previously owned by Reynolds. Alcoa is responsible for obtaining and maintaining all patent rights relating to the licensed technology.

We do not have any patents, licenses or trademarks other than those that are the subject of the Alcoa technology license agreement that we believe to be material to our business viewed as a whole.

Wise Recycling

Wise Recycling was formed in 1998 when Wise Metals purchased the Reynolds Aluminum Recycling division from Reynolds Metals. Wise Recycling is one of the largest aluminum scrap recyclers and one of the largest direct-from-the-public collectors of UBCs in the United States. As well as acting as a low-cost supplier of used beverage container scrap for our aluminum processing operations, Recycling collects and sells copper, brass and other aluminum scrap, which is sold to third parties. In 2006, this segment recycled over 2.7 billion UBCs and contributed 13% of the total revenue of Wise Metals Group.

The following table shows distribution by metal type for the past three years:


	Year ended December 31,
	2006		2005		2004
Copper & Brass	24	%	33	%	27	%
Aluminum	39		38		39
Other	15		5		4

Total Third Party Sales	78		76		70
Intercompany aluminum UBC sales to Wise Alloys	22		24		30

Total	100	%	100	%	100	%

Total pounds billed (in millions)	207.3		160.0		128.5

Market Overview and Competitive Environment

Wise Recycling operates seven shipping and processing locations. These locations support a network of 38 neighborhood collection centers. This structure allows Wise Recycling to service consumers as well as industrial and independent recycling accounts nationwide. From our recycling centers, aluminum and other nonferrous metal materials including copper and brass are sorted, graded, and packaged and then sent to melting and fabricating facilities throughout the country.

Products

Recycling collects scrap for sale in the merchant market and provides us with an effective, profitable infrastructure to obtain a portion of Wise Alloys’ scrap requirements. Wise Recycling also collects other forms of non-ferrous scrap, primarily non-UBC aluminum, copper and brass, for sale into the merchant market.

Customers

Wise Recycling currently sells non-ferrous scrap to third parties including Alsco Metals Corporation, formerly Owens Corning Metals Systems, Howell Metal Company and Maxwell Metals Group. In 2006, Recycling sold 121 million pounds of scrap to third parties. There is no single customer who contributes 10% or more to Recycling’s revenue.

Operations, Suppliers and Materials

In 2006, this subsidiary recycled approximately 2.7 billion UBCs. Recycling has developed a collection process that utilizes both direct acquisitions from scrap dealers and industrial accounts, as well as from the actual consumer, i.e. off-the-street. The collection process is centered through its seven shipping/regional centers which act as hubs for a total of 38 service and convenience centers. The regional shipping centers process and upgrade the various metals collected at their respective area service and convenience centers. We are currently expanding the business of Recycling to include warehousing operations in order to provide regional shipping centers for our scrap collection and to enhance our ability to provide a vendor managed inventory program required by Alloys’ customers. These warehousing facilities, the first of which opened in Los Angeles in May 2004, store can sheet to be delivered to the customer and also operate as centralized shipping points for scrap. This dual role optimizes labor costs and allows us to manage freight costs by coordinating outbound aluminum coil shipments from the Listerhill facility and inbound scrap from the warehouse sites by captive rail car. Recycling is exploring the opening of other warehousing facilities in several other states.

Wise Metals Group

The following discusses matters relating to our business in general.

Research and Development

We engage in research and development programs that include aluminum sheet production process and product development and basic and applied research. We believe that these programs can lead to more cost-effective manufacturing systems that contribute to improvements in quality and operating efficiencies as well as new products. We conduct our research and development activities at our Listerhill facility. Expenditures for our research and development activities were $0.3 million in 2006. We fund substantially all our research and development expenses through operations.

Employees

As of December 31, 2006, we had 895 employees at our Listerhill facility. Approximately 76% of these employees are engaged in production, 3% in engineering, research and development and 21% in sales, marketing, product support and general administration. Approximately 76% of these employees are represented by unions and are covered by collective bargaining agreements that will expire on November 1, 2007. In addition, as of December 31, 2006, we had 29 Wise Group employees at our corporate headquarters, 53 employees at TMC and 114 employees at Recycling. We consider our employee relations to be good. Neither we nor our predecessor have experienced any major labor stoppage in over 10 years.

Environmental Matters

Our operations are subject to numerous and increasingly stringent federal, state and local laws and regulations governing protection of the environment, including those relating to air emissions, wastewater and stormwater discharges, the handling, disposal and remediation of hazardous substances and wastes, and public and employee health and safety. Our operations involve the management of hazardous materials and the use of aboveground and underground storage tanks containing materials that are subject to requirements of the federal Resource Conservation and Recovery Act, or RCRA, and comparable state statutes. Under such statutes, investigation or remediation may be necessary in the event of leaks or other discharges from current or former underground or

aboveground storage tanks or other sources. Our operations involving air emissions and wastewater and stormwater discharges are subject to the Clean Air Act and Clean Water Act, respectively. Similar to many of our competitors, we have incurred and will continue to incur capital and operating expenditures and other costs in complying with such laws and regulations. Our operations also involve the risk of the release of hazardous materials into the environment. In addition, we send material to third party recycling, treatment, and/or disposal facilities. The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 and comparable state statutes can impose strict, and under some circumstances joint and several, liability upon entities that send materials to third party facilities for investigation and remediation of contamination, as well as on owners and operators of sites at which soil or groundwater contamination is identified. We have not received any notice of such potential liability at any such facilities.

Our operating expenditures relating to environmental requirements in 2006 were approximately $3.1 million and are expected to be similar in 2007 and 2008. Future environmental regulations, including those under the Clean Air Act and Clean Water Act, or more aggressive enforcement of existing regulations, may result in stricter compliance requirements for us and for the aluminum industry in general.

In connection with our acquisition of the Listerhill facility in 1999, a consultant performed a soil and groundwater investigation (“Phase II Report”) to identify any environmental issues at the various plants that comprise the Listerhill facility. That Phase II Report identified certain on-site environmental areas of concern that may potentially require investigation or remediation and provided a then-present value estimate of approximately $18 million to address them. Pursuant to the Listerhill facility purchase agreement, the prior owner of the Listerhill facility, Reynolds, now Alcoa, is required to perform the work necessary and to indemnify us against the environmental matters required by applicable law to be addressed that are identified in the Phase II Report and any other such environmental liabilities attributable to Reynolds that were identified on or before March 31, 2004 subject to certain limitations. Alcoa disagrees with the cost estimates contained in the Phase II Report and has stated that it estimates that the environmental issues identified in the Phase II Report will cost less than $18 million to remediate. Although Alcoa has conducted some on-site environmental investigations and sampling and has submitted reports to the Alabama Department of Environmental Management (ADEM) regarding most of the on-site areas of concern, it has not yet commenced cleanup activities with respect to many of the areas of concern.

We are also party to an Environmental Cooperation Agreement, or ECA, with Alcoa, which is Reynolds’ successor. The ECA addresses, among other things, the use of a surface water ditch system by both us and Alcoa, the use of process water retention ponds on Alcoa’s property and certain surface drainage easements across our property. The ECA expires in December 2009, with automatic two year renewal periods unless either party elects to terminate, in which event the ECA will terminate one year following such election. Under the ECA, each party defends and indemnifies the other against claims arising from its own violations of any applicable environmental laws, its handling, use, or disposal of hazardous materials at the Listerhill facility, a breach of any warranties, representations or covenants in the agreement, or damage or loss to property and injury to or death of any persons.

In November 2006 the Company received notice from the Environmental Protection Agency (“EPA”) regarding certain violations of the Clean Air Act. The Company disputes some of the alleged violations and has initiated actions to come into compliance with the relevant requirements. The EPA has indicated its intent to resolve the violations through a judicial consent-decree, including the payment of civil penalties by the Company. Discussions with the EPA are ongoing. The ultimate outcome cannot be reasonably estimated at this time and thus no expense has been recorded in the Company’s consolidated financial statements.

We believe that we are in material compliance with environmental requirements and that environmental matters will not have a material adverse effect on our business, although resolution of particular items in any particular year or quarter could be material to the results of operations or liquidity for that period. However, we cannot guarantee that newly discovered conditions, or new, or more aggressive enforcement of applicable environmental requirements, or any failure by Alcoa to perform its indemnification obligations will not have a material adverse effect on our business.

Wise has not discovered any new environmental concerns. As noted all significant environmental issues have been identified and remain the responsibilities of Alcoa under the original Asset Purchase Agreement. Alcoa has acknowledged its obligation and discussions continue regarding the methodology to remediate these concerns.

Item 1A.

Risk Factors.

We may not be able to effectively manage our exposure to fluctuations in aluminum prices.

Aluminum purchases and related alloying agents represented approximately 74% of our cost of sales in 2006. Prime aluminum costs fluctuate over time. We reduce our exposure to aluminum price fluctuations by seeking to pass cost increases to customers through an indexed sales pricing mechanism, by keeping sufficient inventory on hand and/or by fixing the cost of metal through forward contracts on the London Metal Exchange, or LME, based on the cost of prime aluminum. We seek to reduce our exposure to increases in aluminum prices over the contracted price by purchasing or committing to purchase aluminum at relative fixed prices. We seek to protect ourselves against price fluctuations in prime aluminum contracts both by purchasing and selling futures contracts and through the use of options contracts to effectively match our customer and supplier commitments. These hedging transactions may require us to post cash pursuant to margin calls. However, there can be no assurance that we will be successful in our efforts to use these types of derivative transactions to help manage fluctuations in prime aluminum prices.

In addition, we are further exposed to counter-party performance risk in adverse market conditions in the event of non-performance by a supplier, customer or LME broker and could suffer significant financial losses as a result.

Our processing-based business model seeks to take advantage of the lower price of scrap aluminum compared to prime aluminum to provide a cost-competitive product. To the extent the discount between the LME’s quoted primary aluminum price and scrap price narrows, our competitive advantage is reduced. We cannot make use of financial markets to effectively hedge against reductions in this discount as this market is not readily available. If the difference between the price of prime and scrap aluminum is narrow for a considerable period of time, or, if we are unable to successfully manage the risks associated with fluctuations in the price of prime aluminum, our profitability could decline. Hedging transactions may require us to post cash pursuant to margin calls. Significant losses could occur if we entered into a hedge transaction that became unprofitable because a significant customer reduced orders.

A decrease in sales to a major customer could adversely affect our business.

We derived approximately 55% and 16% of our total revenues in 2006 from sales to Ball and Crown, respectively. Ball, under long-term supply agreements, has the ability to reduce their purchases from us if our product quality declines or if we fail to perform under a material provision of our supply agreements. There is no guarantee that we will be able to renew this supply agreement on favorable terms, or at all. In addition, the amount of aluminum can stock and other products we sell under this agreement could decrease. For example, Ball has the option under their supply agreements to reduce specified shipment amounts in proportion to reductions in the beverage can stock requirements of all of their can manufacturing facilities in North America. See Item 1, “Business — Wise Alloys — Customers.”

The loss of either of these customers or decreases in either customer’s levels of purchases from us for any reason, including a customer’s closing or sale of a plant, a sale of its business, a strike or work stoppage by its employees or financial difficulties, or an adverse change in the terms of the supply arrangements with either customer could have a harmful effect on our business.

The loss of our raw materials sources could hurt our business.

Our aluminum can stock production operations use various raw materials, including scrap aluminum and prime aluminum. During 2005 and 2006, we purchased approximately 18% of the aluminum used in our can stock production operations from two major suppliers. Unlike Alcoa, we are not an integrated producer of aluminum. Accordingly, our ability to produce competitively priced aluminum products depends on our ability to procure a competitively priced supply of scrap and prime aluminum in a timely manner. We expect that a significant amount of our scrap aluminum supply requirements will continue to be sourced through scrap purchase arrangements with our customers and acquisitions of scrap aluminum from our Wise Recycling segment and from third party suppliers. We obtain prime aluminum from brokers throughout the United States and directly from foreign and domestic producers. While we believe that these sources of raw materials are sufficient to meet our current operating requirements, we cannot assure you that we will be able to timely procure competitively priced aluminum or that we

will not experience shortages due to the interruption of supply. In addition, if Alcoa or Novelis significantly increase their purchases of scrap aluminum, we may experience difficulty in obtaining our raw materials at the price discount that scrap has had traditionally over prime aluminum. Furthermore, the price of scrap aluminum may rise if foreign demand for scrap aluminum increases. The recent trend of increased copper and steel scrap consumption by China and other foreign countries could extend to aluminum scrap.

Our operations require substantial amounts of energy and raw materials and, as a result, our profitability may decline if energy and/or commodity costs increase, or if these supplies are interrupted.

We consume substantial amounts of energy in our operations. Energy costs constituted approximately 6% of our overall cost of sales in both 2006 and 2005. Excluding metal costs, energy represented approximately 22% of our conversion costs in both 2006 and 2005, respectively. Although we generally expect to meet our energy requirements from our long-term natural gas and electricity contracts, we have been and could again be adversely affected by increases in the costs in natural gas and/or electricity, interruptions in energy supply due to equipment failure, hurricanes, or other causes, and by our inability to extend the contracts upon expiration on economical terms. For example, we suffered interruptions in our supply of natural gas in 2005 because of hurricanes Katrina and Rita. We buy natural gas on a forward basis to minimize risk of rising prices, but we may not always be able to do so successfully. Except to the extent we are able to protect ourselves against fluctuations in gas prices, every $1.00 change per mmBTU in the price of gas would affect our annual net income by approximately $4.2 million based on our 2006 usage levels. In addition, an outbreak or escalation of hostilities between the United States and any foreign power and, in particular, a prolonged armed conflict in the Middle East, could result in a real or perceived shortage of oil and/or natural gas, which could result in an increase in the cost of natural gas or energy generally. If energy costs were to rise, or if energy supplies or supply arrangements were disturbed, our profitability may decline.

In addition, our operations generally require an uninterrupted supply of intense electrical energy, and any interruption for more than a very short duration, whatever the cause, may have a major technical, commercial and financial impact on our business operations. In warm weather, TVA, our electrical energy source for the Listerhill facility, is vulnerable to surges in demand for energy. These increases in demand may outstrip the available energy supply and lead to a curtailment. In 1999, we experienced this type of curtailment for approximately five days.

Outside of aluminum, our operations require substantial materials and supplies, many of which are subject to cost increases due to increasing commodity costs used in the production of these supplies and materials. These materials account for approximately 9% of cost of sales. In addition, metal costs include costs for non-aluminum hardeners and alloying agents such as magnesium and manganese. These materials comprise approximately 2% of metal costs and are subject to volatile commodity pricing and resulting cost increases. The price increases that we are able to achieve from our customers may not be sufficient to offset the effects of these rising input costs.

A business interruption at our Listerhill facility could significantly harm our operations.

Our beverage can stock production is concentrated entirely at our Listerhill facility. We depend on the equipment and facilities at Listerhill for the production of our beverage can stock and other aluminum sheet products. If our equipment or operations at Listerhill or portions thereof were disabled, our ability to manufacture beverage can stock products could be impaired or interrupted for an indefinite period or could cease altogether and cause a material adverse effect on our financial condition. For example, in 2003 a fire at the facility curtailed our operations for four weeks and caused delivery problems for three months. Business interruption insurance proceeds may not fully compensate us for damage to our equipment and facilities, lost profits and lost market share. We currently also have property casualty insurance for our Listerhill facility. However, the policy is subject to limits and exclusions.

The beverage can stock industry is highly concentrated and our competitors have greater resources.

The market for beverage can stock products is highly concentrated. Competitors such as Novelis and Alcoa, each with an approximate one-third market share, have market presence, operating capabilities and financial, personnel and other resources that are substantially greater than our own. Also, Alcoa is a fully integrated competitor who supplies its own prime aluminum for use in producing beverage can stock. They may also affect prices for scrap aluminum by making purchases of scrap aluminum. These competitors can develop their technologies more quickly, take advantage of acquisition and other opportunities more readily, produce their own

supply of aluminum and devote greater resources to the marketing and sale of their products and services than we can. They may be able to purchase raw materials at a lower cost because of their size. Finally, the financial resources and excess capacity of our major competitors may give them the ability to reduce their prices for an extended period of time. Any of these factors may reduce the prices we can charge for our products, lower our gross margins and cause us to lose market share. We cannot assure you that we will be able to compete successfully in these circumstances.

We are subject to competition from non-aluminum sources of packaging.

Although aluminum maintains the largest overall share among packaging materials of the U.S. beverage container industry, it faces increasing competition from other packaging materials such as plastics and glass. We face continued competition from plastic packaging producers (primarily high density polyethylene, or HDPE, and polyethylene terephthalate, or PET) in the soft drink and juice segment of the beverage packaging industry. PET increased its market share of the U.S. beverage container market from an approximate 19% market share, as measured by number of containers, in 1997 to an approximate 26% market share in 2002 and is projected to have approximately 31% market share in 2007 based on information provided by the Freedonia Group as reported by the Can Manufacturers Institute (CMI). Some manufacturers and consumers prefer PET to aluminum because of its clarity, availability in multiple sizes and ability to be resealed. In addition, glass accounted for approximately 13% of beverage container demand in 2002 with little expected increase in market share by 2007 as reported by CMI. If plastic and/or glass and/or other new products increase their respective market shares, demand for our products may decrease significantly. For the years ended December 31, 2006 and 2005, 78% and 85%, respectively, of our sales volume was from beverage can stock and we expect to derive a significant portion of our revenues from these sales in the future. If demand for these products decreased, our profits and cash flows could be reduced.

Demand in the packaging market in which we participate can be inconsistent.

We primarily manufacture aluminum can stock that is used for beverage and, to a lesser extent, food packaging for which demand may be inconsistent. For example, it is believed that the unseasonably cold and wet weather in the summer of 2003 decreased consumer demand in the U.S. and Canada for beverages packaged in the containers produced by our customers. As a result, our sales to Ball and Crown declined in 2003. Our operating results could be adversely affected if the packaging market experiences weakness because of weather or general economic conditions or other factors.

We cannot guarantee that we will be successful in developing new products or entering new markets.

We have begun the development of higher value-added and intermediate products that complement our aluminum beverage can stock production. For example, we also process aluminum sheet for use in food containers, trailer roofing and air conditioner and refrigerator components. Commercial product volume for the years ended December 31, 2006, 2005 and 2004 were 102.2 million, 61.1 million and 45.0 million pounds respectively. In 2001, we developed high-luster heavier gauge embossed sheet and end plate for sale in the automotive after market. In addition, we have begun to supply intermediate aluminum products to other industry participants. Intermediate aluminum products are products that we sell to customers before they have undergone final processing. We cannot assure you that we will be successful in further developing these products and in entering into new markets. We may experience design, manufacturing, marketing or other difficulties that could delay or prevent the development, introduction or commercialization of any new products. Development of these products and entry into new markets may require greater capital resources than we currently anticipate. We cannot guarantee when or whether these new products will be widely introduced or fully implemented, that they will be successful when they are introduced or that customers will purchase the products offered. If these products or services are not successful or the costs associated with implementation and completion of the rollout of these products or services materially exceed those currently estimated by us, our results of operations may suffer.

Environmental requirements could adversely affect our financial condition and our ability to conduct our business.

underground storage tanks containing materials that are subject to requirements of the federal Resource Conservation and Recovery Act, or RCRA, and comparable state statutes. Under such statutes, investigation or remediation may be necessary in the event of leaks or other discharges from current or former underground or aboveground storage tanks or other sources. Our operations involving air emissions and wastewater and stormwater discharges are subject to the Clean Air Act and Clean Water Act, respectively. Similar to many of our competitors, we have incurred and will continue to incur capital and operating expenditures and other costs in complying with such laws and regulations. Our operations also involve the risk of the release of hazardous materials into the environment. In addition, we send material to third party recycling, treatment, and/or disposal facilities. The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 and comparable state statutes can impose strict, and under some circumstances joint and several, liability upon entities that send materials to third party facilities for investigation and remediation of contamination, as well as upon the owners and operators of sites at which soil or groundwater contamination is identified. We have not received any notice of such potential liability at any such facilities. Future environmental regulations, including those under the Clean Air Act and Clean Water Act, or more aggressive enforcement of existing regulations, may result in stricter compliance requirements for us and for the aluminum industry in general.

In connection with our acquisition of the Listerhill facility in 1999, a consultant performed a soil and groundwater investigation (“Phase II Report”) to identify any environmental issues at the various plants that comprise the Listerhill facility. That Phase II Report identified certain on-site environmental areas of concern that may potentially require investigation or remediation and provided a then-present value estimate of approximately $18 million to address them. Pursuant to the Listerhill facility purchase agreement, the prior owner of the Listerhill facility, Reynolds, now Alcoa, is required to perform the work necessary and to indemnify us against the environmental matters required by applicable law to be addressed and identified in the Phase II Report and any other such environmental liabilities attributable to Reynolds that were identified on or before March 31, 2004, subject to certain limitations. Alcoa disagrees with the cost estimates contained in the Phase II Report and has stated that it estimates that the environmental issues identified in the Phase II Report will cost less than $18 million to remediate. Although Alcoa has conducted some on-site environmental investigations and sampling and has submitted reports to the Alabama Department of Environmental Management (ADEM) regarding most of the on-site areas of concern, it has not yet commenced cleanup activities with respect to many of the areas of concern.

However, there can be no assurance that Alcoa will be willing to perform its indemnification obligations regarding the Listerhill facility or that costs to do so will not exceed $18 million. Any failure by Alcoa to address completely such issues could materially affect our financial condition and our ability to conduct our business. Furthermore, there can be no assurance that environmental conditions requiring remediation will not be discovered in the future which are not addressed by Alcoa and could result in material costs to us. See Item 1, “Business — Wise Metals Group — Environmental Matters.”

We have a unionized workforce, and union disputes and other employee relations issues could harm our financial results.

Mostly all of our hourly-paid employees are represented by labor unions under seven collective bargaining agreements. We may not be able to satisfactorily renegotiate our labor agreements when they expire on November 1, 2007. In addition, although we consider our employee relations generally to be good, our existing labor agreements may not prevent a strike or work stoppage at our facility in the future, and any such prolonged work stoppage could have a material adverse effect on our financial condition and results of operations. See Item 1, “Business — Employees.”

Our success will continue to depend on our ability to attract and retain executives and other key personnel.

Our continued success depends on our ability to attract, motivate and retain highly skilled and qualified management and technical personnel. Any inability to do so could hurt our business. In addition, there can be no assurance that we will be able to hire qualified persons when needed or on favorable terms. In addition, the loss of any one or more of our executive officers could have an adverse effect on our ability to manage and operate our business. We do not have employment agreements with any of our executive officers.

We are controlled by a limited number of persons.

As of December 31, 2006, Silver Knot, LLC, owns approximately 79% of the membership interests of Wise Group. David D’Addario, CEO, Chairman and a Manager of Wise Group, controls Silver Knot and Greg Garvey, a Manager of Wise Group is also a member of Silver Knot. The board of Wise Group contains no independent managers. Mr. D’Addario and Mr. Garvey have the ability to affect certain corporate transactions, including mergers, consolidations and the sale of all or substantially all of Wise Group’s assets.

We may expand our operations through acquisitions, which may divert management’s attention and expose us to unanticipated liabilities and costs. We may experience difficulties integrating any acquired operations, and we may incur costs relating to acquisitions that are never consummated.

Our business strategy contemplates continued expansion of our operations, including growth through future acquisitions. However, our ability to consummate and integrate effectively any future acquisitions on terms that are favorable to us may be limited by the number of attractive acquisition targets, internal demands on our resources and our ability to obtain financing. Our success in integrating newly acquired businesses will depend upon our ability to retain key personnel, avoid diversion of management’s attention from operational matters, and integrate general and administrative services and key information processing systems. In addition, future acquisitions could result in the incurrence of additional indebtedness, costs and contingent liabilities. We may also incur costs and divert management attention to acquisitions that are never consummated. Integration of acquired operations may also take longer, or be more costly or disruptive to our business, than originally anticipated. It is also possible that expected synergies from future acquisitions may not materialize.

Although we will undertake a comprehensive due diligence investigation of each business that we might acquire, there may be liabilities of the acquired companies that we fail or are unable to discover during the diligence investigation and for which we, as a successor owner, may be responsible. In connection with acquisitions, we generally seek to minimize the impact of these types of potential liabilities through indemnities and warranties from the seller, which may in some instances be supported by deferring payment of a portion of the purchase price. However, these indemnities and warranties, if obtained, may not fully cover the liabilities due to limitations in scope, amount or duration, financial limitations of the indemnitor or warrantor or other reasons.

Our leverage may affect our business and may restrict our operating flexibility.

We have substantial debt and, as a result, significant debt service obligations. As of December 31, 2006, we had approximately $344.8 million of debt outstanding, including $177.2 million under our senior secured facility, and outstanding letters of credit in the amount of $2.1 million. Our availability was $3.6 million under our senior secured credit facility. Subject to certain restrictions set forth in our senior secured credit facility and the indenture, we may incur additional indebtedness in the future. Our substantial level of debt and debt service obligations could:

•

limit cash flow available for general corporate purposes, such as acquisitions and capital expenditures, due to the ongoing cash flow requirements for debt service;

•

limit our ability to obtain, or obtain on favorable terms, additional debt financing in the future for working capital, capital expenditures, acquisitions or other corporate requirements;

•

limit our flexibility in reacting to competitive and other changes in the aluminum industry and economic conditions generally;

•

make it difficult to meet debt service requirements; and

•

expose us to risks inherent in interest rate fluctuations in respect of any borrowings at variable rates of interest, which could result in higher interest expense in the event of increases in interest rates.

Our ability to make scheduled payments of principal of, to pay interest on, or to refinance, our indebtedness and to satisfy our other debt obligations will depend upon our future operating performance, which may be affected by general economic, financial, competitive, legislative, regulatory, business and other factors beyond our control. We will not be able to control many of these factors, such as the economic conditions in the markets in which we operate and initiatives taken by our competitors. In addition, there can be no assurance that future borrowings or equity financing will be available for the payment or refinancing of our indebtedness. If we are unable to service our indebtedness, whether in the ordinary course of business or upon acceleration of such indebtedness, we may be forced to pursue one or more alternative strategies, such as restructuring or refinancing our indebtedness, selling assets, reducing or delaying capital expenditures or seeking additional equity capital. There can be no assurance that any of these strategies could be affected on satisfactory terms, if at all.

We may not be able to finance future needs or modify our business plan because of restrictions placed on us by our senior secured credit facility, the indenture for senior secured notes and the instruments governing our other indebtedness.

Our senior secured credit facility, as amended and restated, the indenture for our senior secured notes and other agreements governing our other indebtedness contain covenants that restrict us from taking various actions such as incurring additional debt under certain circumstances, paying dividends, making investments, entering into transactions with affiliates, merging or consolidating with other entities and selling all or substantially all of our assets. We are also bound to comply with certain specified tests under our senior secured credit facility. These restrictions could limit our ability to obtain future financings, make needed capital expenditures, withstand future downturns in our business or the economy in general or otherwise conduct necessary corporate activities. We may also be prevented from taking advantage of business opportunities that arise because of limitations imposed on us by these restrictive covenants.

If we do not comply with these or other covenants and restrictions contained in our senior secured credit facility, the indenture and other agreements governing our indebtedness, we could be in default under those agreements, and the debt under those instruments, together with accrued interest, could then be declared immediately due and payable. If we default under our senior secured credit facility, the lenders could cause all of our outstanding debt obligations under our senior secured credit facility to become due and payable, require us to apply all of our cash to repay the indebtedness or prevent us from making debt service payments on any other indebtedness we owe. In addition, any default under our senior secured credit facility or agreements governing our other indebtedness could lead to an acceleration of debt under other debt instruments that contain cross-acceleration or cross-default provisions. If the indebtedness under our senior secured credit facility and indenture is accelerated, we may not have sufficient assets to repay amounts due under our senior secured credit facility, the exchange notes or under other debt securities then outstanding. Our ability to comply with these provisions of our senior secured credit facility, the indenture and other agreements governing our other indebtedness may be affected by changes in the economic or business conditions or other events beyond our control.

Item 1B.

Unresolved Staff Comments.

Not applicable.

Item 2.

Property.

Our Listerhill manufacturing operations are located in Muscle Shoals, Alabama and comprise approximately 1,500 acres, of which approximately 102 acres are leased. Our corporate headquarters are located in Linthicum, Maryland. Recycling currently operates shipping centers in the locations contained in the listing below.

The following table presents certain information regarding our owned and leased facilities as of December 31, 2006:


Location	Estimated Square Feet	Use	Owned/ Leased	Lease Expiration Date
Wise Metals Group Facilities

Linthicum, MD	6,394	Offices	Leased	March 2013

Wise Alloys Facilities
Muscle Shoals, AL	4,000,000	Alloys Plant	Owned
	215,000	Alabama Reclamation Plant	Owned
	115,000	Southern Reclamation Plant(1)(2)	Owned
	300,000	Sheffield Coating Plant(2)	Leased	March 2098
	30,928	Sewage Treatment Plant(2)	Leased	March 2098
	48,840	Drinking Water Plant(2)	Leased	March 2098
	33,105	Locomotive Shed and Maintenance Building(2)	Leased	March 2098

Wise Recycling Facilities
Albuquerque, NM	16,475	Recycling Service Center	Owned
Bristol, VA	31,800	Recycling Service Center	Owned
Charlotte, NC	30,000	Recycling Service Center	Leased	Month-to-Month
Commerce, CA	72,105	Recycling Warehousing Operation	Leased	October 2013
Denver, CO	18,260	Recycling Service Center	Owned
Lexington, KY	43,000	Recycling Service Center	Leased	February 2008
Pensacola, FL	10,900	Recycling Service Center	Leased	November 2015
Raleigh, NC	25,000	Recycling Service Center	Leased	March 2010

(1)	The plant is owned; certain portions of the land are leased from Alcoa. The lease on the land expires March 2098.

(2)

The leases on these plants are subject to certain change of control and consent provisions. Under the terms of the lease related to the Southern Reclamation Plant, Alcoa has the right to terminate the lease if we sell, transfer or assign the lease or the Southern Reclamation plant without Alcoa’s prior consent. Under the terms of the lease related to the sewage treatment plant, Alcoa has the right to terminate the lease prior to its expiration date if we cease to operate the sewage treatment plant, cease to provide sewage treatment services to Alcoa or sell, transfer or assign the lease to the sewage treatment plant without Alcoa’s prior consent. Under the terms of the lease related to the drinking water plant, Alcoa has the right to terminate the lease prior to its expiration date if we cease to provide drinking water services to Alcoa, cease to operate the drinking water plant or sell, transfer or assign the lease of the drinking water plant without Alcoa’s prior consent. Under the terms of the lease related to locomotive shed and maintenance buildings and the related buildings and the related real property, Alcoa has the right to terminate the lease prior to the expiration date if we cease to operate our Listerhill facility, the Alabama Reclamation Plant, the Southern Reclamation Plant or the Sheffield Coating Plant or we sell, transfer or assign the lease for our Listerhill facility, the Alabama Reclamation Plant, the Southern Reclamation Plant or the Sheffield Coating Plant without Alcoa’s prior consent.

Item 3.

Legal Proceedings

We are a defendant from time to time in various legal actions arising in the normal course of business, the outcomes of which, in the opinion of management, neither individually nor in the aggregate are likely to result in a material adverse effect on our business, results of operations or financial condition.

the material allegations and alleging several affirmative defenses and counterclaims which exceed in amount the sum sought by Merrill Lynch. Merrill Lynch moved to dismiss the Company’s counterclaims and by an order dated December 30, 2004, the Court granted this motion, dismissed the counterclaims and permitted the Company to replead two of the counterclaims. The Company appealed, which resulted in a reversal reinstating the dismissed counterclaims. Merrill Lynch has replied to the counterclaims. The action is presently in the discovery stage. The Company believes that it is not currently possible to estimate the ultimate outcome of this litigation. As a result, no expense for any potential adverse outcome of this matter has been recorded in the consolidated financial statements.

The Company is a defendant in an action brought by a former executive seeking compensatory damages pending in Delaware State Court. The plaintiff alleged that a deal had been negotiated whereby in exchange for $2 million the plaintiff would surrender his equity interest in the Company, forgo any claim for a $1 million severance that plaintiff alleges would otherwise come due on his 62nd birthday (payable in $50,000 quarterly installments) and provide the Company with a general release of any existing or potential claims. The Company has accrued a $1 million reserve in connection with this litigation. The Company has hired counsel, is vigorously contesting this lawsuit and believes it has meritorious defenses. In addition, this plaintiff sought to enforce an alleged settlement contract with the Company in Alabama State Court. The Company filed for summary judgment on all claims related to this alleged settlement and on February 12, 2007, the Court granted the motion in full and dismissed all claims with prejudice. Appeal is permitted until April 23, 2007.

On August 11, 2006 the Company filed a lawsuit against Crown Cork and Seal (USA), Inc. in state court in Alabama for breach of contract and seeking a declaratory judgment on our beverage can sheet and food sheet contracts. The lawsuit alleges damages because of breaches by Crown of the beverage can sheet contract, and asks the court to interpret certain pricing provisions of the food contract.

On September 8, 2006, Crown entered a counter claim asserting breaches to the food and beverage can contracts. The Company intends to vigorously contest this counterclaim and at this time is unable to determine the reasonable likely outcome of both the Company’s and Crown’s claim. In the opinion of management, amounts accrued for exposures relating to the aforementioned contingencies, and other legal proceedings are adequate and, accordingly, the ultimate resolution of these matters is not expected to have a material adverse effect on the Company’s consolidated financial statements.

As of December 31, 2006, the Company had no known probable but inestimable exposures relating to claims, environmental matters, or other legal proceedings that are expected to have a material adverse effect on the Company. There can be no assurance, however, that unanticipated events will not require the Company to increase the amount it has accrued for any matter or accrue for a matter that has not been previously accrued because it was not considered probable. While it is possible that the increase or establishment of an accrual could have a material adverse effect on the Company’s financial results for any particular fiscal quarter or year, in the opinion of management there exists no known potential exposure that would have a material adverse effect on the financial condition or on the financial results of the Company beyond such fiscal quarter or year.

Item 4.

Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders in 2006.

Part II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

There is no publicly traded market for our common equity.

Item 6.

Selected Consolidated Financial Information

The following table sets forth our selected historical and other financial data for each of the five years in the period ended December 31. Until June 30, 2003, we accounted for our 50% membership interest in Wise Recycling using the equity method. With the acquisition of the remaining 50% membership interest, Wise Recycling has been included in our statement of operations data from July 1, 2003. You should read the following selected historical financial and other information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operation” and our consolidated financial statements and the notes thereto included elsewhere in this Form 10-K.


	2006			2005			2004			2003			2002
Statement of Operations Data:
Sales	$	1,013,033		$	883,844		$	766,868		$	619,058		$	628,313
Cost of sales		1,024,864			881,290			770,518			601,675			593,048

Gross margin (deficit)		(11,831	)		2,554			(3,650	)		17,383			35,265
Selling, general and administrative		11,557			10,728			11,967			9,204			6,750
Severance charges (credit)		—			—			—			(4,315	)		6,196

Operating income (loss)		(23,388	)		(8,174	)		(15,617			12,494			22,319
Nonrecurring charges		—			—			—			—			(3,221	)
Guarantee of affiliate debt		—			—			—			300			1,471
Income (loss) from affiliate		—			—			—			973			—
Early extinguishment of debt		—			—			(7,455	)		—			12,967
Interest expense and fees, net		(32,679	)		(25,110	)		(17,920	)		(14,400	)		(11,113	)
Adjustment for contracts under SFAS 133(1)		(24,126	)		11,666	)		(550	)		8,196			12,704

Income (loss) before cumulative effect of change in accounting principle		(80,193	)		(21,618	)		(41,542	)		7,563			35,127
Cumulative effect of change in accounting principle		—			—			—			—			—

Net income (loss)	$	(80,193	)	$	(21,618	)	$	(41,542	)	$	7,563		$	35,127

Other Data:
Depreciation and amortization	$	12,580		$	13,355		$	13,211		$	12,300		$	8,679
Adjusted EBITDA(2)		9,106			7,499			33,335			30,423			33,383
Capital expenditures		10,612			14,537			12,329			10,143			14,248
Total pounds billed-rolled aluminum (in millions)		636			661			653			570			599
Number of employees at end of period—Total		1,091			1,151			1,134			1,147			1,085
Number of employees at end of period—Alloys		895			959			1,012			1,026			1,067
Total man hours worked (in thousands) —Alloys		1,509			1,527			1,609			1,747			1,809

Balance Sheet Data (at period end):
Cash	$	2,280		$	6,456		$	7,669		$	903		$	3,533
Restricted cash(3)		7,889			250			250			250			6,916
Property and equipment, net		84,589			86,557			85,375			86,257			81,979
Total assets		338,256			342,077			334,470			285,640			279,213
Working capital		(24,022	)		34,798			55,867			18,016			13,455
Total debt		344,800			290,033			254,244			175,270			163,435
Total members’ (deficit) equity		(115,482	)		(35,289	)		(12,765	)		42,890			35,327

(1)

We adopted SFAS No. 133, Accounting for Derivative Instruments and Hedging Activity, on January 1, 2001. We have elected not to designate any of our derivative instruments as hedges under this statement. All of our derivatives are recorded at fair value in our balance sheets. Accordingly, any unrealized loss or gain is recorded in operations as of the end of each accounting period. (See Note 1 to our Consolidated Financial Statements).

(2)

Adjusted EBITDA represents EBITDA (defined as net income (loss) before income taxes, interest expense and fees, net, and depreciation and amortization), adjusted to exclude early extinguishment of debt, income from affiliate, nonrecurring charges, severance charges and credits, LIFO adjustments, cumulative effect of change in accounting principle and mark-to-market adjustment for contracts under SFAS 133. Adjusted EBITDA should be considered in addition to, and not as a substitute for, cash flows as a measure of liquidity. We include Adjusted EBITDA information because this measure is used to measure our compliance with debt covenants and used by investors and note holders to evaluate our ability to service debt. Our measure of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. The table below sets forth the computation of Adjusted EBITDA. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results Of Operation — Liquidity and Capital Resources.”

(3)	Restricted cash includes cash deposits with commodity brokers to cover open hedging positions.


	2006			2005			2004			2003			2002
Net Cash (used in) provided by operating activities	$	(47,175	)	$	(21,559	)	$	(33,823	)	$	(2,340	)	$	22,866
Changes in working capital items and other		23,602			3,948			48,653			23,951			37,190
Interest expense and fees, net(a)		32,679			25,110			18,505			14,400			11,113
Income from affiliate		—			—			—			(1,273	)		(1,471	)
Severance charges (credits)		—			—			—			(4,315	)		6,196
Nonrecurring charges		—			—			—			—			3,221

Adjusted EBITDA	$	9,106		$	7,499		$	33,335		$	30,423		$	33,383

(a)	Interest expense and fees includes servicing fees paid in conjunction with receivables asset sales in the amount of $585 in 2004.

Item 7.

Management’s Discussion And Analysis Of Financial Condition And Results Of Operation

Overview

We are the third largest producer of aluminum beverage can stock in the world and one of the largest aluminum and other non-ferrous scrap recyclers in the United States. Beverage can stock is aluminum sheet specifically designed and engineered for the production of aluminum beverage cans. We own one of only five beverage can stock facilities in North America, providing valuable capacity to meet volume demands in a consolidated industry. Our can stock customers include Ball, Crown and Rexam. These customers produce aluminum cans for the largest brewers and carbonated soft drink bottlers in North America. In addition, we produce food container stock and semi-fabricated aluminum sheet for transportation and other common alloy commercial markets. Our recycling operation, Wise Recycling, provides aluminum feedstock for our aluminum sheet production as well as collection of scrap for sale in the merchant market.

Unlike some of our principal competitors, we do not manufacture aluminum from bauxite. Instead, we process aluminum scrap and prime aluminum manufactured by third parties. As a result, we do not have the capital requirements and high fixed costs associated with the production of prime aluminum. Aluminum purchases comprised approximately 74% of our cost of sales in 2006. Historically, prices of our aluminum can stock and other products have been directly correlated to the prices of our metal material cost due to the standard industry practice of passing through the metal material costs to customers. This correlation, subject to the impact of metal ceiling or “price caps” has otherwise allowed us to maintain a relatively consistent conversion revenue, defined as net revenue less material costs, on a per pound basis. The impact of metal prices rising above the ceiling in 2004, 2005 and 2006 has led to a reduction in conversion revenue and resulting conversion margin. The Company expects to have no impact from metal ceilings in 2007.

Our can stock production takes place at our Listerhill facility in Muscle Shoals, Alabama. We purchased this facility from Reynolds in January 1999. At our Listerhill facility, we convert used beverage cans, other forms of scrap aluminum and primary ingot into high quality aluminum sheet, or can stock, that is used by our customers to produce beverage and food cans and other aluminum sheet products. There are five primary steps in the production process: (i) melting the raw material; (ii) casting an ingot; (iii) hot rolling the ingot and reducing its gauge to a 0.10 inch thickness; (iv) further reducing the thickness to customer specified gauges on our cold mills and (v) finishing the can stock with a coating. Including commercial products and can sheet, we believe our cast house and hot mill have annual capacity in excess of 1.8 and 1.4 billion pounds, respectively, while our cold mills and finishing capacity is limited to approximately 1.1 billion pounds.

We generally warehouse finished can stock at twelve locations which are strategically situated in close proximity to many of the primary customer plant locations that we serve. Our customer plant locations require daily shipments by either rail or truck to replenish warehouse inventory.

In 2006, approximately 55% and 16% of our total revenues were derived from sales to Ball and Crown, respectively. Our Listerhill facility has been a supplier to selected Ball manufacturing facilities since 1965, and we are the largest supplier of beverage can stock to Ball. Ball has contracted to purchase aluminum beverage can stock from us through a multi-year supply agreement extending beyond 2006. We supplied beverage can stock to Crown under a supply agreement through September, 2006 and continue to make spot shipments. We currently supply Crown food can stock under a multi-year supply agreement which extends beyond 2007. We began to ship can stock to Rexam in 2004 and continue with Rexam to make spot shipments. We also continue with trial shipments to a fourth major beverage can manufacturer.

Our historic beverage can stock shipments have been fairly consistent since our purchase of our Listerhill facility in 1999, as the beverage can market and competitive market share positions have been relatively constant over that period.

We recognize revenue at the later of the date of shipment, or upon transfer of title. The majority of our inventory is accounted for on a last-in, first-out basis. We have elected not to designate any of our derivative instruments as hedges under SFAS No. 133. All of our derivatives have been recorded at fair value on our balance sheets.

Metal, labor, natural gas, electricity and plant maintenance costs represent the primary components of our cost of sales. In 2006, scrap aluminum represented approximately 69% of our metal input. In 2006, aluminum represented approximately 74% of our cost of sales. Purchases of scrap aluminum from Recycling and our customers made up 47% of total scrap used, with the balance coming from purchases in the open market. The scrap purchase arrangements with our key customers through which we purchase scrap aluminum generated in their can production processes provided us with approximately 26% of our scrap aluminum requirements in 2006. In 2006, scrap aluminum purchases from Recycling represented 21% of our purchases of scrap aluminum. Recycling presently operates seven area centers with twenty service centers and eighteen convenience centers associated with the area centers. Recycling continues to identify potential locations where there is a sufficient industrial base to provide scrap to the plant and operate profitably on an independent basis. Recycling also sells copper and other non-ferrous scrap to unaffiliated third party buyers.

The primary aluminum alloys utilized in our business are readily available and are purchased from both foreign and domestic sources.

We currently purchase natural gas on a bid basis from Atmos which is delivered through Northern Alabama Gas District Pipeline and purchase electricity from the TVA, which provides for firm power at fixed prices and variable power at market prices.

Shipping and handling costs amounted to $25.6 million, $23.9 million, and $25.5 million for the years ended December 31, 2006, 2005 and 2004, respectively, and are recorded as a reduction of sales in the statements of operations. While shipments increased from 736.1 million pounds in 2004 to 764.7 million pounds in 2005 , freight costs actually decreased from $25.5 million in 2004 to $23.9 million in 2005 due to more effective use of rail transportation which provides for a less expensive mode of transportation versus shipments by truck. While shipments decreased from 764.71 million pounds in 2005 to 757.3 million pounds in 2006, freight costs actually increased from $23.9 million in 2005 to $25.6 million in 2006 due an increased use of truck transportation which provides for a more expensive mode of transportation versus shipments by rail.

Selling, general and administrative expenses consist primarily of employment and various administrative expenses. Employment costs comprised approximately 48% of selling, general and administrative expenses in 2006. Eleven unions represent our hourly workers under seven collective bargaining agreements. The current labor agreements are in effect through November 1, 2007.

Wise Metals Group LLC and its subsidiaries are taxed as partnerships under Subchapter K of the Internal Revenue Code. Therefore, the results of the Company’s operations are included in the taxable income of the individual shareholders. As a result, no provision for federal income taxes has been included in the consolidated financial statements.

At a minimum, the Company intends to make cash distributions to its shareholders in the amount necessary for its shareholders to pay their individual taxes associated with the Company’s taxable income.

Operating Results

Year ended December 31, 2006 compared to year ended December 31, 2005

Sales. Consolidated sales increased from $883.8 million in 2005 to $1,013.0 million in 2006, an increase of $129.2 million, or 15%. Total volumes decreased from 765 million pounds in 2005 to 757 million pounds in 2006, a decrease of 8 million pounds, or 1%.

Wise Alloys sales increased from $807.9 million in 2005 to $880.4 million in 2006, an increase of 9% while shipments decreased from 661.3 million pounds in 2005 to 636.3 million pounds in 2006, a decrease of 4%. Contributing to sales increases were continued higher commodity prices for aluminum which resulted in price increases for products including can sheet.

Wise Recycling sales to third parties increased from $73.5 million in 2005 to $131.2 million in 2006, an increase of 79% while shipments to third parties increased from 103.4 million pounds in 2005 to 121.0 million pounds in 2006, an increase of 17%. The increased shipments at Recycling resulted from continued internal growth and expansion efforts within existing facilities to handle increased non-aluminum scrap such as copper and brass. Also contributing to sales increases were continued higher commodity prices for aluminum and other scrap products which resulted in price increases for recycled products.

Cost of Sales. Consolidated cost of sales increased from $881.3 million in 2005 to $1,024.9 million in 2006 an increase of $143.6 million or 16%.

Wise Alloys cost of sales increased from $817.1 million in 2005 to $921.3 million in 2006, an increase of 13%. Metal costs, accounted for on the last-in-first-out (LIFO) basis and representing 70.1% and 75.7% of cost of sales in 2005 and 2006, respectively, increased from $572.7 million in 2005 to $697.3 million in 2006, an increase of $124.6 million or 22%. Gross margin decreased from a deficit of ($11.0) million in 2005 to a deficit of ($59.9) million in 2006. Contributing to this change is the 2006 impact of higher metal costs accounted for on LIFO. Metal prices in 2006 averaged approximately 33% higher than in 2005, while metal prices in 2005 averaged approximately 8% higher than in 2004. The increase in metal prices resulted in a $19.9 million loss from the LIFO liquidation during 2006. The decrease in margin resulted from an approximate $42.2 million impact from metal price caps on can sheet which reduced the effective selling price of can sheet and prevented a full pass-through of increased aluminum prices. Also contributing to the margin decrease was the increased prices paid for energy including natural gas. The price paid per mmBTU in 2005 was $8.98 versus an average price paid in 2006 of $9.69, an increase of 8% or approximately $.71 per mmBTU. Based on annual usage of approximately 4.4 million mmBTUs, this price increase contributed approximately $3.1 million to the decrease in margin in 2006. Also contributing to the decrease were the effects of other input costs increases including coatings.

Wise Recycling cost of sales associated with third party sales increased from $70.7 million in 2005 to $117.9 million in 2006, an increase of 67%. The increase can be attributed to the increased volumes at Recycling as well as the higher commodity prices for aluminum and other scrap products including copper and brass which resulted in cost increases for recycled products.

Selling, General and Administrative. Selling, general and administrative expenses increased from $10.7 million in 2005 to $11.6 million in 2006, an increase of $0.9 million or 8% due to an increase in personnel costs.

Interest Expense and Fees. Interest expense, including regular amortization of deferred financing costs, increased from $25.1 million in 2005 to $32.7 million in 2006, an increase of $7.6 million, primarily as a result of higher outstanding borrowings due to higher metal prices and higher interest rates on the variable rate revolving line of credit. Non-cash amortization of deferred financing costs included in interest expense and fees was $1.2 million in 2005 and $1.7 million in 2006, an increase of $0.5 million or 42%.

Mark-to-Market for Contracts under SFAS No. 133. This loss represents the non-cash loss we recognized pursuant to SFAS No. 133. In 2006, we recognized an unrealized loss of ($24.1) million versus a gain of $11.7 million in 2005.The unrealized losses were as a result of forward contracts entered into to hedge the cost of natural gas and aluminum. The fair value at December 31, 2006 for natural gas and aluminum derivatives were ($3.6) million and ($2.8) million, respectively.

Year ended December 31, 2005 compared to year ended December 31, 2004

Sales. Consolidated sales increased from $766.9 million in 2004 to $883.8 million in 2005, an increase of $116.9 million, or 15%. Total volumes increased from 736 million pounds in 2004 to 765 million pounds in 2005, an increase of 29 million pounds, or 4%.

Wise Alloys sales increased from $711.0 million in 2004 to $807.9 million in 2005, an increase of 14% while shipments increased from 652.7 million pounds in 2004 to 661.3 million pounds in 2005, an increase of 1%. Contributing to sales increases were continued higher commodity prices for aluminum which resulted in price increases for products including can sheet.

Wise Recycling sales to third parties increased from $55.6 million in 2004 to $73.5 million in 2005, an increase of 32% while shipments to third parties increased from 83.4 million pounds in 2004 to 103.4 million pounds in 2005, an increase of 24%. The increased shipments at Recycling resulted from continued internal growth and expansion efforts within existing facilities to handle increased non-aluminum scrap such as copper and brass. Also contributing to sales increases were continued higher commodity prices for aluminum and other scrap products which resulted in price increases for recycled products.

Cost of Sales. Consolidated cost of sales increased from $770.5 million in 2004 to $881.3 million in 2005, an increase of $110.8 million or 14%.

Wise Alloys cost of sales increased from $697.4 million in 2004 to $817.1 million in 2005, an increase of 17%. Metal costs, accounted for on the last-in-first-out (LIFO) basis and representing 74.7% and 70.1% of cost of sales in 2004 and 2005, respectively, increased from $521.4 million in 2004 to $572.7 million in 2005, an increase of $51.4 million or 10%. Gross margin improved from a deficit of ($21.1) million in 2004 to a deficit of ($11.0) million in 2005. Contributing to this improvement is the 2004 impact of higher metal costs accounted for on LIFO. Metal prices in 2005 averaged approximately 8% higher than in 2004, while metal prices in 2004 averaged approximately 23% higher than in 2003. The smaller increase in metal prices combined with an overall reduction in the days of inventory on-hand subject to LIFO, resulted in an $8.5 million gain from the LIFO liquidation. The price paid per mmBTU in 2004 was $6.18 versus an average price paid in 2005 of $8.98, an increase of 45% or approximately $2.80 per mmBTU. Based on annual usage of approximately 4.4 million mmBTUs, this price increase resulted in an approximately $12.3 million decrease in margin in 2005. Also reducing margin was an approximate $8.1 million impact from metal price caps on can sheet which reduced the effective selling price of can sheet and prevented a full pass-through of increased aluminum prices. Also offsetting the increase were the effects of other input costs increases including coatings, the disruptive effects of both Hurricanes Katrina and Rita on production, as well as the adverse effects of the temporary curtailment of shipments to a major can sheet customer. During 2005 we announced price increases and our intentions to eliminate the metal ceiling on can sheet contracts. In response to this announcement, one of our major can sheet customers withdrew their volume for the third quarter and later restored their shipments in the fourth quarter.

Wise Recycling cost of sales associated with third party sales increased from $52.6 million in 2004 to $70.7 million in 2005, an increase of 34%. The increase can be attributed to the increased volumes at Recycling as well as the higher commodity prices for aluminum and other scrap products including copper and brass which resulted in cost increases for recycled products.

Selling, General and Administrative. Selling, general and administrative expenses decreased from $12.0 million in 2004 to $10.7 million in 2005, a decrease of $1.3 million or 11%. Contributing to this decrease was an approximate $0.7 million in bank charges in 2004 for an accounts receivable asset sale transaction for which no similar transactions were completed in 2005.

Early Extinguishment of Debt. Effective May 5, 2004, we issued $150 million of 10.25% senior secured notes due 2012. Use of these proceeds included an early extinguishment of the subordinated 15% notes for which a prepayment penalty of $3.5 million was paid and is included as other expense in the Company’s 2004 consolidated

statement of operations. As part of the refinancing, approximately $4.0 million of deferred financing costs were written off through accelerated amortization of deferred financing fees and is also included as other expense. Accordingly, total early extinguishment of debt in 2004 was $7.5 million.

Interest Expense and Fees. Interest expense, including regular amortization of deferred financing costs, increased from $17.9 million in 2004 to $25.1 million, an increase of $7.2 million, primarily as a result of higher outstanding borrowings due to higher metal prices, higher interest rates on the variable rate revolving line of credit and as a result of issuing the $150 million of 10.25% senior secured notes which occurred on May 5, 2004. Non-cash amortization of deferred financing costs for the year ended December 31, 2005 and included in interest expense and fees was $1.2 million.

Mark-to-Market for Contracts under SFAS No. 133. This gain represents the non-cash gain we recognized pursuant to SFAS No. 133. The unrealized gains were as a result of forward contracts entered into to hedge the cost of natural gas and aluminum. The fair value at December 31, 2005 for natural gas and aluminum derivatives were ($0.6) million and $16.4 million, respectively. In 2005, we recognized an unrealized gain of $11.7 million versus a loss of $0.6 million in 2004.

Liquidity and Capital Resources

Our principal source of cash to fund liquidity needs is net cash provided by operating activities and availability under the revolving portion of our senior secured facility. We anticipate that our primary liquidity needs will be for debt service, working capital, capital expenditures and distributions for tax purposes. Our debt service costs increased as a result of the offering of the senior secured notes. We believe that cash generated from operations and available borrowings under our senior secured credit facility, as amended and restated, will be sufficient to enable us to meet our liquidity requirements in the foreseeable future.

Our principal sources of cash to fund liquidity needs are net cash provided by operating activities and availability under our revolving senior secured credit facility described in Note 4 to our Combined Consolidated Financial Statements below. We anticipate that our primary liquidity needs will be for debt service, working capital (including potential increased margin deposits associated with derivatives) and capital expenditures. Our debt service costs and working capital requirements have increased as a result of increased aluminum prices. We believe that cash generated from operations, available borrowings under our senior revolving secured credit facility, including anticipated increases in borrowing base availability that would likely result as our accounts receivable and inventory values increase, and other indebtedness, such as the Master Equipment Lease dated November 13, 2006 by and among Alloys, Wilmington Trust Company, The Employees’ Retirement System of Alabama and the Teachers’ Retirement System of Alabama executed in connection with the sale and concurrent leaseback of certain property by Alloys and agreements that we enter from time to time pursuant to which we sell certain accounts receivable, will be sufficient to enable us to meet our liquidity requirements in the foreseeable future.

Our liquidity has been directly impacted by aluminum prices which have increased steadily and dramatically since 2002. Average aluminum prices in 2002 were 65.4 cents per pound and have risen over 40% to average 91.7 cents per pound for 2005. In 2006, aluminum prices had risen to average $1.22 per pound for the year and the monthly average for December, 2006 was $1.31. These price increases have and are continuing to impact our working capital requirements resulting in higher outstanding debt supported by higher levels of receivables and inventory. Our net liquidity is determined based on a standard borrowing base formula which accounts for the collateral value of inventory and receivables on a basis approximating the lower of current cost (on a FIFO basis) or fair market value. This borrowing base is then compared to the outstanding loan balance including outstanding letters of credit to determine a net amount available for additional borrowings. Our liquidity could also be hampered if we incurred significant unexpected increases in necessary capital expenditures. Significant increases in volumes could also impact our liquidity. See Item 1A, “Risk Factors” for certain circumstances that could adversely affect our liquidity. In particular, a default under our senior secured credit facility or decreased sales or lower margins from our sales to Ball or Crown could have a material adverse effect on our liquidity. While the metal ceiling have materially impacted sales in 2004, 2005 and 2006, the Company expects to have no impact from metal price ceilings in 2007.

As of December 31, 2006, the outstanding balance on our revolving line-of-credit was $177.2 million. In addition, we had approximately $2.1 million of outstanding letters of credit against our $207.5 million revolving credit line. The termination date on the facility is May 5, 2009. The terms of the credit facility permit us to enter into various forms of additional financing with varying amounts. Furthermore, we frequently offer cash discounts for early payment against receivables from our major can sheet customers which can also decrease outstanding debt and increase our overall liquidity.

Our total available credit under our revolving credit facility is $207.5 million which represents our primary source of liquidity for our working capital needs. Our ability to borrow the full available amount of our credit facility is limited by the available borrowing base under the revolving credit facility as determined based on a borrowing base formula which relates to the collateral value of trade receivables and inventory on a basis approximating the lower of current cost (on a first-in first-out or FIFO basis) or fair market value. This borrowing base is then compared to the outstanding loan balance (including outstanding letters of credit) to determine a net amount available for additional borrowings (“Availability”).

This credit facility requires also that we comply with either a minimum “Adjusted EBITDA” or an Adjusted Excess Availability calculation as defined by this agreement. These covenants are measured on a monthly basis.

As described in note 4 to our consolidated financial statements below, Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization adjusted for the effects of LIFO and SFAS No. 133 mark to market charge. Adjusted Excess Availability is determined as availability adjusted to remove any contractual sub-limits such as those for inventory or any limitations on the maximum amount of the revolving credit facility.

This credit facility was amended on August 4, 2006 which, among other things, modified our compliance requirements for our debt covenants. We were not required to comply with either the Adjusted EBITDA or Adjusted Excess Availability calculation until month ends beginning after July 31, 2006.

Subsequent to July 31, 2006 we were required to meet the minimum Adjusted EBITDA levels as noted within our credit agreement or the Adjusted Excess Availability must be equal to or greater than $20,000,000 for each of the ten (10) consecutive days immediately preceding the last day of the month.

Effective December 31, 2006, the Company completed an amendment to this revolving credit facility. The amendment was to reset certain covenant levels based on the company’s most recent financial projections and results and as noted within our credit agreement. As of and subsequent to December 31, 2006, the Company must either meet the minimum Adjusted EBITDA levels as noted within our credit agreement or the Adjusted Excess Availability must be equal to or greater than $20,000,000 for each of the ten (10) consecutive days immediately preceding the last day of the month. As of the December 31, 2006 the Company was in compliance with the debt covenants under this agreement, as amended.

If we do not comply with these or other covenants and restrictions contained in our senior secured credit facility, the indenture and other agreements governing our indebtedness, we could be in default under those agreements, and the debt under those instruments, together with accrued interest, could then be declared immediately due and payable. If we default under our senior secured credit facility, the lenders could cause all of our outstanding debt obligations under our senior secured credit facility to become due and payable, require us to apply all of our cash to repay the indebtedness or prevent us from making debt service payments on any other indebtedness we owe. In addition, any default under our senior secured credit facility or agreements governing our other indebtedness could lead to an acceleration of debt under other debt instruments that contain cross-acceleration or cross-default provisions. If the indebtedness under our senior secured credit facility and indenture is accelerated, we may have to seek other sources of financing or otherwise may not have sufficient assets to repay amounts due under our senior secured credit facility, our senior secured notes or under other debt securities then outstanding. Our ability to comply with these provisions of our senior secured credit facility, the indenture and other agreements governing our other indebtedness may be affected by changes in the economic or business conditions or other events beyond our control.

In 2006 the Company executed a sale leaseback agreement on certain pieces of production equipment with The Employees’ Retirement System of Alabama in the amount of $29.9 million. The agreement executed on November 13, 2006 provided the Company with an initial funding of $14.95 million to be followed by an additional $14.95 million which became available on December 1, 2006 and the Company drew down on January 3, 2007. The agreement qualifies as a capital lease and has a three-year term with a fixed interest rate of 10.7%.

Should aluminum prices continue to rise, we expect that the collateral value of our working capital would continue to rise sufficiently to warrant further increases to the senior secured credit facility should required borrowings and conditions dictate. As such, we believe our available sources of credit will be sufficient to meet our liquidity needs.

Year ended December 31, 2006 compared to year ended December 31, 2005

Operating Activities. During the year ended December 31, 2006, net cash used in operating activities was $47.2 million as compared to $21.6 million in 2005. Cash used in or provided by operating activities are subject to fluctuations in working capital requirements especially for accounts receivable and inventories. Accounts receivable increased from $73.3 million at December 31, 2005 to $104.1 million at December 31, 2006, an increase of $30.8 million. This increase is a result of timing and the rising price of metal. The payments by our customers are made at periodic times during the week and month, not everyday, nor exactly in 30 days, so the balance in receivables can fluctuate significantly at the end of a quarter depending on the timing of receiving payments. The increase in working capital requirements affecting both accounts receivable and inventory were also result of higher aluminum prices which increased an average of approximately 33% for the year.

Investing Activities. In 2006, our capital expenditures were $10.6 million as compared to $14.5 million in 2005. These expenditures, which exclude recurring maintenance expenditures, are comprised of capital improvements principally related to machinery and equipment. The Company has completed the next step in a program to further diversify industry product offerings by adding increased width to its aluminum can-stock capabilities. The results of this phase will extend the width of Wise Alloys can stock from 60 inches to 72 inches by the end of 2008. This project will allow Wise Alloys’ can-sheet product to become also available to beverage-can producers that use “14 and 15 out” extended-width cupping presses in their manufacturing process.

Financing Activities. Net cash provided by financing activities was $53.6 million in 2006 compared with $34.9 million in 2005. Net cash provided by financing activities was from increased borrowings under the senior secured credit facility as well as funds received under the sale lease back agreement.

Effective March 3, 2006, we amended and restated our revolving credit facility to increase the revolver limit from $150 million to $180 million, subject to a borrowing base calculation and certain working capital eligibility requirements and limits. Proceeds from the revolver are used primarily to finance increased working capital requirements due to higher shipment levels and increased metal prices. On June 12, 2006, we further amended and restated our revolving credit facility to increase the revolver limit from $180 million to $200 million. On August 4, 2006, we further amended and restated our revolving credit facility to increase the revolver limit from $200 million to $207.5 million.

Year ended December 31, 2005 compared to year ended December 31, 2004

Operating Activities. During the year ended December 31, 2005, net cash used in operating activities was $21.6 million as compared to $33.8 million in 2004. Cash used in or provided by operating activities are subject to fluctuations in working capital requirements especially for accounts receivable and inventories. Accounts receivable increased from $46.3 million at December 31, 2004 to $73.3 million at December 31, 2005, an increase of $27 million. This increase is a result of timing and the rising price of metal. The payments by our customers are made at periodic times during the week and month, not everyday, nor exactly in 30 days, so the balance in receivables can fluctuate significantly at the end of a quarter depending on the timing of receiving payments. In addition, in late 2005, a significant can sheet customer who had curtailed orders during the third quarter, increased its order rate significantly at the end of the year leading to a temporary increase in accounts receivable to that customer and a corresponding decrease in inventory levels. The increase in working capital requirements affecting both accounts receivable and inventory were also result of higher aluminum prices which increased an average of approximately 8% for the year.

Investing Activities. In 2005, our capital expenditures were $14.5 million as compared to $12.3 million in 2004. These expenditures, which exclude recurring maintenance expenditures, are comprised of capital improvements principally related to machinery and equipment. We do not anticipate the need to make any major capital expenditures in the immediate future.

Financing Activities. Net cash provided by financing activities was $34.9 million in 2005 compared with $52.9 million in 2004. Net cash provided by financing activities was from increased borrowings under the senior secured credit facility.

Effective October 31, 2005, we amended and restated our revolving credit facility to increase the revolver limit from $125 million to $150 million, subject to a borrowing base calculation and certain working capital eligibility requirements and limits. Proceeds from the revolver are used primarily to finance increased working capital requirements due to higher shipment levels and increased metal prices.

We do not enter into derivative contracts for speculative purposes.

Backlog of Customer Business

We maintain long-term supply agreements with our key customers in the aluminum can sheet market and we believe the general terms of our customer contracts are standard for the industry. These contracts are supply arrangements whereby specific quantities and product pricing are negotiated and agreed to on an annual basis under the terms of the multi-year master supply agreement.

Under the terms of our customer contracts, we use an industry standard for pricing the metal component of all aluminum can sheet sold. Accordingly, at any given point in time, we may have seven months of delivery priced under the master contract, the exact specifications and delivery locations to be determined as described below.

We receive orders from our customers which provide detailed specifications as to metal characteristics and specific plant location. Although all orders are placed pursuant to the contract, quantities and specifications will vary by plant and more specifically by production line within the plant. These orders are generally provided with a two to three month lead time. The majority of all orders, specifically can sheet orders, that are processed by Alloys are made pursuant to a specific customer order. Due to seasonal considerations, Alloys highest sales volumes generally occur during the first and second quarters.

We earlier announced conversion price increases effective January 1, 2006, as well as our intent to begin moving away from providing ceiling coverage, or price caps, on the metal transfer price offered to can sheet customers. For the second and third and fourth quarters of 2006 the metal transfer price was above the ceiling. Confidential discussions are continuing with customers with regard to implementing these and other changes. These discussions resulted in contractual price increases that were effective January 1, April 1, and October 1, 2006, with new price increases effective January 1, 2007. Other can sheet suppliers have also announced similar intentions and discussions.

During the second quarter of 2006, Crown Cork and Seal (USA), Inc. notified us that it had arranged to cover its beverage can sheet volume requirements for the fourth quarter of 2006 and for calendar year 2007. In 2005, sales to Crown totaled approximately 20% of our net sales of which beverage can sheet was a substantial portion. In 2006, sales to Crown totaled approximately 17% of our net sales of which beverage can sheet was a substantial portion. Crown has requested and we have provided assurances that we will continue to supply our can sheet volume for food products. In connection with Crown’s beverage can business, we filed a lawsuit against Crown and in connection with Crown’s food can business; we are seeking declaratory judgment to interpret certain pricing provisions. See Item 3, “Legal Proceedings” above.

Financing Arrangements

Effective May 5, 2004, we issued $150 million of 10.25% senior secured notes due 2012. In conjunction with issuing the notes, we, on the same date, amended and restated our secured credit facility reducing the revolving line of credit from $130 million to $75 million which on November 10, 2004 was amended and restated to increase the revolving line of credit to $125 million. The revolving line of credit was again increased on October 31, 2005, on March 3, 2006, on June 12, 2006, and on August 4, 2006 to $150 million, $180 million, $200 million and $207.5 million, respectively, as a means to fund higher working capital requirements resulting from higher aluminum prices. The proceeds of the notes were used to primarily repay the $30 million term loan of which $20 million had been outstanding, to repay our subordinated 15% notes of $36 million and to repurchase members’ equity of $14 million. The remaining proceeds were used to initially reduce the revolving line of credit and for working capital purposes.

The repayment of the subordinated 15% notes represented an early extinguishment for which a prepayment penalty of $3.5 million was paid and is included as other expense in the Company’s second quarter consolidated statement of operations for the year ended December 31, 2004. As part of the refinancing, approximately $4.0 million of deferred financing costs were written off through accelerated amortization of deferred financing fees and is also included as other expense for the year ended December 31, 2004. Accordingly, total early extinguishment of debt in 2004 was approximately $7.5 million.

In 2004, total financing costs of approximately $8.2 million were incurred and were deducted from the $150 million gross proceeds of the sale of the 10.25% senior subordinated notes and are included on the balance sheet as other long term assets.

As a result of amending and restating the secured credit facility in 2004, the interest rate on the revolving line of credit was reduced from a variable rate of prime plus a range of 0.75% to 1.50% or LIBOR plus a range of 2.75% to 3.50% to a variable rate of prime plus a range of 0% to 0.50% or LIBOR plus a range of 2.25% to 2.75%.

Effective March 31, 2006 the Company executed an asset sale agreement with a financial institution that allows the Company to sell certain accounts receivable up to $17 million on a non-recourse basis. This agreement was due to expire on December 31, 2006. On December 31, 2006 the agreement was renewed and extended to June 29, 2007, and allowed the Company to sell certain accounts receivable up to $10 million on a non-recourse basis. The agreement was further amended on April 9, 2007 to increase the facility to a total of $20 million. Under the terms of the agreement, the Company agreed to sell on an ongoing basis and without recourse, a designated customer’s accounts receivable. On December 31, 2006 there had been no sales under this agreement. Subsequent to December 31, 2006, the Company sold approximately $10 million of receivables under this agreement.

Quarterly Information

Our quarterly revenues tend to fluctuate period to period based in large part on changes in aluminum prices. Absent the effect of ceilings on metal transfer prices, these changes generally do not affect our cash flow because we seek to match our hedging positions to our contractually-obligated sales agreements. The pass through of aluminum cost increases to customers is done through an indexed pricing mechanism, subject to an industry-wide ceiling, and/or by fixing the cost of metal through forward contracts on the LME. Our net income may also fluctuate period to period because we may have non-cash unrealized gains or losses related to our aluminum and natural gas futures contracts.

Critical Accounting Policies

We have prepared our financial statements in conformity with accounting principles generally accepted in the United States, and these statements necessarily include some amounts that are based on informed judgments and estimates of management. Our critical accounting policies are summarized in Note 2 of the notes to our consolidated financial statements. As discussed below, our financial position or results of operations may be materially affected when reported under different conditions or when using different assumptions in the application of such policies. In the event estimates or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.

Inventory Valuation

Inventories are valued at lower of cost or market using the last-in, first-out (LIFO) method. We use the LIFO method since it better matches current costs with current sales prices in our results of operations. Certain items in inventory may be considered impaired, obsolete or excess, and as such, we may establish an allowance to reduce the carrying value of these items to their net realizable value. Based on certain assumptions and judgments made from the information available at that time, we determine the amounts in these inventory allowances. If these estimates and related assumptions or the market changes, we may be required to record additional reserves.

Derivative Accounting

We have entered into long-term agreements to supply beverage can stock to our largest customers. To reduce the risk of changing prices for purchases and sales of metal, including firm commitments under these supply agreements, as well as to manage volatile natural gas prices, we use commodity futures and option contracts.

Under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activity, we are required to recognize all derivative instruments as either assets or liabilities on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through the statement of operations.

In determining the fair value of our aluminum futures and options contracts, interest rate caps, and our natural gas caps and swaps, we use market quotes for contracts of similar maturities or management estimates in the absence of available market quotes. We adjust the market quotes for our aluminum derivative instruments for premiums or discounts for various product grades, locations and the closing times for various terminal markets. Differences in actual market prices from those estimated may cause us to make adjustments in future periods to reflect these differences.

Allowance for Doubtful Accounts

Our ability to collect outstanding receivables from our customers is critical to our operating performance and cash flows. Typically, our customer agreements require monthly payments, mitigating the risk of non-collection. We record an allowance for uncollectible accounts based on our ongoing monitoring of our customers’ credit and on the aging of the receivables. If the financial condition of our two largest customers, which accounted for 87% of our accounts receivable at December 31, 2006, were to deteriorate, resulting in an impairment of their ability to make payments, the recorded allowance for doubtful accounts may not be sufficient.

Contractual Obligations and Other Commitments

The following tables summarize our material contractual obligations as of December 31, 2006.

Payments due by period—December 31, 2006

(in thousands)


	Total		Less than 1 year		1-3 Years		3-5 Years		More than 5 Years
Long-term debt and capital lease obligations(1)	$	167,613	$	1,759	$	15,051	$	803	$	150,000
Purchase obligations(2)		67,035		67,035		—		—		—
Interest on fixed-rate debt instruments		84,828		15,497		30,797		30,795		7,739
Operating leases		11,971		1,701		3,238		2,939		4,093
Other long-term liabilities reflected on balance sheet under GAAP(3)		1,877		379		879		539		80

Total contractual obligations	$	333,761	$	86,555	$	50,173	$	35,116	$	161,917

(1)	Long-term obligations include capital lease obligations resulting from the sales-leaseback agreement executed in 2006 as discussed in Note 4, Financing Arrangements, in the Notes to Consolidated Financial Statements.

(2)	Purchase obligations include an estimate for metal purchases based on price commitments.

(3)	Other long-term obligations include certain future payments related to employment contracts for certain of our current executives. See Item 11, “Executive Compensation — Employment Agreements.”

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to changes in interest rates as a result of our outstanding debt. A hypothetical 100 basis point increase (or decrease) in interest rates from December 31, 2006 levels would impact our interest expense by approximately $1.4 million. Certain materials used in the manufacture of our products, most significantly natural gas and aluminum, are subject to price volatility. While future movements in prices of natural gas and aluminum are uncertain, the Company enters into certain derivative contracts to mitigate the exposure to natural gas and aluminum prices. The Company has not designated these instruments as hedges under SFAS 133 and, accordingly, the mark-to-market impact of these derivatives is recorded each period in current earnings. A hypothetical increase in aluminum prices only impacts the Company to the extent such increase was to exceed the metal price caps in our agreements with our customers since we pass the metal price along to our customers. In 2006 we used approximately 4.2 million mmBTUs of natural gas. A hypothetical $1 increase (or decrease) per mmBTU would have impacted our cost of sales by a corresponding $4.4 million.

Item 8.

Financial Statements and Supplementary Data.

The following consolidated financial statements of the Company and its subsidiaries are included herein as indicated below:


Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements.		31
Consolidated Balance Sheets—December 31, 2006 and 2005.		33
Consolidated Statements of Operations—years ended December 31, 2006, 2005, and 2004.		34
Consolidated Statements of Members’ Equity (Deficit)—years ended December 31, 2006, 2005, and 2004.		34
Consolidated Statements of Cash Flows—years ended December 31, 2006, 2005, and 2004.		35
Notes to Consolidated Financial Statements.		36

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM ON CONSOLIDATED FINANCIAL STATEMENTS

Members

Wise Metals Group LLC

We have audited the accompanying consolidated balance sheets of Wise Metals Group LLC (the Company) as of December 31, 2006 and 2005, and the related consolidated statements of operations, members’ equity and cash flows for each of the three years in the period ended December 31, 2006. Our audit also included the financial statement schedule listed in the index at item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Wise Metals Group LLC at December 31, 2006 and 2005, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

Baltimore, Maryland

April 10, 2007

Wise Me tals Group LLC

Consolidated Balance Sheets


	December 31
	2006			2005
	*(In Thousands)*
Assets
Current assets:
Cash	$	2,280		$	6,456
Restricted cash		7,889			250
Accounts receivable, less allowance for doubtful accounts ($1,129 in 2006 and $1,060 in 2005)		104,096			73,326
Inventories		120,565			142,151
Fair value of contracts under SFAS 133		3,897			20,183
Other current assets		5,933			4,379

Total current assets		244,660			246,745
Non-current assets:
Property and equipment, net		84,589			86,557
Other assets		8,724			8,492
Goodwill		283			283

Total non-current assets		93,596			95,332

Total assets	$	338,256		$	342,077


	December 31
	2006			2005
	*(In Thousands)*
Liabilities and members’ deficit
Current liabilities:
Accounts payable	$	71,131		$	54,493
Current portion of long-term debt and capital lease obligations		1,759			1,477
Borrowings under revolving credit facility		177,187			137,730
Fair value of contracts under SFAS 133		10,312			1,542
Accrued expenses, payroll and other		14,526			16,705

Total current liabilities		274,915			211,947
Non-current liabilities:
Term loan and capital lease obligations, less current portion		15,854			826
Senior secured notes		150,000			150,000
Fair value of contracts under SFAS 133		—			2,864
Other liabilities		12,969			11,729

Total non-current liabilities		178,823			165,419
Commitments and contingencies		—			—
Members’ deficit		(115,482	)		(35,289	)

Total liabilities and members’ deficit	$	338,256		$	342,077

See accompanying notes.

Wise Metals Group LLC

Consolidated Statements of Operations


	Years ended December 31
	2006			2005			2004
	*(In Thousands)*
Sales	$	1,013,033		$	883,844		$	766,868
Cost of sales (See Note 2 – Inventories/ LIFO)		1,024,864			881,290			770,518

Gross margin (deficit)		(11,831	)		2,554			(3,650	)

Operating expenses:
Selling, general and administrative		11,557			10,728			11,967
Severance credits		—			—			—

Operating loss		(23,388	)		(8,174	)		(15,617	)

Other income (expense):
Early extinguishment of debt		—			—			(7,455	)
Interest expense and fees, net		(32,679	)		(25,110	)		(17,920	)
Mark-to-market adjustment for contracts under SFAS 133		(24,126	)		11,666			(550	)

		(56,805	)		(13,444	)		(25,925	)

Net loss	$	(80,193	)	$	(21,618	)	$	(41,542	)

See accompanying notes.

Wise Metals Group LLC

Consolidated Statements of Members’ Equity (Deficit)


	Preferred Member’s Equity			Common Members’ Equity (Deficit)			Total
	*(In Thousands)*
Balance at December 31, 2003		22,500			20,390			42,890
Repurchase of preferred member’s equity		(9,000	)		—			(9,000	)
Cancellation of liquidation preference		(13,500	)		13,500			—
Repurchase of common member’s equity		—			(5,113	)		(5,113	)
2004 net loss		—			(41,542	)		(41,542	)

Balance at December 31, 2004		—			(12,765	)		(12,765	)
Repurchase of common member’s equity		—			(906	)		(906	)
2005 net loss		—			(21,618	)		(21,618	)

Balance at December 31, 2005	$	—		$	(35,289	)	$	(35,289	)
2006 net loss		—			(80,193	)		(80,193	)

Balance at December 31, 2006	$	—		$	(115,482	)	$	(115,482	)

See accompanying notes.

Wise Met als Group LLC

Consolidated Statements of Cash Flows


	Years ended December 31
	2006			2005			2004
	*(In Thousands)*
Cash flows from operating activities
Net loss	$	(80,193	)	$	(21,618	)	$	(41,542	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		12,580			13,355			13,211
Amortization of deferred financing fees		1,698			1,208			4,859
LIFO provision		19,914			2,318			35,156
Loss on extinguishment of debt		—			—			7,455
Unrealized (gain) loss on contracts under SFAS 133		24,126			(11,666	)		550
Changes in operating assets and liabilities:
Restricted cash		(7,639	)		—			—
Accounts receivable, net		(30,770	)		(26,990	)		(25,930	)
Inventories		1,672			31,340			(47,715	)
Other current assets		(1,554	)		(1,889	)		541
Accounts payable		16,638			(3,362	)		18,192
Advances to/from related parties		—			—			—
Accrued expenses, payroll and other		(3,647	)		(4,255	)		1,400

Net cash used in operating activities		(47,175	)		(21,559	)		(33,823	)

Cash flows from investing activities
Purchase of equipment		(10,612	)		(14,537	)		(12,329	)

Net cash used in investing activities		(10,612	)		(14,537	)		(12,329	)

Cash flows from financing activities
Net issuance (repayments) of short-term borrowings		39,739			36,003			(12,635	)
Proceeds of senior secured notes offering, net of fees paid		—			—			141,816
Repayment of term debt		—			—			(22,500	)
Repayment of subordinated debt		—			—			(35,687	)
Prepayment fee on subordinated debt		—			—			(3,500	)
Payments of deferred financing costs to lending institutions		(1,156	)		—			—
Proceeds from sale-leaseback transaction		14,950			—			—
Proceeds from (payments on) long-term obligations		78			(214	)		(463	)
Purchase of members’ equity		—			(906	)		(14,113	)

Net cash provided by financing activities		53,611			34,883			52,918

Net increase (decrease) in cash and cash equivalents		(4,176	)		(1,213	)		6,766
Cash and cash equivalents at beginning of year		6,456			7,669			903

Cash and cash equivalents at end of year	$	2,280		$	6,456		$	7,669

See accompanying notes.

Wise Met als Group LLC

Notes to Consolidated Financial Statements

December 31, 2006

(Dollars in Thousands)

1. Organization and Basis of Presentation

Wise Metals Group LLC is a holding company formed for the purpose of managing the operations of Wise Alloys LLC, Wise Recycling LLC and Listerhill Total Maintenance Company LLC (collectively, the Company). Wise Alloys LLC (Alloys) manufactures and sells aluminum can stock and related aluminum products primarily to aluminum can producers. Prior to June 30, 2003, the Company held a 50% membership interest in Wise Recycling LLC (Recycling) through a joint venture with Tomra North America, Inc. (TNA). Effective July 1, 2003, TNA conveyed its membership interest to Recycling, leaving the Company as the sole remaining member of Recycling. As a result, Recycling is now a wholly owned subsidiary, engaged in the recycling and sale of scrap aluminum and other non-ferrous metals. Listerhill Total Maintenance Company LLC (TMC) specializes in providing maintenance, repairs and fabrication to manufacturing and industrial plants all over the world ranging from small onsite repairs to complete turn-key maintenance.

The consolidated financial statements include the accounts of Wise Metals Group LLC and its subsidiaries. Intercompany transactions have been eliminated in consolidation.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid investments with a maturity date of three months or less when purchased.

Restricted Cash

Restricted cash generally consists of cash on deposit with brokers to support lines of credit associated with the Company’s derivative and hedging activity. At December 31, 2006 and December 31, 2005 substantially all restricted cash was on deposit with brokers associated with derivative and hedging activity as more fully described below.

Derivatives and Hedging Activity

The Company has entered into long-term contracts to supply can stock to its largest customers (see Note 8). To reduce the risk of changing prices for purchases and sales of metal, including firm commitments under these supply contracts, the Company uses commodity futures and option contracts. In addition, the Company holds natural gas futures.

Under Financial Accounting Standards Board (FASB) Statement No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), companies are required to recognize all derivative instruments as either assets or liabilities on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through mark-to-market adjustments included in the statement of operations. No derivatives were designated as hedges. In determining fair value, the Company uses market quotes for contracts of similar maturity or management estimates in the absence of available market quotes.

A summary of the Company’s derivative instruments and related activity at December 31, 2006, 2005 and 2004, and for the years then ended is as follows:


	2006						2005						2004
Description of Derivative Instrument	Fair Value			Unrealized Gain (Loss)			Fair Value			Unrealized Gain (Loss)			Fair Value			Unrealized Gain (Loss)
Aluminum futures and options	$	(2,837	)	$	(20,888	)	$	16,394		$	11,693		$	4,745		$	1,361
Interest rate caps		—			—			—			—			—			(21	)
Natural gas caps and swaps		(3,578	)		(3,238	)		(617	)		(27	)		(755	)		(1,890	)

	$	(6,415	)	$	(24,126	)	$	15,777		$	11,666		$	3,990		$	(550	)

In connection with the Company’s futures activity, the Company maintains lines of credit with brokers to cover unrealized losses on futures contracts and uses options to manage price exposure with respect to firm commitments to purchase or sell aluminum. There were no deposits with brokers at December 31, 2004 and 2005. As of December 31, 2006, the Company had $7.6 million on deposit with brokers included on the balance sheet as restricted cash.

Accounts Receivable

The Company’s accounts receivable consist of amounts due from customers throughout the United States, Canada, and Mexico. Collateral is generally not required.

The Company provides an allowance for doubtful accounts receivable by a charge to operations in amounts equal to the estimated losses expected to be incurred in collection of the accounts. The estimated losses are based on historical collection experience and a review of the current status of the existing receivables. Customer accounts are written off against the allowance for doubtful accounts when an account is determined to be uncollectible.

Concentration of Risk

The Company transacts a significant portion of its business, consisting of both sales and purchases of aluminum, with large aluminum producers in the United States. Such large aluminum producers number less than 10. Management believes that the loss of any one of these large aluminum producers, whether as a customer or a vendor, would not have a significant long-term impact upon the Company’s operations, in that another producer would absorb the business that the Company transacts with any lost producer.

During the three years in the period ended December 31, 2006, the Company earned revenues from two customers that individually exceeded 10% of all revenues. These customers also comprised a significant amount of accounts receivable at December 31 as follows:


	2006				2005				2004
	Revenues		Accounts Receivable		Revenues		Accounts Receivable		Revenues		Accounts Receivable
Customer A	$	555,280	$	88,423	$	517,568	$	34,147	$	481,739	$	20,860
Customer B		160,683		2,910		176,558		23,191		202,026		19,048

During the years ended December 31, 2006, 2005 and 2004, the Company purchased approximately 26%, 31%, and 27%, respectively, of its raw materials from two major suppliers.

The Company is exposed to credit loss in the event of nonperformance of counterparties to open positions, commodity futures, and option contracts. This exposure is limited to those instances where the Company is in a net unrealized gain position. This credit risk is managed by entering into arrangements with counterparties meeting the credit standards and by monitoring position limits.

Certain employees of the Company are covered under collective bargaining agreements. Union contracts covering all union employees representing approximately 76% of all employees extend through November 1, 2007.

Inventories

Inventories consisted of the following:


	December 31
	2006			2005
Manufacturing inventories:
Raw materials	$	66,743		$	50,040
Work in progress		65,832			64,941
Finished goods		39,384			58,921
LIFO reserve		(69,454	)		(49,540	)

Total manufacturing inventories		102,505			124,362
Supplies inventory		18,060			17,789

Total inventories	$	120,565		$	142,151

The Company uses the last-in, first-out (LIFO) method of accounting for the manufacturing inventories for both book and tax purposes. If the first-in, first-out (FIFO) method had been used at December 31, 2006, inventories would have been approximately $69,454 higher. During 2006, reductions in LIFO inventories resulted in liquidations of LIFO inventory layers carried at lower costs prevailing in prior years as compared with costs of current year purchases.

Supplies inventory is valued on an average cost basis. Inventories maintained by Recycling, totaling $6,789 and $6,602 at December 31, 2006 and 2005, respectively, and comprised solely of raw materials, are valued on a first-in, first-out (FIFO) basis.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets (buildings–40 years, machinery and equipment–5 to 30 years, and furniture and fixtures–5 to 10 years). Maintenance and repair costs are charged to operations as incurred, major renewals and betterments are capitalized.

Deferred Financing Costs

The Company has approximately $7,240 and $7,772 of unamortized deferred financing costs at December 31, 2006 and 2005, respectively. These costs are being amortized over the life of the related secured credit facilities (see Note 4) and are included in other non-current assets in the consolidated balance sheets. Accumulated amortization is approximately $3,614 and $1,916 at December 31, 2006 and 2005, respectively.

Revenue Recognition

Sales revenue is recognized when products are shipped to customers, or upon transfer of title, if that occurs later.

Shipping and Handling Costs

Shipping and handling costs incurred by the Company amounted to $25,608, $23,892 and $25,489 for the years ended December 31, 2006, 2005, and 2004, respectively, and are recorded as a reduction of sales in the consolidated statements of operations.

Stock-Based Compensation

The Company uses the fair value recognition provisions of FASB Statement No. 123R, “Accounting for Stock-Based Compensation” (SFAS 123R) to account for equity-based compensation.

Income Taxes

Wise Metals Group LLC and subsidiaries are taxed as partnerships under Subchapter K of the Internal Revenue Code. Therefore, the results of the Company’s operations are included in the taxable income of the individual shareholders. As a result, no provision for federal income taxes has been included in the consolidated financial statements.

New Accounting Pronouncements

Effective January 1, 2006 the Company adopted financial accounting standard (SFAS) No. 123R, “Share Based Payments” which requires an enterprise to expense share based payments based on fair value. The Company previously adopted the provisions of SFAS 123, “Accounting For Stock Based Compensation” which previously required expensing fair value of awards. As such, the adoption of 123R did not have a material impact on the Company’s financial position or results of operations.

In November 2004, the FASB issued SFAS No. 151, “Inventory Costs.” The Company was required to adopt the provisions of SFAS No. 151 on a prospective basis, as of January 1, 2006. SFAS No. 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material. SFAS No. 151 requires that those items – if abnormal – be recognized as expenses in the period incurred. In addition, SFAS No. 151 requires the allocation of fixed production overheads to the costs of conversions based upon the normal capacity of the production facilities. The adoption of FAS 151 did not have a material impact on the Company’s financial position or results of operations.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit and Other Postretirement Plans, an amendment of FASB Statements No. 87, 106, and 132 (R),” (“SFAS 158”). SFAS 158 requires companies to recognize a net liability or asset and an offsetting adjustment to accumulated other comprehensive income to report the funded status of defined benefit pension and other postretirement benefit plans. In addition, SFAS 158 requires companies to measure plan assets and obligations at their year-end balance sheet date. SFAS 158 requires prospective application. The recognition and disclosure requirements of SFAS 158 are effective for the Company’s fiscal year ending December 31, 2007 because the Company is not considered a “public entity” as defined in SFAS 158. The requirement under SFAS 158 to measure plan assets and obligations at the year-end balance sheet date will be effective for the Company’s fiscal year ending December 31, 2008. Management does not expect that the adoption of SFAS 158 will have a material impact on the Company’s financial position or results of operations.

3. Property and Equipment

Major classes of property and equipment are:


	December 31
	2006			2005
Land, buildings and improvements	$	12,129		$	11,614
Machinery and equipment		129,352			120,759
Furniture, fixtures and other		3,205			3,610
Construction in progress		12,372			11,344

		157,058			147,327
Accumulated depreciation		(72,469	)		(60,770	)

	$	84,589		$	86,557

As a result of the sale-leaseback transaction discussed in Note 4 , as of December 31, 2006 the company has approximately $14.8 million in assets subject to a capital lease. Depreciation expense for the years ended December 31, 2006, 2005 and 2004 was $12,580, $13,355 and $13,211, respectively.

4. Financing Arrangements

Debt consists of the following at December 31:


	2006			2005
Revolving and secured credit facility	$	177,187		$	137,730
Senior secured 10.25% notes due 2012		150,000			150,000
Other notes payable and capital lease obligations		17,613			2,303

		344,800			290,033
Less current portion		(178,946	)		(139,207	)

	$	165,854		$	150,826

Effective May 5, 2004, the Company issued $150 million of 10.25% senior secured notes due 2012. In conjunction with issuing the notes, the Company, on the same date, amended and restated its secured credit facility reducing the revolving line of credit from $130 million to $75 million which on November 10, 2004 was amended and restated to increase the revolving line of credit to $125 million. The proceeds of the notes were used primarily to repay the secured term loan of which $20 million had been outstanding, to repay the subordinates notes outstanding of $36 million and to repurchase members’ equity of $14 million.

Further use of proceeds included an early extinguishment of subordinated 15% notes for which a prepayment penalty of $3,500 was paid and is included as other expense in the Company’s consolidated statement of operations for the year ended December 31, 2004. As part of the refinancing, approximately $3,955 of then deferred financing costs were written off through accelerated amortization of deferred financing fees and is also included as other expense. Accordingly, total early extinguishment of debt in 2004 was $7,455.

Total financing costs associated with the issuance of the $150 million 10.25% senior secured notes were $8,184 and are included on the balance sheet as other long term assets.

As a result of amending and restating the secured credit facility, the interest rate on the revolving line of credit was reduced from a variable rate of prime plus a range of .75% to 1.50% or LIBOR plus a range of 2.75% to 3.50% to a variable rate of prime plus a range of 0% to 0.50% or LIBOR plus a range of 2.25% to 2.75%.

The revolving line of credit was again increased on October 31, 2005 to $150 million, again increased on March 3, 2006 to $180 million, again increased on June 12, 2006 to $200 million and again increased on August 4, 2006 to $207.5 million and expires on May 5, 2008.

Effective December 31, 2006, the Company completed an amendment to its revolving credit facility. The amendment was to reset certain covenant levels based on the company’s most recent financial projections and results and as noted within our credit agreement. As of and subsequent to December 31, 2006, the Company must either meet the minimum Adjusted EBITDA levels as noted within our credit agreement or the Adjusted Excess Availability must be equal to or greater than $20,000,000 for each of the ten (10) consecutive days immediately preceding the last day of the month. As of the December 31, 2006 the Company was in compliance with the debt covenants under this agreement, as amended. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Liquidity and Capital Resources.”

Other notes payable includes a note to the Tennessee Valley Authority that is payable in monthly installments of principal and interest (at the rate of 4.5% per annum) through November 2010. Amounts outstanding as of December 31, 2006 and 2005 were $835 and $1,032, respectively. Other notes payable also include secured mortgage notes payable in the amount of $1,948 and $1,270 as of December 31, 2006 and 2005, respectively. In January, 2006 these mortgage notes were refinanced. One note was extended through January 1, 2007 and requires

monthly interest only payments on a monthly variable rate of LIBOR plus 7%. The other mortgage note was extended to February 1, 2007 and now requires payments to be made in monthly installments of principal plus interest at the rate of 8% per annum.

At December 31, 2006, the Company also has $2.1 million of outstanding letter of credits with a financial institution. Substantially all the assets of the company are pledged as collateral for our financing arrangements.

Principal payments due on long-term debt outstanding for the years ending December 31 are as follows:


2007	$	1,759
2008		3,211
2009		11,840
2010		245
2011		558
Thereafter		150,000

	$	167,613

Interest paid during the years ended December 31, 2006, 2005 and 2004, was $30,981, $23,903 and $15,051, respectively.

Included in the table above are principle payments relating to the Company’s sale-leaseback facility. Payments due on the facility are as follows:


2007	$	3,044
2008		3,044
2009		12,658

Total Payments		18,746
Less interest payments		(3,916	)

Principle Payments	$	14,830

5. Financial Instruments

The carrying amount of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and certain other financial instruments approximates their fair value at

December 31, 2006 and 2005, respectively. The fair value of the Company’s debt was approximately $310,180 and $263,023 at December 31, 2006 and 2005, respectively, based on the book value of the secured credit facility, and the Company’s estimate of fair value of the senior secured notes and the secured subordinated notes. The Company estimated the fair value of the senior secured notes based on surveyed market quotes for the notes and estimated the fair value of the secured subordinated notes using a discounted cash flow analysis, using interest rates that the Company believes would be obtainable at that point in time.

The Company, as of December 31, 2006 and 2005, has net commodity futures contracts outstanding to sell 7,850 metric tons and purchase 24,450 metric tons, respectively, of aluminum through 2007. At December 31, 2006 and 2005, these commodity futures had a fair value of $(2,850) and $16,427, respectively. At December 31, 2006, the Company had 4,000 metric tons of aluminum options with a fair value of $2,838. At December 31, 2005, the Company had no commodity options outstanding.

As discussed in Note 2, the Company also has natural gas swaps at December 31, 2006 and 2005. The natural gas instruments cover the Company’s estimated natural gas production requirements for the first quarter of 2007 as well as a portion of the estimated production requirements for the remainder of 2007. See Note 2 for their fair values.

6. Benefit Plans

Effective April 1, 1999, the Company established a defined benefit pension plan that covers essentially all union employees. The plan provides certain levels of benefits based on years of service and wage levels, but does not provide benefits for any prior service. In addition, defined contribution plans for both union and nonunion employees were established.

In 2003 the Company established negotiated defined contributions for certain union employees to multi-employer union pension plans. This was done in exchange for freezing service time and pension factor in the aforementioned defined benefit plan as of the first quarter of 2004 and eliminating post-retirement benefits for affected employees.

The Company also established post-retirement benefit plans for all hourly and salaried employees effective April 1, 1999. The union employees who become eligible to retire under the defined benefit plan, and are not a part of the unions that have elected the multi-employer option, will retain health benefits and certain other benefits for life. Salaried employees who retire after age 60 with a combined 10 years service with Wise Alloys LLC and the previous owner of the Wise Alloys facilities will be eligible for medical benefits until age 65.

The Company’s funding policy for these plans is to contribute negotiated amounts to the multi-employer funds and amounts necessary to meet minimum funding requirements of the Employee Retirement Income Security Act for the defined benefit plans but not to exceed the maximum deductible amount allowed by the Internal Revenue Code. The Company contributed $1,644 to the multi-employer plans during 2006. Contributions to the defined benefit plan are expected to be $2,710 during 2007.

The Company uses October 31 as the measurement date for all defined benefit plans. The following summarizes the significant information relating to these defined benefit plans as of and for the years ended December 31, 2006, 2005 and 2004.


	2006						2005						2004
	Pension Benefits			Other Post-Retirement Benefits			Pension Benefits			Other Post-Retirement Benefits			Pension Benefits			Other Post-Retirement Benefits
Accumulated benefit obligation	$	18,141			N/A		$	15,270			N/A		$	12,473			N/A

*Change in benefit obligation:*
Benefit obligation, beginning of year	$	15,270		$	7,347		$	12,473		$	7,404		$	10,194		$	6,121
Service cost		1,300			1,540			1,111			1,392			1,067			1,478
Interest cost		948			458			774			461			657			398
Actuarial (gain)/loss		968			(233	)		1,135			(1,881	)		737			(593	)
Effect of curtailments		—			—			—			—			—			—
Significant event		—			—			—			—			—			—
Benefits paid		(345	)		(26	)		(223	)		(29	)		(182	)		—

Benefit obligation, end of year	$	18,141		$	9,086		$	15,270		$	7,347		$	12,473		$	7,404

*Change in plan assets:*
Fair value of plan assets, beginning of year	$	8,867		$	—		$	7,493		$	—		$	5,763		$	—
Employer contributions		5,328			26			1,218			29			1,756			—
Benefits paid		(345	)		(26	)		(223	)		(29	)		(182	)		—
Actual return on assets		1,190			—			379			—			156			—

Fair value of plan assets, end of year	$	15,040		$	—		$	8,867		$	—		$	7,493		$	—

*Reconciliation of funded status:*
Funded status	$	(3,101	)	$	(9,086	)	$	(6,403	)	$	(7,347	)	$	(4,980	)	$	(7,404	)
Unrecognized net (gain) loss		2,291			(2,760	)		1,841			(2,648	)		549			(794	)
Unrecognized prior service cost		326			—			362			—			399			—

Accrued benefit cost	$	(484	)	$	(11,846	)	$	(4,200	)	$	(9,995	)	$	(4,032	)	$	(8,198	)
*Components of net periodic benefit cost:*
Service cost	$	1,300		$	1,540		$	1,111		$	1,392		$	1,067		$	1,478
Interest cost		948			458			774			461			657			398
Expected return on plan assets		(699	)		—			(536	)		—			(413	)		—
Amortization of prior service cost		36			—			36			—			36			—
Net gain recognition		27			(122	)		—			(22	)		—			(9	)
Curtailments		—			—			—			—			—			—
Special termination benefits		—			—			—			—			—			—
Total benefit cost	$	1,612		$	1,876		$	1,385		$	1,831		$	1,347		$	1,867
*Weighted average assumptions used to determine net periodic costs per year :*
Discount rate		6.25	%		6.25	%		6.25	%		6.25	%		6.25	%		6.25	%
Expected long-term return on assets		7.00	%		N/A			7.00	%		N/A			7.00	%		N/A

The allocation, by category, of assets of our defined benefit pension plan at December 31, 2006 was as follows:


Asset category:
Equity	61	%
Fixed income	38	%
Alternative investments (money market funds)	1	%

	100	%

At our plan measurement date of December 31, 2006, our targeted allocation by category, of assets of our defined benefit pension plan, is equity securities of 61%, and fixed income securities of 38%. Cash from money market funds is available for planned purchases of equity and fixed income securities to achieve targeted allocations.

The Company establishes its estimated long-term return on plan assets considering various factors, which include the targeted asset allocation percentages, historic returns, and expected future returns. Specifically, the factors are considered in the fourth quarter of the year preceding the year for which those assumptions are applied.

The accumulated benefit obligation related to our defined benefit pension plan and information related to the funded status of our plan at the end of each year is as follows:


	2006			2005
Projected benefit obligation	$	(18,141	)	$	(15,270	)
Accumulated benefit obligation		(18,141	)		(15,270	)
Fair value of plan assets		15,040			8,867

The following table sets forth benefit payments, which reflect expected future service, as appropriate, expected to be paid in the periods indicated.


	Pension Plan		Other Post Retirement
2007	$	345	$	47
2008		405		92
2009		757		133
2010		1,028		155
2011		1,192		248
2012 through 2016		8,017		2,932

The pre-Medicare health care cost trend rate used to determine the post retirement benefit obligation was 11% for 2006. This rate decreases gradually to an ultimate rate of 5% in 2018, and remains at that level thereafter. The trend rate is a significant factor in determining the amounts reported. A one-percentage point change in these assumed health care costs trend rates would have the following effect:


	Increase		(Decrease)
Effect on total service and interest cost component	$	236	$	(233	)
Effect on post retirement benefit obligation		758		(750	)

In 2007, the Company expects to make cash contributions of approximately $2,710 to its defined benefit pension plan. The amounts principally represent contributions required by funding regulations and in addition the Company expects to fund benefits paid under its post retirement benefit plans during 2007. No contributions to the post retirement benefits plan were made in 2006.

The Company also maintains a defined contribution plan. The Company matches at a 50% rate the employee’s elected deferral up to the first 6% of the withholding. Additionally, the Company makes an annual contribution based on a defined formula. Expenses for the defined contribution plan are recorded in the income statement as cost of goods sold and were $1,889, $1,835 and $1,851 for 2006, 2005 and 2004, respectively.

7. Preferred Member’s Interest

During 2004, the preferred member’s interest which had been granted by the Company in 2001 to Tomra North America, Inc. was repurchased for $9,000. The preferred member’s equity position carried a $22,500 liquidation preference upon dissolution of the Company as well as the right to a guaranteed payment of 8% of the initial preferred member’s account. As a result of the repurchase of this preferred member’s equity, the Company is no longer obligated to make the guaranteed payment.

8. Commitments and Contingencies

The Company has entered into long-term supply contracts to supply a significant amount of aluminum can stock with certain customers, which represents more than 50% of the production capacity of Alloys. The price under these supply agreements is based on the prior six-month average of a quoted exchange, is reset every six months and is typically subject to a metal price ceiling.

At December 31, 2006, the Company has entered into fixed priced sales commitments of approximately 22 million pounds. Additionally, the Company entered into fixed price commitments to purchase raw material inventory of approximately 136 million pounds. The Company uses inventory, commodity futures and option contracts to reduce the risk of changing prices for purchases and sale of metal.

The Company is a defendant in an action brought by Merrill Lynch, Pierce, Fenner & Smith Incorporated pending in the New York Supreme Court, County of New York. In this action, Merrill Lynch seeks $932 for out-of-pocket costs and expenses allegedly incurred pursuant to a letter agreement between Wise Metals and Merrill Lynch dated January 31, 2002, in which Merrill Lynch alleges that Wise Metals agreed to reimburse Merrill Lynch for such costs and expenses. Wise Metals has hired counsel and is vigorously contesting this lawsuit and believes it has meritorious defenses. Wise Metals has filed an answer to the complaint denying the material allegations and alleging several affirmative defenses and counterclaims which exceed in amount the sum sought by Merrill Lynch. Merrill Lynch moved to dismiss the Wise Metals’ counterclaims and by an order dated December 30, 2004, the Court granted this motion, dismissed the counterclaims and permitted Wise Metals to replead two of the counterclaims. Wise Metals appealed, which resulted in a reversal reinstating the dismissed counterclaims. Merrill Lynch has replied to the counterclaims. The action is proceeding and is presently in the discovery stages. The Company believes that it is not currently possible to estimate the ultimate outcome of this litigation. As a result, no expense for any potential adverse outcome of this matter has been recorded in the consolidated financial statements.

The Company is a party to certain claims and litigation associated with employment related matters for which management believes that the ultimate resolution will not have a material adverse impact on the Company’s financial position.

9. Quarterly Information (Unaudited)


	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Year Ended December 31, 2006
Net sales	$	216,276		$	283,254		$	272,051		$	241,452
Gross margin (deficit)		8,882			(1,654	)		(21,319	)		2,260
Net (loss) income		3,502			(16,460	)		(53,929	)		(13,306	)

Year Ended December 31, 2005
Net sales	$	221,561		$	231,154		$	203,663		$	227,466
Gross margin (deficit)		6,100			9,939			(1,644	)		(11,841	)
Net (loss) income		(6,234	)		5,491			(10,465	)		(10,410	)

Year Ended December 31, 2004
Net sales	$	197,216		$	197,953		$	192,140		$	179,559
Gross margin (deficit)		(1,989	)		9,840			6,592			(18,093	)
Net (loss) income		(6,444	)		(10,653	)		794			(25,239	)

10. Business Segment Information

A reportable segment is a component of an enterprise in which the operating results are regularly reviewed by the enterprise’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. We have two reportable segments under Statement of Financial Accounting Standards (SFAS) No. 131: Wise Alloys “Alloys” and Wise Recycling “Recycling.

Wise Alloys: Alloys principally manufactures and sells aluminum can sheet to aluminum can producers and also serves the transportation, building, and construction markets. Beverage can stock is aluminum sheet specifically designed and engineered for use in the production of aluminum beverage cans and represents our primary product. Can stock customers include Ball Corporation, Crown Holdings, Inc. and Rexam PLC, the three largest beverage can manufacturers in the world. In addition, Alloys produces food can stock and semi-fabricated aluminum sheet for building and construction, transportation and other markets.

Wise Recycling: Recycling is engaged in the recycling and sale of scrap aluminum and other non-ferrous metals for use by Alloys as well as for sale to third parties. Recycling provides the Company with an effective, profitable infrastructure to obtain a portion of Alloys’ scrap requirements. Recycling has developed a collection process that utilizes both direct acquisitions from scrap dealers and industrial accounts, as well as “off-the-street” acquisitions from the actual consumer. Furthermore, Recycling collects other forms of non-ferrous scrap, primarily non-UBC aluminum, copper and brass, for sale in the merchant market. The Company is currently expanding the business of Recycling to include warehousing operations in order to provide regional shipping centers for our scrap collection and to enhance our ability to provide a vendor managed inventory program for Alloys customers.

Substantially all of our revenues and assets are attributed to or are located in the United States. The Company evaluates segment performance based on profit or loss from operations before corporate general and administrative expenses, LIFO adjustments, and mark-to-market adjustments for derivative contracts under SFAS 133. The accounting policies of the segments are the same as those described in the significant accounting policies.

We have concluded that TMC is not a reportable segment because it is not significant to our consolidated operations and represents less than 10% of our revenues in each of the past three years ended December 31, 2006, 2005 and 2004. Financial information about TMC is included in the “Other” caption in the tables below.

As described in Note 2, we earned revenues from two customers that individually exceeded 10% of consolidated revenues. The revenue generated from sales to these customers is included in the Alloys section of the table below.

The following table sets forth information on the Company’s reportable segments:


	Year Ended December 31,
*($ in thousands)*	2006		2005		2004
Net Sales
Alloys	$	880,719	$	807,935	$	710,957
Recycling (1)		131,204		73,457		55,567
Other		1,110		2,452		344

Net sales	$	1,013,033	$	883,844	$	766,868


Segment (loss) profit
Alloys	$	(40,599	)	$	(9,144	)	$	13,568
Recycling (1)		13,230			2,729			3,009

Segment (loss) profit		(27,369	)		(6,415	)		16,577
LIFO adjustment		(19,914	)		(2,318	)		(35,156	)
Mark-to-market adjustments for contracts under SFAS 133		(24,126	)		11,666			(550	)
Corporate and other undistributed expenses, net		(8,784	)		(24,551	)		(22,413	)

Net loss		(80,193	)		(21,618	)		(41,542	)

(1):

The Company has eliminated all intercompany sales and cost of sales associated with transfers of recycled aluminum from Recycling to Alloys. Recycling transfers aluminum to Alloys at market value and recognizes profit only when the sale to the end consumer is completed. During each of the periods presented, Recycling transferred aluminum to Alloys in the amount of $82,288, $40,511 and $30,559 for each year ended December 31, 2006, 2005 and 2004, respectively.


	As of December 31,
*($ in thousands)*	2006		2005		2004
Total Assets
Alloys	$	297,754	$	307,249	$	310,831
Recycling		31,409		13,040		8,754
Corporate and other		9,093		21,788		14,885

Total assets		338,256		342,077		334,470


	As of December 31,
*($ in thousands)*	2006		2005		2004
Depreciation and Amortization
Alloys	$	11,814	$	12,529	$	12,395
Recycling		640		609		492
Corporate and other		126		217		324

Total depreciation and amortization		12,580		13,355		13,211


	As of December 31,
*($ in thousands)*	2006		2005		2004
Capital Expenditures
Alloys	$	9,635	$	13,985	$	11,659
Recycling		977		552		670

Total capital expenditures		10,612		14,537		12,329

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A.

Disclosure Controls and Procedures

(a)

Disclosure Controls and Procedures

As of December 31, 2006, our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), has conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Securities Exchange Act Rule 13a-15(e), as amended). Based on the evaluation, our CEO and CFO concluded that our disclosure controls and procedures as of December 31, 2006 were not effective because of a material weakness in internal control over financial reporting described below.

(b)

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. Under the supervision of management and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2006. Based on our evaluation of internal control over financial reporting, management identified the following material weakness as of December 31, 2006:

The Company has not maintained sufficient staff with appropriate training in US GAAP and SEC financial rules and regulations. These deficiencies result in the potential of material misstatements and/or inadequate disclosures in the Company’s financial statements.

As a result of the material weakness described above, management concluded that internal control over financial reporting was not effective as of December 31, 2006, based on the criteria identified above.

(c)

Remediation Activities

The Company has evaluated its resource requirements to ensure the timely and effective review and management of its reporting process. The Company has formed a Finance Committee consisting of various financial and accounting personnel to regularly review the effectiveness of internal controls over reporting and is evaluating staffing requirements to ensure the preparation of financial statements in accordance with GAAP. It has also added and is continuing to add additional financial staff, and has reviewed and updated scheduling and planning protocols in place to ensure continued timely compliance with SEC reporting deadlines.

(d)

Changes in Internal Control Over Financial Reporting

There was no change in the Company’s internal control over financial reporting that occurred during the fourth fiscal quarter ended December 31, 2006, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B.

Oth er.

None.

Part III

Item 10.

Directors, Executive Officers and Corporate Governance.

The following table sets forth the managers, executive officers and key employees of Wise Group and Wise Alloys and their ages as of January 1, 2007:


Name	Age	Position(s)
David F. D’Addario	44	Chief Executive Officer, Chairman and Manager, Wise Group
John J. Cameron	70	Vice Chairman, Manager
Danny Mendelson	54	Executive Vice President, Chief Strategic Officer, Secretary
Gerald M. David	68	Manager, Wise Group
Gregory Garvey	51	Manager, Wise Group
Don Farrington	58	Senior Vice President, Sales
Sam Glasscock	58	Executive Vice President /Financial Operations
Phillip Tays	61	Executive Vice President, Manufacturing
Michael Patterson	56	Senior Vice President, Strategic Planning
Kenneth Stastny	38	Chief Financial Officer
Richard Weaver	64	Executive Vice President, Development and Risk Management
Robert David	64	Vice President, National Accounts

David F. D’Addario has served as Wise Group’s Chairman since October 2001 and its Chief Executive Officer since February 2004 and has served as a Manager since January 1999. Mr. D’Addario also served as President and Chief Executive Officer of D’Addario Industries, a private company. From 1986 to 2001 served for and was a founder of Neroc, Inc., the predecessor of Tomra of North America, Inc. Mr. D’Addario holds a B.A. degree from Yale University.

John J. Cameron was named Vice Chairman in March 2004. He has served as a Manager since 1999. He served as Wise Group’s Chief Executive Officer from October 2000 until March 2004 and was President of Wise Alloys from 2000 to 2004. Mr. Cameron served as the Chief Executive Officer of Wise Group’s predecessor, Wise Metals Co., Inc., from 1991 to 1999. From 1984 to 1991, Mr. Cameron operated his own business, Arcadia, Inc., an aluminum engineering firm, which he sold in 1991. From 1978 to 1984, Mr. Cameron held various management operating positions at Howmet Corp., serving as Senior Vice President of Operations from 1982 to 1984 and as a director from 1982 to 1983. Mr. Cameron holds a B.S. degree from Fordham University.

Danny Mendelson was named Executive Vice President and Chief Strategic Officer in June 2006 after having served as Wise Group’s Chief Financial Officer since April 1999. Prior to joining Wise Group, Mr. Mendelson was a partner in the Baltimore, Maryland office of Ernst & Young LLP from 1984 to 1999, serving as the director of its tax practice from 1987 to 1997. Mr. Mendelson is a certified public accountant and an attorney. He holds a B.B.A. degree from the University of Michigan, a J.D. from Detroit College of Law and an L.L.M. from Georgetown University.

Gerald M. David has served as a Manager since January 1999. Mr. David served as Chairman from 1999 to September 2001. Mr. David served as President and CEO of Wise Metals Co. from 1987 to 1999. Gerald David is the brother of Robert David, Vice President, National Accounts. Mr. David has a bachelor’s degree in business from the University of Maryland.

Gregory Garvey has served as a Manager since January 1999. Prior to joining Wise Group, Mr. Garvey worked for Tomra of North America, Inc. where he served as Vice Chairman and Executive Vice President, Business Development, from 1994 to 2002. Mr. Garvey holds a Financial Accounting degree from the University of New Haven.

Don Farrington assumed the position of Senior Vice President, Sales, in February 2004. He has served as Vice President of Sales and Marketing for Wise Alloys since February 2001 and as Sales Manager from May 1999 to February 2001. From August 1998 to May 1999, Mr. Farrington served as General Manager of Aluminum of Nittetsu Shoji America, Inc. From 1991 to 1998, Mr. Farrington was Vice President of Sales and Marketing for Ravenswood Aluminum. From 1976 to 1990, Mr. Farrington held sales and marketing positions with Kaiser Aluminum. He holds a B.A. degree from the University of Kansas.

Sam Glasscock was named Executive Vice President/Financial Operations in June 2006 after having served as Senior Vice President and Controller since 1999. He has 31 years of aluminum industry experience in various positions in accounting, finance, manufacturing and transportation. He has a B.S. degree in industrial management and accounting from Auburn University and a MBA from the University of North Alabama.

Phillip Tays serves as Executive Vice President, Manufacturing. He joined Wise Alloys when the Listerhill Facility was purchased from Reynolds Metal Company in 1999. He has 33 years of manufacturing, casting and maintenance management experience in Reynolds Metals Company Reclamation plants in Alabama, Virginia and Brazil. Mr. Tays earned a business administration degree from Athens State University.

Michael Patterson was named Senior Vice President, Strategic Planning in February 2004. He began working at the Reynolds Metal Company’s alloys plant in 1977. He has a bachelor’s of science degree in mechanical engineering from the University of Alabama. His career includes experience in engineering, production and maintenance management. Prior to working for Reynolds, he worked for Exxon Mobil Corporation at their Baton Rouge refinery.

Kenneth Stastny was named Chief Financial Officer in June 2006. He joined the Company in 1998 as Controller of Wise Recycling. He served as Assistant Treasurer of the Company from 1999 until February 2004 when he assumed the position of Treasurer. Prior to joining the Company, he served as audit manager at Ernst & Young LLP. He has 15 years of experience in financial services and risk management. He holds a bachelor’s degree of business administration in both accounting and finance from Loyola College of Baltimore, Maryland.

Richard Weaver serves as Executive Vice President, Development and Risk Management. He joined the Company in 1982 and held various trading and executive management positions. He served as President of Wise Recycling from its inception to mid-2000. Prior to joining the Company, Mr. Weaver was employed by Revere Copper and Brass in sales and marketing positions for both primary and semi-fabricated products. Mr. Weaver has a bachelor’s degree in Government from Hamilton College.

Robert David joined the Company in 1979 and currently serves as Vice President, National Accounts. He has been a director for the Institute of Scrap Recycling Industries, previously holding the position of Chairman of the non-ferrous division. Previously, Mr. David worked as a stock and commodity broker for Bach & Co., Shearson Hayden Stone, and is a former member of the Chicago Board of Trade.

Management Board

Pursuant to Wise Group’s operating agreement, Silver Knot, LLC has the right to appoint five members to Wise Group’s management board, one of whom is to be a designee of Wise Metals Co. Inc., reasonably acceptable to Silver Knot, LLC. Gerald David currently serves as Wise Metals Co.’s designee. David D’Addario, our Chairman, controls Silver Knot, LLC and appoints its designees.

The day-to-day operations of Wise Group are carried out by its executive officers who serve at the discretion of its management board. Certain major decisions require the consent of the management board.

The Wise Group operating agreement provides that no officer may, without the prior approval of the management board, (i) enter into or modify any affiliated transactions or any transactions the length of which exceeds six months and the value of which exceeds $100,000, (ii) lend money, incur indebtedness, dispose of assets, or incur expenditures, each in excess of $100,000 for any one transaction, (iii) make distributions or accept capital contributions, (iv) acquire or dispose of any securities, (v) amend the operating agreement, (vi) approve a merger or consolidation with another person or a sale of substantially all of Wise Group’s assets, (vii) remove or replace or adjust the compensation of any officers, (viii) reorganize Wise Group, (ix) invest surplus funds, (x) materially change Wise Group’s accounting principles, (xi) purchase or sell any real property, (xii) enter into any legal proceeding on behalf of Wise Group, or (xiii) take any action specifically reserved for the management board under the operating agreement.

Except where the Wise Group operating agreement states otherwise, all decisions of the Wise Group management board require a majority vote of the Wise Group management board.

Manager Compensation

Messrs. D’Addario, Cameron, Garvey and David currently comprise the Wise Group management board. David D’Addario is paid $162,500 annually for his service on the Wise Group management board in addition to his salary of $1,062,000 and benefits he receives as an employee of Wise Group. John Cameron is not separately compensated for his service as a member of the Wise Group management board and is solely compensated pursuant

to his employment agreement described below. Gregory Garvey is paid $162,500 annually for his service on the Wise Group management board. Gerald David is not separately compensated for his service on the Wise Group management board and is solely compensated pursuant to his employment agreement described below.

Committees

Gregory Garvey is Chairman and sole member of the Company’s Audit Committee, reporting to the management board. Mr. Garvey is a financial expert as such term is defined by the Securities and Exchange Commission and also serves on the management board.

Code of Ethics

We do not have a formal code of ethics for management, nor is there any requirement that we have one under the law or the requirements of any securities exchange on which our debt securities are listed. Because we have no publicly traded equity securities (substantially all of which are held by the managers or senior executives) and because the management group is extremely small and works closely with the board of managers, the board of managers has concluded that a formal policy would be less effective than the less formal regular interaction between senior management and the board of managers.

Item 11.

Executive Compensation

Compensation Discussion & Analysis

An executive compensation committee comprised of the Company’s chairman and executive vice president/chief strategic officer administers our executive compensation program. This committee, reporting to the management board, oversees our compensation and benefit plans, reviews compensation levels and makes all compensation decisions relating to Wise’s executive officers, including the grant of any incentive compensation. Compensation for Mr. D’Addario who serves as the Company’s Chief Executive Officer, is subject to limitations as prescribed in the Wise Group’s operating agreement. Compensation levels and goals and objectives are reviewed and approved annually. Significant goals and related achievements affecting executive compensation included progress made to realign customer contracts to more appropriately reflect changing market conditions. Other achievements centered around managing company performance and obtaining adequate financing for the Company.

The Wise executive compensation committee and management board believe that compensation levels and benefit plans should be such that the Company is able to attract and retain highly qualified management employees and motivate those employees by tying executive compensation to Company performance. Wise compensates its executives through a combination of salary, bonus, equity incentive and benefit plan compensation.

Salary: Each executive officer is paid an annual cash salary that is consistent with the salary paid to similarly positioned executive officers at comparable companies. The Company examines external market data provided by various salary surveys for companies of similar size and structure that operate in similar industries. Wise pays its executives a salary to ensure that each executive officer receives some compensation that is not tied to the risk inherent in pay for performance compensation, which ensures we are able to attract and retain highly qualified executive officers.

Bonus: Wise’s executive compensation committee and management board has discretion to award cash bonuses to it’s executive officers. The amounts of such awards are determined after reviewing each executive officer’s individual performance and contribution to the achievement of Company goals and objectives. Bonus compensation is designed to align the interests of the Company’s executive officers with the Company’s goal of improved performance.

Equity Incentives: Wise’s executive compensation committee and management board has discretion to award equity incentives to it’s executive officers. The amount of such award is determined after reviewing each executive officer’s role in achieving future goals of the company in light of individual performance and contribution to the achievement of Company past goals and objectives. Equity incentive compensation is designed to align the interests of the Company’s executive officers with the Company’s strategic initiatives.

Benefit Plans: Each executive officer is entitled to compensation in the form of various benefit plans that is consistent with benefits offered to similarly positioned executive officers at comparable companies. The Company examines external market data provided by various benefit surveys for companies of similar size and structure that operate in similar industries. Wise compensates its executives with benefits to ensure that each executive officer receives some compensation that is not tied to the risk inherent in pay for performance compensation, which ensures we are able to attract and retain highly qualified executive officers.

Compensation is paid by Wise Group in respect of Wise Group’s executive officers and allocated to Wise Alloys based on each such person’s duties on behalf of Wise Alloys. The following table sets forth the cash and non-cash compensation paid or incurred on Wise Group’s behalf to its Chief Executive Officer, Chief Financial Officer and each of the three other most highly compensated employee executive officers, as well as compensation paid to Gregory Garvey and Gerald David for whom disclosure would have been required to be provided if such persons were serving as executive officers of the Company in 2006, each of whom made more than $100,000 in 2006:

Summary Compensation Table


	Annual Compensation 2006 2005 2004	Annual Salary 2006 2005 2004		Long-Term Compensation Awards 2006 2005 2004				All other Compensation 2006 2005 2004
Name and Principal Position	Total Compensation	Salary		Bonus			Securities Underlying Options	All other Compensation 2006 2005 2004
David D’Addario Chief Executive Officer, Chairman and Manager	1,224,500 682,500 1,047,500	$	1,224,500(1) 682,500(1) 682,500(1)	$	0 0 365,000		— — —	$	0 0 0
Kenneth Stastny Chief Financial Officer	130,000 125,000 110,000	$	130,000 125,000 110,000	$	0 0 0		— — —	$	0 0 0
John J. Cameron Vice Chairman and Manager	378,000 435,000 635,000	$	78,000 135,000 335,000	$	0 0 0		— — —	$	300,000(2) 300,000(2) 300,000(2)
Danny Mendelson Executive Vice President, Chief Strategic Officer and Secretary	249,000 240,000 490,000	$	249,000 240,000 240,000	$	0 0 250,000		— — —	$	0 0 0
Richard Weaver Executive Vice President, Non-Core Businesses	245,000 225,000 225,000	$	245,000 225,000 225,000	$	0 0 0		— — —	$	0 0 0
Gregory Garvey Manager	162,500 192,500 292,500	$	162,500 162,500 162,500	$	0 30,000 130,000	(3)	— — —	$	0 0 0
Gerald M. David Manager	242,000 300,000 312,000	$	242,000 300,000 300,000	$	0 0 12,000		— — —	$	0 0 0

(1)	Of the salary compensation Mr. D’Addario received in 2006, 2005, and 2004 $162,500 was paid in respect of his service as a member of the Wise Group management board and the remaining was paid in respect of his service as Chairman.

(2)	Mr. Cameron received $300,000 in additional cash compensation in 2006, 2005 and 2004 pursuant to his employment agreement. See “Employment Agreements” below.

(3)	Delayed payment of 2004 bonus.

Indemnification

Under the Wise Group operating agreement, Wise Group has agreed to indemnify and hold harmless each member and economic interest holder, including their affiliates, each member of the management board and all officers of Wise Group to the fullest extent permitted by law from and against any loss, liability, damage or expense incurred or suffered by any of them by reason of any acts or omissions or alleged acts or omissions arising out of their activities on behalf of Wise Group or in connection with the business operations of Wise Group, provided that the acts or omissions or the alleged acts or omissions upon which the action or threatened action, proceeding or claim is based did not involve intentional misconduct by the indemnified party, did not permit the indemnified party to personally gain a financial profit or other advantage to which such party was not legally entitled and were not performed or committed by the indemnified party in knowing violation of the law or otherwise in bad faith.

Employment Agreements

Gerald David Employment Agreement. Gerald David entered into an employment agreement with Wise Group effective on October 1, 2001. This employment agreement extended through September 30, 2003 and is

automatically extended thereafter unless either party gives 90 days prior notice of intent to terminate. Wise Group may terminate the employment agreement for cause and Mr. David may terminate the employment agreement on 30 days notice in the event Wise Group breaches the employment agreement and fails to remedy any such breach. In addition, pursuant to the agreement for the purchase of Wise Metals Co.’s interest in Wise Metals Group by Silver Knot, LLC, Wise Group may not terminate Mr. David’s employment agreement until Wise Metals Co. has received a stated minimum purchase price for Wise Group. Under Mr. David’s employment agreement, Mr. David receives an annual base salary of $300,000. He is eligible to participate in Wise Group’s medical and all other employee benefit plans sponsored or maintained by Wise Group. Mr. David’s employment agreement also provides for a severance payment in the event his employment is terminated in connection with a change of control of Wise Group in which Silver Knot, LLC, or its affiliates lose control of Wise Group. In such instance, if Mr. David does not receive an amount that equals at least the minimum purchase price, Wise Group will pay Mr. David his base salary and any other sums due him through the date of his death plus a severance payment calculated as five times his base salary discounted by the number of months remaining until the ten year anniversary of the employment agreement and divided by 120. The severance payment will be limited by the amount by which payments made to Mr. David under the purchase agreement are less than the purchase price. Mr. David’s severance will be paid in a lump sum.

John Cameron Employment Agreement. John Cameron entered into an employment agreement with Wise Group effective on April 1, 1999. This term of this employment agreement extended through March 31, 2005. Mr. Cameron’s employment agreement provides that, as of July 15, 2002 and continuing until the date he receives a total of $2.5 million, he is entitled to receive, in addition to his salary, $25,000 per month in lieu of the severance that was to be paid to him as of March 31, 2003.

Under his employment agreement, Mr. Cameron agreed to certain non-competition and non-solicitation provisions which were effective during the employment term and which continue from two to three year periods thereafter. Under the non-competition provision, Mr. Cameron may not be employed in, or engaged in, or in any manner connected to or concerned with, directly or indirectly, as a principal, agent, consultant, advisor or owner of any business in the aluminum recycling, reclamation or rolling business. Under the non-solicitation provisions, Mr. Cameron may not directly or indirectly solicit any customer or supplier of Wise Group to cease its business with Wise Group or directly or indirectly solicit current or former employee of Wise Group to join a competitor in the aluminum recycling, reclaiming or rolling businesses.

Non-competition Agreements

Wise Group is not a party to any non-competition or non-solicitation agreements with any current employees. See “Employment Agreements” above for a description of a non-competition arrangement with a former officer of Wise.

Potential Payments upon termination or change-in-control

Mr. David is entitled to a payment upon a change-in-control of Wise. See “Employment Agreements” above. No other named executive officer is entitled to any payments upon his termination or upon a change-in-control of Wise.

Manager Compensation

For a description of current compensation paid to the members of our management board, see Item 10 “Directors, Executive Officers and Corporate Governance” above. Manager compensation levels are determined annually by our Chief Executive Officer.

401(k) Plan

We maintain two 401(k) savings plans, one for nonunion employees and one for union employees. These plans are cash or deferred arrangements intended to be qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended.

The nonunion 401(k) plan provides that an eligible employee may begin to make salary reduction contributions after the first full calendar month following date of hire. Participants may authorize us to contribute a

percentage of their compensation, up to 18%, to the nonunion 401(k) plan on their behalf. The nonunion plan provides for us to make an employer contribution to eligible employees each year based on age and compensation.

The union 401(k) plan provides that an eligible employee may begin to make salary reduction contributions when he satisfies the probationary period specified in the collective bargaining agreement. Participants may authorize us to contribute a percentage of their compensation, up to 18%, to the union 401(k) plan on their behalf. The union plan provides for us to make an employer contribution to eligible employees each year in an amount equal to 54 cents for each hour worked.

For those employees in the Carpenters Union, effective January 1, 2004, the employer contributes an additional 48 cents for each hour paid.

Participants in both the nonunion and union 401(k) plans direct the investment of their accounts, including both employee and employer contributions, among a wide array of mutual fund investment options, and can make changes to such investments as they deem appropriate. Participants in the nonunion 401(k) plan who were employed on April 1, 1999 are 100% vested in their employer contributions. All other participants in the nonunion 401(k) plan become 100% vested in their employer contributions after five years of vesting service, or upon disability or death. Participants in the union 401(k) plan are 100% vested in their employer contributions at all times.

Participants in both the nonunion and union 401(k) plans are eligible to receive company match money. We will contribute $0.50 per $1.00 of employee contribution up to a maximum employee contribution of 6% of gross earnings. This benefit was effective January 1, 2003 for the union 401(k) plan and July 28, 2003 for the nonunion 401(k) plan.

Pension Plan

Effective April 1, 1999, we established a defined benefit pension plan that covers essentially all union employees. The plan provides certain levels of benefits based on years of service and wage levels, but does not provide benefits for any prior service. In addition, defined contribution plans for both union and nonunion employees were established.

In 2003 we established negotiated defined contributions for certain union employees to multi-employer union pension plans. This was done in exchange for freezing service time and pension factor in the aforementioned defined benefit plan as of the first quarter of 2004 and eliminating post retirement benefits for affected employees.

We also established post retirement benefit plans for all hourly and salaried employees on April 1, 1999. The union employees who become eligible to retire under the defined benefit plan and are not a part of the unions that have elected the multi-employer option will retain health benefits and certain other benefits for life. Salaried employees who retire after age 60 with a combined 10 years service with Wise Alloys LLC and the previous owner of the Wise Alloys facilities will be eligible for medical benefits until age 65.

Our funding policy for these plans is to contribute negotiated amounts to the multi-employer funds and amounts necessary to meet minimum funding requirements of the Employee Retirement Income Security Act for the defined benefit plans but not to exceed the maximum deductible amount allowed by the Internal Revenue Code.

Compensation Committee Interlocks and Insider Participation

Executive compensation is determined by the executive compensation committee, reporting to the management board, and oversees compensation and benefit plans, reviews compensation levels and makes all compensation decisions relating to Wise’s executive officers, including the grant of any incentive compensation. The executive committee is comprised of David D’Addario, chairman and chief executive officer, and Danny Mendelson, executive vice president and chief strategic officer. David D’Addario is a member of Silver Knot LLC, who along with fellow board manager Greg Garvey, also a member of Silver Knot LLC, serve on the management board of Wise Group. Otherwise, these members of the executive officer compensation have no relationship with any other members of the management board or any other members of the executive compensation committee.

Management Board Report regarding Compensation

The management board of Wise has reviewed and discussed the Compensation Discussion and Analysis with management and based on such review and discussion has included the Compensation Discussion and Analysis in this Form 10-K.

David F. D’Addario

John J. Cameron

Gregory Garvey

Gerald M. David

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The table below sets forth certain information as of March 30, 2007, concerning the beneficial ownership of equity interests in Wise Group, on a fully diluted basis by: each person known by Wise Group to own beneficially more than five percent of the membership interests; its Chief Executive Officer, Chief Strategic Officer and its three other most highly compensated executive officers; each of its managers; and all of its executive officers and managers as a group.

A person or group is deemed to have beneficial ownership of any membership interests when the person or group has the right to acquire them within 60 days after the date above. For the purpose of computing the percentage of outstanding membership interests held by each person or group named in the table below, any membership interests which the person or group has a right to acquire within 60 days after the date above are deemed to be outstanding.


Name and Address of Beneficial Owners(1)	Percentage of Ownership
Silver Knot, LLC(2)(3) 10 Middle Street Bridgeport, Connecticut 06604	78.8	%
David F. D’Addario(4)	78.8	%
Gregory Garvey(5)	78.8	%
Danny Mendelson(6)	8.2	%
John J. Cameron(7)	6.6	%
Richard Weaver	1.09	%
Kenneth Stastny	*
Gerald M. David	*
All of Wise Group’s executive officers and managers as a group	98.4	%
Others	1.6	%

*	Less than 1.0%

(1)	Except as otherwise indicated, the address for each of the named security holders is 857 Elkridge Landing Road, Suite 600, Linthicum, Maryland 21090.

(2)	David F. D’Addario and certain of his family members and Gregory Garvey and certain of his family members collectively own 100% of Silver Knot, LLC. Mr. D’Addario has full management control of Silver Knot, LLC pursuant to its operating agreement.

(3)

In December, 2001, Silver Knot, LLC entered into an agreement with Wise Metals Co. to acquire its 51.29% equity interest in Wise Group. Silver Knot, LLC pledged 61.2% of its equity interest in Wise Group to Wise Metals to secure its payment obligations under the agreement. According to the terms of the pledge, Silver Knot, LLC retains voting rights for its interest and the right to receive distributions, subject to customary events of default.

(4)	David F. D’Addario holds his beneficial membership interests in Wise Group through his interest in Silver Knot, LLC.

(5)	Gregory Garvey holds his beneficial membership interests in Wise Group through his interest in Silver Knot, LLC.

(6)	Danny Mendelson’s interest is comprised of a 5.3% membership interest and 1.3% economic interest.

(7)	John J. Cameron’s interest is comprised of a 3.1% membership interest and a 3.5% economic interest. Part of this interest is held in trust with his family. His family disclaims beneficial ownership of this interest.

Item 13.

Certain Relationships and Related Transactions and Director Independence.

Set forth below is a summary of certain relationships and related party transactions. The pricing of these transactions is not based on independent appraisals and we do not intend to obtain appraisals for future transactions.

Transactions with Management.

Robert David is the brother of Gerald David, a Manager of Wise Group. Robert David is employed by Wise Group as Vice President, National Accounts and was paid $235,000 in salary and bonus in 2006.

Item 14.

Principal Accounting Fees and Services.

The following is a summary of the fees billed to the Company by Ernst & Young LLP for professional services rendered for the fiscal years ended December 31, 2006 and December 31, 2005:


Fee Category	2006 Fees		2005 Fees
Audit Fees	$	453,065	$	431,352
Audit-Related Fees		—		—
Tax Fees		—		—
All Other Fees		—		—

Total Fees	$	453,065	$	431,352

Audit Fees. These consist of fees billed for professional services rendered for the audit of the Company’s consolidated financial statements, review of the interim consolidated financial statements included in the quarterly reports on Form 10-Q for the respective fiscal years, irrespective of the period in which the related services are rendered or billed and services provided by the independent auditors in connection with regulatory filings, including accounting and financial work related to the proper application of financial accounting and/or reporting standards.

Audit-Related Fees. These consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements and are not reported under “Audit Fees.” These services include consultations related to internal control and compliance procedures, due diligence related to mergers and acquisitions and consultations concerning financial accounting and reporting standards.

Tax Fees. These consist of fees billed for professional services for tax compliance, tax advice and tax planning.

All Other Fees. These consist of fees for services not captured in the other categories.

Policy on Audit Committee Pre-Approval of Audit Services and Permissible Non-Audit Services of Independent Auditors

The Audit Committee’s policy is to pre-approve all audit and permissible audit related and non-audit services performed by the independent auditors. Prior to engagement of the independent auditors for the next year’s audit, the independent auditor provides to the Audit Committee the scope of the proposed audit and proposed related fees for services expected to be rendered during that year within each of four categories of services for approval. The fees are budgeted and the Audit Committee requires the independent auditor and management to report actual fees versus the budget periodically throughout the year by category of service. The Audit Committee is also informed routinely as to the services actually provided by the independent auditor pursuant to this pre-approval process. The Audit Committee’s prior approval must be obtained before the scope or cost of pre-approved services is increased and for additional permissible non-audit services for which a need arises during the course of the year.

In determining whether to pre-approve any given services, the Committee considers whether such services are consistent with the continued independence of the independent auditor under the SEC’s rules, whether the independent auditor is best positioned to provide the most effective and efficient service, and whether the performance of the service by the auditor might enhance the Company’s ability to manage or control risk or improve audit quality.

Item 15.

Exhibits and Financial Statement Schedules.

(a)	List of Financial Statements, Financial Statement Schedules, and Exhibits

(1)

List of Financial Statements

See Index to Consolidated Financial Statements in Item 8, “Financial Statements And Supplementary Data”.

(2)

List of Financial Statement Schedules

The following financial statement schedules of the Company are included herein:

Schedule II – Valuation of Qualifying Accounts

All other schedules for which provision is made in the applicable accounting regulations of the Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.

(3)

Exhibits

The following exhibits are either included in this report or incorporated herein by reference as indicated below:


1.1		Purchase Agreement, dated April 30, 2004, by and among the Issuers, the Guarantors and the Initial Purchasers (incorporated by reference to Exhibit 1.1 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

3.1		Second Amended and Restated Limited Liability Company Agreement of Wise Metals Group LLC (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-4/A filed on September 29, 2004)



3.2a		Certificate of Formation of Wise Metals Holdings LLC filed with the Delaware Secretary of State on February 1, 1999 (incorporated by reference to Exhibit 3.2a to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

3.2b		Certificate of Amendment of Wise Metals Holdings LLC (incorporated by reference to Exhibit 3.2b to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

3.2c		Articles of Merger of Wise Metals Group LLC (incorporated by reference to Exhibit 3.2c to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

3.3		Limited Liability Company Agreement of Listerhill Total Maintenance Center LLC (incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

3.4		Certificate of Formation of Listerhill Total Maintenance Center LLC filed with the Delaware Secretary of State on September 30, 2003 (incorporated by reference to Exhibit 3.4 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

3.5		Limited Liability Company Agreement of Wise Warehousing, LLC (incorporated by reference to Exhibit 3.5 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

3.6		Certificate of Formation of Wise Warehousing, LLC filed with the Delaware Secretary of State on December 22, 2003 (incorporated by reference to Exhibit 3.6 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

3.7		Limited Liability Company Agreement of Wise Alloys LLC (together with amendment 3 thereto) (incorporated by reference to Exhibit 3.7 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

3.8		Certificate of Formation of Wise Alloys LLC filed with the Delaware Secretary of State on December 9, 1998 (incorporated by reference to Exhibit 3.8 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

3.9		Amended and Restated Limited Liability Company Agreement of Wise Recycling West, LLC (incorporated by reference to Exhibit 3.9 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

3.10a		Certificate of Formation of Wise Recycling West, LLC filed with the Delaware Secretary of State on December 27, 2001 (incorporated by reference to Exhibit 3.10a to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

3.10b		Certificate of Amendment of Certificate of Formation of Wise Recycling West, LLC (incorporated by reference to Exhibit 3.10b to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

3.11		Limited Liability Company Agreement of Wise Recycling Texas, LLC (incorporated by reference to Exhibit 3.11 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

3.12		Certificate of Formation of Wise Recycling Texas, LLC filed with the Delaware Secretary of State on June 4, 2002 (incorporated by reference to Exhibit 3.12 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

3.13		Second Amended and Restated Limited Liability Company Operating Agreement of Wise Recycling, LLC (incorporated by reference to Exhibit 3.13 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

3.14		Articles of Organization of Wise Recycling, LLC filed with the Maryland Secretary of State on January 20, 1998 (incorporated by reference to Exhibit 3.14 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)



3.15		Certificate of Incorporation of Wise Alloys Finance Corporation filed with the Delaware Secretary of State on April 18, 2002 (incorporated by reference to Exhibit 3.15 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

3.16		Bylaws of Wise Alloys Finance Corporation (incorporated by reference to Exhibit 3.16 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

4.1		Indenture, dated May 5, 2004, by and among the Issuers, the Guarantors and the Trustee (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

4.2		Registration Rights Agreement, dated as of May 5, 2004, by and among the Issuers, the Guarantors and the Initial Purchasers (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.1		General Security Agreement, dated as of May 5, 2004, by the Issuers and the Guarantors in favor of the Trustee (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.2		Intercreditor Agreement, dated May 5, 2004, by and between the Trustee and Congress Financial Corporation (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.3		Collateral Assignment of Acquisition Agreement, dated May 5, 2004, by Wise Alloys LLC in favor of the Trustee (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.4		Investment Property Pledge and Security Agreement, dated May 5, 2004, by Wise Alloys LLC in favor of the Trustee (incorporated by reference to Exhibit 10.4 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.5		Fee and Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated May 5, 2004, by Wise Alloys LLC in favor of the Trustee (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.6		Pledge and Security Agreement, dated May 5, 2004, by the Issuers and the Guarantors in favor of the Trustee (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.7		Trademark Collateral Assignment and Security Agreement, dated May 5, 2004, by and between Wise Alloys LLC and the Trustee (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.8		Beverage Can Supply Letter Agreement, dated August 10, 1998 and as most recently amended April 1, 2003, by and between Ball Corporation and Wise Alloys LLC (incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Amendment No. 1 to the Form S-4 filed on September 29, 2004)†

10.9		Beverage Can Supply Letter Agreement, dated April 22, 2004, by and between Crown Cork & Seal Co. and Wise Alloys LLC (incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Amendment No. 1 to the Form S-4 filed on September 29, 2004)†

10.10		Amended and Restated Loan Agreement, dated May 5, 2004, by and among the Issuers, the Guarantors, Congress Financial Corporation, Fleet Capital Corporation and the Financial Institutions named therein (incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.11		Employment Agreement, dated December 31, 2001, by and between Gerald David and Wise Metals Group LLC (incorporated by reference to Exhibit 10.11 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)



10.12		Employment Agreement, dated April 1, 1999, by and between John Cameron and Wise Metals Group LLC (together with amendments thereto) (incorporated by reference to Exhibit 10.12 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.13		$720,000 Real Estate Mortgage Note, dated December 5, 2002, issued by Wise Recycling West, LLC on behalf of TOMRA of North America Finance Corporation (incorporated by reference to Exhibit 10.13 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.14		Mortgage, dated December 5, 2002, by and between Wise Recycling West, LLC on behalf of TOMRA of North America Finance Corporation (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.15		$720,000 Promissory Note, dated December 6, 2002, issued by Wise Recycling West, LLC on behalf of TOMRA of North America Finance Corporation (incorporated by reference to Exhibit 10.15 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.16		Deed of Trust, dated December 6, 2002, by and between Wise Recycling West, LLC on behalf of TOMRA of North America Finance Corporation (incorporated by reference to Exhibit 10.16 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.17		Environmental Cooperation Agreement, dated March 31, 1999, by Reynolds Metals Company and Wise Alloys LLC (incorporated by reference to Exhibit 10.17 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.18		Technology License Agreement, dated as of March 31, 1999, between Reynolds Metals Company, Southern Reclamation Company, Inc. and Wise Alloys LLC (incorporated by reference to Exhibit 10.18 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.19		Purchase Agreement dated as of October 31, 2003, and effective as of June 30, 2003, by and among David D’Addario and John Cameron and Wise Recycling LLC (incorporated by reference to Exhibit 10.19 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.20		Ground Lease Agreement (Sewage Treatment Plant), dated March 31, 1999, by Reynolds Metals Company and Wise Alloys LLC (incorporated by reference to Exhibit 10.20 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.21		Ground Lease Agreement (Drinking Water Plant), dated March 31, 1999, by Reynolds Metals Company and Wise Alloys LLC (incorporated by reference to Exhibit 10.21 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.22		Ground Lease Agreement (Southern Reclamation Plant), dated March 31, 1999, by Reynolds Aluminum Partners and Wise Alloys LLC (incorporated by reference to Exhibit 10.22 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.23		Lease Agreement, dated March 31, 1999, by Reynolds Metals Company and Wise Alloys LLC (incorporated by reference to Exhibit 10.23 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.24		Asset Purchase Agreement, dated as of December 30, 1998, among Reynolds Metals Company, Southern Reclamation Company, Inc. Reynolds Aluminum Partners and Wise Alloys LLC (incorporated by reference to Exhibit 10.24 to the Company’s Registration Statement on Form S-4 filed on July 23, 2004)

10.25		Amendment No. 1 to Amended and Restated Loan Agreement, dated as of June 30, 2004, by and among the Issuers, the Guarantors, Congress Financial Corporation, Fleet Capital Corporation and the Financial Institutions named therein (incorporated by reference to Exhibit 10.25 to the Company’s Registration Statement on Form S-4/A filed on September 29, 2004)



10.26		Accounts Purchase and Sale Agreement, dated as of June 30, 2004, by and among Wise Alloys LLC and Congress Financial Corporation (incorporated by reference to Exhibit 10.26 to the Company’s Registration Statement on Form S-4/A filed on September 29, 2004)

10.27		Employment Agreement, dated as of July 1, 2004, by and between Randall R. Powers and Wise Metals Group LLC (incorporated by reference to Exhibit 10.27 to the Company’s Registration Statement on Amendment No. 1 to the Form S-4 filed on September 29, 2004)

10.28		Amendment No. 2 to Amended and Restated Loan Agreement, dated November 10, 2004, by and among the Issuers, the Guarantors, Congress Financial Corporation and Fleet Capital Corporation (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)

10.29		Amendment No. 4 to Amended and Restated Loan Agreement, dated October 31, 2005, by and among the Issuers, the Guarantors, Congress Financial Corporation and Fleet Capital Corporation (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005)

10.30		Amendment to Deed of Trust and Assignment of Deed of Trust, dated as January 10, 2005, by Wise Recycling West, LLC, to the Adams County Public Trustee for the benefit of TOMRA of North America Finance Corporation and GAB Holding LLC (incorporated by reference to Exhibit 10.30 to the Company’s Annual Report on form 10-K for the year ended December 31, 2005)

10.31		Extension and Assignment Agreement, entered into as of January 21, 2005, by and among TOMRA of North America Finance Corporation, Wise Recycling West, LLC and GAB Holding LLC (incorporated by reference to Exhibit 10.31 to the Company’s Annual Report on form 10-K for the year ended December 31, 2005)

10.32		Allonge to Real Estate Mortgage Note, attached to, and made a part of that certain Promissory Note dated December 5, 2002, in the principal amount of Seven Hundred Twenty Thousand and 00/100 Dollars ($720,000.00) made by Wise Recycling West, LLC to the order of TOMRA of North America Finance Corporation (incorporated by reference to Exhibit 10.32 to the Company’s Annual Report on form 10-K for the year ended December 31, 2005)

10.33		Amendment No. 3 to Amended and Restated Loan Agreement, dated March 21, 2005, by and among the Issuers, the Guarantors, and Wachovia Corporation (formerly Congress Financial) as Agent Corporation*

10.34		Amendment No. 5 to Amended and Restated Loan Agreement, dated March 6, 2006, by and among the Issuers, the Guarantors, and Wachovia Corporation (formerly Congress Financial) as Agent Corporation (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005)

10.35		Amendment No. 6 to Amended and Restated Loan Agreement, dated March 31, 2006, by and among the Issuers, the Guarantors, and Wachovia Corporation (formerly Congress Financial) as Agent Corporation*

10.36		Amendment No. 7 to Amended and Restated Loan Agreement, dated April 28, 2006, by and among the Issuers, the Guarantors, and Wachovia Corporation (formerly Congress Financial) as Agent Corporation*

10.37		Amendment No. 8 to Amended and Restated Loan Agreement, dated June 12, 2006, by and among the Issuers, the Guarantors, and Wachovia Corporation (formerly Congress Financial) as Agent Corporation (incorporated by reference to Exhibit 10.30 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2006)

10.38		Amendment No. 9 to Amended and Restated Loan Agreement, dated August 4, 2006, by and among the Issuers, the Guarantors, and Wachovia Corporation (formerly Congress Financial) as Agent Corporation (incorporated by reference to Exhibit 10.31 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2006)



10.39		Amendment No. 10 to Amended and Restated Loan Agreement, dated December 31, 2006, by and among the Issuers, the Guarantors, and Wachovia Corporation (formerly Congress Financial) as Agent Corporation*

10.40		Separation Agreement and Release by and between Randall R. Powers and the Company (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2006)

10.41		Master Lease Agreement dated November 13, 2006 by and among The Employees’ Retirement System of Alabama, The Teachers’ Retirement System of Alabama, Wilmington Trust Company and the Company*

10.42		Accounts Purchase and Sale Agreement, dated as of March 31, 2006, by and among Wise Alloys LLC and Wachovia Corporation (formerly Congress Financial) as Agent Corporation*

10.43		Amendment No. 1 to Accounts Purchase and Sale Agreement, dated as of December 31, 2006, by and among Wise Alloys LLC and Wachovia Corporation (formerly Congress Financial) as Agent Corporation*

10.44		Amendment No. 2 to Accounts Purchase and Sale Agreement, dated as of April 9, 2007, by and among Wise Alloys LLC and Wachovia Corporation (formerly Congress Financial) as Agent Corporation*

21		List of Subsidiaries (incorporated by reference to Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005)

31.1		Section302 CEO Certification*

31.2		Section302 CFO Certification*

32.1		Section906 CEO Certification*

32.2		Section906 CFO Certification*

*	Filed herewith.

†	Portions of this document have been omitted and filed separately with the SEC pursuant to a request for confidential treatment in accordance with Rule 406 of the Securities Act.

SIGNATURES

Pursuant to the requirements of section 13 or section 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		WISE METALS GROUP LLC

Dated: April 17, 2007		/s/ DAVID D’ADDARIO
		David D’Addario
		Chairman and Chief Executive Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.


Dated: April 17, 2007		/s/ DAVID D’ADDARIO
		David D’Addario
		Chairman and Chief Executive Officer

		/s/ KENNETH STASTNY
		Kenneth Stastny
		Chief Financial Officer

		/s/ JOHN CAMERON
		John Cameron
		Vice Chairman and Manager

		/s/ GERALD DAVID
		Gerald David
		Manager

		/s/ GREGORY GARVEY
		Gregory Garvey
		Manager

Supplemental Information to be Furnished with Reports Filed Pursuant to Section 15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to Section 12 of the Act.

No annual report or proxy materials have been sent to security holders.

15(a)

Schedule II

Valuation and Qualifying Accounts

Allowance for Doubtful Accounts


Period Ending	Balance at Beginning of Period		Charge to Costs and Expense	Deductions— Write Offs		Other	Balance at Ending of Period
December 31, 2004	$	1,901	—	1,701	(1)	—	200
December 31, 2005		200	860	—		—	1,060
December 31, 2006		1,060	50	10		—	1,100

(1)	An allowance in 2002 was established concurrently with a billing due to the unlikely nature of collection. In 2004, the amount includes the write off this allowance and related receivables recorded in 2002 thus having no impact on earnings.

EX-10.33 2 dex1033.htm AMENDMENT NO.3 TO AMENDED & RESTATED LOAN AGREEMENT Amendment No.3 to Amended & Restated Loan Agreement

Exhibit 10.33

[Execution]

AMENDMENT NO. 3 AND WAIVER

TO AMENDED AND RESTATED LOAN AGREEMENT

This AMENDMENT NO. 3 AND WAIVER TO AMENDED AND RESTATED LOAN AGREEMENT (this “Amendment”), dated as of March 21, 2005, is entered into by and among Wise Alloys LLC, a Delaware limited liability company (“Alloys”), Wise Recycling, LLC, a Maryland limited liability company (“Recycling” and together with Alloys, each individually a “Barrower” and collectively, “Borrowers”), Wise Metals Group LLC, a Delaware limited liability company (“Group”), Wise Alloys Finance Corporation, a Delaware corporation (“Finance”), Listerhill Total Maintenance Center LLC, a Delaware limited liability company (“Listerhill”), Wise Warehousing, LLC, a Delaware limited liability company (“Warehousing”), Wise Recycling Texas, LLC, a Delaware limited liability company (“Recycling Texas”), Wise Recycling West, LLC, a Delaware limited liability company (“Recycling West” and together with Group, Finance, Listerhill, Warehousing and Recycling Texas, each individually a “Guarantor” and collectively, “Guarantors”), the financial institutions from time to time parties hereto as lenders, whether by execution of this Agreement or an Assignment and Acceptance (each individually, a “Lender” and collectively, “Lenders”), Wachovia Bank, National Association, successor by merger to Congress Financial Corporation, in its capacity as administrative agent for Lenders (in such capacity, “Agent”), and Fleet Capital Corporation in its capacity as documentation agent for Lenders (in such capacity, “Documentation Agent”).

W I T N E S S E T H:

WHEREAS, Agent and Lenders have entered into financing arrangements with Borrowers pursuant to which Agent and Lenders may, upon certain terms and conditions, make loans and advances and provide other financial accommodations to Borrowers as set forth in the Amended and Restated Loan Agreement, dated May 5, 2004, as amended by Amendment No. 1 to Amended and Restated Loan Agreement, dated June 30, 2004, and Amendment No. 2 to Amended and Restated Loan Agreement, dated as of November 10, 2004, (as the same now exists and may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the “Loan Agreement”) and the other agreements, documents and instruments referred to therein or any time executed and/or delivered in connection therewith or related thereto, including this Amendment (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the “Financing Agreements”);

WHEREAS, Borrowers have requested that Agent and Lenders agree to waive certain events of default under the Loan Agreement, and agree to make certain amendments to the Loan Agreement, and Agent and Lenders are willing to agree to such request, subject to the terms and conditions contained herein;

WHEREAS, the parties hereto desire to enter into this Amendment to evidence and effectuate such amendments and waivers, subject to the terms and conditions and to the extent set forth herein;

NOW, THEREFORE, in consideration of the premises and covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1. Definitions.

(a) Additional Definitions. As used herein, the following terms shall have the meanings given to it below and the Loan Agreement and the other Financing Agreements are hereby amended to include, in addition and not in limitation, the following:

“Adjusted Inventory Loan Limit “shall mean, as to each Borrower, at any time, the amount equal to $87,500,000 (the “Adjusted Base Amount”), minus the then outstanding principal amount of Loans to the other Borrowers (and including Letter of Credit Accommodations to the extent provided in the definition of the term Borrowing Base) based on Eligible Inventory; provided, that, upon the request of Administrative Borrower and the written consent of Agent, Agent may from time to time, in its sole discretion, increase the Adjusted Base Amount to an amount not to exceed $92,500,00; provided, further, that in no event shall the aggregate amount of the Adjusted Inventory Loan Limit of all the Borrowers exceed the aggregate amount of the Inventory Loan Limit of all Borrowers by more than $7,500,00 at any time.

(b) Amendments to Definitions. Each reference to the term “Adjusted Excess Availability” in the Loan Agreement and the other Financing Agreements is hereby amended so that the amount of Adjusted Excess Availability shall be determined with regard to the Adjusted Inventory Loan Limit in lieu of the Inventory Loan Limit.

(c) Interpretation. Capitalized terms used herein which are not otherwise defined herein shall have the respective meanings ascribed thereto in the Loan Agreement.

2. Minimum EBITDA. Notwithstanding anything to the contrary contained in the Loan Agreement and the other Financing Agreements, Borrowers and Guarantors shall not be required to comply with the terms of Section 9.17 of the Loan Agreement for the periods ending February 28, 2005 and March 31, 2005.

3. Minimum Debt Service Ratio. Notwithstanding anything to the contrary contained in the Loan Agreement and the other Financing Agreements, Borrowers and Guarantors shall not be required to comply with the terms of Section 9.18 of the Loan Agreement for the periods ending February 28, 2005 and March 31, 2005.

4. Waiver. (a) Subject to the terms and conditions set forth herein, Agent and Lenders hereby waive the Events of Default under Section 10.1(a)(iii) of the Loan Agreement arising from the failure of Borrowers and Guarantors to comply with (i) the terms of Section 9.17 of the

Loan Agreement for the periods ending December 31, 2004 and January 31, 2005 and (ii) the terms of Section 9.18 of the Loan Agreement for the period ending January 31, 2005 (collectively, the “Acknowledged Events of Default”).

(b) Agent and Lenders have not waived, are not by this Amendment waiving, and have no intention of waiving any Event of Default which may have occurred on or prior to the date hereof, whether or not continuing on the date hereof, or which may occur after date hereof (whether the same or similar to the Acknowledged Events of Default or otherwise), other than the Acknowledged Events of Default. The foregoing waiver shall not be construed as a bar to or a waiver of any other further Event of Default on any future occasion, whether similar in kind or otherwise and shall not constitute a waiver, express or implied, of any of the rights and remedies of Agent or any Lender arising under the terms of the Loan Agreement or any other Financing Agreements on any future occasion or otherwise.

5. Amendment Fee. In addition to all other fees, charges, interest and expenses payable by Borrowers to Agent and Lenders under the Loan Agreement and the other Financing Agreements, Borrowers shall pay to Agent, for ratable benefit of each Lender that delivers to Agent its written consent to this Amendment on or before March 21, 2005, an amendment fee in the amount of $75,000, which fee shall be due and payable on the effective date hereof. Such amendment fee shall be fully earned as of the date hereof and may be charged to any loan account of Borrowers.

6 . Additional Representation, Warranties and Covenants. Borrowers and Guarantors, jointly and severally, represent, warrant and covenant with and to Agent and Lenders as follows, which representations, warranties and covenants are continuing and shall survive the execution and delivery hereof, and the truth and accuracy of, or compliance with each, together with the representations, warranties and covenants in the other Financing Agreements, being a continuing condition of the making of Loans by Lenders to Borrowers:

(a) This Amendment has been duly authorized, executed and delivered by all necessary action on the part of each Borrower and Guarantor which is a party hereto and, if necessary, their respective members or stockholders, as the case may be, and is in full force and effect as of the date hereof, as the case may be, and the agreements and obligations of Borrowers and Guarantors contained herein constitute legal, valid and binding obligations of Borrowers and Guarantors enforceable against them in accordance with their terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(b) As of the date hereof, all of the representations and warranties set forth in the Loan Agreement and the other Financing Agreements are true and correct in all material respects on and as of the date hereof as if made on the date hereof, except to the extent any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct as of such date.

(c) As of the date hereof and after giving effect to the provisions of Section 4 hereof, no Default or Event of Default exists or has occurred and is continuing.

(d) Neither the execution, delivery and performance of this Amendment or any other Financing Agreements in connection therewith, nor the consummation of any of the transactions contemplated herein or therein (i) are in contravention of law or any indenture, agreement or undertaking (including the Indenture) to which any Borrower or Guarantor is a party or by which any Borrower or Guarantor or its property are bound or (ii) violates any provision of the Certificate of Incorporation or By-Laws or other governing documents of any Borrower or Guarantor.

7 . Conditions Precedent. The provisions contained herein shall be effective as of the date hereof, but only upon the satisfaction of each of the following conditions precedent, in a manner satisfactory to Agent:

(a) Agent shall have received an original of this Amendment, duly authorized, executed and delivered by Borrowers, Guarantors and the Required Lenders; and

(b) no Default or Event of Default shall have occurred and be continuing (after giving effect to the provisions of Section 4 hereof).

8 . Effect of this Amendment; Entire Agreement. Except as expressly set forth herein, no other changes or modifications to the Financing Agreements are intended or implied, and in all other respects the Financing Agreements are hereby specifically ratified, restated and confirmed by all parties hereto as of the date hereof. This Amendment and any instruments or documents delivered or to be delivered in connection herewith, represent the entire agreement and understanding concerning the subject matter hereof and thereof between the parties hereto, and supersede all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written. To the extent of conflict between the terms of this Amendment and the other Financing Agreements, the terms of this Amendment shall control. The Loan Agreement and this Amendment shall be read and construed as one agreement.

9 . Further Assurances. The parties hereto shall execute and deliver such additional documents and take such additional action as may be reasonably necessary or desirable to effectuate the provisions and purposes of this Amendment.

10 . Governing Law. The validity, interpretation and enforcement of this Amendment and any dispute arising out of the relationship between the parties hereto whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

11 . Binding Effect. This Amendment shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

12 . Headings. The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this Amendment.

13 . Counterparts. This Amendment may be executed in any number of counterparts, but all of such counterparts shall together constitute but one and the same agreement. In making proof of this Amendment, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto. This Amendment may be executed and delivered by telecopier with the same force and effect as if it were a manually executed and delivered counterpart.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, Agent, Lenders, Borrowers and Guarantors have caused this Amendment to be duly executed as of the day and year first above written.


BORROWERS

WISE ALLOYS LLC

By:		/s/ Danny Mendelson
Title:		Chief Financial Officer

WISE RECYCLING, LLC

By:		/s/ Danny Mendelson
Title:		President

GUARANTORS

WISE METALS GROUP LLC

By:		/s/ Danny Mendelson
Title:		Chief Financial Officer

WISE ALLOYS FINANCE CORPORATION

By:		/s/ Danny Mendelson
Title:		Chief Financial Officer

LISTERHILL TOTAL MAINTENANCE CENTER LLC

By:		/s/ Danny Mendelson
Title:		Chief Financial Officer

[SIGNATURES CONTINUED ON NEXT PAGE]

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]


WISE RECYCLING TEXAS, LLC

By:		/s/ Danny Mendelson
Title:		President

WISE WAREHOUSING, LLC

By:		/s/ Danny Mendelson
Title:		President

WISE RECYCLING WEST, LLC

By:		/s/ Danny Mendelson
Title:		President

[SIGNATURES CONTINUED ON NEXT PAGE]

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]


AGENT

WACHOVIA BANK, NATIONAL ASSOCIATION, successor by merger to Congress Financial Corporation, as Agent

By:		/s/ James O’Connell
Title:		Assistant Vice President

DOCUMENTATION AGENT

FLEET CAPITAL CORPORATION, as Documentation Agent

By:		/s/ Robert Anchundia
Title:		Vice President

LENDERS

WACHOVIA BANK, NATIONAL ASSOCIATION, successor by merger to Congress Financial Corporation

By:		/s/ James O’Connell
Title:		Assistant Vice President

FLEET CAPITAL CORPORATION

By:		/s/ Robert Anchundia
Title;		Vice President

[SIGNATURES CONTINUED ON NEXT PAGE]


RZB FINANCE LLC

By:		/s/ Eric Salat
Title:		GROUP VICE PRESIDENT

By:		/s/ Griselda Alvizo
Title:		Vice President

UPS CAPITAL CORPORATION

By:		/s/ John P. Holloway
Title:		Director of Portfolio Management

EX-10.35 3 dex1035.htm AMENDMENT NO. 6 TO AMENDED & RESTATED LOAN AGREEMENT, DATED MARCH 31, 2006 Amendment No. 6 to Amended & Restated Loan Agreement, dated March 31, 2006

Exhibit 10.35

[Execution]

AMENDMENT NO. 6 TO AMENDED AND RESTATED LOAN AGREEMENT

This AMENDMENT NO. 6 TO AMENDED AND RESTATED LOAN AGREEMENT (this “Amendment”), dated as of March 31, 2006, is entered into by and among Wise Alloys LLC, a Delaware limited liability company (“Alloys”), Wise Recycling, LLC, a Maryland limited liability company (“Recycling” and together with Alloys, each individually a “Borrower” and collectively, “Borrowers”), Wise Metals Group LLC, a Delaware limited liability company (“Group”), Wise Alloys Finance Corporation, a Delaware corporation (“Finance”), Listerhill Total Maintenance Center LLC, a Delaware limited liability company (“Listerhill”), Wise Warehousing, LLC, a Delaware limited liability company (“Warehousing”), Wise Recycling Texas, LLC, a Delaware limited liability company (“Recycling Texas”), Wise Recycling West, LLC, a Delaware limited liability company (“Recycling West” and together with Group, Finance, Listerhill, Warehousing and Recycling Texas, each individually a “Guarantor” and collectively, “Guarantors”), the financial institutions from time to time parties to the Loan Agreement (as hereinafter defined) as lenders (each individually, a “Lender” and collectively, “Lenders”), and Wachovia Bank, National Association, successor by merger to Congress Financial Corporation, in its capacity as administrative agent for Lenders (in such capacity, “Agent”).

W I T N E S S E T H:

WHEREAS, Agent and Lenders have entered into financing arrangements with Borrowers pursuant to which Agent and Lenders have made and provided and hereafter may make and provide, upon certain terms and conditions, loans and advances and other financial accommodations to Borrowers as set forth in the Amended and Restated Loan Agreement, dated May 5, 2004, by and among Agent, Lenders, Borrowers and Guarantors, as amended by Amendment No. 1 to Amended and Restated Loan Agreement, dated as of June 30, 2004, Amendment No. 2 to Amended and Restated Loan Agreement, dated as of November 10, 2004, Amendment No. 3 and Waiver to Amended and Restated Loan Agreement, dated as of March 21, 2005, Amendment No. 4 to Amended and Restated Loan Agreement, dated as of October 31, 2005, and Amendment No. 5 to Amended and Restated Loan Agreement, dated as of March 3, 2006 (as the same now exists and may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the “Loan Agreement”) and the other agreements, documents and instruments referred to therein or any time executed and/or delivered in connection therewith or related thereto, including this Amendment (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the “Financing Agreements”);

WHEREAS, Borrowers have requested that Agent and Lenders agree to make certain amendments to the Loan Agreement, and Agent and Lenders are willing to agree to such requests, subject to the terms and conditions contained herein;

WHEREAS, the parties hereto desire to enter into this Amendment to evidence and effectuate such amendments, subject to the terms and conditions and to the extent set forth herein;

1. Definitions.

(a) Amendments to Definitions. The definition of “Accounts Purchase Agreement” in the Loan Agreement is hereby amended by deleting such definition in its entirety and replacing it with the following:

“ ‘Accounts Purchase Agreement’ shall mean the Accounts Purchase and Sale Agreement, dated as of March 31, 2006, between Wachovia, as purchaser, and Alloys, as seller, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.”

(b) Interpretation. Capitalized terms used herein which are not otherwise defined herein shall have the respective meanings ascribed thereto in the Loan Agreement.

2. Schedules to Loan Agreement. Schedule 1.27 to the Loan Agreement is hereby amended by deleting such Schedule and replacing it with the Schedule attached hereto as Schedule 1.

3. Release of Security Interest in Certain Collateral. Effective upon the sale by Alloys of any Accounts and Related Assets pursuant to the Accounts Purchase Agreement, the security interests and liens of Collateral Agent in and on such Accounts and Related Assets shall be terminated and released automatically and without further action; provided, that, nothing contained herein or otherwise shall be deemed to be a release or termination by Collateral Agent of any security interests in and liens upon the proceeds from the sale of any such Accounts or any other assets of Borrowers, all of which shall continue in full force and effect. Except as specifically set forth herein, nothing contained herein shall be construed in any manner to constitute a waiver, release or termination or to otherwise limit or impair any of the obligations or indebtedness of any Borrower or any other person or entity to Agent and Lenders, or any duties, obligations or responsibilities of Borrowers or any other person or entity to Agent and Lenders.

4. Additional Representations, Warranties and Covenants. Borrowers and Guarantors, jointly and severally, represent, warrant and covenant with and to Agent and Lenders as follows, which representations, warranties and covenants are continuing and shall survive the execution and delivery hereof, and the truth and accuracy of, or compliance with each, together with the representations, warranties and covenants in the other Financing Agreements, being a continuing condition of the making of Loans by Lenders to Borrowers:

(a) This Amendment and the other Financing Agreements executed and/or delivered by any Borrower or Guarantor in connection herewith (together with this Amendment, the “Amendment Documents”) have been duly authorized, executed and delivered by all necessary action on the part of each Borrower and Guarantor which is a party hereto and, if necessary, their respective members or stockholders, as the case may be, and is in full force and effect as of the date hereof, as the case may be, and the agreements and obligations of Borrowers and Guarantors contained herein or therein constitute legal, valid and binding obligations of Borrowers and Guarantors enforceable against them in accordance with their terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(d) Neither the execution, delivery and performance of this Amendment or any other Amendment Document in connection therewith, nor the consummation of any of the transactions contemplated herein or therein (i) are in contravention of law or any indenture, agreement or undertaking (including the Indenture) to which any Borrower or Guarantor is a party or by which any Borrower or Guarantor or its property are bound or (ii) violates any provision of the Certificate of Incorporation, Certificate of Formation, Operating Agreement, By-Laws or other governing documents of any Borrower or Guarantor.

5. Conditions Precedent. The provisions contained herein shall be effective as of the date hereof, but only upon the satisfaction of each of the following conditions precedent, in a manner satisfactory to Agent:

(a) Agent shall have received an original of this Amendment, duly authorized, executed and delivered by Borrowers, Guarantors and the Required Lenders;

(b) Agent shall have received an original of the Accounts Purchase Agreement, duly authorized, executed and delivered by the parties thereto; and

understanding concerning the subject matter hereof and thereof between the parties hereto, and supersede all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written. To the extent of conflict between the terms of this Amendment and the other Financing Agreements, the terms of this Amendment shall control. The Loan Agreement and this Amendment shall be read and construed as one agreement.

7. Further Assurances. The parties hereto shall execute and deliver such additional documents and take such additional action as may be reasonably necessary or desirable to effectuate the provisions and purposes of this Amendment.

8. Governing Law. The validity, interpretation and enforcement of this Amendment and any dispute arising out of the relationship between the parties hereto whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

9. Binding Effect. This Amendment shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

10. Headings. The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this Amendment.

11. Counterparts. This Amendment may be executed in any number of counterparts, but all of such counterparts shall together constitute but one and the same agreement. In making proof of this Amendment, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto. This Amendment may be executed and delivered by telecopier or other electronic method of transmission with the same force and effect as if it were a manually executed and delivered counterpart.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, Agent, Lenders, Borrower and Guarantors have caused this Amendment to be duly executed as of this day and year first above written.


BORROWERS

WISE ALLOYS LLC

By:		/s/ Danny Mendelson
Title:

WISE RECYCLING, LLC

By:		/s/ Danny Mendelson
Title:

GUARANTORS

WISE METALS GROUP LLC

By:		/s/ Danny Mendelson
Title:

WISE ALLOYS FINANCE CORPORATION

By:		/s/ Danny Mendelson
Title:

LISTERHILL TOTAL MAINTENANCE CENTER LLC

By:		/s/ Danny Mendelson
Title:

WISE RECYCLING TEXAS, LLC

By:		/s/ Danny Mendelson
Title:

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[SlGNATURES CONTINUED FROM PREVIOUS PAGE]


WISE WAREHOUSING, LLC

By:		/s/ Danny Mendelson
Title:

WlSE RECYCLING WEST, LLC

By:		/s/ Danny Mendelson
Title:

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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]


AGENT AND LENDERS

WACHOVIA BANK, NATIONAL ASSOCIATION, successor by merger to Congress Financial Corporation, as Agent, as Collateral Agent and as Lender

By:		/s/ James O’Connell
Title:		Vice President

BANK OF AMERICA, NA, as Lender

By:		/s/ Robert Anchudia
Title:		Vice President

PNC BANK, NATIONAL ASSOCIATION, as Lender

By:		/s/ Jacqueline Mackenzie
Title:		VP

RZB FINANCE LLC, as Lender

By:		/s/ Pamela E. Flynn
Title:		Vice President

By:		/s/ Griselda Alvizo
Title:		Vice President

UPS CAPITAL CORPORATION, as Lender

By:		/s/ John P. Holloway
Title:		Director of Portfolio Management

THE CIT GROUP/BUSINESS CREDIT, INC., as Lender

By:		/s/ Jack A. Myers
Title:		Vice President

SCHEDULE 1

AMENDMENT NO. 5 TO AMENDED AND RESTATED LOAN AGREEMENT

SCHEDULE 1.27

AMENDED AND RESTATED LOAN AGREEMENT

Commitments


Lender	Commitment		Pro Rata Share
Wachovia Bank, National Association	$	50,000,000	27.778	%
Bank of America, N.A	$	50,000,000	27.778	%
The CIT Group/Business Credit, Inc.	$	30,000,000	16.666	%
PNC Bank, National Association	$	20,000,000	11.111	%
UPS Capital Corporation	$	18,000,000	10	%
RZB Finance LLC	$	12,000,000	6.667	%
TOTAL:	$	180,000,000	100	%

EX-10.36 4 dex1036.htm AMENDMENT NO. 7 TO AMENDED AND RESTATED LOAN AGREEMENT, DATED APRIL 28, 2006 Amendment No. 7 to Amended and Restated Loan Agreement, dated April 28, 2006

Exhibit 10.36

[Execution]

AMENDMENT NO. 7 TO AMENDED AND RESTATED LOAN AGREEMENT

This AMENDMENT NO. 7 TO AMENDED AND RESTATED LOAN AGREEMENT (this “Amendment”), dated as of April 28, 2006, is entered into by and among Wise Alloys LLC, a Delaware limited liability company (“Alloys”), Wise Recycling, LLC, a Maryland limited liability company (“Recycling” and together with Alloys, each individually a “Borrower” and collectively, “Borrowers”), Wise Metals Group LLC, a Delaware limited liability company (“Group”), Wise Alloys Finance Corporation, a Delaware corporation (“Finance”), Listerhill Total Maintenance Center LLC, a Delaware limited liability company (“Listerhill”), Wise Warehousing, LLC, a Delaware limited liability company (“Warehousing”), Wise Recycling Texas, LLC, a Delaware limited liability company (“Recycling Texas”), Wise Recycling West, LLC, a Delaware limited liability company (“Recycling West” and together with Group, Finance, Listerhill, Warehousing and Recycling Texas, each individually a “Guarantor” and collectively, “Guarantors”), the financial institutions from time to time parties to the Loan Agreement (as hereinafter defined) as lenders (each individually, a “Lender” and collectively, “Lenders”), and Wachovia Bank, National Association, successor by merger to Congress Financial Corporation, in its capacity as administrative agent for Lenders (in such capacity, “Agent”).

W I T N E S S E T H:

WHEREAS, Agent and Lenders have entered into financing arrangements with Borrowers pursuant to which Agent and Lenders have made and provided and hereafter may make and provide, upon certain terms and conditions, loans and advances and other financial accommodations to Borrowers as set forth in the Amended and Restated Loan Agreement, dated May 5, 2004, by and among Agent, Lenders, Borrowers and Guarantors, as amended by Amendment No. 1 to Amended and Restated Loan Agreement, dated as of June 30, 2004, Amendment No. 2 to Amended and Restated Loan Agreement, dated as of November 10, 2004, Amendment No. 3 and Waiver to Amended and Restated Loan Agreement, dated as of March 21, 2005, Amendment No. 4 to Amended and Restated Loan Agreement, dated as of October 31, 2005, Amendment No. 5 to Amended and Restated Loan Agreement, dated as of March 3, 2006, and Amendment No. 6 to Amended and Restated Loan Agreement, dated as of March 31, 2006 (as the same now exists and may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the “Loan Agreement”) and the other agreements, documents and instruments referred to therein or any time executed and/or delivered in connection therewith or related thereto, including this Amendment (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the “Financing Agreements”);

WHEREAS, the parties hereto desire to enter into this Amendment to evidence and effectuate such amendments, subject to the terms and conditions and to the extent set forth herein;

1. Definitions. Capitalized terms used herein which are not otherwise defined herein shall have the respective meanings ascribed thereto in the Loan Agreement.

2. Minimum EBITDA. Section 9.17 of the Loan Agreement is hereby amended by deleting the reference to “May 1, 2005 through April 30, 2006 - $9,000,000” and replacing it with the following:

“May 1, 2005 through April 30, 2006 - Not Applicable”

3. Amendment Fee. In addition to all other fees payable by Borrowers to Agent and Lenders under the Loan Agreement and the other Financing Agreements, Borrowers shall pay to Agent, for the account of Lenders, an amendment fee in the amount of $100,000, which fee shall be fully earned and due and payable on the effective date hereof and may be charged by Agent directly to any loan account of Borrowers.

(a) Agent shall have received an original of this Amendment, duly authorized, executed and delivered by Borrowers, Guarantors and the Required Lenders; and

(b) no Default or Event of Default shall have occurred and be continuing.

6. Effect of this Amendment; Entire Agreement. Except as expressly set forth herein, no other changes or modifications to the Financing Agreements are intended or implied, and in all other respects the Financing Agreements are hereby specifically ratified, restated and confirmed by all parties hereto as of the date hereof. This Amendment and any instruments or documents delivered or to be delivered in connection herewith, represent the entire agreement and understanding concerning the subject matter hereof and thereof between the parties hereto, and supersede all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written. To the extent of conflict between the terms of this Amendment and the other Financing Agreements, the terms of this Amendment shall control. The Loan Agreement and this Amendment shall be read and construed as one agreement.

9. Binding Effect. This Amendment shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

10. Headings. The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this Amendment.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, Agent, Lenders, Borrower and Guarantors have caused this Amendment to be duly executed as of the day and year first above written.


BORROWERS

WISE ALLOYS LLC

By:		/s/ Julie K. Charping
Title:		Assistant Secretary

WISE RECYCLING, LLC

By:		/s/ Julie K. Charping
Title:		Assistant Secretary

GUARANTORS

WISE METALS GROUP LLC

By:		/s/ Julie K. Charping
Title:		Assistant Secretary

WISE ALLOYS FINANCE CORPORATION

By:		/s/ Julie K. Charping
Title:		Secretary

LISTERHILL TOTAL MAINTENANCE CENTER LLC

By:		/s/ Julie K. Charping
Title:		Assistant Secretary

WISE RECYCLING TEXAS, LLC

By:		/s/ Julie K. Charping
Title:		Assistant Secretary

[SIGNATURES CONTINUED ON NEXT PAGE]

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]


WISE WAREHOUSING, LLC

By:		/s/ Julie K. Charping
Title:		Assistant Secretary

WISE RECYCLING WEST, LLC

By:		/s/ Julie K. Charping
Title:		Assistant Secretary

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]


AGENT AND LENDERS

WACHOVIA BANK, NATIONAL ASSOCIATION, successor by merger to Congress Financial Corporation, as Agent, as Collateral Agent and as Lender

By:
Title:		Vice President

BANK OF AMERICA, NA, as Lender

By:		/s/ Robert Anchundia
		Robert Anchundia
Title:		Vice President

PNC BANK, NATIONAL ASSOCIATION, as Lender

By:
Title:		VP

RZB FINANCE LLC, as Lender

By:		/s/ PAMELA E. FLYNN
		PAMELA E. FLYNN
Title:		VICE PRESIDENT

By:		/s/ DAN BOBRJANSKYJ
		DAN BOBRJANSKYJ
Title:		VICE PRESIDENT

UPS CAPITAL CORPORATION, as Lender

By:		/s/ John P. Holloway
		John P. Holloway
Title:		Director of Portfolio Management

THE CIT GROUP/BUSINESS CREDIT, INC., as Lender

By:		/s/ Jack A. Myers
		Jack A. Myers
Title:		Vice President

EX-10.39 5 dex1039.htm AMENDMENT NO. 10 TO AMENDED & RESTATED LOAN AGREEMENT, DATED DECEMBER 31, 2006 Amendment No. 10 to Amended & Restated Loan Agreement, dated December 31, 2006

Exhibit 10.39

AMENDMENT NO. 10 TO AMENDED AND RESTATED LOAN AGREEMENT

This AMENDMENT NO. 10 TO AMENDED AND RESTATED LOAN AGREEMENT (this “Amendment”), dated as of December 31, 2006, is entered into by and among Wise Alloys LLC, a Delaware limited liability company (“Alloys”), Wise Recycling, LLC, a Maryland limited liability company (“Recycling” and together with Alloys, each individually a “Borrower” and collectively, “Borrowers”), Wise Metals Group LLC, a Delaware limited liability company (“Group”), Wise Alloys Finance Corporation, a Delaware corporation (“Finance”), Listerhill Total Maintenance Center LLC, a Delaware limited liability company (“Listerhill”), Wise Warehousing, LLC, a Delaware limited liability company (“Warehousing”), Wise Recycling Texas, LLC, a Delaware limited liability company (“Recycling Texas”), Wise Recycling West, LLC, a Delaware limited liability company (“Recycling West” and together with Group, Finance, Listerhill, Warehousing and Recycling Texas, each individually a “Guarantor” and collectively, “Guarantors”), the lenders from time to time party thereto, and Wachovia Bank, National Association, successor by merger to Congress Financial Corporation, in its capacity as administrative agent (in such capacity, “Agent”) for Lenders (as hereinafter defined).

WITNESSETH:

WHEREAS, Agent and the financial institutions from time to time parties to the Loan Agreement (as hereinafter defined) as lenders (each individually, a “Lender” and collectively, “Lenders”) have entered into financing arrangements with Borrowers pursuant to which Agent and Lenders have made and provided and hereafter may make and provide, upon certain terms and conditions, loans and advances and other financial accommodations to Borrowers as set forth in the Amended and Restated Loan Agreement, dated May 5, 2004, by and among Agent, Lenders, Borrowers and Guarantors, as amended by Amendment No. 1 to Amended and Restated Loan Agreement, dated as of June 30, 2004, Amendment No. 2 to Amended and Restated Loan Agreement, dated as of November 10, 2004, Amendment No. 3 and Waiver to Amended and Restated Loan Agreement, dated as of March 21, 2005, Amendment No. 4 to Amended and Restated Loan Agreement, dated as of October 31, 2005, Amendment No. 5 to Amended and Restated Loan Agreement, dated as of March 3, 2006, Amendment No. 6 to Amended and Restated Loan Agreement, dated as of March 31, 2006, Amendment No. 7 to Amended and Restated Loan Agreement, dated as of April 28, 2006, Amendment No. 8 to Amended and Restated Loan and Security Agreement, dated as of June 12, 2006, and Amendment No. 9 and Waiver to Amended and Restated Loan Agreement, dated as of August 4, 2006 (as the same now exists and may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the “Loan Agreement”) and the other agreements, documents and instruments referred to therein or any time executed and/or delivered in connection therewith or related thereto, including this Amendment (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the “Financing Agreements”);

WHEREAS, Borrowers have requested that Agent and Lenders agree to make certain amendments to the Loan Agreement, and Agent and Lenders arc willing to agree to such request, subject to the terms and conditions contained herein;

WHEREAS, the parties hereto desire to enter into this Amendment to evidence and effectuate such amendments, subject to the terms and conditions and to the extent set forth herein;

1. Definitions.

(a) Additional Definitions. As used herein, the following terms shall have the meanings given to them below and the Loan Agreement shall be deemed and is hereby amended to include, in addition and not in limitation, the following definitions:

(i) “Amendment No. 10” shall mean Amendment No. 10 to Amended and Restated Loan and Security Agreement, dated as of December 31, 2006, among Agent, Lenders, Borrowers and Guarantors, as the same now exists and may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(ii) “Amendment No. 10 Approving Lenders” shall mean those Lenders that execute and deliver Amendment No. 10 to Agent on or prior to date on which all of the conditions precedent to the effectiveness of Amendment No. 10 have been satisfied in a manner satisfactory to Agent.

(b) Interpretation. Capitalized terms used herein which are not otherwise defined herein shall have the respective meanings ascribed thereto in the Loan Agreement.

2. Minimum EBITDA. Section 9.17 of the Loan Agreement is hereby amended by deleting such Section in its entirety and replacing it with the following:

“9.17 Minimum EBITDA. Group and its Subsidiaries shall not permit the EBITDA of Group and its Subsidiaries for each period set forth below (each, a “Section 9.17 Test Period”) to be less than the amount set forth below opposite such Section 9.17 Test Period:


Period	Minimum EBITDA
January 1, 2006 through December 31, 2006	$	7,300,000
January 1, 2007 through January 31, 2007	$	800,000
January 1, 2007 through February 28, 2007	$	1,500,000
January 1, 2007 through March 31, 2007	$	2,500,000
January 1, 2007 though April 30, 2007	$	5,500,000
January 1, 2007 through May 31, 2007	$	10,000,000


January 1, 2007 through June 30, 2007	$	15,000,000
January 1, 2007 through July 31, 2007	$	20,000,000
January 1, 2007 through August 31, 2007	$	25,300,000
January 1, 2007 through September 30, 2007	$	30,000,000
January 1, 2007 through October 31, 2007	$	35,000,000
January 1, 2007 through November 30, 2007	$	40,000,000
January 1, 2007 through December 31, 2007	$	45,000,000
February 1, 2007 through January 31, 2008 and each twelve (12) month period ending on the last day of each month thereafter	$	50,000,000

provided, that, solely for purposes of this Section 9.17, the calculation of EBITDA shall not include the effects of any non cash accounting adjustments for FASB 133 or any non cash LIFO reserves; provided, further, that, if the Adjusted Excess Availability is equal to or greater than $20,000,000 for each of the ten (10) consecutive days immediately preceding the last day of any Section 9.17 Test Period, then Group and its Subsidiaries shall not be required to comply with the terms of this Section 9.17 for such Section 9.17 Test Period.”

3. Amendment Fee. In addition to all other fees, charges, interest and expenses payable by Borrowers to Agent and Lenders under the Loan Agreement and the other Financing Agreements, Borrowers shall pay to Agent, for the account of Amendment No. 10 Approving Lenders (to the extent and in accordance with the arrangements between Agent and each Amendment No. 10 Approving Lender), an amendment fee in the amount of $207,500, which fee shall be fully earned and due and payable on the effective date hereof and may be charged by Agent directly to any loan account of Borrowers.

4. Additional Representations. Warranties and Covenants. Borrowers and Guarantors, jointly and severally, represent, warrant and covenant with and to Agent and Lenders as follows, which representations, warranties and covenants are continuing and shall survive the execution and delivery hereof, and the truth and accuracy of, or compliance with each, together with the representations, warranties and covenants in the other Financing Agreements, being a continuing condition of the making of Loans by Lenders to Borrowers:

similar laws of general applicability affecting the enforcement of creditors’ rights and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(c) Neither the execution, delivery and performance of this Amendment or any other Amendment Document in connection therewith, nor the consummation of any of the transactions contemplated herein or therein (i) are in contravention of law or any indenture, agreement or undertaking (including the Indenture) to which any Borrower or Guarantor is a party or by which any Borrower or Guarantor or its property are bound, or (ii) violates any provision of the Certificate of Incorporation, Certificate of Formation, Operating Agreement, By-Laws or other governing documents of any Borrower or Guarantor.

(d) As of the date hereof and after giving effect hereto, no Default or Event of Default exists or has occurred and is continuing.

(a) Agent shall have received an original of this Amendment, duly authorized, executed and delivered by Borrowers, Guarantors and Required Lenders;

(b) all representations and warranties contained herein, in the Loan Agreement and in the other Financing Agreements shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date hereof and after giving effect hereto, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date);

(c) no law, regulation, order, judgment or decree of any Governmental Authority shall exist, and no action, suit, investigation, litigation or proceeding shall be pending or threatened in any court or before any arbitrator or Governmental Authority, which (i) purports to enjoin, prohibit, restrain or otherwise affect (A) the making of the Loans or providing the Letter of Credit Accommodations, or (B) the consummation of the transactions contemplated pursuant to the terms of this Amendment, the Loan Agreement or the other Financing Agreements or (ii) has or has a reasonable likelihood of having a Material Adverse Effect; and

(d) no Default or Event of Default shall exist or shall have occurred and be continuing.

9. Binding Effect. This Amendment shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

10. Headings. The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this Amendment.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, Agent, Lenders, Borrowers and Guarantors have caused this Amendment to be duly executed as of the day and year first above written.


AGENT AND LENDERS

WACHOVIA BANK, NATIONAL ASSOCIATION, as Agent and as a Lender

By:
Title:

BANK OF AMERICA, N.A., as a Lender

By:
Title:

PNC BANK, NATIONAL ASSOCIATION, as a Lender

By:
Title:

THE CIT GROUP/BUSINESS CREDIT, INC., as a Lender

By:
Title:

BURDALE FINANCIAL LIMITED, as a Lender

By:
Title:

LASALLE BUSINESS CREDIT, LLC, as a Lender

By:
Title:

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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]


BORROWERS

WISE ALLOYS LLC

By:		/s/ Kenneth Stastny
Title:		Assistant Secretary

WISE RECYCLING, LLC

By:		/s/ Kenneth Stastny
Title:		Assistant Secretary

GUARANTORS

WISE METALS GROUP LLC

By:		/s/ Kenneth Stastny

Title:		Chief Financial Officer

WISE ALLOYS FINANCE CORPORATION

By:		/s/ Kenneth Stastny
Title:		Treasurer

LISTERHILL TOTAL MAINTENANCE CENTER LLC

By:		/s/ Kenneth Stastny
Title:		Assistant Secretary

WISE RECYCLING TEXAS, LLC

By:		/s/ Kenneth Stastny
Title:		Assistant Secretary

[SIGNATURES CONTINUED ON NEXT PAGE]

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]


WISE WAREHOUSING, LLC

By:		/s/ Kenneth Stastny
Title:		Assistant Secretary

WISE RECYCLING WEST, LLC

By:		/s/ Kenneth Stastny
Title:		Assistant Secretary

EX-10.41 6 dex1041.htm MASTER LEASE AGREEMENT, DATED NOVEMBER 13, 2006 Master Lease Agreement, dated November 13, 2006

Exhibit 10.41

Execution Copy

MASTER EQUIPMENT LEASE

Among

WISE ALLOYS LLC

Lessee

and

WILMINGTON TRUST COMPANY,

not in its individual capacity except as expressly

set forth herein, but solely as Owner Trustee

Lessor

and

THE EMPLOYEES’ RETIREMENT SYSTEM OF ALABAMA

and

THE TEACHERS’ RETIREMENT SYSTEM OF ALABAMA

collectively, Owner Participant

Date: November 13, 2006

TABLE OF CONTENTS


		Page
1.	TERM.	1
The Term of this Lease with respect to any item of the Equipment shall consist of the Basic Term set forth in the Equipment Schedule relating thereto.		1
2.	AUTHORIZATION AND CONDITIONS.	1
3.	DELIVERY.	3
4.	RENT.	4
5.	REPRESENTATIONS AND WARRANTIES.	5
6.	COVENANTS.	9
7.	USE AND MAINTENANCE.	12
8.	DISCLAIMER OF WARRANTIES.	14
9.	GENERAL TAX INDEMNITY.	14
10.	LIENS.	17
11.	INSURANCE.	17
12.	LOSS AND DAMAGE.	18
13.	REDELIVERY.	21
14.	INDEMNITY/ENVIRONMENTAL MATTERS.	21
15.	DEFAULT; REMEDIES.	23
16.	ASSIGNMENT BY OWNER PARTICIPANT, LESSOR AND LESSEE.	25
17.	CHATTEL PAPER.	26
18.	[INTENTIONALLY LEFT BLANK].	27
19.	END OF TERM.	27
20.	EARLY TERMINATION.	27
21.	INSPECTION.	27
22.	QUIET ENJOYMENT.	27
23.	TRANSACTION COSTS.	28
24.	PAYMENTS DURING DEFAULT.	28
25.	INVENTORY LEFT BLANK.	28
26.	CHOICE OF LAW; JURISDICTION.	28
27.	MISCELLANEOUS.	29
EQUIPMENT LEASE AGREEMENT		1
BILL OF SALE		1


Exhibits
Exhibit A	-	Equipment Schedule
		Annex A -	Equipment List

		Annex B-1 -	Basic Rent

		Annex B-2 -	Stipulated Loss Values

		Annex C -	Existing Financing Statements

- i -



Exhibit B	-	Definitions

Exhibit C	-	Bill of Sale

Exhibit D	-	Form of Lessee’s and Guarantor’s Counsel’s Opinions

Exhibit E	-	Form of Lessor’s Counsel Opinion

Exhibit F	-	Form of Owner Participant’s In-House Counsel Opinion

- ii -

MASTER EQUIPMENT LEASE

THIS MASTER EQUIPMENT LEASE is made as of the 9th day of November, 2006, by and among THE EMPLOYEES’ RETIREMENT SYSTEM OF ALABAMA and THE TEACHERS’ RETIREMENT SYSTEM OF ALABAMA (collectively, the “Owner Participant”), WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual capacity, except as expressly stated herein, but solely as owner trustee (“Owner Trustee” and in its role as lessor hereunder “Lessor”), and WISE ALLOYS LLC, a Delaware limited liability company (“Lessee”). Unless otherwise defined herein, capitalized terms shall have the meaning assigned to such term in Exhibit B hereto.

The parties agree that, subject to the terms and conditions set forth herein and in the Equipment Schedules, Owner Participant agrees to make an equity investment in the Trust in an aggregate amount not to exceed $30,000,000, Lessor agrees to purchase from and lease to Lessee, and Lessee agrees to sell to and lease from Lessor an aggregate amount of Equipment, the Lessor’s Cost for which shall not exceed $30,000,000, as more fully described in the Equipment Schedules to be executed pursuant hereto.

TERM.

The Term of this Lease with respect to any item of the Equipment shall consist of the Basic Term set forth in the Equipment Schedule relating thereto.

AUTHORIZATION AND CONDITIONS.

(a) At least 3 Business Days prior to each Funding Date, Lessee shall deliver written notice to Owner Participant and Lessor which shall identify the Equipment to be included on the Equipment Schedule to be executed and delivered as of such Funding Date, its manufacturer, model, serial number, its location and Lessor’s Cost.

(b) The Owner Participant’s obligation to make an equity investment in the Trust and Lessor’s obligations to purchase Equipment from Lessee and to lease the same to Lessee under the Equipment Schedules shall be conditioned upon and subject to satisfaction of the terms of Section 2(a) and the receipt by Owner Participant and Lessor prior to the Closing Date and, if applicable, each Funding Date of the following, in form and substance reasonably satisfactory to Owner Participant and Lessor:

(i) prior to each Funding Date, evidence as to due compliance with the insurance provisions hereof, including a certificate of insurance and copies of the applicable insurance policies;

(ii) prior to each Funding Date, precautionary Uniform Commercial Code financing statements as are reasonably required by Lessor;

(iii) prior to the Closing Date, a certificate of each of Guarantor’s and Lessee’s Secretary or Assistant Secretary dated as of the Closing Date certifying:

(A) resolutions of each of Guarantor and of Lessee duly authorizing (x) in the case of Lessee, the leasing of the Equipment hereunder and the execution, delivery and performance of this Lease and the Equipment Schedules and all other Operative Documents to which Lessee is a party and (y) in the case of Guarantor, the Guaranty, and

(B) the incumbency and signature of the officers of Guarantor and Lessee authorized to execute such documents;

(iv) prior to each Funding Date, a certificate of a Responsible Officer of Lessee dated as of such Funding Date, certifying on behalf of Lessee that to the knowledge of such officer, after due inquiry, no Default or Potential Default has occurred and is continuing;

(v) on the Closing Date, opinions of special counsel for Guarantor and Lessee substantially in the form set forth on Exhibit D hereto and on each Funding Date an opinion of special counsel for Guarantor and Lessee substantially in the form set forth on Exhibit D hereto relating to those documents executed and delivered on such Funding Date;

(vi) on each Funding Date the execution and delivery of an Equipment Schedule for such Equipment together with the Bill of Sale as Lessee is required to execute and deliver as of such Funding Date;

(vii) on or prior to each Funding Date, Owner Participant shall have received an Appraisal with respect to such Equipment in form and substance reasonably satisfactory to Owner Participant; and

(viii) all such other documents, instruments and other actions as Owner Participant, Lessor or Lessee may reasonably request in connection with the consummation of the transactions contemplated herein and consistent with the terms hereof shall be complete and reasonably satisfactory to each of Owner Participant, Lessor and Lessee.

(c) Lessee’s obligations to sell Equipment to Lessor and to lease the same from Lessor under the Equipment Schedules shall be conditioned upon and subject to the receipt by Lessee on or prior to the applicable Funding Date of the following in form and substance reasonably satisfactory to Lessee:

(i) funds in the aggregate amount equal to the Lessor’s Cost of such Equipment have been paid to Lessee or as Lessee shall direct in the manner provided in Section 3 hereof;

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(ii) the representations and warranties of Owner Participant in Section 5(b) hereof and of Owner Trustee in Section 5(c) hereof are true and correct on and as of such Funding Date as though made on and as of such date (except to the extent that such representations and warranties expressly relate to a specified earlier date, in which case such representations and warranties were true and correct as of such earlier date);

(iii) a certificate of Lessor’s Secretary dated as of the Closing Date certifying:

(A) resolutions of Lessor’s Board of Directors duly authorizing the execution and delivery of this Lease and all other Operative Documents to which Lessor is a party;

(B) the incumbency and signature of the officers of Lessor authorized to execute such documents;

(iv) (Intentionally Left Blank)

(v) on the Closing Date, opinions of counsel for Lessor, substantially in the form set forth as Exhibit E hereto and of in-house counsel for Owner Participant substantially in the form set forth as Exhibit F hereto;

(vi) execution and delivery of each Operative Document which Lessor or Owner Participant is required to execute and deliver as of such Funding Date; and

(vii) all such other documents, instruments and other actions as Lessee may reasonably request in connection with the consummation of the transactions contemplated herein and consistent with the terms hereof shall be complete and satisfactory to Lessee.

DELIVERY.

Lessor and Lessee shall execute and deliver an Equipment Schedule containing the information specified on Exhibit A hereto for each item of Equipment to be leased hereunder as of each Funding Date. Simultaneously therewith, Lessor shall purchase such Equipment from Lessee by paying to Lessee (to such account as Lessee shall specify) by wire transfer of immediately available funds equal to the Lessor’s Cost of such Equipment, such purchase to be evidenced by a Bill of Sale from Lessee to Lessor covering such Equipment; whereupon, as between Lessor and Lessee, such Equipment shall be deemed to have been accepted by Lessee and subject to this Lease.

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RENT.

(a) Basic Rent. On each Rent Payment Date during the Basic Term, Lessee shall pay to Lessor Basic Rent in the amount specified on the Equipment Schedules for such Rent Payment Date for the Equipment then subject to this Lease.

(b) Supplemental Rent. Lessee shall pay to Lessor, or to whomever shall be entitled thereto as expressly provided herein or in any other Operative Document, any and all Supplemental Rent promptly as the same shall become due and payable. In the event of any failure on the part of Lessee to pay any Supplemental Rent, Lessor shall have the same rights, powers and remedies provided herein or by law or equity in the case of nonpayment of Basic Rent (except for the difference in grace periods provided in Section 15 hereof).

(c) Method of Payment. Rent due and owing from Lessee to Lessor under or in connection with this Lease is payable as and when specified herein, in the Equipment Schedule or any other Operative Document by wire transfer of immediately available funds to Lessor’s account at Wilmington Trust Company, Wilmington, Delaware, ABA No. 031-100-092, Account No. 078632-000, Ref: [Wise Alloys], or to such other account as Lessor may specify in writing from time to time. Any Supplemental Rent payments for the account of the Owner Participant shall be made by wire transfer of immediately available funds to account of Lessor noted above or to such other account as Owner Participant may specify in writing from time to time. If any payment of Rent is not paid on the due date, Lessor may collect, and Lessee agrees to pay, a charge calculated as the product of the Late Charge Rate specified in the applicable Equipment Schedule and the amount in arrears for the period such amount remains unpaid.

(d) Net Lease; No Setoff; etc. This Lease is a net lease and, notwithstanding any other provision of this Lease, it is intended that Lessee’s obligations to pay Basic Rent and Supplemental Rent hereunder shall be absolute and unconditional and shall not be affected by any circumstance whatsoever and shall be paid without notice, demand, counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, diminution or reduction. The obligations and liabilities of Lessee hereunder shall in no way be released, discharged or otherwise affected (except as may be expressly provided herein) for any reason, including, without limitation: (i) any defect in the condition, quality or fitness for use of any item of Equipment or any part thereof; (ii) any damage to, removal, abandonment, salvage, loss, scrapping or destruction of or any requisition or taking of any item of Equipment or any part thereof; (iii) any restriction, prevention or curtailment of or interference with any use of any item of Equipment or any part thereof; (iv) any defect in title to or any Lien on such title; (v) any change, waiver, extension, indulgence or other action or omission in respect to any obligation or liability of Lessor or Owner Participant; (vi) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to Lessee, Lessor, Owner Participant or any other Person, or any action taken with respect to this Lease by any trustee or receiver of Lessee, Lessor, Owner Participant or any other Person, or by any court, in any such proceeding; (vii) any claim that Lessee has or might have against any Person, including, without limitation, Lessor or Owner Participant; (viii) any failure on the part of Lessor or Owner Participant to perform or comply with any of the terms hereof or of any other agreement; (ix) any invalidity or unenforceability or disaffirmance of this Lease against or by

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Lessee or any provision hereof or any of the other Operative Documents or any provision of any thereof; or (x) any other occurrence whatsoever, whether similar or dissimilar to the foregoing, whether or not Lessee shall have notice or knowledge of any of the foregoing. This Lease shall be noncancelable by Lessee and, except as expressly provided herein, Lessee, to the extent permitted by law, waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Lease, or to any diminution or reduction of Rent payable by Lessee hereunder. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of law or otherwise, except as expressly provided herein, Lessee shall nonetheless pay to Lessor (or, in the case of Supplemental Rent, to whomever shall be entitled thereto as expressly provided herein or in any other Operative Document) an amount equal to each Basic Rent payment at the time and in the manner that such payment would have become due and payable under the terms of this Lease if it had not been terminated in whole or in part. Nothing in this Lease shall be construed as a guaranty by Lessee of any Residual Value or Remaining Life of any item of Equipment.

REPRESENTATIONS AND WARRANTIES.

(a) Lessee represents and warrants that, as of the date hereof:

(i) Corporate Power. Lessee is a limited liability company duly organized and validly existing in good standing under the laws of the state of its organization and is in good standing and qualified as a foreign corporation in Alabama.

(ii) Execution, Delivery, etc. The execution, delivery and performance of this Lease and the other Operative Documents to which Lessee is a party: (A) have been duly authorized by all necessary limited liability company action on the part of Lessee; (B) do not require the approval of any member, trustee or holder of any obligations of Lessee except such as have been duly obtained; and (C) do not contravene any law, governmental rule, regulation or order now binding on Lessee, or the organizational documents of Lessee, or contravene the provisions of, or constitute a default under, or result in the creation of any lien or encumbrance upon the property of Lessee under, any indenture, mortgage, contract or other agreement to which Lessee is a party or by which it or its property is bound which, either individually or in the aggregate, would materially and adversely affect the financial condition of Lessee or the ability of Lessee to perform its obligations hereunder.

(iii) Binding Obligations. This Lease and the other Operative Documents to which Lessee is a party, when entered into, will constitute legal, valid and binding obligations of Lessee enforceable against Lessee in accordance with the terms thereof, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally.

(iv) Litigation. There are no pending actions or proceedings to which Lessee is a party, and there are no other pending or threatened actions or proceedings of which Lessee has knowledge, before any court, arbitrator or administrative agency, which, either individually or in the aggregate, would materially and adversely affect the financial

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condition of Lessee or the ability of Lessee to perform its obligations hereunder. Further, Lessee is not in default under any obligation for the payment of borrowed money, for the deferred purchase price of property or for the payment of any rent under any lease agreement which, in each case either individually or in the aggregate, would materially and adversely affect the financial condition of Lessee or the ability of Lessee to perform its obligations hereunder.

(v) Address. The location (as such term is used in Section 9-307 of the Uniform Commercial Code) of Lessee is the State of Delaware. The Lessee’s full and correct legal name is Wise Alloys LLC, and its address is set forth below the signature of Lessee on the signature page of this Lease.

(vi) Liens. Immediately prior to the execution and delivery of the applicable Bill of Sale, the Equipment subject to such Bill of Sale shall be free of all liens, claims and encumbrances other than Permitted Liens and except for the financing statements listed on Annex C to the Equipment Schedule, releases for which will be delivered to Lessor at or prior to the closing of the transactions contemplated to occur on such Funding Date, no effective financing statement or other form of lien notice covering all or any part of the Equipment is on file in any recording office except those in favor of Lessor.

(vii) Title to Equipment. Each Bill of Sale executed by the Lessee shall transfer to Lessor good title to the Equipment described on the schedule attached thereto free and clear of any and all encumbrances, liens, charges or defects other than Permitted Liens.

(viii) Filings. Upon execution and delivery of the applicable Bill of Sale, no further action, including the filing or recording of any document, is required to transfer to the Lessor all right, title and interest in and to the Equipment.

(b) Owner Participant represents and warrants that, as of the date hereof:

(i) Power. Owner Participant is duly organized and validly existing in good standing under the laws of the State of Alabama and has full power authority and legal right to enter into and carry out the transactions contemplated by this Lease and the Operative Documents to which it is to be a party.

(ii) Execution, Delivery, etc. The execution, delivery and performance of this Lease and the other Operative Documents to which Owner Participant is a party (A) have been duly authorized by all necessary action on the part of Owner Participant; (B) do not require the approval of any stockholder, trustee or holder of any obligations of Owner Participant except such as have been duly obtained; and (C) do not contravene any law, governmental rule, regulation or order now binding on Owner Participant, or the organizational documents of Owner Participant, or contravene the provisions of, or constitute a default under, or result in the creation of any lien or encumbrance upon the property of Owner Participant under, any indenture, mortgage, contract or other agreement to which Owner Participant is a party or by which it or its property is bound

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which, either individually or in the aggregate, would materially and adversely affect the financial condition of Owner Participant or the ability of Owner Participant to perform its obligations hereunder.

(iii) Binding Obligations. This Lease and the other Operative Documents to which Owner Participant is a party when entered into, will constitute legal, valid and binding obligations of Owner Participant enforceable against Owner Participant in accordance with the terms thereof, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally.

(iv) Litigation. There are no pending actions or proceedings to which Owner Participant is a party, and there are no other pending or threatened actions or proceedings of which Owner Participant has knowledge, before any court, arbitrator or administrative agency, which, either individually or in the aggregate, would materially and adversely affect the financial condition of Owner Participant or the ability of Owner Participant to perform its obligations hereunder. Further, Owner Participant is not in default under any obligation for the payment of borrowed money, for the deferred purchase price of property or for the payment of any rent under any lease agreement which, in each case either individually or in the aggregate, would materially and adversely affect the financial condition of Owner Participant or the ability of Owner Participant to perform its obligations hereunder.

(v) Offering. (A) The interest in the Trust and this Lease being acquired by Owner Participant is being acquired by it for its own account for investment and not with a view to any resale or distribution and (B) Owner Participant agrees that it has not offered, and neither it nor any authorized person acting on its behalf will hereafter offer, any such interests for sale to, or solicit any offers to buy any thereof from, or otherwise approach or negotiate in respect thereof with, any Person or Persons whomever, so as thereby to result in the making and delivery of such interests being in violation of the provisions of Section 5 of the Securities Act of 1933, as amended.

(c) Owner Trustee represents and warrants that, as of the date hereof (provided that the representations in clause (vii) are made solely in its trust capacity):

(i) Due Organization, etc. It is a Delaware banking corporation duly organized and validly existing and in good standing under the laws of the State of Delaware and the Trust Company has the power and authority to enter into and perform its obligations under the Trust Agreement and (assuming due authorization, execution and delivery of the Trust Agreement by the Owner Participant) has the corporate and trust power and authority to enter into and perform its obligations under each of the other Operative Documents to which it is or is to be a party and each other agreement, instrument and document to be executed and delivered by it in connection with or as contemplated by each such Operative Document to which it is or is to be a party.

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(ii) Authorization; No Conflict. The execution, delivery and performance of each Operative Document to which it is or is to be a party, either in its individual capacity or (assuming due authorization, execution and delivery of the Trust Agreement by the Owner Participant) as Owner Trustee, as the case may be, has been duly authorized by all necessary action on its part and neither the execution and delivery thereof, nor the consummation of the transactions contemplated thereby, nor compliance by the Trust Company with any of the terms and provisions thereof (A) does or will require any approval or consent of any trustee or holders of any of its indebtedness or obligations, (B) does or will contravene any current United States or Delaware law, governmental rule or regulation relating to the Trust Company’s banking or trust powers or any United States or Delaware Applicable Laws relating to its banking or trust powers, (C) does or will contravene or result in any breach of or constitute any default under, or result in the creation of any Lien upon any of the Trust Company’s property under, its charter or by-laws, or any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement or other agreement or instrument to which it is a party or by which it or its properties may be bound or affected or (D) does or will require any action by any Governmental Authority of the State of Delaware.

(iii) Enforceability, etc. The Trust Agreement and, assuming the Trust Agreement is the legal, valid and binding obligation of the Owner Participant, each other Operative Document to which the Trust Company is or will be a party have been, or prior to execution by the Owner Trustee will be, duly executed and delivered by the Trust Company and the Trust Agreement and each such other Operative Document to which the Trust Company is a party in its individual capacity and as Owner Trustee constitutes, or upon execution and delivery of will constitute, its legal, valid and binding obligation enforceable against it in accordance with the terms thereof.

(iv) Litigation. There are no actions or proceedings pending or, to Trust Company’s knowledge, threatened to which Trust Company is or will be a party, either in its individual capacity or as Owner Trustee, before any Governmental Authority that, if adversely determined, would materially and adversely affect its ability, in its individual capacity or as Owner Trustee to perform its obligations under the Operative Documents to which it is a party, would have a material adverse effect on the financial condition of the Trust Company or would question the validity or enforceability of any of the Operative Documents to which Trust Company is or is to become a party.

(v) Lessor Liens. There are no Lessor Liens on or with respect to the Equipment attributable to Trust Company and there will not be any Lessor’s Liens attributable to the Trust Company on or with respect to the Equipment on any Funding Date.

(vi) Assignment. Neither Trust Company nor Owner Trustee has assigned or transferred any of its right, title or interest in or under this Lease or its interest in any Equipment or Equipment Schedule.

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(vii) Enforceability. Assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant and of the other Operative Documents by each of the parties thereto (other than the Trust Company), the Operative Documents to which the Owner Trustee is a party not in its individual capacity but solely as Owner Trustee are legal, valid and binding obligations of the Owner Trustee, enforceable against the Owner Trustee in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors generally and by general equitable principles.

COVENANTS.

(a) Lessee covenants and agrees as follows:

(i) Officer’s Certificate. Lessee will furnish Lessor and Owner Participant, promptly upon any Responsible Officer of Lessee obtaining knowledge of any condition or event which constitutes a Default or a Potential Default hereunder, prompt written notice specifying such condition and what action Lessee intends to take with respect thereto.

(ii) Further Assurances. Lessee will promptly execute and deliver to Lessor or Owner Participant such further documents, instruments and assurances and take such further action as Lessor from time to time may reasonably request in order to carry out the intent and purpose of this Lease and to establish and protect the rights and remedies created or intended to be created in favor of Lessor or Owner Participant hereunder.

(iii) Fixtures. Without limiting the provisions of Section 10 hereof, Lessee agrees that if the manner in which any item of Equipment is attached to or incorporated in any other item of equipment or to or in any real property gives rise to the assertion of any Lien on such item of Equipment by reason of such attachment or the assertion of a claim that such item of Equipment has become a fixture, Lessee will purchase any such item of Equipment which Lessor notifies Lessee in writing is subject to the assertion of any such Lien within ninety (90) days of such notice for the Stipulated Loss Value thereof in accordance with Section 19 hereof unless it has removed or otherwise resolved any such asserted Lien to the reasonable satisfaction of Lessor prior to the required purchase date.

(iv) Merger. Lessee shall not consolidate with or merge into any other corporation or convey, transfer or lease substantially all of its assets as an entirety to any Person unless Lessee is the surviving corporation, or the corporation formed by such consolidation or merger, is an Affiliate of the Guarantor and the Guaranty remains in full force and effect, or shall have a net worth at least equal to that of Guarantor immediately prior thereto and is by operation of law or contract liable for the performance of all the disappearing corporation’s obligations under this Lease and the other Operative Documents or the Person which acquired by conveyance, transfer or lease substantially all of such assets as an entirety shall execute and deliver to Lessor and Owner Participant an agreement reasonably satisfactory in form and substance to Lessor and Owner Participant containing an effective assumption by such Person of the due and punctual

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performance and observance of each covenant and condition of this Lease and the other Operative Documents to be performed or observed by Lessee. However, nothing set forth in this Lease shall restrict or prohibit any such merger, conveyance, transfer or lease from a Consolidated Subsidiary of Guarantor into Lessee or from Lessee into one of Guarantor’s Consolidated Subsidiaries.

Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all the assets of Lessee as an entirety in accordance with this Section 6(a)(iv), the successor corporation formed by such consolidation or the Person to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of Lessee under this Lease and the other Operative Documents with the same effect as if such successor corporation or such Person, as the case may be, had been named as Lessee herein. Nothing contained herein shall permit any lease, sublease or other arrangement for the use, operation or possession of the Equipment except in compliance with the applicable provisions of this Lease.

(v) Use of Proceeds. Lessee shall use the proceeds of the sale of the Equipment on (A) the first Funding Date to fund inventory (metal supply) for current and near term business opportunities; and (B) the Final Funding Date to provide incremental vendor support and to establish letters of credit to retain and attract additional credit support.

(b) Owner Trustee (both in its individual capacity and in its trust capacity) covenants and agrees as follows:

(i) Lessor’s Liens. Owner Trustee (both in its individual capacity and in its trust capacity) agrees that Owner Trustee (both in its individual capacity and in its trust capacity) will, at its own cost and expense, take such action as may be necessary to duly discharge and satisfy in full, promptly after the same first becomes known to Owner Trustee, any Lessor’s Lien on or with respect to the Equipment attributable to Owner Trustee in its individual or trust capacity; provided, however, that unless and until Owner Trustee is required by the terms of this Lease to transfer title to any item of Equipment, Owner Trustee shall not be required to so discharge or satisfy any such Lessor’s Lien while it is contesting such Lessor’s Lien in good faith by appropriate proceedings diligently prosecuted so long as there is no material risk of the sale, forfeiture or loss of such Equipment, no risk of criminal liability or material civil liability on Lessee and, in the reasonable opinion of Lessee, such contest does not interfere with Lessee’s right of quiet enjoyment under Section 22 hereof.

(ii) Lessor’s Lien Indemnity. Owner Trustee (both in its individual capacity and in its trust capacity) agrees to indemnify and hold harmless Lessee from and against any loss, cost, expense, claim or damage which may be suffered by Lessee or any Affiliate of Lessee as the result of the failure of Owner Trustee to discharge and satisfy any Lessor’s Liens as described in this Section 6(b).

(i) Lessor’s Liens. Owner Participant agrees that Owner Participant will, at its own cost and expense, take such action as may be necessary to duly discharge and satisfy in full, promptly after the same first becomes known to Owner Participant, any Lessor’s Lien on or with respect to the Equipment attributable to the Owner Participant; provided, however, Owner Participant shall not be required to so discharge or satisfy any such Lessor’s Lien while it is contesting such Lessor’s Lien in good faith by appropriate proceedings diligently prosecuted so long as there is no material risk of the sale, forfeiture or loss of such Equipment, no risk of criminal liability or material civil liability on Lessee and, in the reasonable opinion of Lessee, such contest does not interfere with Lessee’s right of quiet enjoyment under Section 22 hereof.

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(ii) Lessor’s Lien Indemnity. Owner Participant agrees to indemnify and hold harmless Lessee from and against any loss, cost, expense, claim or damage which may be suffered by Lessee or any Affiliate of Lessee as the result of the failure of Owner Participant to discharge and satisfy any Lessor’s Liens as described in this Section 6(c).

(d) Trust Agreement. Without prejudice to any right under the Trust Agreement of the Owner Trustee to resign, or the Owner Participant’s right under the Trust Agreement to remove the institution acting as Owner Trustee, each of the Owner Participant and the Owner Trustee hereby (i) agrees with the Lessee not to terminate or revoke the trust created by the Trust Agreement except as permitted by Section 11.1 of the Trust Agreement, (ii) agrees with the Lessee not to amend, supplement, terminate or revoke or otherwise modify any provision of the Trust Agreement in such a manner as to adversely affect the rights of Lessee without the prior written consent of Lessee and (iii) agrees to comply with all of the terms of the Trust Agreement applicable to it the nonperformance of which would adversely affect Lessee.

(e) Successor Owner Trustee. The Owner Trustee or any successor may resign or be removed by the Owner Participant as Owner Trustee, a successor Owner Trustee may be appointed, and a corporation may become the Owner Trustee under the Trust Agreement, only in accordance with the provisions of Section 9.1 of the Trust Agreement. The Owner Participant further agrees not to remove the institution acting as Owner Trustee, and not to replace the institution acting as Owner Trustee in the event that such institution resigns as Owner Trustee, unless the Owner Participant shall have received the consent of the Lessee, which will not be unreasonably withheld or delayed; provided that no consent of the Lessee shall be required if a Default shall have occurred and be continuing. So long as no Default shall have occurred and be continuing, the Owner Trustee and the Owner Participant agree that no co-trustee or separate trustee shall be appointed pursuant to Section 9.2 of the Trust Agreement without the Lessee’s prior written consent, such consent not to be unreasonably withheld or delayed.

(f) Indebtedness; Other Business. The Owner Trustee shall not contract for, create, incur or assume any indebtedness, or enter into any business or other activity, other than pursuant to or under the Operative Documents.

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(g) No Violation. The Owner Participant will not instruct the Owner Trustee to take any action in violation of the terms of any Operative Document or any other related documents.

(h) No Voluntary Bankruptcy. The Owner Trustee shall not (i) commence any case, proceeding or other action under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, arrangement, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (ii) seek appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial benefit of its creditors; and the Owner Trustee shall not take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in this paragraph.

(i) Change of Chief Place of Business. The Owner Trustee shall give prompt notice to the Lessee if the Owner Trustee’s chief place of business or the office where the records concerning the accounts or contract rights relating to the Equipment are kept, shall cease to be located in Wilmington, Delaware or if it shall change its name, identity or corporate structure.

USE AND MAINTENANCE.

(a) Use. Lessee may use the Equipment in the conduct of its business, in a manner so as to maintain the Equipment in good working order and condition, ordinary wear and tear excepted, consistent with the requirements of all applicable insurance policies, and in compliance with all Applicable Laws the non-compliance with which (x) would have a material adverse effect on the financial condition of Guarantor and its Consolidated Subsidiaries taken as a whole or the ability of Lessee to perform its obligations hereunder or (y) in the reasonable opinion of Lessor would involve a material risk of any of the items enumerated in clauses (i) and (ii) of the following sentence. Notwithstanding the foregoing, Lessee shall not be deemed to be in default hereof as long as Lessee is contesting the application of any Applicable Law if such test, challenge or appeal for review shall be prosecuted by Lessee in good faith and such test, challenge or appeal shall not involve a material risk of:

(i) foreclosure, sale, forfeiture or loss of the Equipment; or

(ii) criminal liability on Lessor or Owner Participant or a material claim against Lessor or Owner Participant.

(b) Location of Equipment. Lessee may not move or relocate the Equipment from the location identified on the Equipment Schedule for such item of Equipment.

(c) Marking. If requested by Lessor, Lessee will cause each principal item of the Equipment to be continually marked, in a plain and distinct manner, with an inventory control tag furnished by Lessor.

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(d) Maintenance. At its own expense, Lessee will cause the Equipment to be kept and maintained in as good operating condition as when delivered to Lessee hereunder, ordinary wear and tear excepted, and in compliance with all Applicable Laws the non-compliance with which would violate the restriction of subclauses (x) and (y) of Section 7(a) above, and will provide all maintenance and service and make all repairs or replacements reasonably necessary for such purpose.

(e) Parts. If any parts of the Equipment become worn out, lost, destroyed, damaged beyond repair or otherwise permanently rendered unfit for use, Lessee, at its own expense, will replace such parts with replacement parts which are free and clear of all Liens (other than Permitted Liens) and have a value, utility and useful life at least equal to the parts replaced. All parts which are added to the Equipment which are required by Applicable Law, in replacement of or substitution for, and not in addition to any part constituting part of the Equipment on the Funding Date or which cannot be detached from the Equipment without materially adversely affecting the value, utility and useful life which the Equipment would have had without the addition thereof, shall immediately become the property of Lessor, and shall be deemed incorporated in the Equipment and subject to the terms of this Lease as if originally leased hereunder. Title to all other parts added to the Equipment shall be and remain the property of Lessee and shall not be deemed to constitute part of the Equipment or be subject to this Lease.

(f) Inspection. Upon reasonable advance notice, Owner Participant, Lessor and its agents shall have the right to inspect the Equipment and all maintenance records with respect thereto at any reasonable time during normal business hours.

(g) Alterations. (i) Required Alterations. Lessee, at its sole cost and expense, shall make such alterations, modifications and additions (collectively “Alterations”) to the Equipment as may be required from time to time to meet the requirements of Applicable Laws.

(ii) Optional Alterations. Lessee may, at its own expense, from time to time make such Alterations to the Equipment as Lessee may deem desirable in the proper conduct of its business; provided, however, that any such Alteration made pursuant to this clause (ii) shall not materially adversely affect the value, utility and useful life of such Equipment assuming that immediately prior to such Alteration such Equipment was in the condition required by this Lease.

(iii) Title to Alterations. Title to all Alterations required by clause (i) above or made pursuant to clause (ii) above which cannot be detached from the Equipment without materially adversely affecting the value, utility and useful life which the Equipment would have without such Alteration, shall immediately vest with Lessor, and shall be deemed incorporated in the Equipment and subject to the terms of this Lease as if originally leased hereunder. Title to all other Alterations shall be and remain the property of Lessee and shall not be deemed to constitute part of the Equipment.

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DISCLAIMER OF WARRANTIES.

OWNER PARTICIPANT AND LESSOR, NEITHER BEING A SELLER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE IN EFFECT IN ANY APPLICABLE JURISDICTION), NOR A SELLER’S AGENT, EXPRESSLY DISCLAIM AND MAKE TO LESSEE NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO: THE FITNESS FOR USE, DESIGN OR CONDITION OF THE EQUIPMENT; THE QUALITY OR CAPACITY OF THE EQUIPMENT; THE WORKMANSHIP IN THE EQUIPMENT; THAT THE EQUIPMENT WILL SATISFY THE REQUIREMENTS OF ANY LAW, RULE, SPECIFICATION OR CONTRACT PERTAINING THERETO; AND ANY GUARANTY OR WARRANTY AGAINST PATENT INFRINGEMENT OR LATENT DEFECTS, it being agreed that all such risks, as between Lessor, Owner Participant and Lessee, are to be borne by Lessee. Neither Owner Participant nor Lessor is responsible for any direct, indirect, incidental or consequential damage to or losses resulting from the installation, operation or use of the Equipment or any products manufactured thereby. All assignable warranties made by the Manufacturer or other supplier to Lessee are hereby assigned by Lessee to Lessor and in turn are assigned by Lessor to Lessee for and during the Term of this Lease. Lessee agrees to resolve all such claims directly with the Manufacturer or other supplier. Owner Participant and Lessor shall cooperate fully with Lessee with respect to the resolution of such claims, in good faith and by appropriate proceedings at Lessee’s expense. Any such claim shall not affect in any manner the unconditional obligation of Lessee to make Rent payments hereunder.

GENERAL TAX INDEMNITY.

(a) General Taxes. Subject to the provisions of this Section 9, the Lessee agrees to indemnify the Lessor on an After-Tax Basis against, and hold the Trust Company, Lessor and Owner Participant harmless from, the actual amount of any and all Taxes imposed by the United States of America or by any state or local taxing authority within the United States or any foreign or international taxing authority against the Trust Company, Lessor or Owner Participant or the Lessee or withheld from any payment, or imposed against the Equipment after its delivery under the Lease, in connection with or relating to or on or with respect to (i) the Lease or any of the other Operative Documents or any amendment, supplement, waiver or consent thereto or the execution, delivery or performance of any thereof; (ii) the Equipment or any interest therein; (iii) the construction, purchase, acceptance, possession, rejection, ownership, delivery, nondelivery, return, refinancing, use, nonuse, operation, leasing, subleasing, hire, condition, maintenance, modification, repair, sale, abandonment, redelivery, location, transfer of title or other application or disposition of the Equipment or any interest therein; (iv) the payment by the Lessee of Rent or other amounts, receipts, income or earnings arising from the Equipment with respect to the Lease or any other Operative Document; or (v) otherwise with respect to or in connection with the transactions contemplated by the Operative Documents.

(b) Exclusions. Notwithstanding anything to the contrary contained herein, Lessee will have no obligation under this Section 9 with respect to any one or more of the following:

(i) Taxes imposed against or payable by the Trust Company, Lessor or Owner Participant (other than, in each case, Taxes that are, or are in the nature of, sales, use, rental, transfer or property taxes) that are, or are in the nature of, franchise taxes, value added taxes that are in the nature of or have the same effect as a net income tax, Taxes on doing business or Taxes that are based upon, measured by or imposed with respect to capital, net worth, net receipts, net income (including without limitation minimum taxes, tax preference items, alternative minimum taxes, capital gains taxes, personal holding company taxes and excess profits taxes), gross income or gross receipts;

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(ii) Taxes imposed against or payable by the Trust Company, Lessor or Owner Participant to any jurisdiction to the extent such Taxes are not increased by the Lessor’s, Owner Participant’s or Trust Company’s engaging in such jurisdiction in the transactions contemplated by the Operative Documents (assuming for this purpose that the Lessor’s, Owner Participant’s or Trust Company’s engaging in activities in such jurisdiction other than such transactions is sufficient to establish a nexus for the imposition of such Taxes);

(iii) Taxes imposed on or payable by the Trust Company, Lessor or Owner Participant attributable to any voluntary sale, assignment, transfer or other disposition (including a transfer under section 338 of the Code, if applicable) of any interest in the Equipment or the Operative Documents or any interests or obligations arising under the Operative Documents except Taxes resulting from a transfer in connection with the exercise of remedies set forth in Section 15(c) hereof by reason of a default by the Lessee under Section 15(a) hereof;

(iv) any Tax imposed against or payable by the Trust Company, Lessor, Owner Participant or their respective successors and assigns (each an “Indemnitee”), to the extent that the amount of such Tax exceeds the amount of such Tax that would have been imposed against or payable by such Indemnitee if such Indemnitee were not a direct or indirect successor, transferee or assign of the original Trust Company, Lessor or Owner Participant, as the case may be;

(v) Taxes attributable to any period after the expiration or earlier termination of the Lease; provided, that there shall not be excluded under this subparagraph (v) any Taxes to the extent such Taxes relate to events or circumstances occurring or matters arising prior to such expiration, termination or return;

(vi) any Taxes imposed against or payable by the Lessor resulting from, or that would not have been imposed but for, the gross negligence or willful misconduct of such Indemnitee or any Affiliate thereof;

(vii) Taxes imposed on or with respect to or payable by such Indemnitee that would not have been imposed but for an amendment, supplement, modification, consent or waiver to any Operative Document not initiated, requested or consented to by the Lessee;

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(viii) Taxes imposed on or with respect to or payable by such Indemnitee or any Affiliate thereof because such Indemnitee or any Affiliate thereof is not a United States person within the meaning of section 7701(a)(30) of the Code;

(ix) Taxes imposed on or payable by such Indemnitee to the extent such Taxes would not have been imposed but for a breach by such Indemnitee or any Affiliate thereof of any representations, warranties or covenants set forth in the Operative Documents; and

(x) any interest, penalties or additions to Tax imposed on such Indemnitee that would not have been imposed or incurred but for the failure of such Indemnitee or any of its Affiliates to file any return or other document timely and in the form prescribed by law.

(c) Reimbursement. If the Lessee (or a Person making payment on behalf of the Lessee) shall have paid any amount pursuant to the Lease or any other Operative Document with respect to or on account of taxes not subject to indemnification pursuant to this Section 9, such Indemnitee shall pay to the Lessee, within 30 days of receipt of written notice from the Lessee of such payment, the amount so paid by Lessee (or such Person making payment on behalf of the Lessee).

(d) Calculation of General Tax Indemnity Payments; Tax Savings. Any payment or indemnity to or for the benefit of an Indemnitee with respect to any Tax which is subject to indemnification under Section 9(a) hereof shall (A) reflect the combined net savings realized by such Indemnitee and any Affiliate(s) thereof resulting from the current deduction of such indemnified Tax and (B) include, after taking into account the savings described in clause (A), the amount necessary to hold such Indemnitee harmless on an After-Tax Basis; provided, however, that each Indemnitee and each Affiliate thereof shall provide such certifications, information and documentation within their control as shall be reasonably requested by the Lessee to minimize any payment pursuant to this Section 9. If, by reason of any Tax payment made to or for the account of an Indemnitee by or on behalf of the Lessee pursuant to this Section 9 (or the circumstances or event giving rise thereto,) such Indemnitee or any Affiliate thereof realizes a net Tax benefit, refund, saving, deduction or credit not previously taken into account in computing such payment, such Indemnitee shall promptly pay to the Lessee an amount equal to the sum of (I) the net reduction in Taxes, if any, realized by such Indemnitee and its Affiliates which is attributable to such net Tax benefit, refund, saving, deduction or credit and (II) the net reduction in any Taxes realized by such Indemnitee and its Affiliates as the result of any payment made by such Indemnitee. For purposes of the preceding sentence and to the extent permitted by Applicable Laws, such Indemnitee shall be deemed to realize, first, all items of deduction, credit or carryover other than those referred to in the next clause, and, then, pro rata all such items attributable to any leasing transaction entered into by such Indemnitee for which such Indemnitee is entitled to indemnification. Such Indemnitee agrees in good faith to pursue diligently any refunds, deductions, Tax benefits or other savings that would reduce the Lessee’s indemnity obligation or would be required to be paid by such Indemnitee to the Lessee as soon as they are available.

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10.

LIENS.

The parties intend and agree that for all purposes, Lessee will treat the Equipment as personal property and will not take any actions or positions inconsistent therewith, notwithstanding the manner in which it may be affixed to any real property. Lessee further agrees to maintain the Equipment free from all Liens of Persons claiming by, through or under Lessee other than:

(a) the respective rights of Owner Participant, Lessor and Lessee provided herein and in the other Operative Documents;

(b) Lessor’s Liens;

(c) Liens for fees, taxes, levies, duties or other governmental charges of any kind, liens of mechanics, materialmen, laborers, employees or suppliers and similar liens arising by operation of law in each case incurred by Lessee in the ordinary course of business for sums that are not yet delinquent or are being contested in good faith by negotiations or by appropriate proceedings (provided, however, that such proceedings do not involve any material risk of the sale, forfeiture or loss of the Equipment or any interest therein); and

(d) Liens arising out of any judgments or awards against Lessee which have been adequately bonded to protect Lessor’s interests or with respect to which a stay of execution has been obtained pending an appeal or a proceeding for review.

11.

INSURANCE.

(a) Coverages. Lessee shall obtain and maintain during the Term, at its own expense, (i) “all risk” insurance against loss or damage to the Equipment and (ii) commercial general liability insurance (including contractual liability, products liability and completed operations coverages) with insurers of generally recognized standing, in amounts and with coverages consistent with that as maintained by Lessee on similar equipment owned by Lessee.

(b) Coverage Amounts. The amount of the “all risk” insurance required by clause (a)(i) above shall be at least equal to the Stipulated Loss Value of the Equipment. The amount of commercial general liability insurance required by clause (a)(ii) above shall not be less than the amount of coverage certified by Lessee to Lessor in writing on the Funding Date.

(c) Deductibles. The deductible with respect to “all risk” insurance required by clause (a)(i) above shall not exceed $1,000,000, and the deductible with respect to commercial general liability insurance required by clause (a)(ii) above shall not exceed $1,000,000.

(d) Endorsements. Each “all risk” policy shall: (i) name Lessor as sole loss payee with respect to the Equipment, (ii) provide for each insurer’s waiver of its right of subrogation against Lessor and (iii) provide that such insurance (A) shall not be invalidated by any action of, or breach of warranty by, Lessee of a provision of any of its insurance policies and

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(B) shall waive set-off, counterclaim or offset against Lessor. Each liability policy shall (w) name Owner Participant, the Trust Company and Lessor as additional insureds and (x) provide that such insurance shall have cross-liability and severability of interest endorsements (which shall not increase the aggregate policy limits of Lessee’s insurance). All insurance policies shall (y) provide that Lessee’s insurance shall be primary without a right of contribution of Lessor’s, the Trust Company’s or Owner Participant’s insurance, if any, or any obligation on the part of Lessor, the Trust Company or Owner Participant to pay premiums of Lessee, and (z) shall contain a clause requiring the insurer to give Lessor at least 30 days’ prior written notice of its cancellation (other than cancellation for non-payment for which 10 days’ notice shall be sufficient). Lessee shall, upon each policy renewal, furnish to Lessor, the Trust Company and Owner Participant certificates of insurance evidencing coverages in compliance with the requirements of this Section 11.

(e) Payment of Proceeds. All insurance proceeds received by or payable to Lessor on account of any damage to or destruction of the Equipment or any part thereof (less the actual costs, fees and expenses incurred in the collection thereof), other than any damage or destruction constituting a Total Loss which shall be subject to Section 12(c) hereof, shall be paid over to Lessee or as it may direct from time to time as repair and restoration progresses to pay (or reimburse Lessee for) the cost of repair and restoration of the Equipment, but only upon the written request of Lessee accompanied by appropriate evidence reasonably satisfactory to Lessor that the sum requested has been paid or will be applied to the payment of a sum then due and payable; provided, however, that if a Default shall have occurred and be continuing any such amount shall not be paid over to Lessee, but shall be applied as provided in Section 24 hereof. Upon receipt by Lessor of evidence reasonably satisfactory to it that repair and restoration has been completed and the cost thereof paid in full, the balance, if any, of such proceeds shall be promptly paid over or assigned to Lessee or as it may direct unless a Default shall have occurred and be continuing, in which case such balance shall be applied as provided in Section 24 hereof.

12.

LOSS AND DAMAGE.

(a) Loss, Damage or Destruction Not Constituting a Total Loss. In the event of loss or damage to the Equipment which does not constitute a Total Loss, Lessee shall, at its sole cost and expense, promptly repair and restore such item of the Equipment to the condition required by this Lease. Provided that Lessee is not then in Default, upon receipt of evidence reasonably satisfactory to Lessor of completion of such repairs, Lessor will apply any insurance proceeds received by Lessor on account of such loss to the cost of repairs or shall reimburse Lessee for any amounts so expended.

(b) Total Loss. Upon the occurrence of a Total Loss, during the Term of this Lease, Lessee shall give prompt notice thereof to Lessor and by written notice to Lessor given within 60 days after the occurrence of such Total Loss, Lessee may elect one of the following two (2) options (failure by Lessee to make such election within 60 days being deemed to be an election of alternative (i)):

(i) pay to Lessor on the next Rent Payment Date for such Equipment occurring at least 90 days after the date of the Total Loss the Basic Rent then due plus the

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Stipulated Loss Value of the item or items of the Equipment with respect to which the Total Loss has occurred and any other sums then due hereunder with respect to that Equipment (less any insurance proceeds or condemnation award actually paid to Lessor). Upon making such payment, this Lease and the obligation to make future Rent payments shall terminate solely with respect to the Equipment or items thereof so paid for and (to the extent applicable) Lessee shall become entitled to such Equipment and the right to receive any future insurance premiums or condemnation award in respect thereof as is where is without warranty, express or implied except as to the absence of Lessor’s Liens, and Lessor shall deliver to Lessee a bill of sale transferring and assigning to Lessee without recourse or warranty (except as to the absence of Lessor’s Liens) all of Lessor’s right, title and interest in and to such Equipment; or

(ii) Lessee may at its own cost and expense, including all reasonable and documented costs and expenses of Lessor, replace any item of Equipment which may from time to time suffer a Total Loss or otherwise become worn out, inoperable or technologically obsolete for Lessee’s purposes with a replacement item of equipment. All such replacement Equipment shall be free and clear of all Liens (other than Permitted Liens) and shall be of the same or a more recent date of manufacture and in at least as good operating condition and have a value, utility and remaining useful life at least equal to the Equipment being replaced, assuming such replaced Equipment was in the condition and repair required by the terms of this Lease. Prior to the time of any replacement of an item of Equipment pursuant to this Section 12(b), Lessee will at its sole cost and expense, including all reasonable and documented costs and expenses of Lessor:

(A) furnish Lessor with a Bill of Sale with respect to such replacement Equipment;

(B) cause an Equipment Schedule amendment covering such replacement Equipment to be duly executed and delivered;

(C) furnish Lessor with such evidence of compliance with the insurance provisions of Section 11 hereof with respect to such replacement Equipment as Lessor may request;

(D) furnish Lessor with a certificate of an officer of Lessee certifying that such replacement Equipment has a value, utility and useful life at least equal to that of the Equipment replaced, assuming such replaced Equipment was in the condition required by this Lease; and

(E) file UCC financing statements with respect to such replacement Equipment; and

(F) take such other action as Lessor may reasonably request, in order that such replacement Equipment is duly and properly titled in Lessor and leased under this Lease.

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Upon satisfaction of the conditions specified in this Section 12(b)(ii), Lessor will transfer to Lessee without recourse or warranty (except as to the absence of Lessor’s Liens) all of Lessor’s right, title and interest in and to the replaced Equipment. Each replacement item of Equipment shall, after such conveyance, be deemed part of the property leased under this Lease. No such replacement shall result in any change in Basic Rent or Stipulated Loss Value hereunder.

(c) Application of Other Payments Upon a Total Loss. Subject to Section 11(e) hereof, any payments received at any time by Lessor or by Lessee from any Governmental Authority or other Person with respect to the Equipment as a result of the occurrence of Total Loss with respect to all or any portion of the Equipment shall be applied as follows:

(i) subject to Section 24 hereof, if the Lease shall be terminated in accordance with clause (i) of Section 12(b) hereof:

(A) all payments received at any time by Lessee shall be promptly paid to Lessor and so much of such payments as shall not exceed the amount required to be paid by Lessee pursuant to clause (i) of Section 12(b) hereof shall be applied in reduction of Lessee’s obligation to pay such amount if not already paid by Lessee or, if already paid by Lessee, shall be applied to reimburse Lessee for its payment of such amount, unless a Default shall have occurred and be continuing in which case the provisions of Section 24 shall apply; and

(B) the balance, if any, of such payments remaining thereafter shall be paid to Lessee;

(ii) subject to Section 24 hereof, if the Lease shall continue in accordance with clause (ii) of Section 12(b) hereof all such payments shall be paid to Lessee, to be applied, as necessary, for the repair, replacement or restoration of the Equipment in accordance with Section 11(e) hereof;

(iii) so long as such Equipment is replaced, restored or repaired in accordance with the terms of this Lease and so long as no Default has occurred and is continuing, all loss proceeds under insurance paid for or provided by Lessee in excess of the amounts remaining after final payment has been made for the purchase or any work contemplated or required hereby for the replacement, repair or restoration of the Equipment shall be retained by Lessee, and if a Default has occurred and is continuing, the provisions of Section 24 hereof shall apply.

(d) Application of Payments Not Relating to a Total Loss. Unless a Default shall have occurred and be continuing in which case the provisions of Section 24 shall apply, payments (other than insurance proceeds, the application of which is provided for in Section 11(e) hereof) received at any time by Lessor or Lessee from any governmental authority or other Person with respect to any loss, condemnation, confiscation, theft or seizure of, or requisition of title to or use of, or damage to, the Equipment or any part thereof not constituting a Total Loss shall be paid to or retained by the Lessee and shall be applied as follows: first, directly in

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payment for repairs or replacement of the Equipment or parts thereof in respect of which such payment was received in accordance with the provisions of Section 12(a) hereof or Section 11(e) hereof, if not already paid for by Lessee, or, if already paid for by Lessee, shall be applied to reimburse Lessee for such payment; and second, the balance remaining, if any, shall be paid to Lessee.

13.

REDELIVERY.

Upon the termination of this Lease, pursuant to Section 15 and the demand by Lessor for the return of the Equipment, Lessee shall, at its own risk and expense, return the Equipment to Lessor in the same condition as when delivered to Lessee hereunder, ordinary wear and tear excepted, and in the condition required to be maintained by the terms of this Lease, free and clear of all Liens whatsoever except for Lessor’s Liens, by the assembling, crating, and delivering of such Equipment, with all sumps and tanks clean and dry and no Hazardous Materials (other than required lubricants) located in or on the Equipment and together with all maintenance and service records and all software and software documentation necessary for the operation of the Equipment to the nearest railhead or other appropriate common carrier, ready for shipment. Return shall be completed within fifteen (15) days after termination of this Lease with respect to such item of Equipment. In addition to Lessor’s other rights and remedies hereunder, if any item of the Equipment is not returned in compliance with this Section 13 or if repairs are necessary to place the Equipment in the condition required in this Section 13, Lessee shall pay to Lessor the reasonable and documented cost of placing the Equipment in such condition or the cost of such repairs, as applicable.

14.

INDEMNITY/ENVIRONMENTAL MATTERS.

(a) General Indemnity. Lessee assumes and agrees to indemnify, defend and keep harmless Owner Participant, Trust Company, Lessor and their successors and permitted assigns, and their agents and employees (each an “Indemnitee” and collectively “Indemnitees”), from and against any amount payable by the Owner Participant under Section 7.1 of the Trust Agreement, whether as a Trust Claim or otherwise and all documented losses, claims and expenses, including reasonable, documented legal expenses (other than such losses, claims or expenses as may result from the gross negligence or willful misconduct of such party, its agents or employees and other than taxes, related charges, assessments or withholdings of any nature (the sole provision for which is in Section 9 hereof)), arising on account of the ordering, acquisition, delivery, installation or rejection of the Equipment, the possession, maintenance, use, condition (including without limitation, latent and other defects and whether or not discoverable by Lessor or Lessee, any claim in tort for strict liability, and any claim for patent, trademark or copyright infringement) or operation of any item of the Equipment, and by whomsoever used or operated (other than Lessor or Owner Participant), during the Term of this Lease with respect to that item of the Equipment, the loss, damage, destruction, removal, return or surrender of the Equipment, or any item thereof; provided, however, the indemnities contained in this Section 14(a) will not extend to any loss, claim, cost or expense:

(i) resulting from any sale, disposition or transfer by Lessor or Owner Participant of any of its interest herein, in the Equipment or any document or instrument

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executed and delivered in connection herewith except for costs and expenses and third party claims of any such transfer, sale or assignment contemplated in Sections 12, 15, 19 or 20 hereof; or

(ii) to the extent such loss, claim or expense relates to acts or events not attributable to Lessee that occur after the Lease shall have terminated with respect to such item of Equipment; or

(iii) imposed on an Indemnitee to the extent attributable or arising out of any act, misrepresentation, or omission of such Indemnitee or any of its Affiliates in breach of the obligations or representation of such Indemnitee or its Affiliates under the Operative Documents.

Indemnitees shall give Lessee prompt notice of any claim or liability hereby indemnified against; provided, however, that the failure to give such prompt notice shall not affect Lessee’s obligations hereunder unless such failure materially and adversely prejudices the rights of Lessee. Lessee shall be entitled to control the defense of any claim or liability hereby indemnified against, so long as Lessee is diligently pursuing such defense and no Default shall have occurred and be continuing. In the event Lessee assumes the defense of any such action, any Indemnitee shall have the right to employ separate counsel in such action and participate therein, but the fees and expenses of such counsel shall be at the expense of such Indemnitee. Lessee shall not agree to the settlement of any claim, dispute or other proceeding giving rise to any claim for indemnification hereunder or make any admission of any liability on behalf of any Indemnitee, without the prior written consent of such Indemnitee such consent not to be unreasonably withheld in a non-criminal, civil matter. Nothing contained in this Section 14(a) shall be construed as a guaranty by Lessee of any Residual Value or Remaining Life of any item of the Equipment.

(b) Environmental Matters. In addition to and without limitation of all other representations, warranties and covenants made by Lessee under this Lease, Lessee further represents, warrants and covenants that Lessee has not used Hazardous Materials on, in, or affecting the Equipment in any manner which violates Environmental Laws. Lessee’s use of the Equipment shall comply with all Environmental Laws regarding use, storage, treatment, transportation and disposal of Hazardous Materials. Lessee shall (i) conduct and complete all investigations, studies, sampling, testing and all remedial, removal and other actions required by Environmental Laws to clean up and remove all Hazardous Materials, on, in or affecting the Equipment in accordance with (A) Environmental Laws, and (B) any applicable orders and directives of federal, state and local governmental authorities, and (ii) defend, indemnify and hold harmless Indemnitees from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs or expenses of whatever kind or nature, known or unknown, contingent or otherwise, arising out of, or in any way related to, (A) the presence, disposal, release or threatened release of any Hazardous Materials in violation of Environmental Laws in, on or from the Equipment, (B) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such violation of Environmental Laws, and/or (C) any violation of Environmental Laws in any way related to the use, operation or maintenance of the Equipment including, without limitation, reasonable and documented attorney and consultant fees, investigation and laboratory fees, court costs and litigation expenses.

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15.

DEFAULT; REMEDIES.

(a) Defaults. Lessee shall be deemed to be in default hereunder (“Default”) if:

(i) Lessee shall fail to make (A) any payment of Basic Rent within three (3) Business Days after the same shall have become due or (B) any payment of Supplemental Rent hereunder within ten (10) Business Days after Lessor shall have given Lessee notice that the same is due; or

(ii) Lessee shall fail to obtain and maintain in full force and effect the insurance required herein; provided, however, no Default shall occur pursuant to this clause (ii) until the earlier of (A) the date such expiration or termination is effective as to Lessor or Owner Participant or (B) five (5) days after written notice of such failure or lapse from Lessee to Lessor or Owner Participant; or

(iii) Lessee or Guarantor shall fail to perform or observe any other covenant, condition or agreement to be performed or observed by it under the Operative Documents and such failure shall continue unremedied for a period of thirty (30) days unless Lessee or Guarantor is diligently proceeding to cure any such failure or breach but in any event such remedy shall be effected within 90 days of such notice; or

(iv) Lessee or Guarantor shall (A) be generally not paying its debts as they become due; or (B) take action for the purpose of invoking the protection of any bankruptcy or insolvency law, or any such law is invoked against or with respect to Lessee or Guarantor or their respective property, and any such petition filed against Lessee or Guarantor is not dismissed within ninety (90) days; or

(v) any certificate, statement, representation or warranty contained herein or in any other Operative Document to which Lessee or Guarantor is a party shall prove to have been false in any material respect at the time as of which the facts therein set forth were stated or certified and such failure shall continue unremedied for a period of ten (10) days after written notice thereof to Lessee and Guarantor by Lessor unless Lessee or Guarantor is diligently proceeding to cure any such failure or breach but in any event such remedy shall be effected within 90 days of such notice;

(vi) the Guaranty shall be revoked, cancelled, terminated or otherwise cease to be in full force and effect or the Guarantor shall repudiate its obligations thereunder; or

(vii) an “Event of Default”, as such term is defined in the Indenture, shall have occurred and be continuing and such Event of Default shall continue unremedied for a period of 90 days after Lessee and Guarantor have actual notice thereof.

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(b) [reserved]

(c) Remedies. Upon a Default, Lessor may, at its option, declare this Lease to be in default by written notice to Lessee (without election of remedies), and at any time thereafter, may do any one or more of the following, all of which are authorized by Lessee:

(i) declare the Stipulated Loss Value of the Equipment (determined as of the next Rent Payment Date for such Equipment, or as of the final Rent Payment Date if such determination is made after the final Rent Payment Date for such item of Equipment), together with all other sums then due hereunder with respect to such Equipment, immediately due and payable (the parties also deem that such amount best reflects the damages Lessor would sustain in the event of Lessee’s bankruptcy or insolvency and this Lease were not assumed); and/or

(ii) require Lessee to assemble any or all of the Equipment where then located; or to return promptly, at Lessee’s expense, any or all of the Equipment to Lessor at the location, in the condition and otherwise in accordance with all of the terms of Section 13 hereof; and/or

(iii) enter into any premises where any item of Equipment is located and take possession of any or all of the Equipment, wherever it may be located, without any court order or other process of law and without liability for any damages occasioned by such taking of possession (other than as is caused by the gross negligence or willful misconduct of Lessor or Owner Participant) (any such taking of possession shall constitute an automatic cancellation of this Lease as it applies to those items taken without further notice, and such taking of possession shall not prohibit Lessor from exercising its other remedies hereunder), and without removal, Lessor may render any or all of the Equipment unusable and dispose of the Equipment while still located on Lessee’s premises; and/or

(iv) (A) sell or otherwise dispose of any or all of the Equipment, whether or not in Lessor’s possession, in a commercially reasonable manner at public or private sale with notice to Lessee (the parties agreeing that ten (10) days’ prior written notice shall constitute adequate notice of such sale), with the right of Lessor to purchase and apply the net proceeds of such disposition, after deducting all costs of such disposition (including but not limited to costs of transportation, possession, storage, refurbishing, advertising and brokers’ fees), to the obligations of Lessee hereunder, including amounts payable pursuant to clause (c)(i) above, with Lessee remaining liable for any deficiency; or (B) retain any repossessed Equipment and credit the reasonable fair market value thereof to the obligations of Lessee hereunder, including amounts payable pursuant to clause (c)(i) above, with Lessee remaining liable for any deficiency; and/or

(v) cancel this Lease as to any or all of the Equipment; and/or

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(vi) proceed by appropriate court action, either at law or in equity, to enforce performance by Lessee or to recover damages for the breach hereof; or exercise any other right or remedy available to Lessor at law or in equity.

(d) Remedies not Exclusive. Unless otherwise provided above, a cancellation under this Section 15 shall occur only upon written notice by Lessor to Lessee and only with respect to such items of the Equipment as Lessor specifically elects to cancel in such notice. Upon such a cancellation, Lessee’s obligation to continue to pay Rent hereunder shall cease with respect to such items of the Equipment as Lessor specifically elects to cancel. Except as to such items of the Equipment with respect to which there is a termination, this Lease shall remain in full force and effect and Lessee shall be and remain liable for the full performance of all its obligations hereunder. In addition, Lessee shall be liable for all reasonable legal fees and other documented expenses incurred by reason of any Default or the exercise of Lessor’s remedies, including all reasonable and documented expenses incurred in connection with the return of any Equipment in accordance with the terms of Section 13 hereof or in placing such Equipment in the condition required by said Section. No right or remedy referred to in this Section is intended to be exclusive, but each shall be cumulative and shall be in addition to any other remedy referred to above or otherwise available at law or in equity, and may be exercised concurrently or separately from time to time. The failure of Lessor to exercise the rights granted hereunder upon any Default by Lessee shall not constitute a waiver of any such right upon the continuation or reoccurrence of any such Default.

16.

ASSIGNMENT BY OWNER PARTICIPANT, LESSOR AND LESSEE.

(a) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN OR AS EXPRESSLY PERMITTED BY THE OTHER OPERATIVE DOCUMENTS, WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR, LESSEE WILL NOT ASSIGN OR CONVEY ANY OR ALL OF ITS RIGHTS, TITLE AND INTEREST HEREUNDER. No assignment, whether authorized in this Section or in violation of the terms hereof, shall relieve Lessee of its obligations hereunder and Lessee shall remain primarily liable hereunder.

(b) Owner Participant shall not and shall not permit Lessor to (i) assign, convey or otherwise transfer during the Term hereof any of its rights, title or interest in the Equipment, this Lease or the other Operative Documents to which it is a party, except that Owner Participant may upon compliance with the following conditions transfer its interest in the Trust:

(i) The transfer shall be of Owner Participant’s entire interest (which for avoidance of doubt will include the entire interest of both The Employees’ Retirement System of Alabama and The Teachers’ Retirement System of Alabama), and the Person acquiring the interest being transferred shall not be a competitor, either directly or indirectly, of Lessee or any of Lessee’s Affiliates, and such transferee (the “Transferee”) shall have the requisite power and authority to enter into and carry out the transactions contemplated hereby.

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(ii) The Transferee will enter into an agreement or agreements, in form and substance reasonably satisfactory to Lessee (such agreement to include representations and warranties identical, mutatis mutandis, to those made by the Owner Participant herein and to be accompanied by a favorable opinion of counsel with respect to the due authorization, execution, delivery and enforceability of such agreement and the absence of any conflicts with or violations of any Applicable Laws (including, without limitation, that such transfer may be accomplished without any registration under the Securities Act of 1933, as amended) or agreements or instruments to which such Transferee is a party or with respect to which it may be bound), whereby the Transferee confirms that it shall be deemed a party to this Lease, and any other Operative Document to which Owner Participant is a party and is bound by all the terms of, and undertakes all the obligations of Owner Participant contained in such Operative Documents to which it is a party, and including, without limitation, an agreement that such Transferee shall be bound by the restrictions contained in this Section 16 with respect to any subsequent transfer by it. Upon satisfaction of the conditions set forth in this Section 16, Owner Participant shall be released from any and all liabilities arising under or in connection with such Operative Documents (to the extent such liabilities arise after the relevant transfer) unless the Transferee fails to meet the requirements of clause (iii)(A) or (B) hereof and Owner Participant guarantees the obligations of the Transferee under clause (iii)(B) of this Section 16.

(iii) The Transferee shall be either (A) a bank, trust company, insurance company, credit or finance corporation or other corporation or partnership with a tangible net worth of at least $50,000,000 or (B) a corporation, partnership or trust company which has its obligations guaranteed, pursuant to a guaranty agreement or such other agreement reasonably satisfactory to Lessee, by its direct or indirect parent entity (or in the case of a trust, by a beneficiary of the trust) which entity shall meet the requirements of clause (A) of this sentence. Upon any transfer permitted by this Section 16, except as otherwise expressly provided herein, each reference herein to Owner Participant shall thereafter be deemed to be a reference to the Transferee (to the extent provided in this Section 16).

17.

CHATTEL PAPER.

To the extent that this Lease and/or the Equipment Schedules would constitute chattel paper, as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction, no security interest herein or therein may be created through the transfer or possession of this Lease in and of itself without the transfer or possession of the original of the Equipment Schedules executed pursuant to this Lease and incorporating this Lease by reference; and no security interest in this Lease and the Equipment Schedules may be created by the transfer or possession of any counterpart of an Equipment Schedule other than the original thereof, which shall be identified as the document marked “Original” and all other counterparts shall be marked “Duplicate” or “Copy”.

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18.

[INTENTIONALLY LEFT BLANK].

19.

END OF TERM.

Upon payment by Lessee of the final Basic Rent payment on the last day of the Term with respect to all Equipment then subject to an Equipment Schedule, together with all Supplemental Rent then due on such date with respect to such Equipment, this Lease shall terminate as to such Equipment and Lessor will deliver a bill of sale to Lessee transferring to Lessee, without recourse or warranty (except as to the absence of Lessor’s Liens) all of Lessor’s right, title and interest in and to such Equipment.

20.

EARLY TERMINATION.

Notwithstanding any provision in this Lease to the contrary, if no Default shall have occurred and be continuing, Lessee shall have the option by written notice delivered not less than 90 days prior to the proposed termination date, on any Rent Payment Date on or after the first anniversary of the Lease Commencement Date with respect to such Equipment, to terminate this Lease with respect to any item or items of Equipment by paying the Stipulated Loss Value thereof as of the next succeeding Rent Payment Date (the “Termination Date”).

On the Termination Date, Lessee shall pay to Lessor the sum of: (A) the Stipulated Loss Value for the Equipment subject to such termination computed as of the Termination Date, plus (B) all other amounts, whether Basic Rent, Supplemental Rent or otherwise, owing by Lessee hereunder with respect to such items of Equipment. Upon such payment and compliance by Lessee with the provisions of this Section 20, this Lease shall terminate with respect to such Equipment and Lessor will deliver a bill of sale to Lessee transferring without recourse or warranty, except as to the absence of Lessor Liens, all of Lessor’s right, title and interest in and to such Equipment.

21.

INSPECTION.

Lessor and Owner Participant shall have the right at their own risk and expense during normal business hours upon reasonable notice to Lessee and subject to Lessee’s customary safety restrictions and requirements, to enter the premises where the Equipment is located in order to inspect the Equipment and any maintenance records with respect thereto. Any such inspection shall be a visual walkaround inspection and shall not entail any dismantlement, demonstration runs or unscheduled operations.

22.

QUIET ENJOYMENT.

Lessor and Owner Participant covenant and agree that, so long as no Default shall have occurred and be continuing, Lessee shall have the right to possession, use and quiet enjoyment of the Equipment in accordance with the terms of this Lease without hindrance or disturbance by Lessor or Owner Participant or by any other Person claiming by or through Lessor or Owner Participant.

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23.

TRANSACTION COSTS.

Promptly following each Funding Date, Lessee shall pay all Transaction Costs to the parties entitled thereto. For purposes hereof “Transaction Costs” shall mean the fees, expenses and costs of documenting, negotiating and closing the transactions contemplated herein, including, without limitation, the reasonable and documented fees and expenses of outside counsel to Owner Participant, Lessor and Lessee, the reasonable and documented appraisal fees, the reasonable and documented filing fees, the fees of the Owner Trustee in accordance with the fee arrangement between Owner Trustee and Lessee entered into prior to the Closing Date, and all other reasonable and documented fees and expenses of Owner Participant.

24.

PAYMENTS DURING DEFAULT.

(a) Notwithstanding anything to the contrary contained in this Lease, if Lessee is in Default hereunder, any amount that would otherwise be paid to Lessee under this Lease shall be held by Lessor as security for the obligations of Lessee hereunder and invested by Lessor as directed by Lessee in Permitted Investments and, at such time as no Default shall be continuing, such amount shall be paid promptly to Lessee unless Lessor shall have declared this Lease to be in default under Section 15 hereof, in which event such amount shall be applied by Lessor in accordance with the terms of said Section 15. Any income realized as a result of any such investment shall be held and applied by Lessor in the same manner as such amounts held by Lessor are to be applied. Neither Lessor nor any assignee thereof shall have any liability for any loss resulting from any such investment other than by reason of the willful misconduct or gross negligence of Lessor (or any such assignee). Any expenses incurred (including any loss on such investments) in connection with any investment of funds by Lessor pursuant to this Section 24 shall be satisfied out of investments made and the proceeds thereof, except Lessor shall be responsible for any loss resulting from its gross negligence or willful misconduct.

(b) Investment Disclosure. The parties hereto acknowledges that shares or investments in Permitted Investments are not obligations of Wilmington Trust Company, or any parent or affiliate of Wilmington Trust Company, are not deposits and are not insured by the FDIC. The Lessor, the Trust Company or their affiliates may be compensated by mutual funds or other investments comprising Permitted Investments for services rendered in its capacity as investment advisor, or other service provider, and such compensation is both described in detail in the prospectuses for such funds or investments, and is in addition to the compensation, if any, paid to Wilmington Trust Company in its capacity as Owner Trustee and/or Lessor hereunder.

25.

INTENTIONALLY LEFT BLANK.

26.

CHOICE OF LAW; JURISDICTION.

THIS LEASE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ALABAMA (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,

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REGARDLESS OF THE LOCATION OF THE EQUIPMENT UNLESS AND TO THE EXTENT THE GRANT OF A SECURITY INTEREST MAY BE GOVERNED BY APPLICABLE STATE LAW. The parties agree that any action or proceeding arising out of or relating to this Lease may be commenced in any state court in Montgomery County or the U.S. District Court for the Northern District of Alabama, and agree that a summons and complaint commencing an action or proceeding in any such court shall be properly served and shall confer personal jurisdiction if served personally or by certified mail to it at its address hereinbelow set forth, or as it may provide in writing from time to time, or as otherwise provided under the laws of the State of Alabama.

27.

MISCELLANEOUS.

(a) Entire Agreement. This Lease, the Equipment Schedules executed and delivered in accordance with the terms hereof and the other Operative Documents constitute the entire agreement between the parties with respect to the subject matter hereof and shall not be amended or altered in any manner except by a document in writing executed by the parties.

(b) Severability. Any provision of this Lease which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

(c) Survival. The representations, warranties and covenants of Lessee, Owner Participant and Lessor herein shall be deemed to be continuing and to survive the closing hereunder. The obligations of Lessee under Sections 9, 13, 14 and 24 which accrue during the term of this Lease and obligations which by their express terms survive the termination of this Lease, shall survive the termination of this Lease.

(d) Notices. All notices (excluding billings and communications in the ordinary course of business) hereunder shall be in writing, personally delivered, delivered by overnight courier service, sent by facsimile transmission (with confirmation of receipt), or sent by certified mail, return receipt requested, addressed to the other party at its respective address stated below the signature of such party or at such other address as such party shall from time to time designate in writing to the other party; and shall be effective from the date of mailing.

(e) Grant of Security Interest. The parties hereto agree that the transactions contemplated herein are intended as a lease; provided, however, to provide for the contingency of a determination for other reasons that the lease so intended nonetheless creates a security interest, Lessee grants to Lessor to secure the prompt payment and performance as and when due of all obligations and indebtedness of Lessee (or any Affiliate of Lessee), now existing or hereafter created under the Operative Documents a first priority security interest in all right, title and interest Lessee may now have or may hereafter acquire in, to and under the Equipment and all accessions, substitutions and replacements thereto and therefor, any and all leases, subleases, rentals, accounts and contracts with respect to the Equipment which may now exist or hereafter arise, together with all rights thereunder and all rental and other payments and purchase options

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due and to become due thereunder, any and all sales proceeds payable for such property, and proceeds (cash and non-cash), including insurance proceeds thereof and in furtherance of the foregoing, Lessee shall (A) deliver to Lessor, to be recorded at Lessee’s expense, Uniform Commercial Code financing statements and statements of continuation as reasonably may be required by Lessor to perfect and maintain perfected the first priority security interest granted by Lessee herein and (B) execute (if required) and deliver, to be recorded at Lessee’s expense, any such forms and documents as reasonably may be required by Lessor to evidence Lessor’s title to and security interest in any item of Equipment which is covered by the laws of any applicable jurisdiction.

(f) Liability of Owner Trustee Limited. The Lessee and the Owner Participant each acknowledge and agree that the Owner Trustee is (except as otherwise expressly provided herein or therein) entering into this Lease and the other Operative Documents to which it is a party (other than the Trust Agreement), solely in its capacity as trustee under the Trust Agreement and not in its individual capacity and that the Trust Company shall not be liable or accountable under any circumstances whatsoever in its individual capacity for or on account of any statements, representations, warranties, covenants or obligations stated to be those of the Owner Trustee, except for its own gross negligence or willful misconduct and as otherwise expressly provided herein or in the other Operative Documents.

[signature page follows]

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IN WITNESS WHEREOF, the parties hereto have caused this Lease to be duly executed as of the day and year first above set forth.


THE EMPLOYEES’ RETIREMENT		Address:
SYSTEM OF ALABAMA, as Owner Participant		c/o The Retirement Systems of Alabama
		135 South Union Street, Suite 570
		Montgomery, AL 36130
/s/ Dr. David G. Bronner		Fax:	(334) 240-3268
By:	Dr. David G. Bronner	Phone:	(334) 242-5718
Its:	Chief Executive Officer	Attention:	Dr. David G. Bronner

THE TEACHERS’ RETIREMENT SYSTEM OF ALABAMA, as Owner Participant		Address:
		c/o The Retirement Systems of Alabama
		135 South Union Street, Suite 570
		Montgomery, AL 36130
/s/ Dr. David G. Bronner		Fax:	(334) 240-3268
By:	Dr. David G. Bronner	Phone:	(334) 242-5718
Its:	Chief Executive Officer	Attention:	Dr. David G. Bronner

WISE ALLOYS LLC, as Lessee		Address:
		Wise Metals Group LLC
		857 Elkridge Landing Road
		Suite 600
/s/ Mr. Kenneth R. Stastny		Linthicum, MD 21090
By:	Mr. Kenneth R. Stastny	Fax:	(410) 636-0856
Its:	Assistant Secretary	Phone:	(410 636-9241
		Attention:	Assistant Secretary

WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein, but solely in its capacity as Owner Trustee		Address: Rodney Square North 1100 North Market Street Wilmington, DE 19890-0001
		Fax:	(302) 636-4140
		Attention:	Corporate Trust Administration
/s/ J. Christopher Murphy
By:	J. Christopher Murphy
Its:	Financial Services Officer

Exhibit A to

Master Equipment Lease

EQUIPMENT SCHEDULE NO. 1

forming a part of Master Equipment Lease dated as of November 13, 2006

1. EQUIPMENT. The Equipment leased hereunder shall be as set forth in the schedule attached hereto as Annex A.

LESSOR’S COST: $14,950,000

2. TERM. Upon and after the date of execution hereof, the Equipment shall be subject to the terms and conditions provided herein and in the Master Equipment Lease referred to above (the “Lease”) (which is incorporated herein by reference).

The Basic Term Commencement Date for the Equipment leased hereunder shall be November 13, 2006 and the Basic Term shall extend from the Basic Term Commencement Date until the end of the day on November 13, 2009.

3. RENT. From and after the date hereof, the Basic Rent for said Equipment during the Basic Term of this Lease shall be as set forth on Annex B-1 hereto, hereby incorporated by reference and applicable only to the Equipment described in this Equipment Schedule.

4. LESSEE’S CONFIRMATION. Lessee hereby confirms and warrants to Lessor that the Equipment: (a) is located at the location specified in Section 5 hereof; (b) has been received, inspected and determined to be in compliance with all applicable specifications and that the Equipment is hereby accepted for all purposes of the Lease; and (c) is a part of the “Equipment” referred to in the Lease and is taken subject to all terms and conditions therein and herein provided.

5. LOCATION OF EQUIPMENT. The location of the Equipment is specified on the Schedule of Equipment attached hereto.

6. LATE CHARGE RATE. The Late Charge Rate shall be the assumed lease rate of 10.7% per annum plus two percent (2%) per annum (provided, however, that if such rate exceeds the highest rate permitted by Applicable Law, then the Late Charge Rate shall be the highest rate permitted by Applicable Law).

7. SCHEDULE OF STIPULATED LOSS. The Schedule of Stipulated Loss Values attached hereto as Annex B-2 is incorporated herein by reference, and shall be applicable solely to the Equipment described in this Equipment Schedule.

DATE OF EXECUTION: , 2006


WISE ALLOYS LLC


By:
Its:

WILMINGTON TRUST COMPANY, not in its individual capacity, but solely as Owner Trustee


By:
Its:

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ANNEX A TO

EQUIPMENT SCHEDULE

Lessee: Wise Alloys LLC

Equipment Schedule No. 1

Page No. of total pages

Equipment located at:

Street No. 3509 East Second Street

Muscle Shoals Colbert County, Alabama 35661


Item	Description	Lessor’s Cost
		$

ANNEX B-1 TO

EQUIPMENT SCHEDULE

SCHEDULE OF BASIC RENT

Rent Payment Date

% of

Lessor’s Cost

Basic Rent for the Equipment subject to this Equipment Schedule for each Rent Payment Date shall be equal to the Lessor’s Cost of such Equipment then subject to the Lease multiplied by the percentage set forth above for such Rent Payment Date.

ANNEX B-2 TO

EQUIPMENT SCHEDULE

SCHEDULE OF STIPULATED LOSS VALUES

Date

% of

Lessor’s Cost

ANNEX C TO

EQUIPMENT SCHEDULE

FINANCING STATEMENTS

COVERING EQUIPMENT


Secured Party		Statement No.		Filing Date		Filing Location

Exhibit B to

Master Equipment Lease

DEFINITIONS RELATING TO

EQUIPMENT LEASE AGREEMENT

For purposes of this Exhibit, all accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with GAAP. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural depending on the reference. A reference in this Exhibit to any document includes an amendment or supplement to, or replacement or novation of, that document unless otherwise expressly provided herein or in the Lease. A reference in this Exhibit to a party to a document includes that party’s successors and permitted assigns. A reference in this Exhibit to any statute, regulation, proclamation, ordinance or law includes all statutes, regulations, proclamations, ordinances or laws varying, consolidating or replacing them, and a reference to a statute includes all regulations, proclamations and ordinances issued or otherwise applicable under that statute. “Include”, “includes” and “including” shall be deemed to be followed by “without limitation” whether or not they are in fact followed by such words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing, lithography and other means of reproducing words in a visible form.

“Affiliate” of any Person shall mean any other Person directly or indirectly controlling, directly or indirectly controlled by or under direct or indirect common control with such Person; provided, however, that under no circumstances shall the Trust Company be deemed to be an Affiliate of either the Owner Trustee or the Owner Participant nor shall either the Owner Trustee or the Owner Participant be deemed to be an Affiliate of the Trust Company.

“Alterations” shall have the meaning assigned to such term in Section 7(g) of the Lease.

“Applicable Laws” shall mean all applicable laws, statutes, treaties, rules, codes, ordinances, regulations, permits, certificates, orders, interpretations, licenses and permits of any Governmental Authority and judgments, decrees, injunctions, writs, orders or like action of any court, arbitrator or other administrative, judicial or quasi-judicial tribunal or agency of competent jurisdiction (including those pertaining to health, safety or the environment and including any tax laws).

“Appraisal” shall mean a written appraisal report describing Equipment being made subject to the Lease.

“Basic Rent” shall mean with respect to the Equipment subject to an Equipment Schedule, the aggregate periodic rent payable for such Equipment during the Basic Term thereof pursuant to Section 2(a) of the Lease and such Equipment Schedule.

“Basic Term” shall mean with respect to the Equipment subject to an Equipment Schedule, the 36-month period commencing on the Basic Term Commencement Date and ending at the end of the day on the day specified in such Equipment Schedule as the last day of such Basic Term, unless earlier terminated in accordance with the terms of the Lease.

“Basic Term Commencement Date” shall mean with respect to the Equipment subject to an Equipment Schedule, the date specified in such Equipment Schedule as the “Basic Term Commencement Date.”

“Bill of Sale” shall mean a Bill of Sale in the form of Exhibit C to the Lease executed by Lessee in favor of Lessor or such other form as is reasonably acceptable to the Lessor.

“Business Day” shall mean any day excluding Saturday, Sunday and any day on which banking institutions located in the State of Alabama, Maryland or Delaware are authorized by law or other governmental action to close.

“Closing Date” shall mean the date the Lessor, Owner Participant and the Lessee execute and deliver the Lease.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Consolidated Subsidiaries” shall mean with respect to any Person, each subsidiary of such Person that would be consolidated on its financial statements in accordance with GAAP.

“Default” shall have the meaning assigned to such term in Section 15(a) of the Lease.

“Environmental Laws” shall mean applicable federal, state or local laws, ordinances, rules, regulations or policies governing the use, storage, handling, treatment, transportation or disposal of Hazardous Materials.

“Equipment” shall mean the items of equipment described in each Equipment Schedule executed by Lessee and Lessor pursuant to the Lease, together with all additions, attachments, appliances, parts, instruments, appurtenances, accessories, furnishings and other parts of whatever nature which may from time to time be incorporated or installed in or attached to the Equipment title to which vests in Lessor in accordance with the terms of the Lease and any and all replacements, substitutions or exchanges therefor.

“Equipment Schedule” shall mean the Equipment Schedules in the form of Exhibit A to the Lease executed by Lessee and Lessor setting forth certain terms and conditions upon which the items of Equipment described therein will be subjected to the Lease.

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

“Final Funding Date” shall mean such date as Lessee and Owner Participant may agree.

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“Funding Dates” shall mean November 13, 2006 and such other date as the Owner Participant and Lessee may agree.

“GAAP” shall have the meaning assigned to such term in Section 3 of the Lease.

“Governmental Authority” shall mean any federal, state, county, municipal or other United States federal, state or local governmental or regulatory authority, agency, board, body, commission, instrumentality, court or quasi-governmental authority.

“Guarantor” shall mean Wise Metals Group LLC, a Delaware limited liability company.

“Guaranty” shall mean the Guaranty dated as of the Closing Date by Guarantor in favor of Owner Participant and Lessor.

“Hazardous Materials” shall mean any pollutants, contaminants or hazardous substances, hazardous wastes, toxic substances, regulated substances and wastes, radioactive materials, polychlorinated biphenyls and asbestos regulated under Environmental Laws.

“Indemnitee” shall have the meaning assigned to such term in Section 14(a) of the Lease.

“Indenture” shall mean the Indenture dated as of May 5, 2004 among Wise Metals Group LLC, Wise Alloys Finance Corporation, the parties identified therein as Guarantors and The Bank of New York, as Trustee relating to the 10.25% Senior Secured Notes due 2012.

“Late Charge Rate” with respect to any payments relating to an item of Equipment, shall have the meaning assigned to such term in the Equipment Schedule.

“Lease” shall mean the Master Equipment Lease dated as of November 13, 2006 by and among Owner Participant, Lessor and Lessee as supplemented and amended from time to time by Equipment Schedules entered into pursuant to the applicable provisions of the Lease and such other amendments as Lessee, Owner Participant and Lessor may from time to time agree.

“Lessee” shall mean Wise Alloys LLC, a Delaware limited liability company, as Lessee.

“Lessor” shall mean the Owner Trustee in its capacity as lessor under the Lease.

“Lessor’s Cost” shall mean, with respect to all the Equipment, the Lessor’s Cost for such items of Equipment as set forth on the Equipment Schedules and with respect to any item of Equipment the cost set forth on the Equipment Schedule for such item of Equipment.

“Lessor’s Lien” means any lien, claim or encumbrance on the Equipment arising from or attributable to (i) claims against Owner Participant or Owner Trustee (in its individual or trust capacity) not related to the Operative Documents or the transactions contemplated thereby, (ii) any act or omission of the Owner Participant or Owner Trustee (in its individual or trust capacity) not related to the transactions contemplated by the Operative Documents, (iii) any breach or violation of any of the obligations or any false representation by Owner Participant or Owner Trustee (in its individual or trust capacity) under the Operative Documents or (iv) Taxes

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imposed upon Owner Participant or Owner Trustee (in its individual or trust capacity) for which Lessee is not obligated to indemnify Owner Participant or Owner Trustee (in its individual or trust capacity) or any Indemnitee pursuant to the Lease.

“Lien” shall mean any mortgage, pledge, lien, charge, encumbrance, lease, rights, security interest or claim.

“Manufacturer” of any item of Equipment shall mean the manufacturer of such item of Equipment as specified on Annex A to the Equipment Schedule for such item of Equipment.

“Operative Documents” shall mean the Lease, the Bills of Sale, the Equipment Schedules, the Guaranty and the Trust Agreement.

“Owner Participant” shall mean, collectively, The Employees’ Retirement System of Alabama and The Teachers’ Retirement System of Alabama.

“Owner Trustee” shall mean Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity but solely as trustee under the Trust Agreement, including any co-trustee appointed pursuant to the terms of the Trust Agreement.

“Permitted Investments” shall mean collectively (i) marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by any agency thereof, in each case maturing within 90 days from the date of creation thereof and, at the time of acquisition, having a rating of at least “A” from either Standard & Poor’s Corporation or Moody’s Investor Services, Inc., (ii) certificates of deposit, time deposits or bankers’ acceptances maturing within 90 days from the date of acquisition thereof issued by commercial banks organized under the laws of the United States of America or any State thereof or the District of Columbia or U.S. Dollar deposits with any foreign branches of such commercial banks or with any U.S. branches of commercial banks organized outside of the United States, in each case having combined capital and surplus of not less than $500,000,000 and a rating of at least “A” from a nationally recognized rating agency, (iii) money market funds registered with the Securities Exchange Commission under the Investment Company Act of 1940, as amended, and operated in accordance with Rule 2a-7 and which at the time of such investment are rated Aaa by Moody’s Investors Service and/or AAA by Standard & Poor’s, and (iv) repurchase agreements secured by securities specified in clause (i) above.

“Permitted Lien” shall mean any lien, claim, charge, encumbrance or security interest described in Section 10(a) through (d) of the Lease.

“Person” shall mean any individual, corporation, partnership, joint venture, association, joint stock company, trust, nonincorporated organization or government or agency or political subdivision thereof.

“Potential Default” shall mean any event which with the giving of notice or the lapse of time or both would constitute a Default.

- 4 -

“Remaining Life” with respect to any item of Equipment, shall mean the reasonably estimated remaining useful life of such Equipment at the end of the Basic Term or at any other point of determination with respect to such Equipment.

“Rent” shall mean all Basic Rent and Supplemental Rent.

“Rent Payment Date” shall mean with respect to any item of Equipment, each date specified on the applicable Equipment Schedule during the Term of the Lease for which periodic rent is scheduled to be paid under the Equipment Schedule.

“Residual Value” with respect to any item of Equipment, shall mean the reasonably estimated residual fair market value of such Equipment at the end of the Basic Term or at any other point of determination.

“Responsible Officer” shall mean, with respect to any Person, the Chairman, the President, any Vice President, Treasurer or Secretary and any other executive corporate officer (or holder of an equivalent position for a nonincorporated Person) who in the normal performance of his operational responsibilities would have knowledge of such matter and the requirements with respect thereto and in the case of the Owner Trustee shall mean an officer in the Corporate Trust Administration department of the Trust Company who is assigned to or is otherwise responsible for the transactions contemplated by the Operative Documents.

“Stipulated Loss Value” shall mean as of any date of determination, the product of the Lessor’s Cost (designated on the applicable Equipment Schedule) of the Equipment for which such calculation is being made and the applicable percentage factor set forth on the Schedule of Stipulated Loss Values attached to such Equipment Schedule for such date.

“Supplemental Rent” shall mean all amounts, liabilities, and obligations (other than Basic Rent) which Lessee is obligated to pay under the Lease to Lessor, Owner Participant or others, including, without limitation, Stipulated Loss Value payments.

“Term” shall mean with respect to the Equipment subject to an Equipment Schedule, the full term of the Lease with respect thereto.

“Termination Date” shall have the meaning assigned to such term in Section 20 of the Lease.

“Total Loss” shall mean the actual or constructive total loss of any item of the Equipment, or the loss, theft or destruction of any item of the Equipment or damage to any item of the Equipment to such extent as shall make repair thereof uneconomical (in Lessee’s reasonable discretion) or shall render any item of the Equipment permanently unfit for normal use for any reason whatsoever, the taking of title to any item of Equipment or the condemnation, confiscation, requisition, seizure, forfeiture or other taking of use of any item of the Equipment for a period in excess of the lesser of (i) one (1) year or (ii) the remaining Term of the Lease.

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“Transaction Costs” shall have the meaning assigned to such term in Section 23 of the Lease.

“Transferee” shall have the meaning assigned to such term in Section 16(b) of the Lease.

“Trust” shall mean the trust created by the Trust Agreement.

“Trust Agreement” shall mean the Trust Agreement dated as of November 13, 2006 between the Trust Company and the Owner Participant.

“Trust Company” shall mean Wilmington Trust Company, a Delaware banking corporation, in its individual capacity.

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Exhibit C to

Master Equipment Lease

BILL OF SALE

KNOW ALL MEN BY THESE PRESENTS that WISE ALLOYS LLC (“Seller”), for and in consideration of the sum of $10.00 and other good and valuable consideration, in hand paid by WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee (“Purchaser”), the receipt of which is hereby acknowledged, grants, bargains, sells, conveys, transfers and delivers all right, title and interest unto Purchaser, its successors and assigns forever to the property described on Schedule A attached hereto and made a part hereof (the “Equipment”), free and clear of any and all liens, claims, charges and encumbrances other than Permitted Liens (as such term is defined in that certain Master Equipment Lease dated as of November 13, 2006 among Seller, Purchaser and The Employees’ Retirement System of Alabama and The Teachers’ Retirement System of Alabama).

Seller does hereby agree to and with Purchaser, its successors and assigns, to warrant and defend title to the aforesaid Equipment hereby sold unto Purchaser, its successors and assigns against all and every person and persons whomsoever.

Seller hereby represents and warrants to Purchaser that Seller is the owner of such Equipment and that Seller has full right, power and authority to sell the Equipment and to make this Bill of Sale.

Seller, for itself and its successors and assigns further covenants and agrees to do, execute and deliver, or to cause to be done, executed or delivered, all such further acts, transfers and assurances, for the better assuring, conveying and confirming unto Purchaser and its successors and assigns the rights and interests in the Equipment hereby bargained, sold, assigned, transferred, set over and conveyed, as Purchaser and its successors and assigns shall reasonably request.

This Bill of Sale and the representations, warranties and covenants herein contained shall inure to the benefit of Purchaser and its successors and assigns, shall be binding upon Seller and its successors, assigns and transferees, and shall survive the execution and delivery hereof.

IN WITNESS WHEREOF, Seller has hereunto set its hand by an officer as of this day of , 2006.


WISE ALLOYS LLC

By:
Title:

TO:	Hayden Brown, Alex Funderburg Scott Stevenson, Phyllis Woollen

RE:

QANTAS

Attached please find the following documents for the QANTAS transaction:

Assumption Agreement,

Assignment and Assumption Agreement, and

Purchase Price Acknowledgment

We have added the Assumption Agreement feature to this transaction to address an Irish withholding tax issue. The borrower in the deal is the trust (“Lessor”). Because the beneficial interest in the Lessor will be held by BALI, interest payments by the Lessor are deemed for Irish withholding tax purposes to be made by BALI. The Series B Notes in this transaction are held by Eumundi Finance Ltd., a Cayman Islands company. There is no exemption from withholding for payments made from Ireland to the Cayman Islands.

To address Irish withholding tax on payments from the Lessor to the Cayman Islands, prior to the transfer of the Aircraft Interest from BALCAP to BALI, a yet to be identified BofA entity (“BAO”) will assume the obligation to make the Series B debt payments from BALCAP. BAO would be paid cash on the closing date for assuming such obligations. BAO will then make the regularly scheduled payments in respect of the Series B Notes. BAO will be located in a jurisdiction from which such payments can be made without withholding on payments to the Cayman Islands.

We are not asking the lenders to release their lien on the debt collateral or release the Lessor from its obligation under the Series B Notes, but we will ask them to agree that if payments are received from BAO, the duplicate payment generated from the transaction’s normal cash flow would be released to the Lessor under the debt waterfall.

This arrangement has been approved by Pat O’Brien, subject to verification from a U.S. accounting perspective that the B Debt will not be shown on the BALI balance sheet. The next step is to make sure we have not somehow created a tax problem on the U.S. side. Please review the attached and let us know if it works. I would be glad to address any questions.

cc:	Sara Fitch, Keith Guinn, Demetria Vong Spillian, Pat O’Brien, Jed Kelly

Exhibit D to

Master Equipment Lease

[LETTERHEAD OF WINSTON & STRAWN LLP]

November 13, 2006

To Each of the Addressees

Listed in Schedule A Attached Hereto

Ladies and Gentlemen:

We have acted as special counsel for (i) Wise Alloys LLC, a Delaware limited liability company (“Lessee”), in connection with the transactions contemplated by that certain Master Equipment Lease dated as of November 13, 2006 (the “Lease”) among the Lessee; The Employees’ Retirement System of Alabama and The Teachers’ Retirement System of Alabama, collectively, as Owner Participant; and Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity except as expressly stated therein, but solely as Owner Trustee, as Lessor; and (ii) Wise Metals Group LLC, a Delaware limited liability company (“Guarantor”), in connection with that certain Guaranty (the “Guaranty”) dated as of November 13, 2006 by Guarantor in favor of the Lessor and the Owner Participant. For purposes of this opinion letter, each capitalized term used herein and not otherwise defined herein shall have the meaning set forth or referenced in Exhibit B to the Lease.

In connection with the opinions contained herein, we have examined executed counterparts of the Lease, the Bill of Sale dated as of the date hereof, Equipment Schedule No. 1, the Guaranty (collectively, the “Documents”) and the Trust Agreement. We have further examined and, as to factual matters relied upon the accuracy of, original, certified conformed, photographic or telecopied copies of such records, agreements, certificates and other documents as we have deemed necessary or appropriate to enable us to render the opinions expressed herein. In all such examinations, we have assumed the legal capacity of natural persons executing documents, the genuineness of signatures on original documents and the conformity to such original documents of all copies submitted to us as certified, conformed, photographic or telecopied copies, and as to certificates and telegraphic and telephonic confirmations given by public officials, we have assumed the same to have been properly given and to be accurate.

Whenever our opinion with respect to the existence or absence of facts is indicated to be based on our knowledge or awareness, we are referring to the actual present knowledge of the particular partners presently partners of or employed by Winston & Strawn LLP who have given substantive attention to matters involving the Lessee and Guarantor relating to the Documents. As to various questions of fact material to our opinions, we have relied solely upon the accuracy of the statements, representations and warranties made in the Documents and we have made no independent investigation or inquiry with respect to such factual matters.

To Each of the Addressees

Listed in Schedule A Attached Hereto

November 13, 2006

Page 2

We are licensed to practice law in the State of New York and we express no opinions herein as to the laws of any state or jurisdiction other than the laws of the State of New York, the Limited Liability Company Act of the State of Delaware and the laws of the United States of America (other than treaties) provided, however, with your consent we have assumed, without independent investigation that the laws of the State of Alabama are identical to the laws of the State of New York for purposes hereof.

With your consent, and for purposes of this opinion letter, we have assumed the accuracy of the following matters, but we have not made any independent investigation or inquiry with respect thereto and we render no opinion on such matters:

(a)

Each Document has been duly and validly authorized, executed and delivered by each of the respective parties thereto and constitutes the valid and binding obligation of each party thereto (other than the Lessee and the Guarantor) enforceable against each such party in accordance with its terms;

(b)

Each of the parties to the Documents (other than the Lessee and the Guarantor) has MI power, authority and legal right to enter into and perform its respective obligations under each of the Documents to which it is a party;

(c)

The execution, delivery and performance of the Documents by each of the parties thereto (other than the Lessee and the Guarantor) will not violate the respective parties’ constituting documents; and

(d)

The parties to the Documents (other than the Lessee and the Guarantor) with respect to the laws of the State of New York and laws of the United States will have obtained, and there will be in full force and effect, any and all required consents, permits and approvals required by or from any and all federal, state, local or foreign governmental agencies and authorities in connection with the transactions contemplated thereby, to the extent necessary for the validity, binding effect: and enforceability of the Documents.

Based upon the foregoing and on the basis of our consideration of such facts and laws as we have deemed necessary for purposes of this letter, but subject to the specific assumptions, qualifications and reliances herein set forth, it is our opinion that:

1. The Lessee is a limited liability company validly existing in good standing under the laws of the State of Delaware and is in good standing and qualified as a foreign limited liability company in Alabama.

To Each of the Addressees

Listed in Schedule A Attached Hereto

November 13, 2006

Page 3

2. The Documents to which the Lessee is a party have been duly authorized, executed and delivered by the Lessee.

3. The execution, delivery and performance by the Lessee of the Documents to which Lessee is a party do not require the approval of any member, trustee or holder of any obligations of Lessee, or any filing or registration by Lessee with, or approval of, any governmental authority, except in each case as have been duly obtained, and do not contravene any law, governmental rule, regulation or order now binding on Lessee, or the organizational documents of Lessee, or contravene the provisions of, or constitute a default under, or result in the creation of any lien or encumbrance upon the property of Lessee under any indenture, mortgage, contract or other agreement to which Lessee is a party or by which it or its property is bound which, either individually or in the aggregate, would materially and adversely affect the financial condition of Lessee or the ability of the Lessee to perform its obligations under the Documents to which it is a party.

4. The Guarantor is a limited liability company validly existing in good standing under the laws of the State of Delaware.

5. The Guaranty has been duly authorized, executed and delivered by the Guarantor.

6. The execution, delivery and performance by the Guarantor of the Guaranty do not require the approval of any member, trustee or holder of any obligations of Guarantor, or any filing or registration by Guarantor with, or approval of, any governmental authority, except in each case as have been duly obtained, and do not contravene any law, governmental rule, regulation or order now binding on Guarantor, or the organizational documents of Guarantor, or contravene the provisions of, or constitute a default under, or result in the creation of any lien or encumbrance upon the property of Guarantor under the Guaranty or by which it or its property is bound which, either individually or in the aggregate, would materially and adversely affect the financial condition of Guarantor and its Consolidated Subsidiaries taken as a whole or the ability of the Guarantor to perform its obligations under the Guaranty.

7. Each of the Documents to which the Lessee is as party, constitutes a valid and binding agreement of the Lessee enforceable against the Lessee in accordance with its terms.

8. The Guaranty constitutes a valid and binding agreement of Guarantor enforceable against Guarantor in accordance with its terms.

9. Neither the execution and delivery by the Lessee of the Documents to which it is a party nor the consummation by the Lessee of any of the transactions contemplated thereby requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, any governmental authority or agency or violates any applicable law, rule or regulation of the State of New York or of the United States of America.

To Each of the Addressees

Listed in Schedule A Attached Hereto

November 13, 2006

Page 4

10. Neither the execution and delivery by Guarantor of the Guaranty nor the consummation by Guarantor of any of the transactions contemplated thereby requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, any governmental authority or agency or violates any applicable law, rule or regulation of the State of New York or of the United States of America.

11. No filing with, notice to or authorization or approval from any governmental or public body or authority of the State of New York or the United States of America is required in connection with the execution, delivery and performance by the Lessee of any of the Documents to which the Lessee is a party except for those that have already been obtained, given or made.

12. No filing with, notice to or authorization or approval from any governmental or public body or authority of the State of New York or the United States of America is required in connection with the execution, delivery and performance by Guarantor of the Guaranty except for those that have already been obtained, given or made.

13. The Bill of Sale is sufficient as to form under the laws of the State of New York to transfer all right, title and interest in the Equipment described therein and purported to be transferred thereby.

We express no opinion herein as to (i) the severability of any provision of any Document, (ii) any provision of the Documents related to choice of governing law, (iii) any provision in the Documents related to forum selection or submission to jurisdiction to the extent the forum is a federal court, (iv) matters relating to the title to or sufficiency of description of any property or collateral described in any Documents or the creation, perfection or relative priority of any lien or security interest created or intended to be created with respect to such property or collateral thereunder, (v) any matter involving compliance with financial covenants, (vi) the validity, binding effect, or enforceability of any purported waiver, release, or disclaimer under the Documents relating to statutory or equitable rights and defenses of the parties which are not subject to waiver, release, or disclaimer or (vii) whether the Lease is, for tax or any other purpose, a true lease or a lease intended for security. In addition, we express no opinion as to the enforceability of provisions of the Documents that purport (i) to allow any party to unreasonably interfere in the conduct of the business of another party; (ii) to require any party to pay any amounts due to another party without a reasonable accounting of the sums purported to be due, or (iii) provisions that purport to prohibit the assignment of rights that may be assigned pursuant to applicable law regardless of an agreement not to assign such rights. In addition, we express no opinion as to matters governed by (i) any tax laws, (ii) any securities or “blue sky” laws, (iii) any laws pertaining to the parties to the Documents solely because of the business activities of such parties, and which are not applicable to business corporations generally, (iv) any federal, state or local banking or bank regulatory laws, (v) any law, rule or regulation relating to pollution or protection of the environment, (vi) any law, rule or regulation relating to employee rights and benefits or occupational safety and health, (vii) antitrust laws, or (viii) Section 548 of the Bankruptcy Code arid Article 10 of the New York Debtor and Creditor Law relating to

To Each of the Addressees

Listed in Schedule A Attached Hereto

November 13, 2006

Page 5

fraudulent transfers and obligations. Furthermore, with respect to the submissions to the jurisdiction of the U.S. federal courts (located in the State of Alabama) in the Documents, we note the limitations of 28 U.S.C. § 1331 and § 1332 on the subject matter jurisdiction of the federal courts. In connection with the foregoing provisions insofar as they relate to forum selection (including, without limitation, the waiver of any objection to venue or any objection that a court is an inconvenient forum), we note that Alabama courts may have discretion to transfer the place of trial similar to that contained the New York Civil Practice Act, and under 28 U.S.C. § 1404(a) a United States District Court has discretion to transfer an action from one Federal court to another.

With respect to the matters set forth in paragraphs 9 and 10 above, we express no opinion as to any law or regulation (i) which might be violated by any misrepresentation or omission or a fraudulent act or (ii) to which the parties may be subject as a result of their specific business operations or regulatory status and which are not applicable to business corporations generally (although we are not aware of any such other law or regulation that would be violated as a result of the execution, delivery and performance of the Documents and the consummation of the transactions contemplated thereby).

With respect to the matters set forth in paragraphs 7 and 8, the enforceability of the Documents to which the Lessee or the Guarantor are parties and the obligations of the Lessee and the Guarantor thereunder and the availability of certain rights and remedial provisions provided for in such Documents are subject to the effect of bankruptcy, fraudulent conveyance or transfer, insolvency, reorganization, arrangement, liquidation, conservatorship, and moratorium laws and are subject to limitations imposed by other laws and judicial decisions relating to or affecting the rights of creditors or secured creditors generally, and are subject to general principles of equity (regardless of whether enforcement is considered in proceedings at law or in equity) upon the availability of injunctive relief or other equitable remedies, including, without limitation, where (i) the breach of such covenants or provisions imposes restrictions or burdens upon a debtor and it cannot be demonstrated that the enforcement of such remedies, restrictions or burdens is reasonably necessary for the protection of a creditor; (ii) a creditor’s enforcement of such remedies, covenants or provisions under the circumstances, or the manner of such enforcement, would violate such creditor’s implied covenant of good faith and fair dealing, or would be commercially unreasonable; or (iii) a court having jurisdiction finds that such remedies, covenants or provisions were, at the time made, or are in application, unconscionable as a matter of law or contrary to public policy.

The opinions set forth in paragraphs 7 and 8 are (i) subject to the qualification that certain remedial provisions contained in such Documents may be unenforceable in whole or in part, but the inclusion of such provisions does not affect the validity of the Documents, which Documents (subject 1:0 the other qualifications and comments set forth in this opinion letter) contain adequate provisions for the practical realization of the benefits thereof, (ii) subject to the qualification that certain indemnification provisions contained in the Documents may be limited or rendered unenforceable by considerations of public policy or requires an indemnification of a

To Each of the Addressees

Listed in Schedule A Attached Hereto

November 13, 2006

Page 6

party for its own actions or inactions, to the extent such action or inaction involves gross negligence, recklessness, willful misconduct or unlawful conduct, (iii) certain requirements of the Documents specifying that provisions thereof may only be waived in writing may not be valid, binding or enforceable to the extent that an oral agreement or an implied agreement by trade practice or course of conduct has been created, modifying any provision of any such document, (iv) as to Lessor’s ability to use “self-help” remedies to repossess the Equipment or any interest therein if a breach of the peace were to occur and (v) with respect to the enforceability of any provision of the Lease purporting to appoint Lessor as attorney in fact or agent of Lessee.

Pursuant to Section 2(b)(v) of the Lease, this opinion letter is delivered to the addressees listed or. Schedule A attached hereto upon the instruction of our clients, the Lessee and the Guarantor.

This opinion letter is furnished by us to you for your sole benefit for use in connection with the transactions contemplated by the Lease and the Guaranty, and no other Person shall be entitled to rely on this opinion letter without our express written consent. This opinion letter is as of the date hereof and is limited to the matters stated herein, and no opinion is implied or may be inferred beyond the matters expressly stated herein and we undertake no, and expressly disclaim any, obligation to advise you of any changes in any matters set forth herein, regardless of whether changes in such facts or laws come to our attention after the delivery hereof.

No attorney-client relationship exists or has existed by reason of our preparation, execution and delivery of this opinion letter to the addressees hereof or other person or entity except for Lessee and Guarantor. In permitting reliance hereon by any person or entity other than Lessee and Guarantor, we are not acting as counsel for such other person or entity and have not assumed and are not assuming any responsibility to advise such other person or entity with respect to the adequacy of this opinion letter for its purposes.

Very truly yours,

SCHEDULE A

Wilmington Trust Company

The Employees’ Retirement System of Alabama

The Teachers’ Retirement System of Alabama

Exhibit E to

Master Equipment Lease

MORRIS, JAMES, HITCHENS & WILLIAMS LLP

222 Delaware Avenue, 10th Floor

Wilmington, Delaware 19801-1621

(302) 888-6800

Facsimile (302) 888-6989

www.morrisjames.com

Mailing Address

P.O. Box 2306

Wilmington, DE 19899-2306

November 13, 2006

To Each of the Persons

Listed on Schedule A

Attached Hereto

Re:

WISE ALLOYS LLC

Ladies and Gentlemen:

We have acted as special counsel to Wilmington Trust Company, a Delaware banking corporation (the “Trust Company”), in connection with the (i) Trust Agreement, dated as of November 13, 2006 (the “Trust Agreement”), between The Employees’ Retirement System of Alabama, and The Teachers’ Retirement System of Alabama, collectively as Owner Participant and the Trust Company, as Owner Trustee (the “Owner Trustee”). This opinion is furnished pursuant to your request. Capitalized terms used herein and not otherwise defined are used as defined in or by reference in the Trust Agreement, except that reference herein to any instrument shall mean such instrument as in effect on the date hereof.

We have examined executed counterparts or forms or copies otherwise identified to our satisfaction of the following documents:

(a) the Trust Agreement;

(b) the Master Equipment Lease, dated November 13, 2006 among Wise Alloys LLC, as Lessee, the Owner Participant, and the Owner Trustee; and

(c) the Equipment Schedule No. 1, dated November 13, 2006 between Lessee and the Owner Trustee (each of the documents listed in paragraphs (a) through (c) above being collectively referred to as the “Operative Documents”).

We have also examined originals or copies of such other documents, such corporate records, certificates and other statements of governmental officials and corporate officers and other representatives of the corporations or entities referred to herein and such other instruments as we have deemed necessary or appropriate for the purposes of this opinion.


To Each of the Addressees		MORRIS, JAMES, HITCHENS & WILLIAMS LLP
Listed in Schedule A
Attached Hereto
November 13, 2006
Page 2

Moreover, as to certain facts material to the opinions expressed herein, we have relied upon representations and warranties contained in the Operative Documents.

Based upon the foregoing and upon an examination of such questions of law as we have considered necessary or appropriate, and subject to the assumptions, exceptions and qualifications set forth herein, we advise you that, in our opinion:

1. The Trust Company has been duly incorporated and is validly existing as a Delaware banking corporation in good standing under the laws of the State of Delaware. The Trust Company has full corporate power, authority and legal right in its individual capacity, or as Owner Trustee, as the case may be, to execute, deliver and perform its obligations under each of the Operative Documents to which it is a party.

2. Each Operative Document to which the Trust Company or the Owner Trustee is a party, has been duly authorized, executed and delivered by the Trust Company or the Owner Trustee, as the case may be, and constitutes the legal, valid and binding obligation of the Trust Company or the Owner Trustee, as the case may be, enforceable against the Trust Company or the Owner Trustee, as the case may be, in accordance with its terms.

3. The Trust Agreement constitutes a legal, valid, and binding obligation of each of the parties thereto, enforceable against each of the such parties in accordance with its terms.

4. Neither the execution and delivery by the Trust Company or the Owner Trustee, as the case may be, of the Operative Documents to which the Trust Company or the Owner Trustee is a party, nor the fulfillment of, performance of, or compliance by the Trust Company or the Owner Trustee, as the case may be, with the respective provisions of such Operative Documents nor the consummation of any of the transactions contemplated thereby, conflicts with, or results in a breach of the terms, conditions or provisions of, or constitutes a default under, or results in a violation of, the charter or by-laws of the Trust Company, any law, governmental rule or regulation of the State of Delaware or the United States of America governing the banking or trust powers of the Trust Company or, to the best of our knowledge, any mortgage, indenture, contract, agreement or other undertaking to which it is bound or to which any of its property or assets may be subject.

5. No consent, approval or other action by or any notice to or filing or registration with any court or administrative or governmental authority or agency of the State of Delaware or the United States of America governing the banking or trust powers of the Trust Company is required in connection with the execution and delivery by the Trust Company or the Owner Trustee, as the case may be, of the Operative Documents to which the Trust Company or the Owner Trustee is a party, or the fulfillment of or compliance by the Trust Company or the Owner Trustee, as the case may be, with the respective terms and provisions thereof or the consummation of any of the transactions contemplated thereby.


To Each of the Addressees		MORRIS, JAMES, HITCHENS & WILLIAMS LLP
Listed in Schedule A
Attached Hereto
November 13, 2006
Page 3

The foregoing opinions are subject to the following assumptions, exceptions and qualifications:

A. The foregoing opinions are limited to the federal laws of the United States of America governing the banking and trust powers of the Trust Company and the laws of the State of Delaware. In addition, we have not considered and express no opinion on the effect of, concerning matters involving or otherwise with respect to any other laws of any jurisdiction, or rules, regulations, orders and judicial and administrative decisions relating to such laws, including, without limitation (i) the federal laws of the United States of America, including without limitation, the Internal Revenue Code of 1986, as amended, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the Trust Indenture Act of 1939, as amended, and the Investment Company Act of 1940, as amended, (ii) laws, rules and regulations relating to money laundering and terrorist groups (including any requirements imposed under the USA PATRIOT Act of 2001, as amended), or (iii) state securities or blue sky laws, including, without limitation, the securities laws of the State of Delaware. Insofar as the foregoing opinions relate to the validity and enforceability of the Operative Documents which are expressed to be governed by laws other than the laws of the State of Delaware, we have assumed that such documents constitute legal, valid, binding and enforceable documents or instruments under such laws (as to which we express no opinion).

B. The foregoing opinions regarding enforceability of any document are subject to (i) applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance, receivership and similar laws affecting the rights and remedies of creditors generally, and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

C. We have assumed: (i) except as stated in numbered paragraph 1 above, the due incorporation or due formation, as the case may be, due organization, and valid existence in good standing of each of the parties (other than natural persons) to the documents reviewed by us under the laws of all relevant jurisdictions; (ii) the legal capacity of all relevant natural persons, (iii) the due authorization, execution, and delivery of each of the documents reviewed by us by each of the parties thereto (other than by the Trust Company and Owner Trustee); and (iv) that each of such parties (other than the Trust Company and Owner Trustee) had and has the power and authority to execute, deliver, and perform such documents.

D. We have assumed that (i) all signatures (other than those of the Trust Company and the Owner Trustee) on all documents reviewed by us are genuine, (ii) all documents furnished to us as originals are authentic, (iii) all documents furnished to us as copies or specimens conform to the originals thereof, (iv) all documents furnished to us in final draft or


To Each of the Addressees		MORRIS, JAMES, HITCHENS & WILLIAMS LLP
Listed in Schedule A
Attached Hereto
November 13, 2006
Page 4

final or execution form have not been and will not be terminated, rescinded, altered, or amended, are in full force and effect, and conform to the final, executed originals of such documents, (v) each document reviewed by us constitutes the entire agreement among the parties thereto with respect to the subject matter thereof, (vi) except as set forth in the foregoing opinions, each document reviewed by us constitutes a legal, valid and binding obligation of each of the parties thereto, enforceable against each of such parties in accordance with its terms, and (vii) all conditions precedent set forth in the documents reviewed by us have been satisfied.

E. We have assumed that the Operative Documents and the transactions contemplated thereby are not within the prohibitions of Section 406 of the Employee Retirement Income Security Act of 1974.

F. For purposes of this letter, an opinion that is limited “to the best of our knowledge” means that, in the course of our representation of the Trust Company as described above, attorneys in this firm who have worked substantively on this letter and the transactions contemplated by the Operative Documents have not, without undertaking any investigation or verification of the subject matter of such opinion, obtained actual knowledge that such opinion is incorrect.

This opinion letter may be relied upon by you in connection with the matters set forth herein, subject to the understanding that (i) the opinions rendered herein are given on the date hereof and such opinions are rendered only with respect to laws, rules and regulations in effect as of such date and (ii) we assume no obligation to advise you or any other Person of any changes to the foregoing subsequent to the delivery of this opinion letter. Without our prior written consent, this opinion letter may not be relied upon by or furnished to any other person or entity (other than your respective permitted successors and assigns) for any purpose; provided that this opinion may be furnished to your accountants, attorneys, and to any governmental or regulatory body to the extent required by applicable law or regulation.

Very truly yours,

MORRIS, JAMES, HITCHENS & WILLIAMS LLP

SCHEDULE A

Wilmington Trust Company

1100 North Market Street

Rodney Square North

Wilmington, Delaware 19890-0001

Wise Alloys LLC

Wise Metals Group LLC

857 Elkridge Landing Road

Suite 600

Linthicum, MD 21090

The Employees’ Retirement System of Alabama

c/o The Retirement Systems of Alabama

135 South Union Street, Suite 570

Montgomery, AL 36130

The Teachers’ Retirement System of Alabama

c/o The Retirement Systems of Alabama

135 South Union Street, Suite 570

Montgomery, AL 36130

Exhibit F to

Master Equipment Lease

(Mailing Address)

P. O. Box 302150

Montgomery, Alabama 36130-2150

(Office Location)

136 South Union Street

Montgomery, Alabama 36104-0001

Telephone: (334) 832-4140

Web Site: www.rsa.state.al.us

The Retirement Systems of Alabama

Teachers’

Paul R. Hubbert, Chair

Sarah Swindle, Vice Chair

David G. Bronner, CEO

Marcus H, Reynolds, Jr., Deputy

Employees’

State State Police Public Judicial

Bob Riley, Chair

John H. Wilkerson, Jr., Vice Chair

November 13, 2006

Wilmington Trust Company

1100 North Market Street

Rodney Square North

Wilmington, Delaware 19890-0001

Wise Alloys, LLC

c/o Wise Metal Group LLC

857 Elkridge Landing Road

Suite 600

Linthicum, MD 21090

Re:

Master Equipment Lease Among Wise Alloys, L.L.C., Wilmington Trust Company and The Retirement Systems of Alabama; Trust Agreement between Wilmington Trust Company and The Retirement Systems of Alabama

All necessary approvals and authorizations have been obtained for The Employees’ Retirement System of Alabama and The Teachers’ Retirement System of Alabama to enter into the referenced transaction. The Employees’ Retirement System of Alabama and the Teachers’ Retirement System of Alabama are instrumentalities of the State of Alabama, created by and governed by state law; all necessary approvals and authorizations have been obtained for the Employees’ Retirement System of Alabama and the Teachers’ Retirement System of Alabama to enter into the referenced Lease Agreement and Trust Agreement (collectively, the “Agreements”); the Agreements have been properly executed by the chief executive officer of such entities and he is authorized to execute such Agreements.

Sincerely,

/s/ William T. Stephens

William T. Stephens

General Counsel

The Retirement Systems of Alabama

EX-10.42 7 dex1042.htm ACCOUNTS PURCHASE AND SALE AGREEMENT, DATED AS OF MARCH 31, 2006 Accounts Purchase and Sale Agreement, dated as of March 31, 2006

Exhibit 10.42

[Execution]

ACCOUNTS PURCHASE AND SALE AGREEMENT

by and among

WISE ALLOYS LLC

as Seller and Servicer

and

WACHOVIA BANK, NATIONAL ASSOCIATION

as Purchaser

Dated: As of March 31, 2006

TABLE OF CONTENTS


		Page
SECTION 1	DEFINITIONS	1
SECTION 2	AGREEMENT TO PURCHASE AND SELL	8
	2.1 Agreement To Purchase and Sell	8
	2.2 No Assumption of Obligations	9
	2.3 Purchase Procedure	9
	2.4 Payment of Purchase Price	9
	2.5 Seller’s Account	9
	2.6 Debits to Seller’s Account; Repurchase of Accounts	10
	2.7 Availability of Credit Balance; Interest on Credit Balance	10
	2.8 Payment of Debit Balance	10
	2.9 Statements	11
	2.10 True Sales; Security Interests	11
SECTION 3	COMMISSIONS AND EXPENSES	11
	3.1 Commissions and Fees	11
	3.2 Purchaser’s Costs and Expenses	12
SECTION 4	CERTAIN ADDITIONAL AGREEMENTS WITH RESPECT TO THE ACCOUNTS	12
	4.1 Administration of Accounts	12
	4.2 Reporting	13
	4.3 Accounts Covenants	13
	4.4 Application of Collections	14
	4.5 Power of Attorney	15
	4.6 Access to Premises	15
	4.7 Authorization for Filing	15
SECTION 5	CONDITIONS TO PURCHASES	15
	5.1 Conditions Precedent to Initial Purchase	15
	5.2 Condition Precedent to all Purchases	17
SECTION 6	PROVISIONS REGARDING SERVICER	18
	6.1 Appointment of Servicer	18
	6.2 Replacement of Servicer	18
SECTION 7	REPRESENTATIONS AND WARRANTIES	18
	7.1 Representations and Warranties of Seller	18
SECTION 8	COVENANTS	22
	8.1 Affirmative Covenants	22
	8.2 Negative Covenants	23
SECTION 9	EVENTS OF TERMINATION, REMEDIES	23
	9.1 Events of Termination	23
	9.2 Remedies	24
SECTION 10	TERMINATION	24
SECTION 11	TERM OF AGREEMENT, MISCELLANEOUS	25
	11.1 Term	25
	11.2 Interpretative Provisions	25


11.3	Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver	26
11.4	Waiver of Notices	27
11.5	Amendments and Waivers	27
11.6	Waiver of Counterclaims	28
11.7	Indemnification	28
11.8	Notices	28
11.9	Partial Invalidity	29
11.10	Successors	29
11.11	Entire Agreement	29

ACCOUNTS PURCHASE AND SALE AGREEMENT

THIS ACCOUNTS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of March 31, 2006, is by and among Wise Alloys LLC, a Delaware limited liability company (“Seller”), and Wachovia Bank, National Association, a national banking association (“Purchaser”).

W I T N E S S E T H:

WHEREAS, Seller has requested that Purchaser enter into financing arrangements with Seller pursuant to which Seller will sell Accounts (as hereinafter defined) to Purchaser;

WHEREAS, Seller and Purchaser each intend this transaction to be a true sale of Accounts by Seller to Purchaser, providing Purchaser with the full benefits of ownership of the Accounts, and Seller and Purchaser do not intend the transactions hereunder to be characterized as a loan from Purchaser to Seller; and

WHEREAS, Purchaser is willing to agree to make such purchases on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

SECTION 1 DEFINITIONS

For purposes of this Agreement, the following terms shall have the respective meanings given to them below:

1.1 “Account” shall mean all present and future rights of Seller to payment of a monetary obligation, whether or not earned by performance, which is not evidenced by chattel paper or an instrument, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a secondary obligation incurred or to be incurred, or (d) arising out of the use of a credit or charge card or information contained on or for use with the card.

1.2 “Account Debtor” shall mean Ball Corporation and its successors and assigns.

1.3 “Bankruptcy Code” shall mean the United States Bankruptcy Code, being Title 11 of the United States Code, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all official rules, regulations and interpretations thereunder or related thereto.

1.4 “Base Commission” shall have the meaning given to such term in Section 3.1 hereof.

1.5 “Blocked Account” shall have the meaning given to such term in Section 4.1 hereof.

1.6 “Business Day” shall mean any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required to close under the laws of the State of New York or the State of North Carolina, and a day on which Purchaser is open for the transaction of business.

1.7 “Collections” shall mean, with respect to any Account purchased hereunder, all funds which are received by Purchaser, Seller, or Servicer from or on behalf of Account Debtor in payment of any amounts owed (including, without limitation, purchase prices, finance charges, interest and all other charges) in respect of such Accounts or applied to such amounts owed by Account Debtor (including, insurance payments that Purchaser, Seller or Servicer applies in the ordinary course of its business to amounts owed in respect of such Accounts and net proceeds of sale or other disposition of repossessed goods or other collateral or property of Account Debtor or any other Person directly or indirectly liable for payment of such Accounts and available to be applied thereon).

1.8 “Contract” shall mean a contract or invoice between Seller and any Person pursuant to or under which such Person shall be obligated to make payments to Seller with respect to Accounts from time to time.

1.9 “Credit Balance” shall mean a balance in Seller’s account maintained by Purchaser hereunder in excess of the minimum amount required by Section 2.5 hereof, net of such reserves as Purchaser deems necessary in its sole discretion exercised reasonably and in good faith to allow for possible reductions in the Unpaid Balance of Accounts purchased hereunder for any reason set forth in Section 2.6 hereof or to provide for the payment of Seller’s liabilities under this Agreement.

1.10 “Credit and Collection Policies” shall mean (a) so long as Alloys or an affiliate is Servicer, Seller’s credit and collection policies and practices relating to Accounts from time to time in effect, as disclosed to and approved by Purchaser, and (b) after a Servicer Transfer Event with respect to Alloys and its affiliates as Servicer, such credit and collection policies and practices of the Servicer as are approved by Purchaser.

1.11 “Debit Balance” shall mean; a negative balance in Seller’s account maintained by Purchaser hereunder.

1.12 “Eligible Accounts” of Seller shall mean Accounts owing by Account Debtor created by Seller which as of the applicable Purchase Date are acceptable to Purchaser based on the criteria set forth below. In general, Accounts shall be Eligible Accounts if:

(a) such Accounts arise from the actual and bona fide sale and delivery of goods by Seller or rendition of services by Seller in the ordinary course of its business which transactions are completed in accordance with the terms and provisions contained in any Contract related thereto with which Seller must comply in order for Account Debtor to be obligated to pay such Accounts;

(b) on the Purchase Date, such Accounts are not unpaid more than sixty (60) days after the original due date for such Accounts or more than ninety (90) days after the date of the original invoice for them;

(c) the representations and warranties contained in Sections 7.1(g), (h), and (i) hereof are true and correct with respect to such Accounts;

(d) such Accounts do not arise from sales on consignment, guaranteed sale, sale and return, sale on approval, or other terms under which payment by Account Debtor may be conditional or contingent;

(e) the chief executive office of Account Debtor is located in the United States of America;

(f) such Accounts do not consist of progress billings (such that the obligation of Account Debtor is conditioned upon Seller’s satisfactory completion of any further performance under the agreement giving rise thereto), bill and hold invoices or retainage invoices, except as to bill and hold invoices, if Purchaser shall have received an agreement in writing from Account Debtor, in form and substance satisfactory to Purchaser, confirming the unconditional obligation of Account Debtor to take the goods related thereto and pay such invoice;

(g) Account Debtor has not asserted a counterclaim, defense or dispute and does not have, and does not engage in transactions which may give rise to any right of setoff or recoupment against such Accounts (but the portion of the Accounts in excess of the amount at any time and from time to time owed by Seller to Account Debtor or claimed owed by Account Debtor shall not be deemed to be ineligible solely by virtue of this clause (g));

(h) there are no facts, events or occurrences which would impair the validity, enforceability or collectability of such Accounts or reduce the amount payable or delay payment thereunder beyond the terms set forth in clause (b) above (other than reductions in the amount payable thereon as a result of the right to return defective goods in the ordinary course of business);

(i) such Accounts, immediately prior to the time of their purchase by Purchaser, are owned by Seller free and clear of any Lien (other than (A) Liens of Working Capital Agent for itself and on behalf of Working Capital Lenders or Liens of Trustee which Liens, pursuant to the Working Capital Loan Agreement and the Indenture, respectively, shall be released on each Purchase Date with respect to the Accounts purchased on such date and (B) Liens arising solely as the result of any action taken by Purchaser);

(j) neither Account Debtor nor any officer or employee of Account Debtor is an officer, employee or agent of or affiliated with Servicer or Seller directly or indirectly by virtue of family membership, ownership, control, management or otherwise;

(k) there are no bankruptcy, dissolution, liquidation, reorganization or similar proceedings or actions which are threatened or pending against Account Debtor;

(l) such Accounts are not evidenced by or arising under any instrument or chattel paper;

(m) on the Purchase Date, Account Debtor does not have Accounts unpaid more than sixty (60) days after the original due date for such Accounts or more than ninety (90) days after the date of the original invoice for them which constitute more than fifty (50%) percent of the total Accounts owing by Account Debtor;

(n) Account Debtor is not located in a state requiring the filing of a Notice of Business Activities Report or similar report in order to permit Seller to seek judicial enforcement in such State of payment of such Account, unless Seller has qualified to do business in such state or has filed a Notice of Business Activities Report or equivalent report for the then current year or such failure to file and inability to seek judicial enforcement is capable of being remedied without any material delay or material cost;

(o) on the Purchase Date, the total indebtedness of Account Debtor to Seller does not exceed the credit limit with respect to Account Debtor as determined by Seller from time to time, to the extent such credit limit is established consistent with the current practices of Seller as of the date hereof and such credit limit is acceptable to Purchaser as determined by Purchaser in good faith (but the portion of the Accounts not in excess of such credit limit shall not be deemed to be ineligible solely by virtue of this clause (o));

(p) on the Purchase Date, Account Debtor is deemed creditworthy by Purchaser as determined by Purchaser in good faith;

(q) the purchase of such Accounts by Purchaser hereunder does not violate or conflict with any contract or applicable law; and

(r) such Accounts are Accounts as to which all amounts payable by Account Debtor with respect thereto are due and owing on or before November 15, 2005.

General criteria for Eligible Accounts may be established and revised from time to time by Purchaser in its sole discretion. Purchaser shall give Seller notice of any new or revised criteria as promptly as practicable after establishing or revising such criteria. No such new or revised criteria shall have the effect, alone or in conjunction with other provisions hereof, of giving Purchaser a claim against Seller (or assets of Seller) amounting to recourse against Seller for losses solely due to the financial inability of Account Debtor to pay upon the due date for an Account purchased hereunder.

1.13 “Event of Bankruptcy” shall mean any event described in Section 9.1(f) or (g) hereof.

1.14 “Event of Termination” shall have the meaning given to such term in Section 9.1 hereof.

1.15 “Finance” shall mean Wise Alloys Finance Corporation, a Delaware corporation, and its successors and assigns.

1.16 “Group” shall mean Wise Metals Group LLC, a Delaware limited liability company, and its successors and assigns.

1.17 “Guarantors” shall mean, collectively, the following (together with their respective successors and assigns): (a) Wise Recycling, LLC, a Maryland limited liability company, (b) Group; (c) Finance, (d) Listerhill Total Maintenance Center LLC, a Delaware limited liability company, (e) Wise Warehousing, LLC, a Delaware limited liability company, (f) Wise Recycling Texas, LLC, a Delaware limited liability company; (g) Wise Recycling West, LLC, a Delaware limited liability company, and (h) any other Person that from time to time guarantees any or all of the obligations of Seller to Purchaser hereunder; each sometimes being referred to herein individually as a “Guarantor”.

1.18 “Indenture” shall mean the Indenture, dated May 5, 2004, among Group, Finance, the guarantors party thereto and Trustee with respect to the Senior Secured Notes, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.19 “Incentive Fee” shall have the meaning given to such term in Section 6.2 hereof.

1.20 “Initial Closing Date” shall mean the first Purchase Date hereunder.

1.21 “Liens” shall mean, any lien (statutory or other), security interest, assignment, mortgage, charge, pledge, hypothecation, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any financing lease involving substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the UCC or any comparable law of any jurisdiction).

1.22 “Net Amount” of an Account shall mean (i) one hundred (100%) percent times (ii) the gross amount of such Account less (a) sales, excise or similar taxes included in the amount thereof and (b) returns, discounts, claims, credits, allowances and retainages of any nature at any time issued, owing, granted, outstanding, available or claimed with respect thereto.

1.23 “Payment Account” shall have the meaning given to such term in Section 4.1 hereof.

1.24 “Person” or “person” shall mean any individual, sole proprietorship, partnership, corporation (including, without limitation, any corporation which elects subchapter S status under the Internal Revenue Code of 1986, as amended), limited liability company, business trust, unincorporated association, joint stock corporation, trust, joint venture or other entity or any government or any agency or instrumentality or political subdivision thereof.

1.25 “Prime Rate” shall mean the rate from time to time publicly announced by Wachovia Bank, National Association, or its successors, as its prime rate, whether or not such announced rate is the best rate available at such bank.

1.26 “Purchase Date” shall mean any date on which Purchaser purchases Accounts hereunder.

1.27 “Purchase Price” shall mean the amount determined in accordance with Section 2.4 hereof as the purchase price for an Account purchased hereunder.

1.28 “Receivables” shall mean all of the following now owned or hereafter arising or acquired property of Seller: (a) all Accounts purchased hereunder; (b) all interest, fees, late charges, penalties, collection fees and other amounts due or to become due or otherwise payable in connection with any Account purchased hereunder; (c) all general intangibles of Seller related to any Account purchased hereunder; (d) letters of credit, indemnities, guarantees, security or other deposits and proceeds thereof issued payable to Seller or otherwise in favor of or delivered to Seller in connection with any Account purchased hereunder; or (e) all other accounts, contract rights, chattel paper, instruments, notes, general intangibles and other forms of obligations owing to Seller from Account Debtor, whether from the sale and lease of goods or other property, licensing of any property (including intellectual property or other general intangibles), rendition of services or from loans or advances by Seller or otherwise associated with any Accounts purchased hereunder.

1.29 “Records” shall mean all of Seller’s present and future books of account of every kind or nature, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files and other data relating to the Accounts or Account Debtor, together with the tapes, disks, diskettes and other data and software storage media and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of Seller with respect to the foregoing maintained with or by any other person).

1.30 “Related Assets” shall mean (a) all rights to, but not any obligations under, all related Contracts and Related Security with respect to any Accounts purchased hereunder, (b) all Records relating to any Accounts purchased hereunder, (c) all Collections in respect of, all monies due or to become due with respect to, and other proceeds of, any Accounts purchased hereunder or any other Related Assets, (d) all rights in respect of Blocked Accounts and other accounts to which Collections are sent or deposited, and all funds and investments therein; (e) to the extent not otherwise described above, all Receivables relating to any Accounts purchased hereunder; and (f) all proceeds of any of the foregoing.

1.31 “Related Security” shall mean, with respect to any Account purchased hereunder, all of Seller’s right, title and interest in and to: (a) all Contracts and supporting obligations that relate to such Account; (b) all goods (including returned goods), if any, the sale of which gave rise to such Account; (c) all other security interests or liens and property subject thereto from time to time purporting to secure payment of such Account, whether pursuant to the Contract related to such Account or otherwise; (d) all UCC financing statements covering any collateral securing payment of such Account; and (e) all guarantees, letters of credit, and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Account whether pursuant to the Contract related to such Account or otherwise.

1.32 “Senior Secured Notes” shall mean the 10¹/4% Senior Secured Notes due 2012 in the aggregate principal amount of $150,000,000 issued by Group and Finance pursuant to the Indenture (as the same now exist or may hereafter be amended, modified, exchanged, supplemented, extended, renewed, restated or replaced).

1.33 “Servicer” shall mean Alloys or any successor to Alloys as Servicer designated in accordance with this Agreement.

1.34 “Servicer Transfer Event” shall have the meaning given to such term in Section 6.2 hereof.

1.35 “Servicing Fee” shall have the meaning given to such term in Section 6.2 hereof.

1.36 “Successor Notice” shall have the meaning given to such term in Section 6.3 hereof.

1.37 “Solvent” shall have the meaning given to such term in Section 7.1(m) hereof.

1.38 “Termination Date” shall mean December 31, 2006 or the date that the Termination Date shall occur pursuant to Section 10 hereof.

1.39 “Total Investment” shall mean at any time an amount equal to (a) the aggregate of amounts paid by Purchaser as the Purchase Price of Accounts purchased hereunder on and after the Initial Closing Date, minus (b) the aggregate amount of Collections received and transferred to Purchaser’s account on and after the Initial Closing Date.

1.40 “Transaction Documents” shall mean, collectively, this Agreement, any Blocked Account agreements, any UCC financing statement, continuation, amendment or termination statement filed pursuant to any of the foregoing agreements, and any and all other instruments, certificates, agreements, reports or documents delivered to Servicer or Purchaser by Seller or Servicer under or in connection with any of the foregoing agreements, as any of the foregoing may be amended, supplemented, amended and restated, or otherwise modified from time to time.

1.41 “Trustee” shall mean The Bank of New York, a New York banking corporation, as trustee under the Indenture, and its successors and assigns.

1.42 “UCC” shall mean the Uniform Commercial Code as in effect in the State of New York, and any successor statute, as in effect from time to time (except that terms used herein which are defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as Purchaser may otherwise determine.

1.43 “Unpaid Balance” of an Account shall mean at any time the unpaid amount thereof, excluding late payment charges, delinquency charges, and extension or collection fees.

1.44 “Working Capital Agent” shall mean Wachovia Bank, National Association, successor by merger to Congress Financial Corporation, in its capacity as agent pursuant to the Working Capital Loan Agreement, acting for the benefit and on behalf of Working Capital Loan Lenders, and its successors and assigns (and including, without limitation, any successor, assignee or additional person at any time acting as agent for the benefit of or on behalf of it and/or Working Capital Loan Lenders).

1.45 “Working Capital Collateral Agent” shall mean Wachovia Bank, National Association, successor by merger to Congress Financial Corporation, in its capacity as collateral agent pursuant to the Working Capital Loan Agreement, acting for the benefit and on behalf of Working Loan Capital Lenders, and its successors and assigns (and including, without limitation, any successor, assignee or additional person at any time acting as collateral agent for the benefit of or on behalf of it and/or Working Capital Loan Lenders).

1.46 “Working Capital Financing Agreements” shall mean collectively, the Working Capital Loan Agreement and all agreements, documents and instruments at any time executed and/or delivered by Seller or any Guarantor (as such term is defined in the Working Capital Loan Agreement) or any other person with, to or in favor of Working Capital Agent or Working Capital Lenders in connection therewith or related thereto, as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated, refinanced, replaced or restructured.

1.47 “Working Capital Loan Agreement” shall mean the Amended and Restated Loan Agreement, dated May 5, 2004, as amended by Amendment No. 1 to Amended and Restated Loan Agreement, dated as of June 30, 2004, Amendment No. 2 to Amended and Restated Loan Agreement, dated as of November 10, 2004, Amendment No. 3 and Waiver to Amended and Restated Loan Agreement, dated as of March 21, 2005, Amendment No. 4 to Amended and Restated Loan Agreement, dated as of October 31, 2005, Amendment No. 5 to Amended and Restated Loan Agreement, dated as of March 3, 2006, and Amendment No. 6 to Amended and Restated Loan Agreement, dated of even date herewith, by and among Working Capital Agent, Working Capital Lenders, Seller and Guarantors.

1.48 “Working Capital Loan Lenders” shall mean, collectively, Wachovia Bank, National Association, Bank of America, NA, PNC Bank, National Association, RZB Finance LLC, UPS Capital Corporation, and their respective successors and assigns (including any other lender or group of lenders that at any time succeeds to or refinances, replaces or substitutes for all or any portion of the indebtedness arising pursuant to the Working Capital Loan Agreement at any time); each sometimes being referred to herein individually as a “Working Capital Loan Lender”.

SECTION 2 AGREEMENT TO PURCHASE AND SELL

2.1 Agreement To Purchase and Sell. Upon the terms and subject to the conditions set forth in this Agreement, Seller may request that Purchaser purchase Accounts owing by Account Debtor and Related Assets, and Purchaser may in its sole discretion, exercised reasonably and in good faith, purchase such Accounts and Related Assets from Seller, from time to time on or after the Initial Closing Date, but before the Termination Date; provided, however, that no such purchase shall be made, if, after giving effect thereto, Purchaser’s Total Investment would at any time exceed $17,000,000. Except as otherwise expressly provided herein, all purchases hereunder shall be made as true sales without recourse, but shall be made pursuant to, and in reliance upon, the representations, warranties and covenants of Seller set forth in this Agreement and the other Transaction Documents.

2.2 No Assumption of Obligations. Purchaser shall not have any obligation or liability with respect to any Account, any Contract related thereto or any other related purchase orders or other agreements, nor shall Purchaser be obligated to perform any of the obligations of Seller thereunder, and any such assumption is expressly disclaimed.

2.3 Purchase Procedures. Seller may request that Purchaser purchase Accounts and Related Assets on the Initial Closing Date and on each subsequent Purchase Date prior to the Termination Date by delivering to Purchaser a written purchase request, in a form satisfactory to Purchaser, not later than two (2) Business Days prior to such Purchase Date, specifying the Accounts that Purchaser is being requested to purchase. Each such request shall be deemed to be a representation and warranty by Seller that Seller’s representations and warranties in this Agreement are true and correct on such date as if made on and as of such date (except with respect to representations and warranties that are specified to be made as of a particular date, which shall be deemed to be true and correct on and as of such specified date) and that no Event of Termination, or event which would become an Event of Termination with notice or the passage of time, shall have occurred and be continuing. On each Purchase Date for which a purchase notice is timely given, Purchaser shall purchase from Seller, without recourse (except as expressly set forth herein), all right, title and interest of Seller in and to all Accounts identified in such request which Purchaser determines are Eligible Accounts and which Purchaser has elected to purchase in its sole discretion, exercised reasonably and in good faith, together with the applicable Related Assets.

2.4 Payment of Purchase Price.

(a) The purchase price for an Account shall be determined as of the Purchase Date therefor and shall be equal to the Net Amount of such Account (the “Purchase Price”). On each Purchase Date, Purchaser shall pay to Seller the Purchase Price of each Account identified pursuant to Section 2.3 hereof to be purchased on such date, less (i) the Base Commission (as hereinafter defined) and (ii) the Administrative Fee (as hereinafter defined) by crediting such amount to Seller’s account maintained by Purchaser.

(b) Upon payment of the Purchase Price for any Accounts and Related Assets, (i) the Liens of Working Capital Collateral Agent and Trustee on such Accounts and Related Assets shall be released (automatically and without any further action), and (ii) Seller shall have sold and conveyed, and Purchaser shall have purchased, all of Seller’s right, title and interest in and to such Accounts and Related Assets, and ownership of and title to such Accounts and Related Assets shall be transferred to Purchaser.

2.5 Seller’s Account. Purchaser shall maintain one or more accounts on its books on which are recorded the purchase of Accounts hereunder, Collections in respect thereof, and all other appropriate debits and credits as provided in this Agreement, including Base Commissions, interest, costs, and expenses. All entries in such accounts shall be made in accordance with Purchaser’s customary practices as in effect from time to time. Seller shall at all times maintain a balance in Seller’s account maintained with Purchaser equal to fifteen (15%) percent of the Total Investment, provided that Seller shall have three (3) Business Days after notice from Purchaser to cure any breach of this requirement, subject to the requirements of Section 2.8 hereof.

2.6 Debits to Seller’s Account; Repurchase of Accounts.

(a) If any representation or warranty set forth in Section 7.1 (g) or 7.1 (h) hereof was not true when made, or shall cease to be true (other than as a result of Account Debtor’s financial inability to pay upon the due date for an Account purchased hereunder), with respect to any Account purchased hereunder, Purchaser shall debit Seller’s account for the Unpaid Balance of such Account, and Seller shall, immediately upon Purchaser’s demand, pay to Purchaser the Unpaid Balance of such Account in the same manner as applies to the elimination of a Debit Balance under Section 2.8 hereof.

(b) If the Unpaid Balance of any Account purchased hereunder is reduced or is subject to reduction on account of (i) any discount, rebate, refund, or allowance not originally included in calculating the Purchase Price of such Account, (ii) any claim or dispute of any kind with Account Debtor (whether or not related to such Account), other than a claim or dispute arising solely from Account Debtor’s financial inability to pay upon the due date for an Account purchased hereunder, (iii) any return or rejection of goods or services, (iv) any adjustment thereof by the Servicer or Purchaser in accordance with this Agreement, or (v) any other reason except payment, Account Debtor’s financial inability to pay upon the due date for an Account purchased hereunder or an Event of Bankruptcy, then Purchaser shall debit Seller’s account with Purchaser for the amount by which the Unpaid Balance is reduced or subject to reduction (as determined by Purchaser).

(c) No debit to Seller’s account pursuant to this Section shall be deemed to have effected a reconveyance of any Account to Seller unless and until Seller has either (i) paid to Purchaser in cash the Unpaid Balance of such Account or (ii) assigned to Purchaser another Eligible Account (as determined by Purchaser in its sole discretion exercised reasonably and in good faith) the Unpaid Balance of which is at least equal to the Unpaid Balance of the Account to be reconveyed.

2.7 Availability of Credit Balance; Interest on Credit Balance. At the request of Seller from time to time, and from time to time at Purchaser’s option, Purchaser shall remit to Seller any Credit Balance. Such remittances shall be made (a) on the same Business Day if the request of Seller is received prior to 11:00 a.m. New York City time, or on the next Business Day if such request is received after such time and (b) to a deposit account designated in writing by Seller. As of the last day of each month, Purchaser shall pay interest to Seller on the average daily Credit Balance (if any) during such month, at a rate per annum equal to the Prime Rate minus three (3%) percent. Such interest shall be paid by crediting the amount thereof to Seller’s account with Purchaser.

2.8 Payment of Debit Balance. If on any day a Debit Balance exists in Seller’s account with Purchaser, then Seller shall immediately upon Purchaser’s demand, eliminate such Debit Balance by a payment to Purchaser in immediately available funds. Seller shall pay interest on any Debit Balance from the date it arises until fully eliminated at a rate per annum equal to the Prime Rate plus six (6%) percent. Accrued interest on a Debit Balance shall be payable on demand.

2.9 Statements. Purchaser shall render to Seller each month a statement setting forth in reasonable detail the balance in Seller’s account maintained by Purchaser pursuant to the provisions of this Agreement. Each such statement shall be subject to subsequent adjustment by Purchaser but shall, absent manifest errors or omissions, be considered correct and deemed accepted by Seller and conclusively binding upon Seller as an account stated except to the extent that Purchaser receives a written notice from Seller of any specific exceptions of Seller thereto within thirty (30) days after the date such statement has been mailed by Purchaser. Until such time as Purchaser shall have rendered to Seller a written statement as provided above, the balance in Seller’s account) shall be presumptive evidence of the amounts due and owing between Purchaser and Seller.

2.10 True Sales; Security Interests. Purchaser and Seller intend the transfers of Accounts hereunder to be true sales by Seller to Purchaser that are absolute and irrevocable and that provide Purchaser with the full benefits of ownership of the Accounts and the Related Assets, and neither Purchaser nor Seller intends the transactions contemplated hereunder to be, or for any purpose to be characterized as, loans from Purchaser to Seller. It is not the intention of the parties hereto that the conveyance of the Accounts and Related Assets be deemed a grant of a security interest in the Accounts and Related Assets by Seller to Purchaser to secure a debt or other obligation of Seller. However, in the event that, notwithstanding the intent of the parties, any Accounts and Related Assets are property of Seller’s estate, then (a) this Agreement also shall be deemed to be and hereby is a security agreement within the meaning of the UCC, and (b) the conveyance by Seller provided for in this Agreement shall be deemed to be a grant by Seller to Purchaser of, and Seller hereby grants to Purchaser, a security interest in and to all of Seller’s right, title and interest in, to and under the Accounts and Related Assets to secure (i) the enforcement of the rights of Purchaser and its assigns hereunder and (ii) the repayment of a loan by Purchaser to Seller in the amount of the related Purchase Price of the assets sold by Seller to Purchaser, together with all interest, Base Commissions, fees, charges and other sums due from Seller to Purchaser hereunder or under any other Transaction Document. Purchaser and Seller shall, to the extent consistent with this Agreement, take such actions as may be necessary to ensure that, if this Agreement were deemed to create a security interest in the Accounts and Related Assets, such security interest would be deemed to be a perfected security interest of first priority in favor of Purchaser under applicable law and will be maintained as such throughout the term of this Agreement. Purchaser and Seller shall record and carry as sales on their respective books the transfers of Accounts hereunder.

SECTION 3 COMMISSIONS AND EXPENSES

3.1 Commissions and Fees.

(a) For Purchaser’s services hereunder, Purchaser shall receive from Seller a commission with respect to each Account purchased hereunder (the “Base Commission”) at a rate equal to 1.3333% of the portion of the Purchase Price of such Account credited to Seller’s account on the Purchase Date. The Base Commission shall be due and payable on each applicable Purchase Date and shall be debited to Seller’s account with Purchaser. Upon notice to Seller, Purchaser shall have the right in its reasonable discretion at any time to adjust the rate of the Base Commission for future purchases of Accounts based upon collection experience of Accounts previously purchased by Purchaser hereunder.

(b) Seller shall pay to Purchaser a closing fee in the amount of $15,000 which amount is fully earned as of and shall be payable on the date hereof. Seller authorizes Purchaser to debit the closing fee from Seller’s account with Purchaser.

(c) Seller shall pay to Purchaser an administrative fee (the “Administrative Fee”) in the amount of $1,000, which amount shall be payable on each Purchase Date. Seller authorizes Purchaser to debit the Administrative Fee from Seller’s account with Purchaser.

3.2 Purchaser’s Costs and Expenses. Seller shall pay to Purchaser on demand all costs, expenses, filing fees and taxes paid or payable in connection with the preparation, negotiation, execution, delivery, recording, administration, collection, liquidation, enforcement and defense of this Agreement, the other Transaction Documents and all other documents related hereto or thereto, including any amendments, supplements or consents which may hereafter be contemplated (whether or not executed) or entered into in respect hereof and thereof, including: (a) costs and expenses of conducting lien searches and filing or recording (including UCC financing statement filing taxes and fees, documentary taxes, and intangibles taxes, if applicable); (b) costs and expenses of remitting proceeds, collecting checks and other items of payment, and establishing and maintaining the Blocked Accounts, together with Purchaser’s customary charges and fees with respect thereto; (c) costs and expenses of enforcing the provisions of this Agreement and the other Transaction Documents or defending any claims made or threatened against Purchaser arising out of the transactions contemplated hereby and thereby (including, without limitation, preparations for and consultations concerning any such matters); (d) out-of-pocket expenses and costs incurred by Purchaser during the course of field examinations of Accounts purchased hereunder and Seller’s operations, plus a per diem charge at the rate of $750 per person per day for Purchaser’s examiners in the field and office; and (e) reasonable fees and disbursements of counsel (including legal assistants) to Purchaser in connection with any of the foregoing. Notwithstanding the foregoing, this Section 3.2 is not intended to provide recourse to or a claim against Seller with respect to costs and expenses of Purchaser in seeking recoveries against Account Debtor or pursuing collection of the Accounts and Related Assets purchased hereunder (but the foregoing is not in limitation of any claims of breach or nonperformance of servicing obligations that may be made under other provisions hereof against Seller in its capacity as Servicer, or in limitation of otherwise proper claims for indemnification under Section 11.7 hereof), or with respect to losses solely due to Account Debtor’s financial inability to pay an Account purchased hereunder upon the due date therefor.

SECTION 4 CERTAIN ADDITIONAL AGREEMENTS WITH RESPECT TO THE ACCOUNTS

4.1 Administration of Accounts. Consistent with Purchaser’s ownership of the Accounts purchased hereunder, Purchaser or Servicer, on its behalf, shall have the sole right to service, administer and collect such Accounts. Until Purchaser terminates Servicer’s rights and duties by delivery of a Successor Notice in accordance with Section 6.2 hereof, Servicer shall, on behalf of Purchaser, take all such actions as may be necessary or appropriate to collect Accounts purchased hereunder from time to time, all in accordance with applicable laws, rules and regulations, with reasonable care and diligence, and in accordance with the Credit and Collection Policies. Servicer shall establish and maintain, at its expense, such blocked accounts (each, a “Blocked Account”) as Purchaser may specify, with such banks as Servicer selects and are

reasonably acceptable to Purchaser, into which Servicer shall promptly deposit or cause to be deposited all Collections in the identical form in which such payments are made, whether by cash, check or other manner. The banks at which the Blocked Accounts are established shall enter into an agreement, in form and substance reasonably satisfactory to Purchaser, providing that all items received or deposited in the Blocked Accounts are the property of Purchaser, that the depository bank has no lien upon, or right to setoff against, the Blocked Accounts, the items received for deposit therein, or the funds from time to time on deposit therein, and that the depository bank will wire, or otherwise transfer, in immediately available funds, on a daily basis, all funds received or deposited into the Blocked Accounts to such bank account of Purchaser as Purchaser may from time to time designate for such purpose (the “Payment Account”). Seller agrees that all payments made to the Blocked Accounts or other funds received and collected by Purchaser, whether on the Accounts purchased hereunder or as proceeds of other Related Assets or otherwise shall be the property of Purchaser. Servicer and all of its affiliates, subsidiaries, shareholders, directors, employees, and agents shall, acting as trustee for Purchaser, receive, as Purchaser’s property, all Collections which come into their possession or under their control and, on the same Business Day of receipt thereof and identification of such payment to the related Account purchased hereunder, shall deposit or cause the same to be deposited in the Blocked Accounts, or remit the same or cause the same to be remitted, in kind, to Purchaser. If Seller receives any Collections, Seller will remit such Collections to Purchaser in kind on the same Business Day of Seller’s receipt thereof and identification of such payment to the related Account purchased hereunder. In no event shall the same be commingled with Seller’s own funds. Seller and Servicer agree to reimburse Purchaser on demand for any amounts owed or paid to any bank at which a Blocked Account is established or any other bank or person involved in the transfer of funds to or from the Blocked Accounts arising out of Purchaser’s payments to or indemnification of such bank or person. The obligation of Seller to reimburse Purchaser for such amounts pursuant to this Section shall survive the termination of this Agreement.

4.2 Reporting. Servicer shall provide to Purchaser, in form reasonably satisfactory to Purchaser: (a) on a daily basis, a detailed listing of Collections; (b) on a weekly basis, a report by invoice of the Unpaid Balance of Accounts purchased hereunder; (c) on a monthly basis, an aging of Accounts purchased hereunder; (d) on each Purchase Date, copies of invoices, shipping and delivery documents and evidence of customer acceptance with respect to Accounts purchased on such date; (e) upon Purchaser’s reasonable request, copies of customer statements and credit memos, remittance advices and reports, and deposit slips and bank statements, with respect to the Accounts purchased hereunder, Collections, and Related Assets; and (f) such other reports as to the Accounts and Related Assets as Purchaser may request from time to time.

4.3 Accounts Covenants.

(a) Seller shall notify Servicer and Purchaser promptly of: (i) any material delay in Seller’s performance of any of its material obligations to Account Debtor or the assertion of any material claims, offsets, defenses or counterclaims by Account Debtor, or any material disputes with Account Debtor, or any settlement, adjustment or compromise thereof, (ii) all material adverse information known to Seller relating to the financial condition of Account Debtor and (iii) any event or circumstance which, to the best of Seller’s knowledge, would cause Purchaser to consider any then existing Accounts purchased hereunder as no longer constituting Eligible Accounts. No credit, discount, allowance or extension or agreement for any

of the foregoing, shall be granted to Account Debtor by Servicer without Purchaser’s consent, except in the ordinary course of business in accordance with the Credit and Collection Policies when no Event of Termination has occurred and is continuing. So long as no Event of Termination has occurred and is continuing, Servicer shall settle, adjust or compromise any claim, offset, counterclaim or dispute with Account Debtor in accordance with Servicer’s business judgment and in accordance with the Credit and Collection Policies. At any time that an Event of Termination has occurred and is continuing, Purchaser shall, at its option, have the exclusive right to settle, adjust or compromise any claim, offset, counterclaim or dispute with Account Debtor or grant any credits, discounts or allowances and thereby discharge or release Account Debtor or any other party or parties in any way liable for payment thereof without affecting any of Purchaser’s rights against Seller.

(b) Purchaser shall have the right at any time or times, and whether or not a Servicer Transfer Event has occurred, in Purchaser’s name or in the name of a nominee of Purchaser, to verify the validity, amount or any other matter relating to any Account purchased hereunder or Related Asset, by mail, telephone, facsimile transmission or otherwise.

(c) Seller shall deliver or cause to be delivered to Purchaser, with appropriate endorsement and assignment, with recourse to Seller (except with respect to Account Debtor’s financial inability to pay upon the due date for an Account purchased hereunder), all chattel paper and instruments, if any, which Seller now owns or may at any time acquire in connection with any Account purchased hereunder or Related Asset, promptly (but in any event not more than three (3) days) after such Purchaser’s receipt thereof, except as Purchaser may otherwise agree; provided, that, any such endorsement shall be made in such a manner as to not have the effect of recourse to Seller solely for Account Debtor’s financial inability to pay upon the due date for an Account purchased hereunder.

(d) Purchaser may, at any time, (i) to the extent that the notification letter referred to in Section 5.1(d) hereof is deemed in Purchaser’s judgment to be insufficient notice, notify Account Debtor that the Accounts have been purchased by Purchaser, (ii) direct Account Debtor to make payment of Accounts directly to Purchaser or to the Blocked Accounts (and Purchaser shall send copies of such notifications and directions contemporaneously to Seller), (iii) demand, collect or enforce payment of any Accounts, and Purchaser shall not be liable for its failure to collect or enforce the payment thereof nor for the negligence of its agents or attorneys with respect thereto, and (iv) take whatever other action Purchaser may reasonably deem necessary or desirable for the protection of its interests. At Purchaser’s request, all invoices and statements sent to Account Debtor shall state that the Accounts and Related Assets have been purchased by Purchaser and are payable directly and only to Purchaser, and Seller shall deliver to Purchaser such originals of documents evidencing the sale and delivery of goods or the performance of services giving rise to any Accounts as Purchaser may require.

4.4 Application of Collections. Any payment by Account Debtor in respect of any indebtedness owed by it to Seller shall, except as otherwise specified by Account Debtor or required by the underlying Contract or law, be applied, first, as a Collection of the Unpaid Balance of any Account owing by Account Debtor purchased hereunder in the order of the age of such Accounts, starting with the oldest of such Accounts and, second, to any other indebtedness of Account Debtor.

4.5 Power of Attorney. Seller hereby irrevocably designates and appoints each of Purchaser and Servicer (and all persons designated by Purchaser or Servicer) as Seller’s true and lawful attorney-in-fact, and authorizes each of Purchaser and Servicer, in Seller’s or Purchaser’s or Servicer’s name, to: (a) prepare, file and sign Seller’s name on any proof of claim in bankruptcy or other similar document against Account Debtor, (b) have access to any lockbox or postal box into which Seller’s mail regarding Accounts purchased hereunder is deposited, (c) endorse Seller’s name upon any items of payment or proceeds thereof relating to Accounts purchased hereunder and Related Assets and deposit the same in Purchaser’s account, (d) endorse Seller’s name upon any chattel paper, document, instrument, invoice, or similar document or agreement relating to any Account purchased hereunder or any goods pertaining thereto or any other Related Asset; provided, that, any such endorsement shall be made in such a manner as to not have the effect of recourse to Seller solely for Account Debtor’s financial inability to pay upon the due date for an Account purchased hereunder, (e) sign Seller’s name on any verification of Accounts and notices thereof to Account Debtor permitted hereunder and (f) execute in Seller’s name and file any UCC financing statements or amendments thereto relating to any Account purchased hereunder. Seller hereby releases Purchaser and Servicer and its officers, employees and designees from any liabilities arising from any act or acts under this power of attorney and in furtherance thereof, whether of omission or commission, except as a result of Purchaser’s or Servicer’s own gross negligence or willful misconduct as determined pursuant to a final non-appealable order of a court of competent jurisdiction.

4.6 Access to Premises. From time to time as requested by Purchaser, at the cost and expense of Seller, (a) Purchaser or its designee shall have complete access to all of Seller’s premises during normal business hours and after notice to Seller, or at any time and without notice to Seller if an Event of Termination has occurred and is continuing, for the purposes of inspecting, verifying and auditing the Accounts and Related Assets and all of Seller’s books and records, including the Records, (b) Seller shall promptly furnish to Purchaser such books and records or extracts therefrom as Purchaser may request, and (c) Purchaser or its designee may use during normal business hours such of Seller’s personnel, equipment, supplies and premises as may be reasonably necessary for the foregoing, and if an Event of Termination exists or has occurred and is continuing, for the collection of Accounts and realization of other Related Assets and Related Property.

4.7 Authorization for Filing. Seller hereby authorizes Purchaser to file such UCC financing statements and other instruments and documents, and all amendments and continuations thereof, as Purchaser deems necessary or appropriate to evidence and protect Purchaser’s rights with respect to the Accounts and Related Assets purchased hereunder.

SECTION 5 CONDITIONS TO PURCHASES

5.1 Conditions Precedent to Initial Purchase. Each of the following is a condition precedent to Purchaser making the initial purchase hereunder:

(a) Purchaser shall have received, in form and substance satisfactory to Purchaser, a copy of this Agreement duly executed by Seller;

(b) Purchaser shall have received, in form and substance satisfactory to Purchaser, an amendment to the Working Capital Loan Agreement, duly authorized, executed and delivered by Seller, Guarantors, Working Capital Agent and Working Capital Lenders;

(c) Purchaser shall have received, in form and substance satisfactory to Purchaser, a Guarantee from Guarantors guaranteeing the payment and performance of Seller’s obligations under this Agreement;

(d) Purchaser shall have received, in form and substance satisfactory to Purchaser, a notification letter from Purchaser and Seller addressed to Account Debtor, duly authorized, executed and delivered by Seller;

(e) Purchaser shall have received, in form and substance satisfactory to Purchaser, a Deposit Account Control Agreement by and among Purchaser, Seller and each bank where Seller maintains a Blocked Account, in each case, duly authorized, executed and delivered by such bank and Seller (or Purchaser shall be the bank’s customer with respect to such deposit account as Purchaser may specify);

(f) Purchaser shall have received, in form and substance satisfactory to Purchaser, written authorization to file a UCC financing statement naming Seller as debtor/seller and Purchaser as secured party/buyer in respect of the transactions contemplated hereunder;

(g) Purchaser shall have received, in form and substance satisfactory to Purchaser, (i) a proper UCC financing statement naming Seller, as debtor/seller, and Purchaser, as secured party/purchaser, and describing the Accounts and the Related Assets, and (ii) a proper UCC financing statement amendment, naming Trustee, as secured party, and Seller, as debtor, providing for the termination by Trustee of its interests in the Accounts and the Related Assets, and (iii) any other, similar instruments or documents, as may be reasonably necessary or, in the opinion of Purchaser, desirable under the UCC of all reasonably appropriate jurisdictions or any comparable law to perfect Purchaser’s interests in the Accounts and Related Assets;

(h) Purchaser shall have received, in form and substance satisfactory to Purchaser, evidence that the Accounts and Related Assets, upon the purchase by Purchaser hereunder, will be free and clear of all security interests and liens that currently encumber Seller’s assets and property;

(i) Purchaser shall have received, in form and substance satisfactory to Purchaser, an opinion of Winston & Strawn LLP, counsel for Seller and Guarantors, with respect to the matters contemplated by this Agreement and the other Transaction Documents;

(j) Purchaser shall have received, in form and substance satisfactory to Purchaser, a Secretary’s Certificate of Members’ and Managers’ Resolutions, Operating Agreement, Incumbency and Member’s Consent for Seller evidencing the adoption and subsistence of resolutions approving the execution, delivery and performance by Seller of this Agreement and the other Transaction Documents (as hereinafter defined) to which it is a party;

(k) Purchaser shall have received original good standing certificates (or its equivalent) from the Secretary of State (or comparable official) from the jurisdiction of formation of Seller and each jurisdiction where Seller is required to be qualified;

(1) Purchaser shall have received, in form and substance satisfactory to Purchaser, evidence (i) of the execution and delivery by each of the parties thereto of each of the Transaction Documents to be executed and delivered in connection herewith, and (ii) that each of the conditions precedent to the execution, delivery and effectiveness of the Transaction Documents has been satisfied;

(m) all requisite limited liability company action and proceedings in connection with this Agreement shall be satisfactory in form and substance to Purchaser, and Purchaser shall have received all information and copies of all documents, including records of requisite limited liability company action and proceedings which Purchaser may have requested in connection therewith, such documents where requested by Purchaser or its counsel to be certified by appropriate officers or Governmental Authority (and including a copy of the certificate of formation of Seller certified by the Secretary of Seller which shall set forth the same complete limited liability company name of Seller as is set forth herein and such document as shall set forth the organizational identification number of Seller, if one is issued in its jurisdiction of formation);

(n) Purchaser shall have received, in form and substance satisfactory to Purchaser, all consents, waivers, acknowledgments and other agreements from third persons which Purchaser may deem necessary or desirable in order to permit, protect and perfect Purchaser’s security interests in and liens upon the Accounts and Related Assets or to effectuate the provisions of this Agreement and the other Transaction Documents; and

(o) Purchaser shall have received, in form and substance satisfactory to Purchaser, such other documents and instruments as Purchaser shall reasonably request.

5.2 Condition Precedent to all Purchases. Each of the following is an additional condition precedent to each purchase by Purchaser from Seller, including the initial purchase of Accounts, and any future purchase:

(a) all representations and warranties contained herein shall be true and correct with the same effect as though such representations and warranties had been made on and as of the date of the making of each such purchase and after giving effect thereto, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date);

(b) no law, regulation, order, judgment or decree of any Governmental Authority shall exist, and no action, suit, investigation, litigation or proceeding shall be pending or threatened in any court or before any arbitrator or Governmental Authority, which purports to enjoin, prohibit, restrain or otherwise affect the purchase of any Accounts, or the consummation of the transactions contemplated pursuant to the terms hereof or has a reasonable likelihood of

having a material adverse effect on the financial condition, business, performance, prospects, or operations of Seller or the legality, validity or enforceability of this Agreement; and

(c) no Event of Termination, or event which would become an Event of Termination with notice or the passage of time, shall exist or have occurred and be continuing on and as of the date of the making of such purchase and after giving effect thereto.

SECTION 6 PROVISIONS REGARDING SERVICER

6.1 Appointment of Servicer. Purchaser hereby appoints Servicer to act as its agent on behalf of Purchaser in accordance with this Agreement. Alloys is hereby designated as, and hereby agrees to perform the duties and obligations of, the Servicer until it receives a Successor Notice.

6.2 Fees.

(a) Servicer shall be entitled to compensation for undertaking the duties of Servicer hereunder in the amount of one-half of one (¹/2%) percent of the gross amount of all Accounts purchased on each Purchase Date which are collected by Servicer (the “Servicing Fee”), which fee shall be payable within two (2) Business Days following the final collection of all of such Accounts.

(b) In the event that any Account purchased on any Purchase Date is collected on any day prior to thirty (30) days following the Purchase Date for such Account, then Servicer shall also be entitled to receive from Purchaser an incentive fee with respect to each such Account at a rate equal to 0.0277% percent of the gross amount of such Account for each day (not to exceed twenty (20) days) prior to the expiration of such thirty (30) day period (the “Incentive Fee”), which fee shall be payable within two (2) Business Days following the final collection of all Accounts purchased on such Purchase Date.

(c) The Servicing Fee and the Incentive Fee are intended as the sole compensation for Servicer’s undertakings hereunder, and Servicer accepts such compensation with the understanding that it is not entitled to reimbursement, from Collections or otherwise, for its out-of-pocket costs and expenses associated with acting as Servicer hereunder.

6.3 Replacement of Servicer. If an Event of Termination occurs (a “Servicer Transfer Event”), then Purchaser may give written notice to Alloys of either the designation of a new Servicer or the assumption directly by Purchaser of all of the Servicer’s rights and duties hereunder (a “Successor Notice”). Upon receipt of a Successor Notice, Alloys agrees to terminate its activities as Servicer and proceed promptly and in good faith to facilitate the transition of such activities to a new Servicer or Purchaser, as Purchaser may elect.

SECTION 7 REPRESENTATIONS AND WARRANTIES

7.1 Representations and Warranties of Seller. Seller hereby represents and warrants to Purchaser the following (which shall survive the execution and delivery of this Agreement), the truth and accuracy of which are a continuing condition of the making of purchases of Accounts:

(a) Power and Authority, Due Authorization. Seller (i) has all necessary power, authority and legal right (A) to execute and deliver this Agreement and the other Transaction Documents to which it is a party, (B) to carry out the terms of the Transaction Documents to which it is a party, and (C) to sell and assign the Accounts and Related Assets on the terms and conditions herein provided, and (ii) has duly authorized by all necessary limited liability company action the execution, delivery and performance of this Agreement and the other Transaction Documents and the sales and assignments described in clause 7.1(a)(i)(C) above.

(b) Valid Sale, Binding Obligations, (i) This Agreement constitutes a valid sale, transfer, and assignment to Purchaser of all Accounts and Related Assets sold hereunder, enforceable against creditors of, and purchasers from, Seller, and (ii) this Agreement constitutes, and each Transaction Document to be signed by Seller when duly executed and delivered will constitute, a legal, valid and binding obligation of Seller, enforceable in accordance with its terms, except, in the case of this subsection (b), as enforceability may be limited by bankruptcy, insolvency, reorganization, or other similar laws from time to time in effect affecting the enforcement of creditors’ rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(c) No Violation. The consummation of the transactions contemplated by this Agreement and the other Transaction Documents and the fulfillment of the terms hereof will not (i) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under, the certificate of formation or operating agreement of Seller, or any material indenture, loan agreement, receivables purchase agreement, mortgage, deed of trust, or other agreement or instrument to which Seller is a party or by which it or any of its properties is bound, (ii) result in the creation or imposition of any Lien upon any properties of Seller pursuant to the terms of any such indenture, loan agreement, receivables purchase agreement, mortgage, deed of trust, or other agreement or instrument, other than this Agreement and the other Transaction Documents, or (iii) violate any law or any order, rule, or regulation applicable to Seller of any court or of any federal or state regulatory body, administrative agency, or other governmental instrumentality having jurisdiction over Seller or any of its properties.

(d) No Proceedings. There are no proceedings or investigations pending, or to Seller’s knowledge threatened, before any court, regulatory body, administrative agency, or other tribunal or governmental instrumentality (i) asserting the invalidity of this Agreement or any other Transaction Document, (ii) seeking to prevent the sale and assignment of any Accounts or any Related Assets under this Agreement or the consummation of any of the other transactions contemplated by this Agreement or any other Transaction Document, or (iii) seeking any determination or ruling that would reasonably be expected to have a material adverse effect on Seller’s business, assets, prospects, or condition (financial or otherwise), or on Seller’s ability to perform its agreements and obligations under the Transaction Documents.

(e) Bulk Sales Act. No transaction contemplated hereby requires compliance with any bulk sales act or similar law.

(f) Government Approvals. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by Seller of this Agreement and each other Transaction Document to which it is a party, except for (i) the filing of the UCC financing statements referred to in Section 5, and (ii) the filing of any UCC continuation statements and amendments from time to time required in relation to any UCC financing statements filed in connection with this Agreement, all of which, at the time required, shall have been duly made and shall be in full force and effect.

(g) Quality of Title. (i) Each Account proposed to be purchased hereunder, together with the related Contract and all purchase orders and other agreements related to such Account, are owned by Seller free and clear of any Lien (other than (A) Liens of Working Capital Collateral Agent for itself and on behalf of Working Capital Lenders or Liens of Trustee which Liens, pursuant to the Working Capital Loan Agreement and the Indenture, respectively, shall be released on each Purchase Date with respect to the Accounts purchased on such date and (B) Liens arising solely as the result of any action taken by Purchaser); (ii) when Purchaser makes a purchase hereunder, it shall have acquired good and marketable ownership of the purchased Accounts, the Related Assets, and Collections with respect thereto, free and clear of any Lien (other than any Lien arising as the result of any action taken by Purchaser); and (iii) with respect to any Account purchased hereunder and the Related Assets relating thereto transferred by Seller to Purchaser hereunder, Purchaser shall have given reasonably equivalent value to Seller for such transfer, and no such transfer shall have been made on account of an antecedent debt owed by Seller to Purchaser or shall be voidable under any Section of the Bankruptcy Code.

(h) Eligible Accounts. With respect to each Account purchased hereunder: (i) such Account was on the Purchase Date and continues to be as to any Unpaid Balance thereof an Eligible Account; and (ii) none of the transactions giving rise thereto will violate in any material respect any applicable State or Federal laws or regulations, all documentation relating thereto will be legally sufficient under such laws and regulations and all such documentation will be legally enforceable in accordance with its terms.

(i) Unpaid Balance. With respect to each Account purchased hereunder: (i) the amounts shown on any invoice delivered by Seller to Purchaser or Servicer or schedule thereof or report delivered to Purchaser or Servicer by Seller shall be true and complete, (ii) no payments have been made thereon except payments received by Purchaser or Servicer pursuant to the terms of this Agreement, (iii) no credit, discount, allowance, extension or retainage or agreement for any of the foregoing has been granted to Account Debtor except as reported to Purchaser and made in accordance with this Agreement, and (iv) there shall have been no setoffs, deductions, retainages, contras, defenses, counterclaims or disputes existing or asserted with respect thereto (other than the defense of actual payment of the amounts due) except as reported to Purchaser.

(j) Accurate Reports. No information, exhibit, financial statement, document, book, record or report furnished or to be furnished by or on behalf of Seller or Servicer to Purchaser or Servicer in connection with this Agreement was or will be inaccurate in any material respect as of the date it was or will be dated or as of the date so furnished, or contained

or (in the case of information or other materials to be furnished in the future) will contain any material misstatement of fact or omitted or (in the case of information or other materials to be furnished in the future) will omit to state a material fact or any fact necessary to make the statements contained therein not materially misleading.

(k) Name; State of Organization; Chief Executive Office.

(i) The exact legal name of Seller is as set forth on the signature page of this Agreement. Seller has not, during the five (5) years prior to the date of this Agreement, been known by or used any other limited liability company or fictitious name or been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person, or acquired any of its property or assets out of the ordinary course of business.

(ii) The chief executive office and mailing address of Seller and Seller’s Records concerning Accounts are located only at the address of Alloys identified in Section 11.8 hereof.

(l) Servicing Programs. No license or approval is required for Purchaser’s use of any program used by Servicer in the servicing of the Accounts, other than those which have been obtained and are in full force and effect.

(m) Solvency. Immediately after giving effect to each sale now or hereafter made pursuant to this Agreement and the other Transaction Documents, Seller will be Solvent. For purposes of this Section 6.1(m), “Solvent” means, at any time:

(i) the fair value and present fair saleable value of such Person’s total assets is, on the date of determination, greater than such Person’s total liabilities (including contingent and unliquidated liabilities) at such time;

(ii) the fair value and present fair saleable value of such Person’s assets is greater than the amount that will be required to pay such Person’s probable liability on its existing debts as they become absolute and matured (“debts,” for this purpose, includes all legal liabilities, whether matured or unmatured, liquidated or unliquidated, absolute, fixed, or contingent);

(iii) such Person does not intend to incur, or believe that it would incur, debts that would be beyond such Person’s ability to pay as such debts mature;

(iv) such Person does not have unreasonably small capital with which to engage in its current and in its anticipated business; and

(v) such Person is “solvent” within the meaning given that term under applicable laws relating to fraudulent conveyance.

SECTION 8 COVENANTS

8.1 Affirmative Covenants. From the date hereof until the first day following the Termination Date on which Purchaser’s Total Investment shall have been reduced to zero, Seller will:

(a) Compliance with Laws, Etc. Comply in all material respects with all applicable laws, rules, regulations and orders with respect to the Accounts and related Contracts.

(b) Keeping of Records and Books of Account. Maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Accounts in the event of the destruction of the originals thereof), and keep and maintain all documents, banks, records and other information, reasonably necessary or advisable for the collection of all Accounts purchased hereunder (including, without limitation, records adequate to permit the daily identification of each Account purchased hereunder and all Collections of and adjustments to each such Account). Additionally, Seller will mark or designate within its internal books and records relating to Accounts, in a manner sufficient to identify that the same have been purchased hereunder, such Accounts as have been sold and purchased hereunder.

(c) Performance and Compliance with Contracts. At its expense timely and fully perform and comply with all material provisions, covenants and other promises required to be observed by it under the Contracts related to the Accounts purchased hereunder and all purchase orders and other agreements related to such Accounts to the same extent as if the Accounts had not been purchased hereunder, and the exercise by Purchaser (or any of its assignees) of its rights hereunder shall not relieve Seller from such obligations.

(d) Location of Records. Keep its chief place of business and chief executive office, and the offices where it keeps its Records concerning the Accounts purchased hereunder, all related Contracts and all purchase orders and other agreements related to such Accounts (and all original documents relating thereto), at the addresses referred to in Section 11.8 hereof or, upon thirty (30) days’ prior written notice to Purchaser, at such other locations in jurisdictions where all action required to perfect Purchaser’s interests hereunder shall have teen taken and completed. Additionally, Seller will not make any of the books, records or documents that relate to the Accounts purchased hereunder available in any manner to any third party (including, without limitation, any creditor or potential creditor of Seller) without a disclosure that such assets have been sold to Purchaser.

(e) Credit and Collection Policies. Comply in all material respects with the Credit and Collection Policies in regard to each Account purchased hereunder and the related Contract.

(f) Information. Promptly supply Servicer with the information necessary for Servicer to prepare each report required to be delivered hereunder.

(g) Use of Proceeds. For as long as Purchaser may reasonably require, use the proceeds from the sale of Accounts hereunder in the manner required by the Working Capital Financing Agreements and the Indenture.

(h) Further Assurances. At the request of Purchaser or Servicer at any time and from time to time, at its expense, duly execute and deliver, or cause to be duly executed and delivered, such further agreements, documents and instruments, and do or cause to be done such further acts as may be reasonably necessary or proper to evidence, perfect, maintain, enforce, and otherwise effectuate the provisions or purposes of this Agreement or any of the other Transaction Documents.

8.2 Negative Covenants. From the date hereof until the first day following the Termination Date on which Purchaser’s Total Investment shall have been reduced to zero, Seller will not:

(a) Accounting of Purchases. Account for or treat (whether in financial statements or otherwise) the transactions contemplated hereby in any manner other than as sales of Accounts and the Related Assets by Seller to Purchaser.

(b) Changes of Location. Change the jurisdiction in which it is organized unless it has given Purchaser not less than thirty (30) days’ prior written notice of its new jurisdiction of organization and any change in its name or form of organization in connection therewith.

SECTION 9 EVENTS OF TERMINATION; REMEDIES

9.1 Events of Termination. Each of the following shall be an “Event of Termination” hereunder:

(a) Servicer or Seller fails to make an payment hereunder or fails to deposit or remit any Collections as and when required hereunder or Servicer or Seller fails to perform any of the terms, covenants, conditions or provisions contained in this Agreement or any of the other Transaction Documents to which it is a party;

(b) any representation, warranty or statement of fact made by Seller or Servicer to Purchaser in this Agreement, the other Transaction Documents or any other agreement, schedule, confirmatory assignment or otherwise shall when made or deemed made be false or misleading in any material respect;

(c) any Guarantor terminates or fails in any material respect to perform any of the terms, covenants, conditions or provisions of the guarantee of Guarantors in favor of Purchaser;

(d) Seller or Servicer dissolves or suspends or discontinues doing business;

(e) Seller or Servicer makes an assignment for the benefit of creditors, makes or sends notice of a bulk transfer or calls a meeting of its creditors or Seller or Servicer becomes insolvent (however defined or evidenced);

(f) a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter

in effect (whether at law or in equity) is filed against Seller, Servicer, or any Guarantor or all or any part of its properties and such petition or application is not dismissed within thirty (30) days after the date of its filing, or Seller, Servicer, or any Guarantor shall file any answer admitting or not contesting such petition or application or indicates its or his consent to, acquiescence in or approval of, any such action or proceeding or the relief requested is granted sooner;

(g) a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at a law or equity) is filed by Seller, Servicer, or any Guarantor for all or any part of its property;

(h) any Event of Default, or event which with notice or the passage of time or both, would become an Event of Default, under and as defined in the Indenture or the Working Capital Financing Agreements, or any agreement securing or guaranteeing payment of the Senior Secured Notes or the amounts due under the Working Capital Financing Agreements,

(i) any default by Seller, Servicer, or any Guarantor under any agreement, document or instrument relating to any other indebtedness for borrowed money owing to any person other than the Working Capital Lenders, or any capitalized lease obligations, contingent indebtedness in connection with any guarantee, letter of credit, indemnity or similar type of instrument in favor of any person other than the Working Capital Lenders, in any case in an amount in excess of $2,500,000, which default continues for more than the applicable cure period, if any, with respect thereto, or any default by Seller, Servicer, or any Guarantor under any material contract, lease, license or other obligation to any Person other than the Working Capital Lenders, which default continues for more than the applicable cure period, if any, with respect thereto; or

(j) the Working Capital Financing Agreements shall expire or terminate.

9.2 Remedies. Upon the occurrence of the Termination Date, Purchaser shall have, in addition to all other rights and remedies under this Agreement or otherwise, all other rights and remedies provided under the UCC of each applicable jurisdiction and other applicable laws, which rights shall be cumulative. Without limiting the foregoing, the occurrence of the Termination Date shall not deny Purchaser any remedy in addition to termination of the purchase facility hereunder to which Purchaser may be otherwise appropriately entitled, whether at law or equity.

SECTION 10 TERMINATION

Upon the occurrence of any Event of Termination (other than an Event of Termination described in Section 9. l(d), (e), (f), or (g)), Purchaser may, by written notice to Servicer and Seller, declare the Termination Date to have occurred. Upon the occurrence of an Event of Termination described in Section 9.1(d), (e), (f), (g) or (i) the Termination Date shall occur automatically.

SECTION 11 TERM OF AGREEMENT, MISCELLANEOUS

11.1 Term. This Agreement shall become effective as of the date set forth on the first page hereof and shall continue in full force and effect for a term ending on the “Termination Date”. Purchaser may, at its option, terminate this Agreement at any time on or after an Event of Termination.

11.2 Interpretative Provisions.

(a) All references to the plural herein shall also mean the singular and to the singular shall also mean the plural unless the context otherwise requires.

(b) All references to any Purchaser or Seller pursuant to the definitions set forth in the recitals hereto, or to any other person herein, shall include their respective successors and assigns.

(c) The words “hereof, “herein”, “hereunder”, “this Agreement” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not any particular provision of this Agreement and as this Agreement now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(d) The word “including” when used in this Agreement shall mean “including, without limitation” and the word “will” when used in this Agreement shall be construed to have the same meaning and effect as the word “shall”.

(e) An Event of Termination shall exist or continue or be continuing until such Event of Termination is waived in accordance with Section 11.3 or is cured in a manner satisfactory to Purchaser, if such Event of Default is capable of being cured as determined by Purchaser.

(f) All references to the term “good faith” used herein when applicable to Purchaser shall mean, notwithstanding anything to the contrary contained herein or in the UCC, honesty in fact in the conduct or transaction concerned. Seller shall have the burden of proving any lack of good faith on the part of Purchaser alleged by Seller at any time.

(g) Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given in accordance with GAAP, and all financial computations hereunder shall be computed unless otherwise specifically provided herein, in accordance with GAAP as consistently applied and using the same method for inventory valuation as used in the preparation of the financial statements of Group and its subsidiaries most recently received by Purchaser prior to the date hereof. Notwithstanding anything to the contrary contained in GAAP or any interpretations or other pronouncements by the Financial Accounting Standards Board or otherwise, the term “unqualified opinion” as used herein to refer to opinions or reports provided by accountants shall mean an opinion or report that is not only unqualified but also does not include any explanatory note or language, including any explanation, supplemental comment or other comment concerning the ability of the applicable person to continue as a going concern or otherwise.

(h) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”, the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including”.

(i) Unless otherwise expressly provided herein, (i) references herein to any agreement, document or instrument shall be deemed to include all subsequent amendments, modifications, supplements, extensions, renewals, restatements or replacements with respect thereto, but only to the extent the same are not prohibited by the terms hereof or of any other Agreement, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, recodifying, supplementing or interpreting the statute or regulation.

(j) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

(k) This Agreement is the result of negotiations among and have been reviewed by counsel to Seller and the other parties, and are the products of all parties. Accordingly, this Agreement shall not be construed against Purchaser merely because of Purchaser’s involvement in its preparation.

11.3 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.

(a) The validity, interpretation and enforcement of this Agreement and the other Transaction Documents and any dispute arising out of the relationship between the parties hereto, whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

(b) Seller, Servicer, and Purchaser irrevocably consent and submit to the non exclusive jurisdiction of the Supreme Court of the State of New York for New York County and the United States District Court for the Southern District of New York and waive any objection based on venue or forum non conveniens with respect to any action instituted therein arising under this Agreement or any, of the other Transaction Documents or many way connected with or related or incidental to the dealings of the parties hereto in respect of this Agreement or any of the other Transaction Documents or the transactions related hereto or thereto, in each case whether now existing or hereafter arising, and whether in contract, tort, equity or otherwise, and agree that any dispute with respect to any such matters shall be heard only in the courts described above (except that Purchaser shall have the right to bring any action or proceeding against Seller or Servicer or its property in the courts of any other jurisdiction which Seller or Servicer deems necessary or appropriate in order to enforce its rights against Seller or Servicer or its property).

(c) Seller and Servicer hereby waives personal service of any and all process upon it and consents that all such service of process may be made by certified mail (return receipt requested) directed to its address set forth on the signature pages hereof and service so made shall be deemed to be completed five (5) days after the same shall have been so deposited in the U.S. mails, or, at Purchaser’s option, by service upon Seller or Servicer in any other

manner provided under the rules of any such courts. Within thirty (30) days after such service, Seller or Servicer shall appear in answer to such process, failing which Seller or Servicer shall be deemed in default and judgment may be entered by Purchaser against Seller or Servicer for the amount of the claim and other relief requested.

(d) SERVICER, SELLER AND PURCHASER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. SERVICER, SELLER AND PURCHASER HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT SERVICER, SELLER OR PURCHASER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

(e) Purchaser shall not have any liability to Seller or Servicer (whether in tort, contract, equity or otherwise) for losses suffered by Seller or Servicer in connection with, arising out of, or in any way related to the transactions or relationships contemplated by this Agreement, or any act, omission or event occurring in connection herewith, unless it is determined by a final and non-appealable judgment or court order binding on Purchaser, that the losses were the result of acts or omissions constituting gross negligence or willful misconduct. In any such litigation, Purchaser shall be entitled to the benefit of the rebuttable presumption that it acted in good faith and with the exercise of ordinary care in the performance by it of the terms of this Agreement.

11.4 Waiver of Notices. Seller and Servicer hereby expressly waives demand, presentment, protest and notice of protest and notice of dishonor with respect to any and all instruments and chattel paper, included in or evidencing any of the Accounts and Related Assets, and any and all other demands and notices of any kind or nature whatsoever with respect to the Accounts and Related Assets, and this Agreement, except such as are expressly provided for herein. No notice to or demand on Seller and Servicer which Purchaser may elect to give shall entitle Seller or Servicer to any other or further notice or demand in the same, similar or other circumstances.

11.5 Amendments and Waivers. Neither this Agreement nor any provision hereof shall be amended, modified, waived or discharged orally or by course of conduct, but only by a written agreement signed by an authorized officer of Purchaser. Purchaser shall not, by any act, delay, omission or otherwise be deemed to have expressly or impliedly waived any of its rights, powers and/or remedies unless such waiver shall be in writing and signed by an authorized officer of Purchaser. Any such waiver shall be enforceable only to the extent specifically set forth therein. A waiver by Purchaser of any right, power and/or remedy on any one occasion shall not be construed as a bar to or waiver of any such right, power and/or remedy which Purchaser would otherwise have on any future occasion, whether similar in kind or otherwise.

11.6 Waiver of Counterclaims. Seller and Servicer waives all rights to interpose any claims, deductions, setoffs or counterclaims of any nature (other then compulsory counterclaims) in any action or proceeding with respect to this Agreement, the Accounts, the Related Assets, or any matter arising therefrom or relating hereto or thereto.

11.7 Indemnification. Seller and Servicer shall, jointly and severally, indemnify, defend and hold Purchaser, and its directors, agents, employees and counsel, harmless from and against any and all losses, claims, damages, liabilities, costs or expenses imposed on, incurred by or asserted against any of them in connection with any litigation, investigation, claim or proceeding commenced or threatened related to the negotiation, preparation, execution, delivery, enforcement, performance or administration of this Agreement, any other Transaction Documents, or any undertaking or proceeding related to any of the transactions contemplated hereby or any act, omission, event or transaction related or attendant thereto, including, without limitation, amounts paid in settlement, court costs, and the reasonable fees and expenses of counsel (provided, that Seller and Servicer shall not be liable for such indemnification with respect to any loss that is determined by a final and non-appealable judgment or court order binding on Purchaser to have resulted from Purchaser’s gross negligence or willful misconduct). To the extent that the undertaking to indemnify, pay and hold harmless set forth in this Section may be unenforceable because it violates any law or public policy, Seller and Servicer shall pay the maximum portion which it is permitted to pay under applicable law to Purchaser in satisfaction of indemnified matters under this Section. Nothing contained in this Section 11.7 shall be deemed to modify the nature of the sales of Accounts contemplated hereunder or to impose any liability on Seller or Servicer with respect to the Accounts purchased hereunder, except as expressly set forth in this Agreement. The foregoing indemnity shall survive the termination of this Agreement.

11.8 Notices. All notices, requests and demands hereunder shall be in writing and deemed to have been given or made: if delivered in person, immediately upon delivery; if by telex, telegram or facsimile transmission, immediately upon sending and upon confirmation of receipt; if by nationally recognized overnight courier service with instructions to deliver the next Business Day, one (1) Business Day after sending; and if by certified mail, return receipt requested, five (5) days after mailing. All notices, requests and demands upon the parties are to be given to the following addresses (or to such other address as any party may designate by notice in accordance with this Section):


If to Seller:		Wise Alloys LLC International Tower Building 857 Elkridge Landing Road, Suite 600 Linthicum, Maryland 21090 Attention: Mr. Dan Mendelson Telecopy No.: (410) 636-0856

with a copy to:		Winston & Strawn LLP 200 Park Avenue New York, New York 10166 Attention: Robert W. Ericson, Esq. Telecopy No.; (212) 294-4700

If to Purchaser:

Wachovia Bank, National Association

1133 Avenue of the Americas

New York, New York 10036

Attn: Portfolio Manager — Wise Alloys LLC

Telecopy No.: (212) 545-4283

11.9 Partial Invalidity. If any provision of this Agreement is held to be invalid or unenforceable, such invalidity or unenforceability shall not invalidate this Agreement as a whole, but this Agreement shall be construed as though it did not contain the particular provision held to be invalid or unenforceable and the rights and obligations of the parties shall be construed and enforced only to such extent as shall be permitted by applicable law.

11.10 Successors. This Agreement, the other Transaction Documents and any other document referred to herein or therein shall be binding upon and inure to the benefit of and be enforceable by Purchaser, Seller, Servicer, and their respective successors and assigns, except that neither Seller nor Servicer may assign any of their rights or obligations under this Agreement, the other Transaction Documents and any other document referred to herein or therein without the prior written consent of Purchaser. Purchaser may, after notice to Seller and Servicer, assign its rights and delegate its obligations under this Agreement and the other Transaction Documents and further may assign all or any part of the Accounts and Related Assets or any other interest herein to another financial institution or other person, in which event, the assignee shall have, to the extent of such assignment, the same rights as it would have if it were the Purchaser hereunder, except as otherwise provided by such assignment.

11.11 Entire Agreement. This Agreement, the other Transaction Documents, any supplements hereto or thereto, and any instruments or documents delivered or to be delivered in connection herewith or therewith represents the entire agreement and understanding concerning fit matter hereof and thereof between the parties hereto, and supersede all other priorities, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written.

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IN WITNESS WHEREOF, Purchaser and Seller have caused this Agreement to be duly executed as of the day and year first above written.


PURCHASER		SELLER

WACHOVIA BANK, NATIONAL ASSOCIATION		WISE ALLOYS LLC, individually and as Servicer

By:	/s/ James O’Connell	By:	/s/ Danny Mendelson

Title:	Vice President	Title:

ACKNOWLEDGED AND AGREED AS TO SECTION 2.4(b)

WACHOVIA BANK, NATIONAL ASSOCIATION, as Working Capital Collateral Agent

By:	/s/ James O’Connell

Title:	Vice President

EX-10.43 8 dex1043.htm AMENDMENT NO. 1 TO ACCOUNTS PURCHASE & SALE AGREEMENT, DATED DECEMBER 31, 2006 Amendment No. 1 to Accounts Purchase & Sale Agreement, dated December 31, 2006

Exhibit 10.43

AMENDMENT NO. 1 TO ACCOUNTS PURCHASE AND SALE AGREEMENT

This AMENDMENT NO. 1 TO ACCOUNTS PURCHASE AND SALE AGREEMENT (this “Amendment”), dated as of December 31, 2006, is by and between Wise Alloys LLC, a Delaware limited liability company (“Seller”), and Wachovia Bank, National Association, a national banking association (“Purchaser”).

W I T N E S S E T H:

WHEREAS, Seller and Purchaser have entered into financing arrangements pursuant to which Seller has agreed to sell Accounts to Purchaser as set forth in the Accounts Purchase and Sale Agreement, dated as of March 31, 2006, between Seller and Purchaser (as the same may hereafter be further amended, modified, supplemented, extended, renewed, restated or replaced, the “Purchase Agreement”);

WHEREAS, Seller has requested that Purchaser agree to make certain amendments to the Purchase Agreement, and Purchaser is willing to agree to such request, subject to the terms and conditions contained herein; and

WHEREAS, the parties hereto desire to enter into this Amendment to evidence and effectuate such amendments, subject to the terms and conditions and to the extent set forth herein;

SECTION 1 DEFINITIONS

1.1 Amendment to Definition of Termination Date. The definition of “Termination Date” in Section 1.38 of the Purchase Agreement is hereby amended by deleting such definition in its entirety and replacing it with the following:

“1.38 ‘Termination Date’ shall mean June 15, 2007 or the date that the Termination Date shall occur pursuant to Section 10 hereof.”

1.2 Interpretation. Capitalized terms used herein which are not otherwise defined herein shall have the respective meanings ascribed thereto in the Purchase Agreement.

SECTION 2 AGREEMENT TO PURCHASE AND SELL

Section 2.1 of the Purchase Agreement is hereby amended by deleting the reference to “$17,000,000” and replacing it with “$10,000,000”.

SECTION 3 COMMISSIONS AND EXPENSES

In addition to all other fees, charges, commissions and expenses payable by Seller to Purchaser under the Purchase Agreement and the other Transaction Documents, in connection with the execution and delivery of this Amendment, Seller shall pay to Purchaser an amendment fee in the amount of $20,000, which fee is fully earned as of and shall be payable on the date hereof. Seller authorizes Purchaser to debit the closing fee from Seller’s account with Purchaser.

SECTION 4 CONDITIONS PRECEDENT

The provisions contained herein shall only be effective upon the satisfaction of each of the following conditions precedent in a manner satisfactory to Purchaser:

4.1 Purchaser shall have received this Amendment, duly authorized, executed and delivered by Seller; and

4.2 after giving effect to this Amendment, no Event of Termination shall exist or have occurred and be continuing.

SECTION 5 REPRESENTATIONS, WARRANTIES AND COVENANTS.

Seller hereby represents and warrants to Purchaser the following (which shall survive the execution and delivery of this Amendment):

5.1 this Amendment has been duly authorized, executed and delivered by all necessary action on the part of Seller and, if necessary, its members, and is in full force and effect as of the date hereof, and the agreements and obligations of Seller contained herein constitute the legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their terms, except as enforceability is limited by bankruptcy, insolvency, moratorium or other similar laws affecting creditors’ rights generally and by general equitable principles;

5.2 the execution, delivery and performance of this Amendment (a) are all within Seller’s limited liability company powers, and (b) are not in contravention of law or the terms of Seller’s certificate of formation, operating agreement or other organizational documentation;

5.3 neither the execution and delivery of this Amendment, nor the consummation of the transactions contemplated hereby, nor compliance with the provisions hereof (i) has violated or shall violate any applicable laws or regulations or any order or decree of any court or Governmental Authority in any respect; and (ii) does or shall conflict with or result in the breach of, or constitute a default in any respect under any material mortgage, deed of trust, security agreement, agreement or instrument to which Seller is a party or may be bound (including without limitation the Indenture);

5.4 no action of, or filing with, or consent of any Governmental Authority, and no approval or consent of any other third party (including without limitation the Trustee) that has not been obtained, is required to authorize, or is otherwise required in connection with, the execution, delivery and performance of this Amendment;

5.5 all of the representations and warranties set forth in the Purchase Agreement and the other Transaction Documents, as amended hereby, are true and correct in all material respects on and as of the date hereof as if made on the date hereof, except to the extent any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct in all material respects as of such date; and

5.6 after giving effect to the this Amendment, no Event of Termination exists or has occurred and is continuing.

SECTION 6 MISCELLANEOUS

6.1 Governing Law. The validity, interpretation and enforcement of this Amendment and any dispute arising out of the relationship between the parties hereto, whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

6.2 Partial Invalidity. If any provision of this Amendment is held to be invalid or unenforceable, such invalidity or unenforceability shall not invalidate this Amendment as a whole, but this Amendment shall be construed as though it did not contain the particular provision held to be invalid or unenforceable and the rights and obligations of the parties shall be construed and enforced only to such extent as shall be permitted by applicable law.

6.3 Entire Agreement. This Amendment represents the entire agreement and understanding concerning fit matter hereof and thereof between the parties hereto, and supersede all other priorities, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written.

6.4 Effect of this Agreement. Except as expressly amended or waived pursuant hereto, no other changes, waivers or modifications to the Transaction Documents are intended or implied, and in all other respects the Transaction Documents are hereby specifically ratified, restated and confirmed by all parties hereto as of the date hereof. To the extent that any provision of the Purchase Agreement or any of the other Transaction Documents are inconsistent with the provisions of this Amendment, the provisions of this Amendment shall control.

6.5 Further Assurances. Seller shall execute and deliver such additional documents and take such additional action as may be requested by Purchaser to effectuate the provisions and purposes hereof.

6.6 Binding Effect. This Amendment shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

6.7 Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Amendment by telefacsimile or other electronic method of transmission shall have the same force and effect as the delivery of an original executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telefacsimile or other electronic method of transmission shall also deliver an original executed counterpart, but the failure to do so shall not affect the validity, enforceability or binding effect of this Amendment.

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IN WITNESS WHEREOF, Purchaser and Seller have caused this Amendment to be duly executed as of the day and year first above written.


PURCHASER						SELLER

WACHOVIA BANK, NATIONAL ASSOCIATION						WISE ALLOYS LLC, individually and as Servicer

By:						By:

Title:						Title:

ACKNOWLEDGED AND AGREED:

WACHOVIA BANK, NATIONAL ASSOCIATION, as Working Capital Collateral Agent

By:

Title:

EX-10.44 9 dex1044.htm AMENDMENT NO. 2 TO ACCOUNTS PURCHASE & SALE AGREEMENT, DATED APRIL 9, 2007 Amendment No. 2 to Accounts Purchase & Sale Agreement, dated April 9, 2007

Exhibit 10.44

AMENDMENT NO. 2 TO ACCOUNTS PURCHASE AND SALE AGREEMENT

This AMENDMENT NO. 2 TO ACCOUNTS PURCHASE AND SALE AGREEMENT (this Amendment”), dated as of April 9, 2007, is by and between Wise Alloys LLC, a Delaware limited liability company (“Seller”), and Wachovia Bank, National Association, a national banking association (“Purchaser”).

W I T N E S S E T H:

WHEREAS, Seller and Purchaser have entered into financing arrangements pursuant to which Seller has agreed to sell Accounts to Purchaser as set forth in the Accounts Purchase and Sale Agreement, dated as of March 31, 2006, as amended by Amendment No. 1 to Accounts Purchase and Sale Agreement, dated as of December 31, 2006, between Seller and Purchaser (as the same may hereafter be further amended, modified, supplemented, extended, renewed, restated or replaced, the “purchase Agreement”);

WHEREAS, The parties hereto desire to enter into this Amendment to evidence and effectuate such amendments, subject to the terms and conditions and to the extent set forth herein;

SECTION 1 DEFINITIONS

“1.38 ‘Termination Date’ shall mean June 29, 2007 or the date that the Termination Date shall occur pursuant to Section 10 hereof.”

1.2 Interpretation. Capitalized terms used herein which are not otherwise defined herein shall have the respective meanings ascribed thereto in the Purchase Agreement.

SECTION 2 AGREEMENT TO PURCHASE AND SELL

Section 2.1 of the Purchase Agreement is hereby amended by deleting the reference to “$10,000,000” and replacing it with “$20,000,000”.

SECTION 3 COMMISSIONS AND EXPENSES

In addition to all other fees, charges, commissions and expenses payable by Seller to Purchaser under the Purchase Agreement and the other Transaction Documents, in connection

with the execution and delivery of this Amendment, Seller shall pay to Purchaser an amendment fee in the amount of $20,000, which fee is fully earned as of and shall be payable on the date hereof. Seller authorizes Purchaser to debit the closing fee from Seller’s account with Purchaser.

SECTION 4 CONDITIONS PRECEDENT

The provisions contained herein shall only be effective upon the satisfaction of each of the following conditions precedent in a manner satisfactory to Purchaser:

4.1 Purchaser shall have received this Amendment, duly authorized, executed and delivered by Seller; and

4.2 after giving effect to this Amendment, no Event of Termination shall exist or have occurred and be continuing.

SECTION 5 REPRESENTATIONS, WARRANTIES AND COVENANTS.

Seller hereby represents and warrants to Purchaser the following (which shall survive the execution and delivery of this Amendment):

representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct in all material respects as of such date; and

5.6 after giving effect to the this Amendment, no Event of Termination exists or has occurred and is continuing.

SECTION 6 MISCELLANEOUS

6.4 Effect of this Agreement. Except as expressly amended or waived pursuant hereto, no other changes, waivers or modifications to the Transaction Documents are intended or implied, and in all other respects the Transaction Documents are hereby specifically ratified. restated and confirmed by all parties hereto as of the date hereof. To the extent that any provision of the Purchase Agreement or any of the other Transaction Documents are inconsistent with the provisions of this Amendment, the provisions of this Amendment shall control.

6.5 Further Assurances. Seller shall execute and deliver such additional documents and take such additional action as may be requested by Purchaser to effectuate the provisions and purposes hereof.

6.6 Binding Effect. This Amendment shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

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IN WITNESS WHEREOF, Purchaser and Seller have caused this Amendment to be duly executed as of the day and year first above written.


PURCHASER	SELLER

WACHOVIA BANK NATIONAL ASSOCIATION	WISE ALLOYS LLC, individually and as Servicer

By:	By:	/s/ Kenneth Stastny

Title:	Title:	Assistant Secretary

ACKNOWLEDGED AND AGREED:

WACHOVIA BANK, NATIONAL ASSOCIATION as Working Capital Collateral Agent

By:

Title:

EX-31.1 10 dex311.htm SECTION 302 CEO CERTIFICATION Section 302 CEO Certification

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, David D’Addario, certify that:

1. I have reviewed this Annual Report on Form 10-K of Wise Metals Group LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter covered by this report (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 17, 2007

/s/ David D’Addario

David D’Addario

Chairman and Chief Executive Officer

EX-31.2 11 dex312.htm SECTION 302 CFO CERTIFICATION Section 302 CFO Certification

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Kenneth Stastny, certify that:

1. I have reviewed this Annual Report on Form 10-K of Wise Metals Group LLC;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 17, 2007

/s/ Kenneth Stastny

Kenneth Stastny

Chief Financial Officer

EX-32.1 12 dex321.htm SECTION 906 CEO CERTIFICATION Section 906 CEO Certification

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Wise Metals Group LLC (the “Company”) for the fiscal year ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David D’Addario, Chairman and Chief Executive Officer of the Company, certify to my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 17, 2007


By:		/s/ David D’Addario
		David D’Addario
		Chairman and Chief Executive Officer

A signed original of this written statement, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2 13 dex322.htm SECTION 906 CFO CERTIFICATION Section 906 CFO Certification

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Wise Metals Group LLC (the “Company”) for the fiscal year ending December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kenneth Stastny, Chief Financial Officer of the Company, certify to my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 17, 2007


By:		/s/ Kenneth Stastny
		Kenneth Stastny
		Chief Financial Officer

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