Exhibit 10.1
U.S. $75 million 121/2% Senior Subordinated Notes due 2013
Neenah Foundry Company
EXCHANGE AGREEMENT
December 29, 2006

      Tontine Capital Partners, L.P. (“Tontine”),
 
  55 Railroad Avenue, 1st Floor
 
  Greenwich, CT 06830

     Dear Sirs:
          1. Introductory. Neenah Foundry Company, a Wisconsin corporation (the
“Company”), hereby agrees to issue to you, at the time set forth in this
Agreement, U.S.$75,000,000 of the Company’s 121/2% Senior Subordinated Notes due
2013 (the “New Subordinated Notes”) in exchange for an equal principal amount of
the Company’s outstanding 13% Senior Subordinated Notes due 2013 (the “13%
Notes") that you now own. The New Subordinated Notes will be substantially in
the form attached hereto as Schedule A. Concurrently with the issuance of the
New Subordinated Notes, the Company will also issue and sell to Credit Suisse
Securities (USA) LLC (“Credit Suisse") U.S. $225,000,000 91/2% Senior Secured
Notes due 2017 (the “Senior Notes”) pursuant to a Purchase Agreement (the
“Senior Notes Purchase Agreement") dated December 15, 2006, a copy of which is
attached hereto as Schedule B. The payment of principal of, and interest on, the
New Subordinated Notes will be guaranteed on a subordinated basis, jointly and
severally (the “Guarantees”), by all of the Company’s Wholly Owned Domestic
Restricted Subsidiaries as defined in the form of Indenture attached to and
incorporated by reference into the New Subordinated Notes (the “Indenture"). Our
Wholly Owned Domestic Restricted Subsidiaries are collectively referred to as
the “Guarantors” herein. The New Subordinated Notes and the Guarantees will be
unsecured. The New Subordinated Notes and the Guarantees are herein collectively
referred to as the “Exchanged Securities.” The United States Securities Act of
1933, as amended, is herein referred to as the “Securities Act.”
          Holders (including subsequent transferees) of the Exchanged Securities
will have the registration rights set forth in the registration rights agreement
(the “Registration Rights Agreement”), to be dated the date hereof, for so long
as such Exchanged Securities constitute “Transfer Restricted Securities” (as
defined in the Registration Rights Agreement). Pursuant to the Registration
Rights Agreement, the Company will agree to file with the Securities and
Exchange Commission (the “Commission”) under the circumstances set forth
therein, (i) a registration statement under the Securities Act relating to other
securities that are identical in all material respects to the Exchanged
Securities and registered under the Securities Act (the “Registered Exchange
Securities"), to be offered in exchange for the Exchanged Securities (such offer
to exchange being referred to as the “Exchange Offer”) or, in certain
circumstances (ii) a shelf registration statement pursuant to Rule 415 under the
Securities Act (the “Shelf Registration Statement” and, together with the
Exchange Offer Registration Statement, the “Registration Statements”) relating
to the resale by certain holders of the Exchanged Securities, and to use its
commercially reasonable efforts to cause such Registration Statements to be
declared and remain effective and usable for the periods specified in the
Registration Rights Agreement and to consummate the Exchange Offer. The
Exchanged Securities and the Registered Exchange Securities are referred to
collectively as the “Securities.”
          The Company has commenced an offer to purchase (the “Tender Offer”)
any and all of its existing U.S. $133,130,000 11% Senior Secured Notes due 2010
(the “2010 Notes”), together with a related solicitation of consents (the
“Consent Solicitation”), as further described in the Offer to Purchase and
Consent Solicitation

 

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Statement dated December 15, 2006 (the “Offer to Purchase and Consent
Solicitation Statement”). The Company also has negotiated an Amended and
Restated Loan and Security Agreement among the Company, as Borrower, and Bank of
America, N.A., as Agent, the other parties named therein and the Lenders named
therein (the “New Credit Agreement”). The closing of the Tender Offer and the
Consent Solicitation is conditioned on the purchase of at least a majority of
the 2010 Notes in accordance therewith and on the closing of the sale of the
Senior Notes and the closing of the New Credit Agreement.
          The Company also plans to redeem (the “Redemption”) its 13% Notes that
remain outstanding after completion of the exchange contemplated hereby in
accordance with the terms of the indenture governing the 13% Notes (the “13%
Notes Indenture”). The Redemption will occur as soon as practicable following
the purchase of at least a majority of the 2010 Notes pursuant to the Tender
Offer and the Consent Solicitation, the closing of the sale of the Senior Notes,
and the closing of the New Credit Agreement.
          The Company and the Guarantors hereby agree with Tontine as follows:
          2. Representations and Warranties of the Company and the Guarantors.
As appropriate in the context of this Agreement, the Company and the Guarantors,
jointly and severally, hereby make to Tontine as of the date hereof each of the
representations and warranties included in Section 2 of the Senior Notes
Purchase Agreement, as fully as if completely set forth in this place. In
addition, the Company and the Guarantors, jointly and severally, further
represent and warrant to, and agree with, Tontine that:
     (a) This Agreement has been duly authorized, executed and delivered by the
Company and each of the Guarantors. The Registration Rights Agreement has been
duly authorized, executed and delivered by the Company and each of the
Guarantors and each of this Agreement and the Registration Rights Agreement is
the valid and binding agreement of the Company and each of the Guarantors,
enforceable against the Company and each Guarantor in accordance with its terms,
except that the enforceability thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws now or hereafter in effect relating to or affecting the enforcement of
creditors’ rights generally, (ii) the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law), and (iii) an implied covenant of good faith and fair dealing and except
that any rights to indemnity or contribution thereunder may be limited by
federal and state securities laws and public policy.
     (b) Neither the Company nor any of its subsidiaries nor any agent thereof
acting on the behalf of them has taken, and none of them will take, any action
that might cause this Agreement or the issuance of the Exchanged Securities to
violate Regulation T, Regulation U or Regulation X of the Board of Governors of
the Federal Reserve System.
     (c) No securities of the same class (within the meaning of Rule 144A(d)(3)
under the Securities Act) as the Exchanged Securities are listed on any national
securities exchange registered under Section 6 of the Securities Exchange Act of
1934 (the “Exchange Act”) or quoted in a U.S. automated inter-dealer quotation
system.
     (d) Assuming the accuracy of the representations by Tontine in Section 4 of
this Agreement, the issuance of the Exchanged Securities to Tontine as
contemplated by this Agreement will be exempt from the registration requirements
of the Securities Act by reason of Section 4(2) thereof.
     (e) The Exchanged Securities have been duly authorized, and when issued,
executed, authenticated, delivered and paid for pursuant to this Agreement, the
Exchanged Securities will have been duly executed and delivered by the Company
and each Guarantor and will constitute valid and binding agreements of the
Company and the Guarantors, enforceable against the Company and the Guarantors
in accordance with their respective terms, except that the enforceability
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws now or

 

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hereafter in effect relating to or affecting the enforcement of creditors’
rights generally, (ii) the effect of general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law), and
(iii) an implied covenant of good faith and fair dealing.
          3. Issuance and Delivery of Exchanged Securities in Exchange for 13%
Notes. On the basis of the representations, warranties and agreements and
subject to the terms and conditions set forth herein, promptly after the
execution and delivery hereof the Company shall issue and sell $75,000,000 of
the Exchanged Securities to Tontine in exchange for an equal principal amount of
13% Notes owned by Tontine and the payment to Tontine of the accrued and unpaid
interest on such 13% Notes, and Tontine shall acquire $75,000,000 of the
Exchanged Securities from the Company in exchange for an equal principal amount
of the 13% Notes and the payment to Tontine of the accrued and unpaid interest
on such 13% Notes.
          4. Representations by Tontine; Resale. Tontine represents and warrants
that:

  (a)   Tontine is an institutional “accredited investor” within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act (an “Institutional
Accredited Investor”).     (b)   Tontine is acquiring the Exchanged Securities
for its own account. Tontine owns the 13% Notes being exchanged for the
Exchanged Securities free and clear of any liens, claims or encumbrances. This
Agreement has been duly authorized, executed and delivered by Tontine. The
Registration Rights Agreement has been duly authorized, executed and delivered
by Tontine and each of this Agreement and the Registration Rights Agreement is
the valid and binding agreement of Tontine, enforceable against Tontine in
accordance with its terms, except that the enforceability thereof may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
or other similar laws now or hereafter in effect relating to or affecting the
enforcement of creditors’ rights generally, (ii) the effect of general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law), and (iii) an implied covenant of good faith and
fair dealing and except that any rights to indemnity or contribution thereunder
may be limited by federal and state securities laws and public policy.     (c)  
Tontine has such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of an investment in the
Exchanged Securities and is able to bear the economic risks of and an entire
loss of its investment in the Exchanged Securities.     (d)   Tontine is not
acquiring the Exchanged Securities with a view to any distribution thereof in a
transaction that would violate the Securities Act or the securities laws of any
State of the United States or any other applicable jurisdiction.     (e)  
Tontine acknowledges that the Exchanged Securities have not been registered
under the Securities Act and that the Exchanged Securities may not be offered or
sold within the United States or to or for the benefit of U.S. persons except as
set forth below.

          Tontine agrees for the benefit of the Company that the Exchanged
Securities may be offered, sold, pledged or otherwise transferred only in
accordance with the Securities Act and any applicable securities laws of any
State of the United States and only (a) to the Company, (b) pursuant to a
registration statement which has become effective under the Securities Act,
(c) to a qualified institutional buyer in compliance with Rule 144A under the
Securities Act, (d) in an offshore transaction in compliance with Rule 904 of
Regulation S under the Securities Act, (e) in a principal amount of not less
than $250,000, to an Institutional Accredited Investor that, prior to such
transfer, delivers to the Company or any trustee under the Indenture (if one is
appointed, the “Trustee”) a duly completed and signed certificate (the form of
which may be obtained from the Company or the Trustee) relating to the
restrictions on transfer of the Exchanged Securities or (f) pursuant to an
exemption from registration provided by Rule 144 under the Securities Act or any
other available exemption from the registration requirements of the Securities
Act.

 

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          Prior to the registration of any transfer in accordance with (c) or
(d) above, Tontine acknowledges that a duly completed and signed certificate
(the form of which may be obtained from the Company or the Trustee) must be
delivered to the Company or the Trustee. Prior to the registration of any
transfer in accordance with (e) or (f) above, Tontine acknowledges that the
Company reserves the right to require the delivery of such legal opinions,
certifications or other evidence as may reasonably be required in order to
determine that the proposed transfer is being made in compliance with the
Securities Act and applicable state securities laws. Tontine acknowledges that
no representation is made as to the availability of any Rule 144 exemption from
the registration requirements of the Securities Act.
          Tontine understands that the Company and the Trustee will not be
required to accept for registration of transfer any Notes acquired by Tontine,
except upon presentation of evidence satisfactory to the Company and the Trustee
that the foregoing restrictions on transfer have been complied with. Tontine
further understands that if the Exchanged Securities are in the form of
definitive physical certificates, such certificates will bear a legend
reflecting the substance of the preceding paragraph. Tontine further agrees to
provide to any person acquiring any of the Exchanged Securities from Tontine a
notice advising such person that resales of the Exchanged Securities are
restricted as stated herein and that certificates representing the Exchanged
Securities will bear a legend to that effect.
          Tontine agrees to notify the Company promptly in writing if any of its
acknowledgments, representations or agreements herein ceases to be accurate and
complete. Tontine represents and warrants that it has full power to make the
foregoing acknowledgments, representations and agreements.
          5. Certain Agreements of the Company. The Company agrees with Tontine
that:
     (a) The Company will furnish to Tontine copies of the following documents
with respect to the Senior Notes (each as defined in the Senior Notes Purchase
Agreement): the Preliminary Offering Circular, each other document comprising a
part of the General Disclosure Package, the Final Offering Circular, and all
amendments and supplements to such documents, in each case as soon as available
and in such quantities as Tontine reasonably requests. At any time when the
Company is not subject to Section 13 or 15(d) of the Exchange Act, the Company
will promptly furnish or cause to be furnished to Tontine copies of the
information required to be delivered to holders and prospective purchasers of
the Exchanged Securities pursuant to Rule 144A(d)(4) under the Securities Act
(or any successor provision thereto) in order to permit compliance with
Rule 144A in connection with resales of the Exchanged Securities. The Company
will pay the expenses of printing and distributing to Tontine all such
documents.
     (b) During the period that Tontine holds any of the Exchanged Securities,
unless otherwise publicly available, the Company will furnish to Tontine, as
soon as practicable after the end of each fiscal year, a copy of its annual
report to shareholders for such year, if one is prepared; and unless otherwise
publicly available, the Company will furnish to Tontine, (i) as soon as
available, a copy of each report and any definitive proxy statement of the
Company filed with the Commission under the Exchange Act or mailed to
shareholders, and (ii) from time to time, such other information concerning the
Company as Tontine may reasonably request.
     (c) During the period of two years after the date hereof, the Company will
not be, or become, an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered under
Section 8 of the Investment Company Act of 1940, as amended (the “Investment
Company Act”).
     (d) The Company will pay all expenses incidental to the performance of its
obligations under this Agreement, the related Indenture and the Registration
Rights Agreement.
     (e) The Company will not at any time offer, sell, contract to sell, pledge
or otherwise dispose of, directly or indirectly, any securities under
circumstances where such offer, sale, pledge, contract or

 

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disposition would cause the exemption afforded by Section 4(2) of the Securities
Act to cease to be applicable to the offer and sale of the Exchanged Securities
to Tontine.
     (f) Promptly after the execution and delivery of this Agreement Tontine
shall receive an opinion, dated the date hereof, of Quarles & Brady LLP, counsel
for the Company, substantially to the effect that:
     (i) The Company is a corporation validly existing and in good standing (or
equivalent status) (meaning that the Company has filed its most recent required
annual report, and has not filed articles of dissolution, with the Wisconsin
Department of Financial Institutions) under the laws of the State of Wisconsin
with corporate power to own its properties and conduct its business as described
in the General Disclosure Package with respect to the Senior Notes;
     (ii) Each Guarantor is a corporation validly existing and in good standing
(or equivalent status) (meaning, in the case of any Guarantor incorporated under
the laws of the State of Wisconsin, that such Guarantor has filed its most
recent required annual report, and has not filed articles of dissolution, with
the Wisconsin Department of Financial Institutions) under the laws of the
jurisdiction of its organization, with corporate power to own its properties and
conduct its business as described in the General Disclosure Package with respect
to the Senior Notes;
     (iii) The issuance of the Exchanged Securities in exchange for an equal
principal amount of the 13% Notes has been authorized by all necessary corporate
action on the part of the Company and each Guarantor and the Exchanged
Securities are the valid and legally binding obligations of the Company and the
Guarantors, enforceable in accordance with their terms, except that the
enforceability thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws now or
hereafter in effect relating to or affecting the enforcement of creditors’
rights generally, (ii) the effect of general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law), and
(iii) an implied covenant of good faith and fair dealing;
     (iv) The Company is not and, after giving effect to the offering and sale
of the Exchanged Securities will not be an “investment company” that is required
to be registered under the Investment Company Act;
     (v) No consent, approval, authorization or order of, or filing with, any
governmental agency or body or any court which such counsel has, in the exercise
of customary professional diligence, recognized as applicable to the Company or
the Guarantors, is required in connection with the issuance or sale of the
Exchanged Securities by the Company and the Guarantors, except (a) such as have
been made or obtained prior to the date of the opinion, (b) such as may be
required under the Securities Act, the Exchange Act or regulations thereunder in
connection with the transactions contemplated by the Exchange Offer Registration
Statement or, if required, the Shelf Registration Statement, (c) such as may be
required under applicable state and provincial securities or “blue sky” laws or
legal investment laws, and (d) the possible eventual qualification of the
Indenture under the Trust Indenture Act of 1939, as amended;
     (vi) This Agreement and the Registration Rights Agreement have each been
authorized, executed and delivered by the Company and each Guarantor;
     (vii) The Registration Rights Agreement is a valid and binding agreement of
the Company and each Guarantor, enforceable against the Company and each
Guarantor in accordance with its terms, except that the enforceability thereof
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws now or hereafter in effect relating to
or affecting the enforcement of creditors’ rights generally, (ii) the effect of

 

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general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law), and (iii) an implied covenant of good
faith and fair dealing and except that any rights to indemnity or contribution
thereunder may be limited by federal and state securities laws and public policy
considerations; and
     (viii) Assuming the accuracy of the representations by Tontine in Section 4
of this Agreement, it is not necessary in connection with the offer, sale and
delivery of the Exchanged Securities by the Company to Tontine pursuant to this
Agreement to register the Exchanged Securities under the Securities Act, it
being expressly understood that such counsel need express no opinion as to any
subsequent reoffer or resale of any of the Exchanged Securities by Tontine.
     Such legal opinion may state that it is limited to matters governed by the
federal laws of the United States of America, the internal laws of the state of
Wisconsin and the General Corporation Law of the State of Delaware, and may
contain other customary assumptions, limitations and qualifications as provided
therein. With respect to opinions regarding the enforceability of any instrument
or agreement that provides that it is governed by the laws of a jurisdiction
other than Wisconsin, or the creation of any security interest under such an
instrument or agreement, such legal opinion may be rendered as if the internal
laws of Wisconsin (without giving effect to its choice of law principles)
governed such instrument or agreement.
     (g) The Company and the Guarantors shall execute and deliver the
Registration Rights Agreement.
     (h) The Company shall cause the Trustee under the 13% Notes Indenture to
send a notice of redemption to each holder of the 13% Notes in accordance with
the 13% Notes Indenture calling for redemption of all of the outstanding 13%
Notes and shall irrevocably deposit with the Trustee money sufficient to pay at
redemption all of the outstanding 13% Notes.
          The Company will furnish Tontine with such conformed copies of such
opinions, certificates, letters and documents as Tontine reasonably requests.
          6. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of Tontine set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation,
or statement as to the results thereof, made by or on behalf of Tontine, the
Company or any of their respective representatives, officers or directors or any
controlling person, and will survive delivery of and payment for the Exchanged
Securities.
          7. Notices. All communications hereunder will be in writing and, if
sent to Tontine will be mailed, delivered or telegraphed and confirmed to
Tontine at the address set forth above, or, if sent to the Company, will be
mailed, delivered or telegraphed and confirmed to it at 2121 Brooks Avenue, P.O.
Box 729, Neenah, Wisconsin 54957 Attention: William M. Barrett.
          8. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors, and no other
person will have any right or obligation hereunder.
          9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
          10. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without regard to
principles of conflicts of laws.

 

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     If the foregoing is in accordance with Tontine’ understanding of our
agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Company, the Guarantors
and Tontine in accordance with its terms.

             
 
                Very truly yours,    
 
                NEENAH FOUNDRY COMPANY    
 
           
 
  By:   /s/ Gary W. LaChey    
 
           
 
      Name: Gary W. LaChey    
 
      Title: Corporate Vice President — Finance    
 
                and Chief Financial Officer    
 
                GUARANTORS:    
 
                ADVANCED CAST PRODUCTS, INC.         DALTON CORPORATION        
DALTON CORPORATION, WARSAW              MANUFACTURING FACILITY         DALTON
CORPORATION, STRYKER              MACHINING FACILITY CO.         DALTON
CORPORATION, ASHLAND              MANUFACTURING FACILITY         DALTON
CORPORATION, KENDALLVILLE              MANUFACTURING FACILITY         DEETER
FOUNDRY, INC.         GREGG INDUSTRIES, INC.         MERCER FORGE CORPORATION  
      A&M SPECIALTIES, INC.         NEENAH TRANSPORT, INC.         CAST ALLOYS,
INC.         BELCHER CORPORATION         PEERLESS CORPORATION    
 
           
 
      Acting on behalf of each of the Guarantors    
 
           
 
  By:   /s/ Gary W. LaChey    
 
           
 
      Name: Gary W. LaChey    
 
      Title: Corporate Vice President — Finance    
 
                and Chief Financial Officer    

 

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The foregoing Exchange Agreement
  is hereby confirmed and accepted
  as of the date first above written.

         
 
        Tontine Capital Partners, L.P.    
 
       
By:
  /s/ Jeffrey L. Gendell
 
Name: Jeffrey L. Gendell    
 
  Title: