<PAGE>

                         SUBORDINATED SECURITY AGREEMENT

                  THIS SUBORDINATED SECURITY AGREEMENT is made as of the 8th day
of October, 2003 by Neenah Foundry Company, a Wisconsin corporation ("Issuer"
and a "Grantor"), and each of the other entities listed on the signature pages
hereof (each, a "Grantor" and collectively, together with Issuer, the
"Grantors") in favor of The Bank of New York, a New York banking corporation, as
Trustee (the "Trustee") for the noteholders (the "Noteholders") under the
Indenture (as defined below). The Trustee's address is 101 Barclay Street, 8th
Floor West, New York, New York 10286.

                  1.       DEFINITIONS.

                  As used in this Agreement:

                  "Account Debtor" shall mean any Person who is or may become
obligated under or on account of any Account, Contract Right, Chattel Paper or
General Intangible.

                  "Agreement" shall mean this Security Agreement, as it may be
amended, modified or supplemented from time to time.

                   "Code" shall mean the Uniform Commercial Code as in effect in
the State of New York on the date hereof, as it may be amended or otherwise
modified.

                  "Collateral" shall mean all of the Property and interests in
Property described in Section 2 of this Agreement, and all other property that
now or hereafter secures the payment and performance of any of the Obligations.

                  "Contract Right" shall mean any right of Issuer or any Grantor
to payment under a contract for the sale or lease of goods or the rendering of
services, which right is at the time not yet earned by performance.

                  "Default" shall have the meaning provided to such term in
Section 4.1 of this Agreement.

                  "Guaranty" shall mean the Subsidiary Guarantee as defined in
the Indenture, as such Subsidiary Guarantee may be amended, modified or
supplemented from time to time.

                  "Guaranty Documents" shall mean, collectively, this Agreement,
the Guaranty, the Indenture and all other agreements, instruments and documents
now or hereafter executed and/or delivered by any Grantor to Trustee or any
Noteholder in order to evidence or secure the Obligations, as each may be
amended, modified or supplemented from time to time.

                  "Indenture" shall mean that certain Indenture dated as of the
date hereof (as may be amended, modified or supplemented from time to time) by
and among Issuer, the Subsidiary

<PAGE>

Guarantors party thereto and the Trustee pursuant to which Issuer has issued its
11% senior secured notes due September 30, 2010 in the aggregate principal
amount of $133,130,000.

                  "Loan Agreement Termination" shall mean the payment in full of
the Senior Indebtedness.

                  "Obligations" shall mean all obligations with respect to the
Guaranty and all other indebtedness, liabilities, obligations, covenants and
duties arising due or payable from each Grantor to Trustee or any Noteholder of
any kind or nature, present or future, arising under the Guaranty or any of the
other Guaranty Documents, whether direct or indirect (including those acquired
by assignment), absolute or contingent, primary or secondary, due or to become
due, now existing or hereafter arising and however acquired. The term includes,
without limitation, all interest, charges, expenses, fees, attorneys' fees and
any other sums chargeable to each Grantor under the Guaranty, this Agreement or
any of the other Guaranty Documents.

                  The foregoing definitions shall be equally applicable to the
singular and plural forms of the defined terms. Capitalized terms used in this
Agreement without definition and defined in the Indenture shall have the
meanings ascribed to such terms in the Indenture, it being understood and
acknowledged that any such capitalized terms defined in the Indenture describing
property or interests in property of Issuer or a Subsidiary Guarantor
(including, without limitation, capitalized terms used in Section 2.1 of this
Agreement) shall be construed herein to refer to property or interests in
property of each Grantor. Terms used in this Agreement and not defined herein or
in the Indenture shall have the meanings given such terms in the Code.

                  2.       SECURITY INTEREST.

                  2.1.     Security Interest in Collateral. To secure the prompt
payment and performance to Trustee and each Noteholder of the Obligations, each
Grantor hereby grants to Trustee for the benefit of itself and each Noteholder a
continuing Lien upon all of such Grantor's assets, including all of the
following Property and interests in Property of such Grantor, whether now owned
or existing or hereafter created, acquired or arising and wheresoever located:

                  (a)      Accounts;

                  (b)      Certificated Securities;

                  (c)      Chattel Paper;

                  (d)      Computer Hardware and Software and all rights with
                           respect thereto, including, any and all licenses,
                           options, warranties, service contracts, program
                           services, test rights, maintenance rights, support
                           rights, improvement rights, renewal rights and
                           indemnifications, and any substitutions,
                           replacements, additions or model conversions of any
                           of the foregoing;

                  (e)      Contract Rights;

                                       2-

<PAGE>

                  (f)      Deposit Accounts;

                  (g)      Documents;

                  (h)      Equipment;

                  (i)      Financial Assets;

                  (j)      Fixtures;

                  (k)      General Intangibles, including Payment Intangibles
                           and Software;

                  (l)      Goods (including all of its Equipment, Fixtures and
                           Inventory), and all accessions, additions,
                           attachments, improvements, substitutions and
                           replacements thereto and therefor;

                  (m)      Instruments;

                  (n)      Intellectual Property;

                  (o)      Inventory;

                  (p)      Investment Property;

                  (q)      money (located in every jurisdiction whatsoever);

                  (r)      Letter-of-Credit Rights;

                  (s)      Payment Intangibles;

                  (t)      Security Entitlements;

                  (u)      Software;

                  (v)      Supporting Obligations;

                  (w)      Uncertificated Securities; and

                  (x)      to the extent not included in the foregoing, all
                           other personal property of any kind or description;

together with all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, or evidencing,
embodying, incorporating or referring to any of the foregoing, and all Proceeds,
products, offspring, rents, issues, profits and returns of and from any of the
foregoing; provided, that to the extent that the provisions of any lease,
license, contract, permit, Document or Instrument expressly prohibit (which
prohibition is enforceable under applicable law) any assignment thereof (unless
such prohibition specifically excludes from its scope an assignment for
collateral security purposes) or the grant of a Lien therein, (i) Trustee will
not enforce its Lien in any Grantor's rights under such lease, license,
contract,

                                       3-

<PAGE>

permit, Document or Instrument (other than in respect of the Proceeds thereof)
for so long as such prohibition continues, and (ii) to the extent a violation of
any such prohibition caused by the Lien under this Section 2.1 would allow the
counterparty to any such lease, license, contract, permit, Document or
Instrument to terminate the same under applicable law, then such lease, license,
contract, permit, Document or Instrument shall not constitute Collateral for so
long as such prohibition continues; it being understood that upon request of
Trustee, each Grantor will in good faith use reasonable efforts to obtain
consent for the creation of a Lien in favor of Trustee (and to Trustee's
enforcement of such Lien) in any lease, license, contract, permit, Document or
Instrument that prohibits any assignment thereof or the grant of a Lien therein;
and provided, further, that no Lien is granted in any "intent to use" trademark
applications until such time as a verified statement of use is filed.

                  2.2.     Other Collateral.

                  2.2.1.   Commercial Tort Claims. Each Grantor shall promptly
         notify Trustee in writing upon having a Commercial Tort Claim that
         arises after the Issue Date against any third party and, upon request
         of Trustee, promptly enter into an amendment to this Agreement and do
         such other acts or things reasonably deemed necessary by Trustee to
         give Trustee a security interest in any such Commercial Tort Claim.
         Each Grantor represents and warrants that as of the date of this
         Agreement, to its knowledge, it does not possess any Commercial Tort
         Claims.

                  2.2.2.   Other Collateral. Each Grantor shall (i) prior to the
         Loan Agreement Termination, from time to time (but in no event later
         than four months from any event giving rise to the notice obligation)
         and (ii) following the Loan Agreement Termination, promptly, notify
         Trustee in writing upon acquiring or otherwise obtaining any Collateral
         after the date hereof consisting of (1) Deposit Accounts, Investment
         Property or Letter-of-Credit Rights in (or relating to) an amount in
         excess of $250,000 or Electronic Chattel Paper in (or relating to) an
         amount in excess of $1,000,000 and, upon the request of Trustee and
         subject to the Subordination Agreement, promptly execute such other
         documents, and do such other acts or things deemed appropriate by
         Trustee to deliver to Trustee "control" (as such term is defined in the
         Code) with respect to such Collateral and (2) Documents or Instruments
         in (or relating to) an amount in excess of $250,000 and, upon the
         request of Trustee and subject to the Subordination Agreement, will
         promptly execute such other documents, and do such other acts or things
         deemed appropriate by Trustee to deliver to Trustee possession of such
         Documents which are negotiable and Instruments, and, with respect to
         nonnegotiable Documents, to have such nonnegotiable Documents issued in
         the name of Trustee; and with respect to Collateral having a value in
         excess of $250,000 that is in the possession of a third party, other
         than Certificated Securities and Goods covered by a Document, subject
         to the Subordination Agreement, obtain an acknowledgement from the
         third party that it is holding the Collateral for the benefit of
         Trustee.

                  2.2.3.   Lien Perfection; Further Assurances. Each Grantor
         shall execute such instruments, assignments or documents as are
         necessary to perfect Trustee's Lien upon any of the Collateral and
         shall take such other action as may be required to

                                       4-

<PAGE>

         perfect or to continue the perfection of Trustee's Lien upon the
         Collateral. Unless prohibited by applicable law, each Grantor hereby
         authorizes Trustee to execute and file any such financing statement,
         including, without limitation, financing statements that indicate the
         Collateral (i) as all assets of such Grantor or words of similar
         effect, or (ii) as being of an equal or lesser scope, or with greater
         or lesser detail, than as set forth in Section 2.1, on such Grantor's
         behalf. Each Grantor also hereby ratifies its authorization for Trustee
         to have filed in any jurisdiction any like financing statements or
         amendments thereto if filed prior to the date hereof. The parties agree
         that a carbon, photographic or other reproduction of this Agreement
         shall be sufficient as a financing statement and may be filed in any
         appropriate office in lieu thereof. At Trustee's request, each Grantor
         shall also promptly execute or cause to be executed and shall deliver
         to Trustee any and all documents, instruments and agreements reasonably
         deemed necessary by Trustee to give effect to or carry out the terms of
         the Guaranty Documents.

                  2.2.4.   Lien Subordination. Notwithstanding anything in this
         Agreement to the contrary, the liens securing this Agreement are
         subordinate in the manner and to the extent set forth in that certain
         Lien Subordination Agreement (the "Subordination Agreement") dated as
         of the date hereof among Trustee, Neenah Foundry Company ("Neenah") and
         the other "Companies" (as defined therein) party thereto and Fleet
         Capital Corporation ("Agent"), to the liens securing the indebtedness
         (including interest) owed by the Companies pursuant to or in connection
         with that certain Loan and Security Agreement dated as of the date
         hereof among Neenah, certain of the other Companies, Agent and the
         lenders from time to time party thereto, as such Loan and Security
         Agreement may be amended, supplemented or otherwise modified from time
         to time and to indebtedness refinancing the indebtedness under such
         Loan and Security Agreement; and the Trustee (on behalf of itself and
         each Noteholder), by its acceptance hereof, irrevocably agrees to be
         bound by the provisions of the Subordination Agreement and each
         agreement made therein by the Trustee on its behalf.

                  3.       REPRESENTATIONS, WARRANTIES AND COVENANTS

                  3.1.     [Intentionally Omitted]

                  3.2.     Location of Collateral. All Collateral, other than
Inventory in transit and motor vehicles, will at all times be kept by the
Grantors at one or more of the business locations set forth in Exhibit 3.2
hereto, as updated by the Grantors providing prior written notice to Trustee of
any new location.

                  3.3.     Accounts.

                  3.3.1.   Records of Accounts. Each Grantor shall keep accurate
         and complete records of its Accounts and all payments and collections
         thereon and shall submit to Trustee on such periodic basis as Trustee
         shall reasonably request a sales and collections report for the
         preceding period.

                                       5-

<PAGE>

                  3.3.2.   Account Verification. Any of Trustee's officers,
         employees or agents shall have the right, at any time or times
         hereafter, in the name of Trustee, any designee of Trustee or any
         Grantor, to verify the validity, amount or any other matter relating to
         any Accounts by mail, telephone, electronic communication or otherwise,
         and each Grantor shall cooperate fully with Trustee in an effort to
         facilitate and promptly conclude any such verification process;
         provided, that so long as no Event of -------- Default has occurred and
         is continuing, (a) Trustee shall provide each Grantor with reasonable
         prior notice that Trustee will be conducting Account verifications (it
         being understood that Trustee shall have no duty to identify any of the
         specific Account debtors to be contacted by Trustee in connection
         therewith), and (b) Trustee shall afford each Grantor the opportunity
         to have an observational role with respect to any such Account
         verifications (it being understood that no Grantor will have any right
         to be an active participant with respect to any such Account
         verifications).

                  3.4.     Inventory. Each Grantor shall keep accurate and
complete records of its Inventory.

                  3.5.     Equipment. Each Grantor shall keep accurate records
itemizing and describing the kind, type, quantity and book value of its
Equipment and all dispositions thereof. Promptly after the reasonable request
therefor by Trustee, each Grantor shall deliver to Trustee any and all evidence
of ownership, if any, of any of its Equipment.

                  4.       DEFAULTS; RIGHTS AND REMEDIES ON DEFAULT.

                  4.1.     Default. Each of the following occurrences shall
constitute a default under this Agreement (each, a "Default"):

                  (a)      Breach of Indenture. The occurrence of any Event of
                           Default under the Indenture (it being agreed and
                           understood that, notwithstanding anything to the
                           contrary contained in the Indenture, a breach of any
                           of the terms of Section 2.2, Section 3.2, Section
                           3.3, Section 3.4 or Section 3.5 hereof shall only
                           result in a Default hereunder and an Event of Default
                           under the Indenture if such breach has not been cured
                           within 30 days after the sooner to occur of any
                           Grantor's receipt of notice of such breach from
                           Trustee or the date on which such breach first
                           becomes known to an officer of any such Grantor); or

                  (b)      Breach under other Guaranty Documents. Any Grantor's
                           failure to pay when due any obligations of such
                           Grantor under the Guaranty, or the occurrence of any
                           breach of the terms and conditions contained in any
                           Guaranty Document other than, subject to Section
                           4.1(a) above, the Indenture.

                  4.2.     Remedies. Subject to the Subordination Agreement,
upon the occurrence and during the continuance of an Event of Default, Trustee
shall have and may exercise from time to time the following other rights and
remedies:

                                       6-

<PAGE>

                  (a)      All of the rights and remedies of a secured party
                           under the UCC or under other applicable law, and all
                           other legal and equitable rights to which Trustee or
                           Noteholders may be entitled, all of which rights and
                           remedies shall be cumulative and shall be in addition
                           to any other rights or remedies contained in this
                           Agreement or any of the other Guaranty Documents, and
                           none of which shall be exclusive.

                  (b)      The right to take immediate possession of the
                           Collateral, and to (i) require any Grantor to
                           assemble the Collateral, at each Grantor's expense,
                           and make it available to Trustee at a place
                           designated by Trustee which is reasonably convenient
                           to both parties, and (ii) enter any premises where
                           any of the Collateral shall be located and to keep
                           and store the Collateral on said premises until sold
                           (and if said premises be the Property of any Grantor,
                           each Grantor agrees not to charge Trustee for storage
                           thereof).

                  (c)      The right to sell or otherwise dispose of all or any
                           Collateral in its then condition, or after any
                           further manufacturing or processing thereof, at
                           public or private sale or sales, with such notice as
                           may be required by law, in lots or in bulk, for cash
                           or on credit, all as Trustee, in its sole discretion,
                           may deem advisable. Trustee may, at Trustee's option,
                           disclaim any and all warranties regarding the
                           Collateral in connection with any such sale. Each
                           Grantor agrees that 10 days' written notice to any
                           Grantor of any public or private sale or other
                           disposition of Collateral shall be reasonable notice
                           thereof, and such sale shall be at such locations as
                           Trustee may designate in said notice. Trustee shall
                           have the right to conduct such sales on each
                           Grantor's premises, without charge therefor, and such
                           sales may be adjourned from time to time in
                           accordance with applicable law. Trustee shall have
                           the right to sell, lease or otherwise dispose of the
                           Collateral, or any part thereof, for cash, credit or
                           any combination thereof, and Trustee, on behalf of
                           Noteholders, may purchase all or any part of the
                           Collateral at public or, if permitted by law, private
                           sale and, in lieu of actual payment of such purchase
                           price, may set off the amount of such price against
                           the Obligations. The proceeds realized from the sale
                           of any Collateral shall be applied in a manner that
                           is consistent with the terms of the Indenture. If any
                           deficiency shall arise, the Grantors shall remain
                           liable to Trustee and Noteholders therefore. Any
                           surplus shall be remitted to whomsoever shall be
                           legally entitled to the same.

                  (d)      Trustee is hereby granted a non-exclusive license or
                           other right to use, without charge, effective upon
                           the occurrence and continuance of an Event of
                           Default, each Grantor's labels, patents, copyrights,
                           licenses, rights of use of any name, trade secrets,
                           tradenames, trademarks and advertising matter, or any
                           Property of a similar nature, as it pertains to the
                           Collateral, in completing, advertising for sale and
                           selling any

                                       7-

<PAGE>

                           Collateral and each Grantor's rights under all
                           licenses and all franchise agreements shall inure to
                           Trustee's benefit.

                  4.3.     Remedies Cumulative; No Waiver. All covenants,
conditions, provisions, warranties, guaranties, indemnities, and other
undertakings of each Grantor contained in this Agreement and the other Guaranty
Documents, or in any document referred to herein or contained in any agreement
supplementary hereto or in any schedule or in any Guaranty Document given to
Trustee or any Noteholder or contained in any other agreement between any
Noteholder and any Grantor or between Trustee and any Grantor heretofore,
concurrently, or hereafter entered into, shall be deemed cumulative to and not
in derogation or substitution of any of the terms, covenants, conditions, or
agreements of each Grantor herein contained. The failure or delay of Trustee or
any Noteholder to require strict performance by any Grantor of any provision of
this Agreement or to exercise or enforce any rights, Liens, powers, or remedies
hereunder or under any of the aforesaid agreements or other documents or
security or Collateral shall not operate as a waiver of such performance, Liens,
rights, powers and remedies, but all such requirements, Liens, rights, powers,
and remedies shall continue in full force and effect until all Loans and other
Obligations owing or to become owing from each Grantor to Trustee and each
Noteholder have been fully satisfied. None of the undertakings, agreements,
warranties, covenants and representations of each Grantor contained in this
Agreement or any of the other Guaranty Documents and no Default or Event of
Default by any Grantor under this Agreement or any other Guaranty Documents
shall be deemed to have been suspended or waived by Noteholders, unless such
suspension or waiver is by an instrument in writing specifying such suspension
or waiver and is signed by a duly authorized representative of Trustee and
directed to any such Grantor.

                  5.       MISCELLANEOUS.

                  5.1.     Power of Attorney.

                  Each Grantor hereby irrevocably designates, makes, constitutes
and appoints Trustee (and all Persons designated by Trustee) as such Grantor's
true and lawful attorney (and agent-in-fact), solely with respect to the matters
set forth in this Section 5.1, and Trustee, or Trustee's agent, may, subject to
the Subordination Agreement, without notice to any Grantor and in any Grantor's
or Trustee's name, but at the cost and expense of the Grantors:

                  5.1.1.   [Intentionally Omitted]

                  5.1.2.   At such time or times after the occurrence and during
         the continuance of an Event of Default, as Trustee or its agent in its
         sole discretion may determine: (i) demand payment of the Accounts from
         the Account Debtors, enforce payment of the Accounts by legal
         proceedings or otherwise, and generally exercise all of each Grantor's
         rights and remedies with respect to the collection of the Accounts;
         (ii) settle, adjust, compromise, discharge or release any of the
         Accounts or other Collateral or any legal proceedings brought to
         collect any of the Accounts or other Collateral; (iii) sell or assign
         any of the Accounts and other Collateral upon such terms, for such
         amounts and at such time or times as Trustee deems advisable, and at
         Trustee's option, with all warranties regarding the Collateral
         disclaimed; (iv) prepare,

                                       8-

<PAGE>

         file and sign any Grantor's name to a proof of claim in bankruptcy or
         similar document against any Account Debtor or to any notice of lien,
         assignment or satisfaction of lien or similar document in connection
         with any of the Collateral; (v) receive, open and dispose of all mail
         addressed to any Grantor and, if an Event of Default has occurred and
         is continuing, notify postal authorities to change the address for
         delivery thereof to such address as Trustee may designate until such
         time as no Event of Default exists; provided, that any contents of such
         mail other than any checks, notes, acceptances, drafts, money orders or
         other evidence of payment or proceeds of the Collateral shall be
         furnished by Trustee to each Grantor in accordance with written
         instructions provided by any such Grantor; (vi) endorse the name of any
         Grantor upon any of the items of payment or proceeds relating to any
         Collateral and deposit the same to the account of Trustee on account of
         the Obligations; (vii) endorse the name of any Grantor upon any chattel
         paper, document, instrument, invoice, freight bill, bill of lading or
         similar document or agreement relating to any Collateral; (viii) use
         each Grantor's stationery and sign the name of each Grantor to
         verifications of the Accounts and notices thereof to Account Debtors
         (provided that Trustee shall deliver drafts of any such written
         communication to each such Grantor prior to the delivery thereof to any
         Account Debtors); (ix) use the information recorded on or contained in
         any data processing equipment and Computer Hardware and Software
         relating to the Accounts, Inventory, Equipment and any other
         Collateral; (x) make and adjust claims under policies of insurance to
         the extent related to the Collateral; and (xi) do all other acts and
         things necessary, in Trustee's determination, to fulfill each Grantor's
         obligations under this Agreement.

                  The power of attorney granted hereby shall constitute a power
coupled with an interest and shall be irrevocable.

                  5.2.     Indemnity. Each Grantor hereby agrees to indemnify
Trustee and each Noteholder (and each of their Affiliates) and hold Trustee and
each Noteholder (and each of their Affiliates) harmless from and against any
liability, loss, damage, suit, action or proceeding suffered or incurred by any
such Person (including reasonable documented attorneys fees and legal expenses)
as the result of any Grantor's failure to observe, perform or discharge such
Grantor's duties hereunder, except those determined by a court of competent
jurisdiction in a final nonappealable judgment to have arisen out of the bad
faith, gross negligence or willful misconduct of, or breach of the terms of this
Agreement or any other Guaranty Document by, Trustee or such Noteholder. In
addition, each Grantor shall defend Trustee and each Noteholder (and each of
their Affiliates) against and hold it harmless from all claims of any Person
with respect to the Collateral (except those resulting from the gross negligence
or intentional misconduct of, or breach of the terms of this Agreement or any
other Loan Document by, any such Person). Without limiting the generality of the
foregoing, each Grantor shall indemnify and hold harmless Trustee and each
Noteholder (and each of their Affiliates) from and against any loss, damage,
cost, expense or liability directly or indirectly arising out of or under the
Environmental Laws, or attributable to the use, generation, storage, release,
threatened release, discharge, disposal or presence of any pollutants,
flammables, explosives, petroleum (including crude oil) or any fraction thereof,
radioactive materials, hazardous wastes, toxic substances or related materials,

                                       9-

<PAGE>

including, without limitation, any substances defined as or included in the
definition of toxic or hazardous substances, wastes, or materials under any
Environmental Law, except for those losses, damages, costs, expenses or
liabilities determined by a court of competent jurisdiction in a final
nonappealable judgment to have arisen out of the bad faith, gross negligence or
willful misconduct of Trustee or such Noteholder. Notwithstanding any contrary
provision in this Agreement, the obligation of each Grantor under this Section
5.2 shall survive the payment in full of the non-indemnity Obligations and the
termination of this Agreement. In connection with its appointment and acting
hereunder, the Trustee is entitled to all rights, privileges, benefits,
protections, immunities and indemnities provided to it under the Indenture.

                  5.3.     Complete Agreement; Sale of Interest.

                  (a)      The Guaranty Documents constitute the complete
                           agreement among the parties with respect to the
                           subject matter hereof and may not be modified,
                           altered or amended, except by an agreement in writing
                           signed by each Grantor and Trustee. No Grantor may
                           sell, assign or transfer any interest in this
                           Agreement or any of the other Guaranty Documents, or
                           any of the Obligations or any portion thereof,
                           including, without limitation, any Grantor's rights,
                           title, interests, remedies, powers and duties
                           hereunder or thereunder.

                  (b)      Each Grantor hereby consents to any Noteholder's
                           participation, sale, assignment, transfer or other
                           disposition, at any time or times hereafter, of this
                           Agreement, the Indenture, any of the other Guaranty
                           Documents or any of the Obligations, or of any
                           portion hereof or thereof, including, without
                           limitation, such Noteholder's rights, title,
                           interests, remedies, powers and duties hereunder or
                           thereunder.

                  5.4.     Modification of Agreement. No amendment, modification
or waiver of any provision of this Agreement or any other Guaranty Document nor
consent to any departure by any Grantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by Trustee and each
Grantor, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

                  5.5.     Reimbursement of Expenses. If, at any time or times
regardless of whether or not an Event of Default then exists, (i) Trustee incurs
reasonable and documented legal or accounting expenses or any other costs or
out-of-pocket expenses in connection with (1) the negotiation and preparation of
this Agreement or any of the other Guaranty Documents or any amendment of or
modification of this Agreement or any of the other Guaranty Documents or (2) the
administration of this Agreement or any of the other Guaranty Documents and the
transactions contemplated hereby and thereby; or (ii) Trustee or any Noteholder
incurs reasonable and documented legal or accounting expenses or any other costs
or out-of-pocket expenses in connection with (1) any litigation, contest,
dispute, suit, proceeding or action (whether instituted by Trustee, any
Noteholder, any Grantor or any other Person) relating to the Collateral, this
Agreement or any of the other Guaranty Documents or any Grantor's affairs; (2)
any attempt to enforce any rights of Trustee or any

                                      10-

<PAGE>

Noteholder against any Grantor or any other Person which may be obligated to
Trustee or any Noteholder by virtue of this Agreement or any of the other
Guaranty Documents, including, without limitation, the Account Debtors; or (3)
any attempt to inspect, verify, protect, preserve, restore, collect, sell,
liquidate or otherwise dispose of or realize upon the Collateral; then all such
legal and accounting expenses, other costs and out of pocket expenses of Trustee
or any Noteholder, as applicable, shall be charged to the Grantors; provided,
that no Grantor shall be responsible for such expenses, costs and out-of-pocket
expenses to the extent incurred because of the gross negligence, bad faith or
willful misconduct of Trustee or any Noteholder. All amounts chargeable to any
Grantor under this Section 5.5 shall be Obligations secured by all of the
Collateral, shall be payable within 15 days following demand to Trustee or such
Noteholder, as the case may be, and shall bear interest from the date due and
owing until paid in full at the rate set forth in the Indenture. The Grantors
shall also reimburse Trustee for expenses incurred by Trustee in its
administration of the Collateral to the extent and in the manner provided in the
Indenture.

                  5.6.     Severability. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.

                  5.7.     Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the successors and assigns of each
Grantor, Trustee and each Noteholder.

                  5.8.     Notice. Except as otherwise provided herein, all
notices, requests and demands to or upon a party hereto, to be effective, shall
be in writing, return receipt requested, by personal delivery against receipt,
by overnight courier or by facsimile and, unless otherwise expressly provided
herein, shall be deemed to have been validly served, given, delivered or
received, as applicable, immediately when delivered against receipt, one
Business Day after deposit with an overnight courier or, in the case of
facsimile notice, when sent, addressed as follows:

         If to Trustee:              The Bank of New York
                                     101 Barclay Street, 8th Floor West
                                     New York, NY 10286
                                     Attention: Corporate Trust Administration
                                     Fax No.: (212) 815-5707

         If to any Grantor:          c/o Neenah Foundry Company
                                     2121 Brooks Avenue
                                     Neenah, Wisconsin 54956
                                     Attention: Mr. Gary LaChey
                                     Fax No.: (920) 729-3633

                                      11-

<PAGE>

         With a copy to:             Kirkland & Ellis LLP
                                     Citigroup Center
                                     153 E. 53rd Street
                                     New York, New York 10022
                                     Attention: Geoffrey W. Levin, Esq.
                                     Fax No.: (212) 446-4900

or to such other address as each party may designate for itself by notice given
in accordance with this Section 5.8.

                  5.9.     Release; Termination.

                  5.9.1.   Upon any sale, lease, transfer or other disposition
         of any item of Collateral that is consummated in compliance with the
         Subordination Agreement or the Indenture, Trustee shall execute and
         deliver such documents that the Grantors may reasonably request to
         evidence the release of any such item of Collateral from the security
         interests granted hereunder.

                  5.9.2.   Upon termination of the Indenture and payment in full
         of all Obligations (other than contingent indemnity obligations), the
         security interests granted hereunder shall terminate and all rights to
         the Collateral shall revert back to the Grantors. Upon such
         termination, Trustee shall execute and deliver such documents that the
         Grantors may reasonably request to evidence such termination.

                  5.10.    Interpretation. No provision of this Agreement or any
of the other Guaranty Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have been
structured, drafted or dictated such provision.

                  5.11.    Governing Law; Consent to Forum. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK (WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTS OF LAWS); PROVIDED,
HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION
OTHER THAN NEW YORK, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD,
MANNER AND PROCEDURE FOR FORECLOSURE OF TRUSTEE'S LIEN UPON SUCH COLLATERAL AND
THE ENFORCEMENT OF TRUSTEE'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE
EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT
WITH THE LAWS OF NEW YORK. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED,
AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS
OF ANY GRANTOR, TRUSTEE OR ANY NOTEHOLDER, EACH GRANTOR HEREBY CONSENTS AND
AGREES THAT THE COURTS OF THE STATE OF NEW YORK, OR, AT TRUSTEE'S OPTION, THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY
GRANTOR ON THE ONE HAND AND

                                      12-

<PAGE>

TRUSTEE OR ANY NOTEHOLDER ON THE OTHER HAND PERTAINING TO THIS AGREEMENT OR TO
ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. NOTWITHSTANDING ANYTHING
TO THE CONTRARY IN THE CONFIRMATION ORDER (OR IN ANY AGREEMENT TO WHICH ANY
GRANTOR IS A PARTY) TO THE CONTRARY, EACH GRANTOR EXPRESSLY SUBMITS AND CONSENTS
IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
COURT, AND EACH GRANTOR HEREBY WAIVES ANY OBJECTION WHICH ANY GRANTOR MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS. EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL ADDRESSED TO SUCH GRANTOR AT THE ADDRESS SET FORTH IN THIS
AGREEMENT OR OTHERWISE PROVIDED TO TRUSTEE AS A NEW NOTICE ADDRESS IN ACCORDANCE
WITH THE TERMS HEREOF AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON
THE EARLIER OF SUCH GRANTOR'S ACTUAL RECEIPT THEREOF OR 5 BUSINESS DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF TRUSTEE OR ANY NOTEHOLDER TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE
ENFORCEMENT BY TRUSTEE OR ANY NOTEHOLDER OF ANY JUDGMENT OR ORDER OBTAINED IN
SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN
ANY OTHER APPROPRIATE FORUM OR JURISDICTION.

                  5.12.    Waivers. EACH GRANTOR IRREVOCABLY WAIVES (A) THE
RIGHT TO TRIAL BY JURY (WHICH TRUSTEE HEREBY ALSO WAIVES) IN ANY ACTION, SUIT,
PROCEEDING OF COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS
AGREEMENT, OR ANY OF THE OTHER GUARANTY DOCUMENTS, THE OBLIGATIONS OR THE
COLLATERAL; (B) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT,
PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT,
EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS,
DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY TRUSTEE
OR ANY NOTEHOLDER, ON WHICH ANY GRANTOR MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER TRUSTEE OR ANY NOTEHOLDER MAY DO IN THIS REGARD;
(C) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND
OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING TRUSTEE TO
EXERCISE ANY REMEDIES HEREUNDER; (D) THE BENEFIT OF ALL VALUATION, APPRAISEMENT
AND EXEMPTION LAWS AND (E) NOTICE OF ACCEPTANCE HEREOF. EACH GRANTOR
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO TRUSTEE'S
ENTERING INTO THIS AGREEMENT AND THAT TRUSTEE IS RELYING UPON THE FOREGOING
WAIVERS IN ITS FUTURE DEALINGS WITH THE GRANTORS. EACH

                                      13-

<PAGE>

GRANTOR WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH
ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

                                      14-

<PAGE>

                  IN WITNESS WHEREOF, this Agreement has been duly executed on
the day and year specified at the beginning hereof.

                                       NEENAH FOUNDRY COMPANY

                                       By: _____________________________________
                                       Title:___________________________________

                                       DEETER FOUNDRY, INC.

                                       By: _____________________________________
                                       Title:___________________________________

                                       MERCER FORGE CORPORATION

                                       By: _____________________________________
                                       Title:___________________________________

                                       DALTON CORPORATION

                                       By: _____________________________________
                                       Title:___________________________________

                                       DALTON CORPORATION, STRYKER MACHINING
                                       FACILITY CO.

                                       By: _____________________________________
                                       Title:___________________________________

                                       DALTON CORPORATION, WARSAW MANUFACTURING
                                       FACILITY

                                       By: _____________________________________
                                       Title:___________________________________

                                      15-

<PAGE>

                                       ADVANCED CAST PRODUCTS, INC.

                                       By: _____________________________________
                                       Title:___________________________________

                                       GREGG INDUSTRIES, INC.

                                       By: _____________________________________
                                       Title:___________________________________

                                       NEENAH TRANSPORT, INC.

                                       By: _____________________________________
                                       Title:___________________________________

                                       CAST ALLOYS, INC.

                                       By: _____________________________________
                                       Title:___________________________________

                                       DALTON CORPORATION, KENDALLVILLE
                                       MANUFACTURING FACILITY

                                       By: _____________________________________
                                       Title:___________________________________

                                       DALTON CORPORATION, ASHLAND
                                       MANUFACTURING FACILITY

                                       By: _____________________________________
                                       Title:___________________________________

                                      16-

<PAGE>

                                       A&M SPECIALTIES, INC.

                                       By: _____________________________________
                                       Title:___________________________________

                                       BELCHER CORPORATION

                                       By: _____________________________________
                                       Title:___________________________________

                                       PEERLESS CORPORATION

                                       By: _____________________________________
                                       Title:___________________________________

                                       THE BANK OF NEW YORK, a New York banking
                                       corporation, as Trustee

                                       By:______________________________________
                                       Title:___________________________________

                                      17-

<PAGE>

                                   EXHIBIT 3.2

                             LOCATIONS OF COLLATERAL

                                      18-