SECURITY AGREEMENT

        This Security Agreement (the “Agreement”) is dated as of June 3, 2005,
by and among Gehl Company, a Wisconsin corporation (the “Company”), Compact
Equipment Attachments Inc., a Wisconsin corporation (“Compact”), Gehl Power
Products, Inc., a South Dakota corporation (“Gehl Power”), and Mustang
Manufacturing Company, Inc., a Minnesota corporation (“Mustang” and, together
with Compact and Gehl Power, the “Subsidiary Borrowers;” the Company and
Subsidiary Borrowers are referred to herein collectively as the “Borrowers” and
individually as a “Borrower”) (the Borrowers along with any parties who execute
and deliver to the Agent (as defined below) an agreement substantially in the
form attached hereto as Schedule F, being hereinafter referred to collectively
as the “Debtors” and individually as a “Debtor”), each with its mailing address
as set forth in Section 14(b) below, and Harris N.A., a national banking
association (“Harris”), with its mailing address as set forth in Section 14(b)
below, acting as administrative agent hereunder for the Secured Creditors
hereinafter identified and defined (Harris acting as such administrative agent
and any successor or successors to Harris acting in such capacity being
hereinafter referred to as the “Agent”).

P R E L I M I N A R Y    S T A T E M E N T S

        A.     The Borrowers, the other Debtors, and Harris, individually and as
Agent, have entered into a Credit Agreement dated as of June 3, 2005(such Credit
Agreement, as the same may be amended or modified from time to time, including
amendments and restatements thereof in its entirety, being hereinafter referred
to as the “Credit Agreement”), pursuant to which Harris and other banks and
financial institutions and letter of credit issuers from time to time party to
the Credit Agreement (Harris, in its individual capacity, and such other banks
and financial institutions being hereinafter referred to collectively as the
“Lenders” and individually as a “Lender” and such letter of credit issuers being
hereinafter referred to collectively as the “L/C Issuers”and individually as a
“L/C Issuer”) have agreed, subject to certain terms and conditions, to extend
credit and make certain other financial accommodations available to the
Borrowers (the Agent, the L/C Issuers, and the Lenders, together with affiliates
of the Lenders with respect to Hedging Liability and Funds Transfer and Deposit
Account Liability referred to below, being hereinafter referred to collectively
as the “Secured Creditors” and individually as a “Secured Creditor”).

        B.     In addition, one or more of the Debtors may from time to time be
liable to the Lenders and/or their affiliates with respect to Hedging Liability
and/or Funds Transfer and Deposit Account Liability (as such terms are defined
in the Credit Agreement).

        C.     As a condition to extending credit to the Borrowers under the
Credit Agreement, the Secured Creditors have required, among other things, that
each Debtor grant to the Agent for the benefit of the Secured Creditors a lien
on and security interest in the personal property of such Debtor described
herein subject to the terms and conditions hereof.

        D.     The Company owns, directly or indirectly, equity interests in
each of the Subsidiary Borrowers and in each other Debtor, and the Company
provides each of the Subsidiary Borrowers and each of the other Debtors with
financial, management, administrative, and technical support which enables the
Subsidiary Borrowers and such Debtors to conduct their businesses in an orderly
and efficient manner in the ordinary course.

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        E.     Each Debtor will benefit, directly or indirectly, from credit and
other financial accommodations extended by the Secured Creditors to the
Borrowers.

        NOW, THEREFORE, for good and valuable consideration, receipt whereof is
hereby acknowledged, the parties hereto hereby agree as follows:

        Section 1.    Terms defined in Credit Agreement. Except as otherwise
provided herein, all capitalized terms used herein without definition shall have
the same meanings herein as such terms have in the Credit Agreement. The term
“Debtor” and “Debtors” as used herein shall mean and include the Debtors
collectively and also each individually, with all grants, representations,
warranties, and covenants of and by the Debtors, or any of them, herein
contained to constitute joint and several grants, representations, warranties,
and covenants of and by the Debtors; provided, however, that unless the context
in which the same is used shall otherwise require, any grant, representation,
warranty or covenant contained herein related to the Collateral shall be made by
each Debtor only with respect to the Collateral owned by it or represented by
such Debtor as owned by it.

        Section 2.    Grant of Security Interest in the Collateral. As
collateral security for the Secured Obligations defined below, each Debtor
hereby grants to the Agent for the benefit of the Secured Creditors a lien on
and security interest in, and right of set-off against, and acknowledges and
agrees that the Agent has and shall continue to have for the benefit of the
Secured Creditors a continuing lien on and security interest in, and right of
set-off against, all right, title, and interest in and to the following personal
property of each Debtor, whether now owned or existing or hereafter created,
acquired or arising:

          (a)     Accounts;

          (b)     Chattel Paper;

          (c)     Instruments (including Promissory Notes) to the extent
evidencing or relating to Wholesale Receivables;

          (d)     Documents to the extent evidencing or relating to Inventory;

          (e)     Payment Intangibles;

          (f)     Letter-of-Credit Rights to the extent supporting or relating
to Wholesale Receivables;

          (g)     Supporting Obligations to the extent supporting or relating to
Wholesale Receivables;

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          (h)     deposit accounts no. 19512504 of Compact and no. 27555192 of
the Company, in each case held with M&I Marshall & Ilsley Bank, together with
any other deposit accounts of the Company or its Subsidiaries held at M&I
Marshall & Ilsley Bank into which the proceeds of Wholesale Receivables are
deposited;

          (i)     Subsidiary Interests, whether classified as Investment
Property or as General Intangibles under the UCC;

          (j)     Inventory;

          (k)     Rights to merchandise and other Goods (including rights to
returned or repossessed Goods and rights of stoppage in transit) which is
represented by, arises from, or relates to any of the foregoing;

          (l)     Supporting evidence and documents relating to any of the
above-described property, including, without limitation, computer programs,
disks, tapes and related electronic data processing media, and all rights of
such Debtor to retrieve the same from third parties, written applications,
credit information, account cards, payment records, correspondence, delivery and
installation certificates, invoice copies, delivery receipts, notes and other
evidences of indebtedness, insurance certificates and the like, together with
all books of account, ledgers, and cabinets in which the same are reflected or
maintained;

          (m)     Accessions and additions to, and substitutions and
replacements of, any and all of the foregoing; and

          (n)     Proceeds and products of the foregoing, and all insurance of
the foregoing and proceeds thereof;

all of the foregoing being herein sometimes referred to as the “Collateral;”
provided, however, that the Collateral shall not include the Securitization
Financing Assets. All terms which are used in this Agreement which are defined
in the Uniform Commercial Code of the State of Illinois as in effect from time
to time (“UCC”) shall have the same meanings herein as such terms are defined in
the UCC, unless this Agreement shall otherwise specifically provide.

        For purposes of this Agreement, the following terms when used herein
shall have the following meanings:

        “Dealer” means any dealer in goods manufactured, distributed or sold by
any Debtor for resale or lease by such dealer.

        “Finished Goods” means serialized goods and all attachments for such
serialized goods manufactured, distributed or sold by any Debtor to authorized
Dealers and held for sale or lease.

        “Qualified Securitization Transaction” is used as defined in the Credit
Agreement.

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        “Receivables” means all rights to the payment of a monetary obligation,
whether or not earned by performance, and whether evidenced by an Account,
Chattel Paper, Instrument, Payment Intangible, or otherwise

        “Securitization Financing Assets” means all of (x) each Debtor’s
installment sale contracts and installment promissory notes arising from (i) a
Debtor’s sale or financing (including a refinancing of a previous financing by
any Debtor) of Inventory to Dealers, for lease (but not for sale) to retail
customers, under installment sale contracts or installment promissory notes
which are owned by any Debtor; (ii) a Dealer’s sale or financing of Finished
Goods to retail customers under installment sale contracts or installment
promissory notes which installment sales contracts or installment promissory
notes were purchased by and are owned by a Debtor; (iii) a Debtor’s sale or
financing (including a refinancing of a previous financing by any Debtor) of
Inventory to retail customers under installment sale contracts or installment
promissory notes which are owned by a Debtor; and (iv) installment sale
contracts or installment promissory notes repurchased by any Debtor from third
party creditors to whom a Debtor previously sold or otherwise transferred such
installment sale contracts or installment promissory notes (the installment sale
contracts and installment promissory notes described in the foregoing clauses
(i), (ii) and (iii), collectively, the “Base Securitization Assets”), together
with (y) all of the following: (A) any Inventory the sale or financing of which
(including a refinancing of a previous financing by any Debtor) created a Base
Securitization Asset, (B) all rights of recourse against any Dealer only to the
extent related to the Base Securitization Assets, (C) all rights of recourse
against any third party to whom any Debtor previously sold or otherwise
transferred installment sale contracts or installment promissory notes and such
installment sale contracts or installment promissory notes were repurchased by
any Debtor only to the extent related to the Base Securitization Assets, (D) all
refunds for the cost of extended service contracts only to the extent related to
Base Securitization Assets, (E) all proceeds, including insurance proceeds, only
to the extent relating to the Base Securitization Assets, and including any such
proceeds deposited into any lockbox or bank account established in connection
with such Qualified Securitization Transaction to which the Persons providing
the financing under any Qualified Securitization Transaction have access
pursuant to a written agreement between such Persons and the depository bank,
and (F) all books and records of the Debtors only to the extent relating to the
Base Securitization Assets.

        “Subsidiary Interests” means all equity interests held by a Debtor or
its Subsidiaries (as that term is defined in the Credit Agreement), whether such
equity interests constitute Investment Property or General Intangibles under the
UCC; provided, however, Subsidiary Interests shall not include equity interests
held by a Debtor or its Subsidiaries in an SPE (as such term is defined in the
Credit Agreement).

        “Wholesale Receivables” is used as defined in the Credit Agreement.

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        Section 3.    Secured Obligations. This Agreement is made and given to
secure, and shall secure, the prompt payment and performance when due of (a) any
and all indebtedness, obligations, and liabilities of the Debtors, and of any of
them individually, to the Secured Creditors, and to any of them individually,
under or in connection with or evidenced by the Credit Agreement or any other
Loan Documents, including, without limitation, all obligations evidenced by the
Notes of the Borrowers heretofore or hereafter issued under the Credit
Agreement, all obligations of the Borrowers to reimburse the Secured Creditors
for the amount of all drawings on all Letters of Credit issued pursuant to the
Credit Agreement and all other obligations of the Borrowers under all
Applications for Letters of Credit, all obligations of the Debtors, and of any
of them individually, with respect to any Hedging Liability, all obligations of
the Debtors, and of any of them individually, with respect to any Funds Transfer
and Deposit Account Liability, and all obligations of the Debtors, and of any of
them individually, arising under any guaranty issued by it relating to the
foregoing or any part thereof, in each case whether now existing or hereafter
arising (and whether arising before or after the filing of a petition in
bankruptcy and including all interest accrued after the petition date), due or
to become due, direct or indirect, absolute or contingent, and howsoever
evidenced, held or acquired and (b) any and all reasonable expenses and charges,
legal or otherwise, suffered or incurred by the Secured Creditors, and any of
them individually, in collecting or enforcing any of such indebtedness,
obligations, and liabilities or in realizing on or protecting or preserving any
security therefor, including, without limitation, the lien and security interest
granted hereby (all of the indebtedness, obligations, liabilities, expenses, and
charges described above being hereinafter referred to as the “Secured
Obligations”). Notwithstanding anything in this Agreement to the contrary, the
right of recovery against any Debtor under this Agreement shall not exceed $1.00
less than the lowest amount which would render such Debtor’s obligations under
this Agreement void or voidable under applicable law, including fraudulent
conveyance law.

        Section 4.    Covenants, Agreements, Representations and Warranties.
Each Debtor hereby covenants and agrees with, and represents and warrants to,
the Secured Creditors that:

          (a)     Each Debtor is duly organized and validly existing in good
standing under the laws of the jurisdiction of its organization. Each Debtor is
the sole and lawful owner of its Collateral, and has full right, power, and
authority to enter into this Agreement and to perform each and all of the
matters and things herein provided for. The execution and delivery of this
Agreement, and the observance and performance of each of the matters and things
herein set forth, will not (i) contravene or constitute a default under any
provision of law or any judgment, injunction, order or decree binding upon any
Debtor or any provision of any Debtor’s organizational documents (e.g., charter,
articles or certificate of incorporation and by-laws, articles or certificate of
formation and limited liability company operating agreement, partnership
agreement or similar organizational documents) or any covenant, indenture or
agreement of or affecting any Debtor or any of its property, in each case where
such contravention or default, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect (as such term is
defined in the Credit Agreement) or (ii) result in the creation or imposition of
any lien or encumbrance on any property of any Debtor except for the lien and
security interest granted to the Agent hereunder.

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          (b)     Each Debtor’s respective chief executive office is at the
location listed under Column 2 on Schedule A attached hereto opposite such
Debtor’s name; and such Debtor has no other executive offices or principal
places of business other than those listed under Column 3 on Schedule A attached
hereto opposite such Debtor’s name. The Collateral is and shall remain in such
Debtor’s possession or control at the locations listed under Columns 2 and 3 on
Schedule A attached hereto opposite such Debtor’s name (collectively for each
Debtor, the “Permitted Collateral Locations”), except for (i) Collateral which
in the ordinary course of the Debtor’s business is in transit between Permitted
Collateral Locations or from a vendor to a Permitted Collateral Location and
(ii) Collateral aggregating less than $2,500,000 in fair market value
outstanding at any one time. If for any reason any Collateral is at any time
kept or located at a location other than a Permitted Collateral Location, the
Agent shall nevertheless have and retain a lien on and security interest
therein. The Debtors own and shall continue to own the Permitted Collateral
Locations except to the extent otherwise disclosed under Columns 2 and 3 on
Schedule A. No Debtor shall move its chief executive office or maintain a place
of business at a location other than those specified under Columns 2 or 3 on
Schedule A or permit any Collateral to be located at a location other than a
Permitted Collateral Location, in each case without first providing the Agent at
least 30 days prior written notice of the Debtor’s intent to do so; provided
that each Debtor shall at all times maintain its chief executive office,
principal places of business, and Permitted Collateral Locations in the United
States of America and such Debtor shall have taken all action reasonably
requested by the Agent to maintain the lien and security interest of the Agent
in the Collateral at all times fully perfected and in full force and effect.

          (c)     Each Debtor’s legal name, jurisdiction of organization and
organizational number (if any) are correctly set forth under Column 1 on
Schedule A of this Agreement. No Debtor has transacted business at any time
during the immediately preceding five-year period, and does not currently
transact business, under any other legal names or trade names other than the
prior legal names and trade names (if any) set forth on Schedule B attached
hereto. No Debtor shall change its jurisdiction of organization without first
giving 30 days’ prior written notice to the Agent and no such Debtor shall have
a jurisdiction of organization outside the United States of America. No Debtor
shall change its legal name or transact business under any other trade name
without first giving 30 days’ prior written notice of its intent to do so to the
Agent.

          (d)     The Collateral and every part thereof is and shall be free and
clear of all security interests, liens (including, without limitation,
mechanics’, laborers’ and statutory liens), attachments, levies, and
encumbrances of every kind, nature, and description and whether voluntary or
involuntary, except for the lien and security interest of the Agent therein and
other Liens permitted by Section 8.8 of the Credit Agreement (herein, the
“Permitted Liens”). Each Debtor shall warrant and defend the Collateral against
any claims and demands of all persons at any time claiming the same or any
interest in the Collateral adverse to any of the Secured Creditors.

          (e)     Each Debtor will promptly pay when due all taxes, assessments,
and governmental charges and levies upon or against it or its Collateral, in
each case before the same become delinquent and before penalties accrue thereon,
unless and to the extent that the same are being contested in good faith by
appropriate proceedings which prevent attachment of any lien resulting therefrom
to, foreclosure on or other realization upon any Collateral and preclude
interference with the operation of its business in the ordinary course and such
Debtor shall have established adequate reserves therefor.

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          (f)     Each Debtor agrees it will not waste or destroy the Collateral
or any part thereof and will not be negligent in the care or use of any
Collateral. Each Debtor agrees it will not use, manufacture, sell or distribute
any Collateral in violation of any statute, ordinance or other governmental
requirement to the extent such violation would be reasonably likely to have a
Material Adverse Effect. Each Debtor will perform in all material respects its
obligations under any contract or other agreement constituting part of the
Collateral, it being understood and agreed that the Secured Creditors have no
responsibility to perform such obligations.

          (g)     Subject to Sections 5(c), 6(a), 7(b), and 8(c) hereof and the
terms of the Credit Agreement (including, without limitation, Section 8.10
thereof), each Debtor agrees it will not, without the Agent’s prior written
consent, sell, assign, mortgage, lease, or otherwise dispose of the Collateral
or any interest therein.

          (h)     Each Debtor will insure its Collateral consisting of tangible
personal property against such risks and hazards as other companies similarly
situated insure against, and including in any event loss or damage by fire,
theft, burglary, pilferage, and loss in transit, in amounts and under policies
containing loss payable clauses to the Agent as its interest may appear (and, if
the Agent requests, naming the Agent as additional insured therein) by insurers
reasonably acceptable to the Agent. All premiums on such insurance shall be paid
by the Debtors and copies of the policies of such insurance (or certificates
therefor) shall be delivered to the Agent. All insurance required hereby shall
provide that any loss shall be payable notwithstanding any act or negligence of
the relevant Debtor, shall provide that no cancellation thereof shall be
effective until at least 30 days after receipt by the relevant Debtor and the
Agent of written notice thereof, and shall be reasonably satisfactory to the
Agent in all other respects. In case of any material loss, damage to or
destruction of the Collateral or any part thereof, the relevant Debtor shall
promptly give written notice thereof to the Agent generally describing the
nature and extent of such loss, damage or destruction. In case of any loss,
damage to or destruction of the Collateral or any part thereof, the relevant
Debtor, whether or not the insurance proceeds, if any, received on account of
such damage or destruction shall be sufficient for that purpose, at such
Debtor’s cost and expense, will promptly repair or replace the Collateral so
lost, damaged or destroyed, except to the extent such Collateral is not
necessary to the conduct of such Debtor’s business in the ordinary course. In
the event any Debtor shall receive any proceeds of such insurance, such Debtor
shall immediately pay over such proceeds of insurance to the Agent which will
thereafter be applied to the reduction of the Secured Obligations (whether or
not then due) or held as collateral security therefor, as the Agent may then
determine or as otherwise provided for in the Credit Agreement; provided,
however, that the Agent agrees to release such insurance proceeds to the
relevant Debtor for replacement or restoration of the portion of the Collateral
lost, damaged or destroyed if, but only if, (i) at the time of release no
Default or Event of Default exists, (ii) written application for such release is
received by the Agent from the relevant Debtor within 30 days of the receipt of
such proceeds, and (iii) the Agent has received evidence reasonably satisfactory
to it that the Collateral lost, damaged or destroyed has been or will be
replaced or restored to its condition immediately prior to the loss, destruction
or other event giving rise to the payment of such insurance proceeds. Each
Debtor hereby authorizes the Agent, at the Agent’s option and upon written
notice of such election, to adjust, compromise, and settle any losses under any
insurance afforded at any time after the occurrence and during the continuation
of any Event of Default, and such Debtor does hereby irrevocably constitute the
Agent, its officers, agents, and attorneys, as such Debtor’s attorneys-in-fact,
with full power and authority after the occurrence and during the continuation
of any Event of Default to effect such adjustment, compromise, and/or settlement
and to endorse any drafts drawn by an insurer of the Collateral or any part
thereof and to do everything necessary to carry out such purposes and to receive
and receipt for any unearned premiums due under policies of such insurance.
Unless the Agent elects to adjust, compromise or settle losses as aforesaid, any
adjustment, compromise, and/or settlement of any losses under any insurance
shall be made by the relevant Debtor subject to final approval of the Agent
(regardless of whether or not an Event of Default shall have occurred) in the
case of losses exceeding $5,000,000. All insurance proceeds shall be subject to
the lien and security interest of the Agent hereunder.

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          UNLESS THE DEBTORS PROVIDE THE AGENT WITH EVIDENCE OF THE INSURANCE
COVERAGE REQUIRED BY THIS AGREEMENT, THE AGENT MAY PURCHASE INSURANCE AT THE
DEBTORS’ EXPENSE TO PROTECT THE AGENT’S INTERESTS IN THE COLLATERAL. THIS
INSURANCE MAY, BUT NEED NOT, PROTECT ANY DEBTOR’S INTERESTS IN THE COLLATERAL.
THE COVERAGE PURCHASED BY THE AGENT MAY NOT PAY ANY CLAIMS THAT ANY DEBTOR MAKES
OR ANY CLAIM THAT IS MADE AGAINST SUCH DEBTOR IN CONNECTION WITH THE COLLATERAL.
THE DEBTORS MAY LATER CANCEL ANY SUCH INSURANCE PURCHASED BY THE AGENT, BUT ONLY
AFTER PROVIDING THE AGENT WITH EVIDENCE THAT THE DEBTORS HAVE OBTAINED INSURANCE
AS REQUIRED BY THIS AGREEMENT. IF THE AGENT PURCHASES INSURANCE FOR THE
COLLATERAL, THE DEBTORS WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE,
INCLUDING INTEREST AND ANY OTHER CHARGES THAT THE AGENT MAY IMPOSE IN CONNECTION
WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE
CANCELLATION OR EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE
ADDED TO THE SECURED OBLIGATIONS SECURED HEREBY. THE COSTS OF THE INSURANCE MAY
BE MORE THAN THE COST OF INSURANCE THE DEBTORS MAY BE ABLE TO OBTAIN ON THEIR
OWN.

          (i)     Each Debtor will at all times allow the Secured Creditors, at
such Secured Creditors’ expense in the absence of an Event of Default and at the
Debtors’ expense during the existence of an Event of Default, and their
respective representatives free access to and right of inspection of the
Collateral at such reasonable times and intervals as the Agent or any other
Secured Creditor may designate and, in the absence of any existing Default or
Event of Default, with reasonable prior written notice to the relevant Debtor.

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          (j)     If any Collateral is in the possession or control of any
agents or processors of a Debtor and the Agent so requests, such Debtor agrees
to notify such agents or processors in writing of the Agent’s lien and security
interest therein and instruct them to hold all such Collateral for the Agent’s
account and subject to the Agent’s instructions. Each Debtor will, upon the
request of the Agent, authorize and instruct all bailees and any other parties,
if any, at any time processing, labeling, packaging, holding, storing, shipping
or transferring all or any part of the Collateral to permit the Secured
Creditors and their respective representatives to examine and inspect any of the
Collateral then in such party’s possession and to verify from such party’s own
books and records any information concerning the Collateral or any part thereof
which the Secured Creditors or their respective representatives may seek to
verify. As to any premises not owned by a Debtor wherein any of the Collateral
is located, if any, such Debtor shall, upon the Agent’s request, use
commercially reasonable efforts to cause each party having any right, title or
interest in, or lien on, any of such premises to enter into an agreement (any
such agreement to contain a legal description of such premises) whereby such
party disclaims any right, title, and interest in and lien on the Collateral,
allows the removal of such Collateral by the Agent or its agents or
representatives, and otherwise is in form and substance reasonably acceptable to
the Agent.

          (k)     Upon the Agent’s reasonable request, each Debtor agrees from
time to time to deliver to the Agent such evidence of the existence, identity,
and location of its Collateral and of its availability as collateral security
pursuant hereto (including, without limitation, schedules describing all
Receivables created or acquired by such Debtor, copies of customer invoices or
the equivalent and original shipping or delivery receipts for all merchandise
and other goods sold or leased or services rendered by it, together with such
Debtor’s warranty of the genuineness thereof, and reports stating the book value
of its Inventory by major category and location). The Agent shall have the right
to verify all or any part of the Collateral in any manner, and through any
medium, which the Agent considers appropriate and reasonable, and each Debtor
agrees to furnish all assistance and information, and perform any acts, which
the Agent may reasonably require in connection therewith.

          (l)     Each Debtor will comply in all material respects with the
terms and conditions of any and all leases, easements, right-of-way agreements,
and other agreements binding upon such Debtor or affecting the Collateral, in
each case which cover the premises wherein the Collateral is located, and any
orders, ordinances, laws or statutes of any city, state or other governmental
entity, department or agency having jurisdiction with respect to such premises
or the conduct of business thereon.

          (m)    [Intentionally omitted.]

          (n)    [Intentionally omitted.]

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          (o)     Each Debtor agrees to execute and deliver to the Agent such
further agreements, assignments, instruments, and documents, and to do all such
other things, as the Agent may reasonably deem necessary or appropriate to
assure the Agent its lien and security interest hereunder, including, without
limitation, (i) such financing statements or other instruments and documents as
the Agent may from time to time reasonably require to comply with the UCC and
any other applicable law and (ii) such control agreements with respect to
Collateral consisting of Deposit Accounts, Subsidiary Interests,
Letter-of-Credit Rights, and electronic Chattel Paper, and to use commercially
reasonable efforts to cause the relevant depository institutions, financial
intermediaries, and issuers to execute and deliver such control agreements, as
the Agent may from time to time reasonably require. Each Debtor hereby agrees
that a carbon, photographic or other reproduction of this Agreement or any such
financing statement is sufficient for filing as a financing statement by the
Agent. Each Debtor hereby authorizes the Agent to file any and all financing
statements covering the Collateral or any part thereof as the Agent may
reasonably require. The Agent may order lien searches from time to time against
any Debtor and the Collateral, and the Debtors shall promptly reimburse the
Agent for all reasonable costs and expenses incurred in connection with such
lien searches; provided, however, in the absence of an Event of Default, the
Debtors shall only be required to pay for one such lien search per fiscal year
for any Debtor in any relevant jurisdiction. In the event for any reason the law
of any jurisdiction other than Illinois becomes or is applicable to the
Collateral or any part thereof, or to any of the Secured Obligations, each
Debtor agrees to execute and deliver all such agreements, assignments,
instruments, and documents and to do all such other things as the Agent
reasonably deems necessary or appropriate to preserve, protect, and enforce the
security interest of the Agent under the law of such other jurisdiction. Each
Debtor agrees to mark its books and records to reflect the lien and security
interest of the Agent in the Collateral.

          (p)        On failure of any Debtor to perform any of the covenants
and agreements herein contained, the Agent may, at its option, perform the same
and in so doing may expend such sums as the Agent reasonably deems advisable in
the performance thereof, including, without limitation, the payment of any
insurance premiums, the payment of any taxes, liens, and encumbrances,
expenditures made in defending against any adverse claims, and all other
expenditures which the Agent may be compelled to make by operation of law or
which the Agent may make by agreement or otherwise for the protection of the
security hereof. All such sums and amounts so expended shall be repayable by the
Debtors upon demand, shall constitute additional Secured Obligations secured
hereunder, and shall bear interest from the date said amounts are expended at
the rate per annum (computed on the basis of a year of 365 or 366 days, as the
case may be for the actual number of days elapsed) determined by adding 2.0% per
annum to the Base Rate from time to time in effect plus the Applicable Margin
from time to time in effect for Base Rate Loans under the Revolving Credit, with
any change in such rate per annum as so determined by reason of a change in such
Base Rate to be effective on the date of such change in said Base Rate (such
rate per annum as so determined being hereinafter referred to as the “Default
Rate”). No such performance of any covenant or agreement by the Agent on behalf
of a Debtor, and no such advancement or expenditure therefor, shall relieve any
Debtor of any default under the terms of this Agreement or in any way obligate
any Secured Creditor to take any further or future action with respect thereto.
The Agent, in making any payment hereby authorized, may do so according to any
bill, statement or estimate procured from the appropriate public office or
holder of the claim to be discharged without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax assessment, sale,
forfeiture, tax lien or title or claim. The Agent, in performing any act
hereunder, shall be the sole judge of whether the relevant Debtor is required to
perform the same under the terms of this Agreement. The Agent is hereby
authorized to charge any account of any Debtor maintained with any Secured
Creditor for the amount of such sums and amounts so expended.

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        Section 5.    Special Provisions Re: Receivables. (a) As of the time any
Receivable owned by a Debtor becomes subject to the security interest provided
for hereby, and at all times thereafter (or, if any such warranty is expressly
stated to have been made as of a specified date, as of such specified date),
such Debtor shall be deemed to have warranted as to each such Receivable that
all warranties of such Debtor set forth in this Agreement are true and correct
in all material respects with respect to such Receivable; that such Receivable
and all papers and documents relating thereto are genuine and in all respects
what they purport to be; that such Receivable is valid and subsisting; that the
amount of such Receivable represented as owing is the correct amount actually
and unconditionally owing, except for normal cash discounts on normal trade
terms in the ordinary course of business; that the amount of such Receivable
represented as owing is not disputed and is not subject to any material
set-offs, credits, deductions or countercharges other than those arising in the
ordinary course of such Debtor’s business which are disclosed to the Agent in
writing promptly upon such Debtor becoming aware thereof; and, except as
disclosed to the Agent in writing at or prior to the time such Receivable is
created, that no surety bond was required or given in connection with such
Receivable or the contracts or purchase orders out of which the same arose.

        (b)     If any Receivable arises out of a contract with the United
States of America, or any state or political subdivision thereof, or any
department, agency or instrumentality of any of the foregoing, each Debtor
agrees to promptly so notify the Agent and, at the request of the Agent or the
Secured Creditors, execute whatever instruments and documents are reasonably
required by the Agent in order that such Receivable shall be assigned to the
Agent and that proper notice of such assignment shall be given under the federal
Assignment of Claims Act (or any successor statute) or any similar state or
local statute, as the case may be.

        (c)     Unless and until an Event of Default has occurred and is
continuing any merchandise or other goods which are returned by a customer or
account debtor or otherwise recovered may be resold by a Debtor in the ordinary
course of its business as presently conducted in accordance with Section 7(b)
hereof; and, during the existence of any Event of Default, such merchandise and
other goods shall be set aside at the request of the Agent and held by the
relevant Debtor as trustee for the Secured Creditors and shall remain part of
the Secured Creditors’ Collateral. Unless and until an Event of Default has
occurred and is continuing, each Debtor may settle and adjust disputes and
claims with its customers and account debtors, handle returns and recoveries,
and grant discounts, credits, and allowances in the ordinary course of its
business as presently conducted for amounts and on terms which such Debtor in
good faith considers advisable; and, during the existence of any Event of
Default, at the Agent’s request, the Debtors shall notify the Agent promptly of
all returns and recoveries and, on the Agent’s request, deliver any such
merchandise or other goods to the Agent. During the existence of any Event of
Default, at the Agent’s request, the Debtors shall also notify the Agent
promptly of all disputes and claims and settle or adjust them at no expense to
the Agent, but no discount, credit or allowance other than on normal trade terms
in the ordinary course of business as presently conducted shall be granted to
any customer or account debtor and no returns of merchandise or other goods
shall be accepted by any Debtor without the Agent’s consent. The Agent may, at
all times during the existence of any Event of Default, settle or adjust
disputes and claims directly with customers or account debtors for amounts and
upon terms which the Agent considers advisable.

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        (d)     Upon the request of the Agent, each Debtor shall cause any
Receivable or other item of Collateral evidenced by an Instrument or tangible
Chattel Paper to be pledged and delivered to the Agent. Unless delivered to the
Agent or its agent, all tangible Chattel Paper and Instruments shall contain a
legend reasonably acceptable to the Agent indicating that such Chattel Paper or
Instrument is subject to the security interest of the Agent contemplated by this
Agreement.

        Section 6.    Collection of Receivables. (a) Except as otherwise
provided in this Agreement, each Debtor shall make collection of its Receivables
and may use the same to carry on its business in accordance with sound business
practice and otherwise subject to the terms hereof.

        (b)     In the event the Agent requests any Debtor to do so:

          (i)     all Instruments and tangible Chattel Paper at any time
constituting part of the Receivables (including any postdated checks) shall,
upon receipt by such Debtor, be immediately endorsed to and deposited with
Agent; and/or

          (ii)     after the occurrence of an Event of Default, such Debtor
shall instruct all customers and account debtors to remit all payments in
respect of Receivables or any other Collateral to a lockbox or lockboxes under
the sole custody and control of the Agent and which are maintained at one or
more post offices selected by the Agent.

        (c)     Upon the occurrence and during the continuation of any Event of
Default, whether or not the Agent has exercised any of its other rights under
the other provisions of this Section 6, the Agent or its designee may notify the
relevant Debtor’s customers and account debtors at any time that Receivables
have been assigned to the Agent or of the Agent’s security interest therein, and
either in its own name, or such Debtor’s name, or both, demand, collect
(including, without limitation, through a lockbox analogous to that described in
Section 6(b)(ii) hereof), receive, receipt for, sue for, compound and give
acquittance for any or all amounts due or to become due on Receivables, and in
the Agent’s discretion file any claim or take any other action or proceeding
which the Agent may deem necessary or appropriate to protect and realize upon
the security interest of the Agent in the Receivables or any other Collateral.

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        (d)     Any proceeds of Receivables or other Collateral transmitted to
or otherwise received by the Agent pursuant to any of the provisions of
Sections 6(b) or 6(c) hereof may be handled and administered by the Agent in and
through a remittance account or accounts maintained at the Agent or by the Agent
at a commercial bank or banks selected by the Agent (collectively the
“Depositary Banks” and individually a “Depositary Bank”), and each Debtor
acknowledges that the maintenance of such remittance accounts by the Agent is
solely for the Agent’s convenience and that the Debtors do not have any right,
title or interest in such remittance accounts or any amounts at any time
standing to the credit thereof. The Agent may, after the occurrence and during
the continuation of any Event of Default, apply all or any part of any proceeds
of Receivables or other Collateral received by it from any source to the payment
of the Secured Obligations (whether or not then due and payable), such
applications to be made in such amounts, in such manner and order, and at such
intervals as the Agent may from time to time in its discretion determine, but
not less often than once each week. The Agent need not apply or give credit for
any item included in proceeds of Receivables or other Collateral until the
Depositary Bank has received final payment therefor at its office in cash or
final solvent credits current at the site of deposit acceptable to the Agent and
the Depositary Bank as such. However, if the Agent does permit credit to be
given for any item prior to a Depositary Bank receiving final payment therefor
and such Depositary Bank fails to receive such final payment or an item is
charged back to the Agent or any Depositary Bank for any reason, the Agent may
at its election in either instance charge the amount of such item back against
any such remittance accounts or any Deposit Account of any Debtor subject to the
lien and security interest of this Agreement, together with interest thereon at
the Default Rate. Concurrently with each transmission of any proceeds of
Receivables or other Collateral to any such remittance account, upon the Agent’s
request, the relevant Debtor shall furnish the Agent with a report in such form
as Agent shall reasonably require identifying the particular Receivable or such
other Collateral from which the same arises or relates. Each Debtor hereby
indemnifies the Secured Creditors from and against all liabilities, damages,
losses, actions, claims, judgments, and all reasonable costs, expenses, charges,
and attorneys’ fees suffered or incurred by any Secured Creditor because of the
maintenance of the foregoing arrangements; provided,however, that no Debtor
shall be required to indemnify any Secured Creditor for any of the foregoing to
the extent they arise solely from the gross negligence or willful misconduct of
the person seeking to be indemnified. The Secured Creditors shall have no
liability or responsibility to any Debtor for the Agent or any Depositary Bank
accepting any check, draft or other order for payment of money bearing the
legend “payment in full” or words of similar import or any other restrictive
legend or endorsement whatsoever or be responsible for determining the
correctness of any remittance.

        (e)     Cash proceeds of Wholesale Receivables shall be deposited by the
Debtors only in the deposit accounts specifically identified by number in
Section 2(h) hereof or in other deposit accounts in which the Agent has been
granted a security interest hereunder and with respect to which the Debtor has
caused to be delivered to the Agent a deposit account control agreement in form
and substance reasonably satisfactory to the Agent.

        Section 7.    Special Provisions Re: Inventory. (a) Each Debtor shall at
its own cost and expense maintain, keep, and preserve its Inventory in good and
merchantable condition.

        (b)     Each Debtor may, until an Event of Default has occurred and is
continuing and thereafter until otherwise notified by the Agent, use, consume,
sell, and lease the Inventory in the ordinary course of its business, but a sale
in the ordinary course of business shall not under any circumstance include any
transfer or sale in satisfaction, partial or complete, of a debt owing by such
Debtor.

        (c)    [Intentionally omitted.]

        (d)     As of the time any Inventory of a Debtor becomes subject to the
security interest provided for hereby and at all times thereafter (or, if any
such warranty is expressly stated to have been made as of a specific date, as of
such specific date), such Debtor shall be deemed to have warranted as to any and
all of such Inventory that all warranties of such Debtor set forth in this
Agreement are true and correct in all material respects with respect to such
Inventory; and that all of such Inventory is located at a location set forth
pursuant to Section 4(b) hereof. Each Debtor warrants and agrees that none of
its Inventory is or will be consigned to any other person without the Agent’s
prior written consent.

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        (e)     EachDebtor shall at its own cost and expense cause the lien of
the Agent in and to any portion of the Collateral subject to a certificate of
title law to be duly noted on such certificate of title or to be otherwise filed
in such manner as is prescribed by law in order to perfect such lien and will
cause all such certificates of title and evidences of lien to be deposited with
the Agent.

        (f)    [Intentionally omitted.]

        (g)     If any of the Inventory constituting Collateral is at any time
evidenced by a document of title, such document shall be promptly delivered by
the relevant Debtor to the Agent.

        Section 8.    Special Provisions Re: Subsidiary Interests. (a) Unless
and until an Event of Default has occurred and is continuing and thereafter
until notified to the contrary by the Agent pursuant to Section 10(d) hereof:

          (i)     each Debtor shall be entitled to exercise all voting and/or
consensual powers pertaining to its Subsidiary Interests, or any part thereof,
for all purposes not inconsistent with the terms of this Agreement, the Credit
Agreement or any other document evidencing or otherwise relating to any Secured
Obligations;

          (ii)     each Debtor shall be entitled to receive and retain all cash
dividends paid upon or in respect of its Subsidiary Interests subject to the
lien and security interest of this Agreement; and

          (iii)     the Agent shall execute and deliver to each Debtor all such
proxies and other instruments as such Debtor may reasonably request for the
purpose of enabling such Debtor to exercise the rights set forth in clause (i)
above and to receive the amounts set forth in clause (ii) above.

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        (b)     All Subsidiary Interests of the Debtors on the date hereof are
listed and identified on Schedule E attached hereto and made a part hereof. Each
Debtor shall promptly notify the Agent of any other Subsidiary Interests
acquired or maintained by such Debtor after the date hereof, and shall submit to
the Agent a supplement to Schedule E to reflect such additional rights (provided
any Debtor’s failure to do so shall not impair the Agent’s security interest
therein). Certificates for all certificated securities now or at any time
constituting Subsidiary Interests and part of the Collateral hereunder shall be
promptly delivered by the relevant Debtor to the Agent duly endorsed in blank
for transfer or accompanied by an appropriate assignment or assignments or an
appropriate undated stock power or powers, in every case sufficient to transfer
title thereto, including, without limitation, all stock received in respect of a
stock dividend or resulting from a split-up, revision or reclassification of the
Subsidiary Interests or any part thereof or received in addition to, in
substitution of or in exchange for the Subsidiary Interests any part thereof as
a result of a merger, consolidation or otherwise. With respect to any
uncertificated securities or any other Subsidiary Interests held by a securities
intermediary or other financial intermediary of any kind, at the Agent’s
request, the relevant Debtor shall execute and deliver, and shall use
commercially reasonable efforts to cause any such intermediary to execute and
deliver, an agreement among such Debtor, the Agent, and such intermediary in
form and substance satisfactory to the Agent which provides, among other things,
for the intermediary’s agreement that it will comply with such entitlement
orders, and apply any value distributed on account of any Subsidiary Interests,
as directed by the Agent without further consent by such Debtor. The Agent may,
at any time after the occurrence and during the continuation of any Event of
Default, cause to be transferred into its name or the name of its nominee or
nominees any and all of the Subsidiary Interests hereunder.

        (c)     Except to the extent permitted by the Credit Agreement, no
Debtor shall sell or otherwise dispose of any capital stock or other equity
interest in any Subsidiary Interests without the prior written consent of the
Agent. After the occurrence and during the continuation of any Event of Default,
no Debtor shall sell all or any part of its Subsidiary Interests without the
prior written consent of the Agent.

        (d)     Each Debtor represents that on the date of this Agreement, none
of the Collateral consists of margin stock (as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System) except to
the extent such Debtor has delivered to the Agent a duly executed and completed
Form U-1 with respect to such stock. If at any time the Subsidiary Interests or
any part thereof consists of margin stock, the relevant Debtor shall promptly so
notify the Agent and deliver to the Agent a duly executed and completed Form U-1
and such other instruments and documents reasonably requested by the Agent in
form and substance satisfactory to the Agent.

        (e)     Notwithstanding anything to the contrary contained herein, in
the event any Subsidiary Interests are subject to the terms of a separate
security agreement in favor of the Agent, the terms of such separate security
agreement shall govern and control unless otherwise agreed to in writing by the
Agent.

        (f)     Each Debtor represents and warrants to the Secured Creditors as
follows: (i) as of the date hereof, each Subsidiary is a valid and existing
entity of the type listed on Schedule E and is duly organized and existing under
applicable law; (ii) as of the date hereof, the Subsidiary Interests listed and
described on Schedule E hereto constitute the percentage of the equity interest
in each Subsidiary set forth thereon owned by the relevant Debtor; (iii) as of
the date hereof, copies of the certificate or articles of incorporation and
by-laws, certificate or articles of association and operating agreement, and
partnership agreement of each Subsidiary (each such agreement being hereinafter
referred to as an “Organizational Agreement”) heretofore delivered to the Agent
are true and correct copies thereof and have not been amended or modified in any
respect, and (iv) without the prior written consent of the Agent, no Debtor will
agree to any amendment or modification to any Organizational Agreement which
would materially and adversely affect or impair the Subsidiary Interests or
reduce or dilute the rights of such Debtor with respect to any Subsidiary
Interests. Each Debtor shall perform when due all of its material obligations
under each Organizational Agreement.

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        (g)     Any Debtor which is the owner of any Dormant Subsidiary shall
not allow such Dormant Subsidiary to (i) have or retain any assets other than a
de minimis amount of assets or (ii) incur any obligations or conduct any
business other than the winding-up and dissolution of such Dormant Subsidiary.
For purposes of this Agreement, “Dormant Subsidiary” means Hedlund Martin, Inc.,
a Pennsylvania corporation.

        Section 9.    Power of Attorney. In addition to any other powers of
attorney contained herein, each Debtor hereby appoints the Agent, its nominee,
or any other person whom the Agent may designate as such Debtor’s
attorney-in-fact, with full power and authority upon the occurrence and during
the continuation of any Event of Default to sign such Debtor’s name on
verifications of Receivables and other Collateral; to send requests for
verification of Collateral to such Debtor’s customers, account debtors, and
other obligors; to endorse such Debtor’s name on any checks, notes, acceptances,
money orders, drafts, and any other forms of payment or security that may come
into the Agent’s possession; to endorse the Collateral in blank or to the order
of the Agent or its nominee; to sign such Debtor’s name on any invoice or bill
of lading relating to any Collateral, on claims to enforce collection of any
Collateral, on notices to and drafts against customers and account debtors and
other obligors, on schedules and assignments of Collateral, on notices of
assignment and on public records; to notify the post office authorities to
change the address for delivery of such Debtor’s mail to an address designated
by the Agent; to receive, open, and dispose of all mail addressed to such
Debtor; and to do all things necessary to carry out this Agreement. Each Debtor
hereby ratifies and approves all acts of any such attorney and agrees that
neither the Agent nor any such attorney will be liable for any acts or omissions
nor for any error of judgment or mistake of fact or law other than such person’s
gross negligence or willful misconduct. The foregoing powers of attorney, being
coupled with an interest, are irrevocable until the Secured Obligations (other
than contingent indemnification obligations with respect to which no claim for
indemnification has been made) have been fully paid and satisfied and the
commitments of the Lenders to extend credit to or for the account of the
Borrowers under the Credit Agreement have expired or otherwise terminated.

        Section 10.    Defaults and Remedies. (a) The occurrence of any event or
the existence of any condition which is specified as an “Event of Default” under
the Credit Agreement shall constitute an “Event of Default” hereunder.

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        (b)     Upon the occurrence and during the continuation of any Event of
Default, the Agent shall have, in addition to all other rights provided herein
or by law, the rights and remedies of a secured party under the UCC (regardless
of whether the UCC is the law of the jurisdiction where the rights or remedies
are asserted and regardless of whether the UCC applies to the affected
Collateral), and further the Agent may, without demand and, to the extent
permitted by applicable law, without advertisement, notice, hearing or process
of law, all of which each Debtor hereby waives to the extent permitted by
applicable law, at any time or times, sell and deliver any or all Collateral
held by or for it at public or private sale, at any securities exchange or
broker’s board or at the Agent’s office or elsewhere, for cash, upon credit or
otherwise, at such prices and upon such terms as the Agent deems advisable, in
its discretion. In the exercise of any such remedies, the Agent may sell the
Collateral as a unit even though the sales price thereof may be in excess of the
amount remaining unpaid on the Secured Obligations. Also, if less than all the
Collateral is sold, the Agent shall have no duty to marshal or apportion the
part of the Collateral so sold as between the Debtors, or any of them, but may
sell and deliver any or all of the Collateral without regard to which of the
Debtors are the owners thereof. In addition to all other sums due any Secured
Creditor hereunder, each Debtor shall pay the Secured Creditors all reasonable
costs and expenses incurred by the Secured Creditors, including reasonable
attorneys’ fees and court costs, in obtaining, liquidating or enforcing payment
of Collateral or the Secured Obligations or in the prosecution or defense of any
action or proceeding by or against any Secured Creditor or any Debtor concerning
any matter arising out of or connected with this Agreement or the Collateral or
the Secured Obligations, including, without limitation, any of the foregoing
arising in, arising under or related to a case under the United States
Bankruptcy Code (or any successor statute). Any requirement of reasonable notice
shall be met if such notice is personally served on or mailed, postage prepaid,
to the Debtors in accordance with Section 14(b) hereof at least 10 days before
the time of sale or other event giving rise to the requirement of such notice;
provided, however, no notification need be given to a Debtor if such Debtor has
signed, after an Event of Default hereunder has occurred, a statement renouncing
any right to notification of sale or other intended disposition. The Agent shall
not be obligated to make any sale or other disposition of the Collateral
regardless of notice having been given. Any Secured Creditor may be the
purchaser at any such sale. Each Debtor hereby waives all of its rights of
redemption from any such sale. The Agent may postpone or cause the postponement
of the sale of all or any portion of the Collateral by announcement at the time
and place of such sale, and such sale may, without further notice, be made at
the time and place to which the sale was postponed or the Agent may further
postpone such sale by announcement made at such time and place. The Agent has no
obligation to prepare the Collateral for sale. The Agent may sell or otherwise
dispose of the Collateral without giving any warranties as to the Collateral or
any part thereof, including disclaimers of any warranties of title or the like,
and each Debtor acknowledges and agrees that the absence of such warranties
shall not render the disposition commercially unreasonable.

        (c)     Without in any way limiting the foregoing, upon the occurrence
and during the continuation of any Event of Default hereunder, in addition to
all other rights provided herein or by law, (i) the Agent shall have the right
to take physical possession of any and all of the Collateral and anything found
therein, the right for that purpose to enter without legal process any premises
where the Collateral may be found (provided such entry be done lawfully), and
the right to maintain such possession on the relevant Debtor’s premises (each
Debtor hereby agreeing, to the extent it may lawfully do so, to lease such
premises without cost or expense to the Agent or its designee if the Agent so
requests) or to remove the Collateral or any part thereof to such other places
as the Agent may desire, (ii) the Agent shall have the right to direct any
intermediary at any time holding any Subsidiary interests or other Collateral,
or any issuer thereof, to deliver such Collateral or any part thereof to the
Agent and/or to liquidate such Collateral or any part thereof and deliver the
proceeds thereof to the Agent (including, without limitation, the right to
deliver a notice of control with respect to any Collateral held in a securities
account or commodities account and deliver all entitlement orders with respect
thereto), (iii) the Agent shall have the right to exercise any and all rights
with respect to all deposit accounts which are part of the Collateral,
including, without limitation, the right to direct the disposition of the funds
in each such deposit account and to collect, withdraw, and receive all amounts
due or to become due or payable thereunder, and (iv) each Debtor shall, upon the
Agent’s demand, promptly assemble the Collateral and make it available to the
Agent at a place reasonably designated by the Agent. If the Agent exercises its
right to take possession of the Collateral, each Debtor shall also at its
expense perform any and all other steps requested by the Agent to preserve and
protect the security interest hereby granted in the Collateral, such as placing
and maintaining signs indicating the security interest of the Agent, appointing
overseers for the Collateral and maintaining Collateral records.

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        (d)     Without in any way limiting the foregoing, upon the occurrence
and during the continuation of any Event of Default, all rights of the Debtors
to exercise the voting and/or consensual powers which they are entitled to
exercise pursuant to Section 8(a)(i) hereof and/or to receive and retain the
distributions which they are entitled to receive and retain pursuant to
Section 8(a)(ii) hereof, shall, at the option of the Agent, cease and thereupon
become vested in the Agent, which, in addition to all other rights provided
herein or by law, shall then be entitled solely and exclusively to exercise all
voting and other consensual powers pertaining to the Subsidiary Interests and/or
to receive and retain the distributions which such Debtor would otherwise have
been authorized to retain pursuant to Section 8(a)(ii) hereof and shall then be
entitled solely and exclusively to exercise any and all rights of conversion,
exchange or subscription or any other rights, privileges or options pertaining
to any Subsidiary Interests as if the Agent were the absolute owner thereof
including, without limitation, the rights to exchange, at its discretion, all
Subsidiary Interests or any part thereof upon the merger, consolidation,
reorganization, recapitalization or other readjustment of the respective issuer
thereof or upon the exercise by or on behalf of any such issuer or the Agent of
any right, privilege or option pertaining to any Subsidiary Interests and, in
connection therewith, to deposit and deliver the Subsidiary Interests or any
part thereof with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the Agent may determine. In
the event the Agent in good faith believes any of the Collateral constitutes
restricted securities within the meaning of any applicable securities laws, any
disposition thereof in compliance with such laws shall not render the
disposition commercially unreasonable.

        (e)    [Intentionally omitted.]

        (f)     The powers conferred upon the Secured Creditors hereunder are
solely to protect their interest in the Collateral and shall not impose on them
any duty to exercise such powers. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession or control if such Collateral is accorded treatment substantially
equivalent to that which the Agent accords its own property, consisting of
similar type assets, it being understood, however, that the Agent shall have no
responsibility for (i) ascertaining or taking any action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any
Collateral, whether or not the Agent has or is deemed to have knowledge of such
matters, (ii) taking any necessary steps to preserve rights against any parties
with respect to any Collateral, or (iii) initiating any action to protect the
Collateral or any part thereof against the possibility of a decline in market
value. This Agreement constitutes an assignment of rights only and not an
assignment of any duties or obligations of the Debtors in any way related to the
Collateral, and the Agent shall have no duty or obligation to discharge any such
duty or obligation. Neither any Secured Creditor nor any party acting as
attorney for any Secured Creditor shall be liable for any acts or omissions or
for any error of judgment or mistake of fact or law other than such person’s
gross negligence or willful misconduct.

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        (g)     Failure by the Agent to exercise any right, remedy or option
under this Agreement or any other agreement between any Debtor and the Agent or
provided by law, or delay by the Agent in exercising the same, shall not operate
as a waiver; and no waiver shall be effective unless it is in writing, signed by
the party against whom such waiver is sought to be enforced and then only to the
extent specifically stated. The rights and remedies of the Secured Creditors
under this Agreement shall be cumulative and not exclusive of any other right or
remedy which any Secured Creditor may have. For purposes of this Agreement, an
Event of Default shall be construed as continuing after its occurrence until the
same is waived in writing by the Agent.

        Section 11.    Application of Proceeds. The proceeds and avails of the
Collateral at any time received by the Agent upon the occurrence and during the
continuation of any Event of Default shall, when received by the Agent in cash
or its equivalent, be applied by the Agent in reduction of, or held as
collateral security for, the Secured Obligations in accordance with the terms of
the Credit Agreement. The Debtors shall remain liable to the Secured Creditors
for any deficiency. Any surplus remaining after the full payment and
satisfaction of the Secured Obligations shall be returned to the Borrowers, as
agent for the Debtors, or to whomsoever the Agent reasonably determines is
lawfully entitled thereto.

        Section 12.    Continuing Agreement. This Agreement shall be a
continuing agreement in every respect and shall remain in full force and effect
until all of the Secured Obligations, both for principal and interest, have been
fully paid and satisfied and the commitments of the Lenders to extend credit to
or for the account of the Borrowers under the Credit Agreement have expired or
otherwise terminated. Upon such termination of this Agreement, the Agent shall,
at the expense of the Debtors, forthwith terminate its liens and security
interests hereunder and deliver to the Debtors such documents as the Debtors may
reasonably request to evidence such termination.

        Section 13.    The Agent. In acting under or by virtue of this
Agreement, the Agent shall be entitled to all the rights, authority, privileges,
and immunities provided in the Credit Agreement, all of which provisions of said
Credit Agreement (including, without limitation, Section 11 thereof) are
incorporated by reference herein with the same force and effect as if set forth
herein in their entirety. The Agent hereby disclaims any representation or
warranty to the Secured Creditors or any other holders of the Secured
Obligations concerning the perfection of the liens and security interests
granted hereunder or in the value of any of the Collateral.

        Section 14.    Miscellaneous. (a) This Agreement cannot be changed or
terminated orally. This Agreement shall create a continuing lien on and security
interest in the Collateral and shall be binding upon each Debtor and its
successors and assigns and shall inure, together with the rights and remedies of
the Secured Creditors hereunder, to the benefit of the Secured Creditors and
their successors and permitted assigns; provided, however, that no Debtor may
assign its rights or delegate its duties hereunder without the Agent’s prior
written consent. Without limiting the generality of the foregoing, and subject
to the provisions of the Credit Agreement, any Lender may assign or otherwise
transfer any indebtedness held by it secured by this Agreement to any other
person, and such other person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender herein or otherwise.

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        (b)  Except as otherwise specified herein, all notices hereunder shall
be in writing (including, without limitation, notice by telecopy) and shall be
given to the relevant party at its address or telecopier number set forth below
(or, if no such address is set forth below, at the address of the relevant
Debtor as shown on the records of the Agent), or such other address or
telecopier number as such party may hereafter specify by notice to the other
given by United States certified or registered mail, by telecopy or by other
telecommunication device capable of creating a written record of such notice and
its receipt. Notices hereunder shall be addressed:

to the Debtors at (and c/o, as applicable): to the Agent at: Gehl Company Harris
N.A. 143 Water Street 111 West Monroe Street, 10th Floor West Bend, Wisconsin
53095 Chicago, Illinois 60603 Attention:      Mr. Thomas Rettler
Attention:      Danjuma Gibson Telephone:    (262) 334-6632 Telephone:    (312)
461-7100 Telecopy:      (262) 334-6628 Telecopy:      (312) 293-5068

Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section and a confirmation of such telecopy has been received
by the sender, (ii) if given by mail, five (5) days after such communication is
deposited in the mail, certified or registered with return receipt requested,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the addresses specified in this Section.

        (c)     In the event and to the extent that any provision hereof shall
be deemed to be invalid or unenforceable by reason of the operation of any law
or by reason of the interpretation placed thereon by any court, this Agreement
shall to such extent be construed as not containing such provision, but only as
to such jurisdictions where such law or interpretation is operative, and the
invalidity or unenforceability of such provision shall not affect the validity
of any remaining provisions hereof, and any and all other provisions hereof
which are otherwise lawful and valid shall remain in full force and effect.
Without limiting the generality of the foregoing, in the event that this
Agreement shall be deemed to be invalid or otherwise unenforceable with respect
to any Debtor, such invalidity or unenforceability shall not affect the validity
of this Agreement with respect to the other Debtors.

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        (d)     The lien and security interest herein created and provided for
stand as direct and primary security for the Secured Obligations of the
Borrowers arising under or otherwise relating to the Credit Agreement as well as
for the other Secured Obligations secured hereby. No application of any sums
received by the Secured Creditors in respect of the Collateral or any
disposition thereof to the reduction of the Secured Obligations or any part
thereof shall in any manner entitle any Debtor to any right, title or interest
in or to the Secured Obligations or any collateral or security therefor, whether
by subrogation or otherwise, unless and until all Secured Obligations (other
than contingent indemnification obligations with respect to which no claim for
indemnification has been made) have been fully paid and satisfied and all
commitments to extend credit to or for the account of the Borrowers under the
Credit Agreement have expired or otherwise terminated. Each Debtor acknowledges
and agrees that the lien and security interest hereby created and provided are
absolute and unconditional and shall not in any manner be affected or impaired
by any acts of omissions whatsoever of any Secured Creditor or any other holder
of any Secured Obligations, and without limiting the generality of the
foregoing, the lien and security interest hereof shall not be impaired by any
acceptance by any Secured Creditor or any other holder of any Secured
Obligations of any other security for or guarantors upon any of the Secured
Obligations or by any failure, neglect or omission on the part of any Secured
Creditor or any other holder of any of the Secured Obligations to realize upon
or protect any of the Secured Obligations or any collateral or security
therefor. The lien and security interest hereof shall not in any manner be
impaired or affected by (and the Secured Creditors, without notice to anyone,
are hereby authorized to make from time to time) any sale, pledge, surrender,
compromise, settlement, release, renewal, extension, indulgence, alteration,
substitution, exchange, change in, modification or disposition of any of the
Secured Obligations or of any collateral or security therefor, or of any
guaranty thereof, or of any instrument or agreement setting forth the terms and
conditions pertaining to any of the foregoing. The Secured Creditors may at
their discretion at any time grant credit to the Borrowers without notice to the
other Debtors in such amounts and on such terms as the Secured Creditors may
elect without in any manner impairing the lien and security interest created and
provided for. In order to realize hereon and to exercise the rights granted the
Secured Creditors hereunder and under applicable law, there shall be no
obligation on the part of any Secured Creditor or any other holder of any
Secured Obligations at any time to first resort for payment to the Borrowers or
any other Debtor or to any guaranty of the Secured Obligations or any portion
thereof or to resort to any other collateral, security, property, liens or any
other rights or remedies whatsoever, and the Secured Creditors shall have the
right to enforce this Agreement against any Debtor or its Collateral
irrespective of whether or not other proceedings or steps seeking resort to or
realization upon or from any of the foregoing are pending.

        (e)     In the event the Secured Creditors shall at any time in their
discretion permit a substitution of Debtors hereunder or a party shall wish to
become a Debtor hereunder, such substituted or additional Debtor shall, upon
executing an agreement substantially in the form attached hereto as Schedule F,
become a party hereto and be bound by all the terms and conditions hereof to the
same extent as though such Debtor had originally executed this Agreement and, in
the case of a substitution, in lieu of the Debtor being replaced. Any such
agreement shall contain information as to such Debtor necessary to update
Schedules A, B, C and E hereto with respect to it. No such substitution shall be
effective absent the written consent of the Agent nor shall it in any manner
affect the obligations of the other Debtors hereunder.

        (f)     This Agreement may be executed in any number of counterparts and
by different parties hereto on separate counterpart signature pages, each
constituting an original, but all together one and the same instrument. Each
Debtor acknowledges that this Agreement is and shall be effective upon its
execution and delivery by such Debtor to the Agent, and it shall not be
necessary for the Agent to execute this Agreement or any other acceptance hereof
or otherwise to signify or express its acceptance hereof.

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        (g)     This Agreement shall be deemed to have been made in the State of
Illinois and shall be governed by, and construed in accordance with, the laws of
the State of Illinois. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning of any
provision hereof.

        (h)     Each Debtor hereby submits to the non-exclusive jurisdiction of
the United States District Court for the Northern District of Illinois and of
any Illinois state court sitting in the City of Chicago, Illinois, for purposes
of all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. Each Debtor irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient form. EACH DEBTOR AND, BY ACCEPTING THE BENEFITS OF THIS AGREEMENT,
EACH SECURED CREDITOR HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

[SIGNATURE PAGES TO FOLLOW]

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        IN WITNESS WHEREOF, each Debtor has caused this Security Agreement to be
duly executed and delivered as of the date first above written.

“DEBTORS”
  GEHL COMPANY

  By  /s/ Thomas M. Rettler       Name: Thomas M. Rettler       Title: Vice
President and CFO
  COMPACT EQUIPMENT ATTACHMENTS INC.

  By  /s/ Thomas M. Rettler       Name: Thomas M. Rettler       Title: Vice
President and Treasurer
  GEHL POWER PRODUCTS, INC.

  By  /s/ Thomas M. Rettler       Name: Thomas M. Rettler       Title: Vice
President and Treasurer
  MUSTANG MANUFACTURING COMPANY, INC.

  By  /s/ Thomas M. Rettler       Name: Thomas M. Rettler       Title: Vice
President and Treasurer

        Accepted and agreed to in Chicago, Illinois, as of the date first above
written.

HARRIS N.A., as Agent

  By  /s/ Danjuma Gibson         Name: Danjuma Gibson        Title: Vice
President

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SCHEDULE A

LOCATIONS

COLUMN 1 COLUMN 2 COLUMN 3 NAME OF DEBTOR (AND STATE
OF ORGANIZATION AND
ORGANIZATIONAL
REGISTRATION NUMBER) CHIEF EXECUTIVE OFFICE
(AND NAME OF RECORD
OWNER OF SUCH LOCATION) ADDITIONAL PLACES OF
BUSINESS AND COLLATERAL
LOCATIONS (AND NAME OF
RECORD OWNER OF SUCH
LOCATIONS)
Gehl Company 143 Water Street 147 Indiana Avenue (Wisconsin ID 1G01013) West
Bend, Wisconsin 53095 West Bend, WI 53095 Owned Owned
  915 SW 7th Avenue Madison, SD 57042 Owned
  941 Forest Street West Bend, WI 53095 Owned
  Pierce Distribution Services Company 888 Landmark Drive Belvidere, Illinois
61108
Compact Equipment Attachments Inc. 143 Water Street N19 W6721 Commerce Court
(Wisconsin ID C050567) West Bend, Wisconsin 53095 Cedarburg, WI 53012 Owned
Landlord: The Intrepid Group
Gehl Power Products, Inc. 143 Water Street 900 Ferdig Avenue (South Dakota ID DB
039426) West Bend, Wisconsin 53095 Yankton, SD 57078 Owned Owned
Mustang Manufacturing Company, Inc. 143 Water Street 1880 Austin Road (Minnesota
ID 5O-78) West Bend, Wisconsin 53095 Owatonna, MN 55060 Owned Landlord: Douglas
W. Hughes

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SCHEDULE B

OTHER NAMES

A. PRIOR LEGAL NAMES

  Mustang Finance, Inc.
Mustang America, Inc.

B. TRADE NAMES

  Gehl Finance

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SCHEDULE C

[INTENTIONALLY OMITTED]

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SCHEDULE D

[INTENTIONALLY OMITTED]

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SCHEDULE E

SUBSIDIARY INTERESTS AND DEPOSITS

A. SUBSIDIARY INTERESTS

NAME JURISDICTION OF
ORGANIZATION PERCENTAGE
OWNERSHIP OWNER
Compact Equipment Attachments Inc. Wisconsin 100% Gehl Company
Gehl Power Products, Inc. South Dakota 100% Gehl Company
Mustang Manufacturing Company, Inc. Minnesota 100% Gehl Company
Hedlund Martin, Inc. Pennsylvania 100% Gehl Company
Gehl Europe Germany 100% Gehl Company

B. DEPOSITS

NAME DEPOSITARY BANK ACCOUNT NO.
Compact Equipment Attachments Inc M&I Marshall & Ilsley Bank 19512504
Gehl Company M&I Marshall & Ilsley Bank 27555192

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SCHEDULE F

ASSUMPTION AND SUPPLEMENTAL SECURITY AGREEMENT

        THIS AGREEMENT dated as of this _____ day of _____________, 20__ from
[new Debtor], a _______________ corporation/limited liability
company/partnership (the “New Debtor”), to Harris N.A. (“Harris”), as
administrative agent for the Secured Creditors (defined in the Security
Agreement hereinafter identified and defined) (Harris acting as such agent and
any successor or successors to Harris in such capacity being hereinafter
referred to as the “Agent”).

PRELIMINARY STATEMENTS

        A.     Gehl Company (the “Company”), Compact Equipment Attachments Inc.
(“Compact”), Gehl Power Products, Inc. (“Gehl Power”) and Mustang Manufacturing
Company, Inc. (“Mustang;” the Company, Compact, Gehl Power and Mustang
collectively, the “Borrowers”) and certain other parties have executed and
delivered to the Agent that certain Security Agreement dated as of June 3, 2005
(such Security Agreement, as the same may from time to time be amended, modified
or restated, including supplements thereto which add additional parties as
Debtors thereunder, being hereinafter referred to as the “Security Agreement”),
pursuant to which such parties (the “Existing Debtors”) have granted to the
Agent for the benefit of the Secured Creditors a lien on and security interest
in the Existing Debtors’ Collateral (as such term is defined in the Security
Agreement) to secure the Secured Obligations (as such term is defined in the
Security Agreement).

        B.     The Company provides the New Debtor with substantial financial,
managerial, administrative, and technical support and the New Debtor will
benefit, directly and indirectly, from credit and other financial accommodations
extended by the Secured Creditors to the Borrowers.

        NOW, THEREFORE, FOR VALUE RECEIVED, and in consideration of advances
made or to be made, or credit accommodations given or to be given, to the
Borrowers by the Secured Creditors from time to time, the New Debtor hereby
agrees as follows:

        1.     The New Debtor acknowledges and agrees that it shall become a
“Debtor” party to the Security Agreement effective upon the date the New
Debtor’s execution of this Agreement and the delivery of this Agreement to the
Agent, and that upon such execution and delivery, all references in the Security
Agreement to the terms “Debtor” or “Debtors” shall be deemed to include the New
Debtor. Without limiting the generality of the foregoing, the New Debtor hereby
repeats and reaffirms all grants (including the grant of a lien and security
interest), covenants, agreements, representations, and warranties contained in
the Security Agreement as amended hereby, each and all of which are and shall
remain applicable to the Collateral from time to time owned by the New Debtor or
in which the New Debtor from time to time has any rights. Without limiting the
foregoing, in order to secure payment of the Secured Obligations, whether now
existing or hereafter arising, the New Debtor does hereby grant to the Agent for
the benefit of the Secured Creditors, and hereby agrees that the Agent has and
shall continue to have for the benefit of the Secured Creditors, a continuing
lien on and security interest in, among other things, all of the New Debtor’s
Collateral (as such term is defined in the Security Agreement), each and all of
the granting clauses set forth in Section 2 of the Security Agreement being
incorporated herein by reference with the same force and effect as if set forth
herein in their entirety except that all references in such clauses to the
Existing Debtors or any of them shall be deemed to include references to the New
Debtor. Nothing contained herein shall in any manner impair the priority of the
liens and security interests heretofore granted in favor of the Agent under the
Security Agreement.

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        2.     Schedules A (Locations), Schedule B (Other Names), and Schedule E
(Subsidiary Interests and Deposits) to the Security Agreement shall be
supplemented by the information stated below with respect to the New Debtor:

SUPPLEMENT TO SCHEDULE A

NAME OF DEBTOR (AND
STATE OF ORGANIZATION
AND ORGANIZATIONAL
REGISTRATION NUMBER) CHIEF EXECUTIVE OFFICE (AND
NAME OF RECORD OWNER OF
SUCH LOCATION) ADDITIONAL PLACES OF
BUSINESS AND COLLATERAL
LOCATIONS (AND NAME OF
RECORD OWNER OF SUCH
LOCATIONS)
______________________ _________________________ _______________________
______________________ _________________________ _______________________

SUPPLEMENT TO SCHEDULE B

NAME OF DEBTOR PRIOR LEGAL NAMES AND TRADE NAMES OF
SUCH DEBTOR
____________________________________ _________________________________

SUPPLEMENT TO SCHEDULE E

SUBSIDIARY INTERESTS AND DEPOSITS

_________________

_________________

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        3.     The New Debtor hereby acknowledges and agrees that the Secured
Obligations are secured by all of the Collateral according to, and otherwise on
and subject to, the terms and conditions of the Security Agreement to the same
extent and with the same force and effect as if the New Debtor had originally
been one of the Existing Debtors under the Security Agreement and had originally
executed the same as such an Existing Debtor.

        4.     All capitalized terms used in this Agreement without definition
shall have the same meaning herein as such terms have in the Security Agreement,
except that any reference to the term “Debtor” or “Debtors” and any provision of
the Security Agreement providing meaning to such term shall be deemed a
reference to the Existing Debtors and the New Debtor. Except as specifically
modified hereby, all of the terms and conditions of the Security Agreement shall
stand and remain unchanged and in full force and effect.

        5.     The New Debtor agrees to execute and deliver such further
instruments and documents and do such further acts and things as the Agent may
deem necessary or proper to carry out more effectively the purposes of this
Agreement.

        6.     No reference to this Agreement need be made in the Security
Agreement or in any other document or instrument making reference to the
Security Agreement, any reference to the Security Agreement in any of such to be
deemed a reference to the Security Agreement as modified hereby.

        7.     This Agreement shall be governed by and construed in accordance
with the State of Illinois (without regard to principles of conflicts of law).

[INSERT NAME OF NEW DEBTOR]

  By       Name__________________________________________________
      Title_________________________________________________

        Accepted and agreed to as of the date first above written.

HARRIS N.A., as Agent

  By       Name__________________________________________________
      Title_________________________________________________

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