Document:

EXHIBIT 10.20

                          COLLATERAL SHARING AGREEMENT

                  This COLLATERAL SHARING AGREEMENT, dated as of May 15, 2000
(as the same may be amended, restated, supplemented or otherwise modified from
time to time, the "AGREEMENT"), is entered into by and among Bank One, NA ("BANK
ONE"), having its principal office in Chicago, Illinois, formerly known as The
First National Bank of Chicago, in its capacity as contractual representative
(the "AGENT") for the "Lenders" under the Bank Credit Agreements (as defined
below) listed on Annex I attached hereto (such Lenders, the "BANKS"), the Banks,
the holder of the 2001 Notes (as defined below) listed on Annex II attached
hereto (the "2001 NOTEHOLDER" and together with the 2005 Noteholder defined
below, the "NOTEHOLDERS"), the holder of the 2005 Notes (as defined below)
listed on Annex III attached hereto (the "2005 NOTEHOLDER"; the Banks, the 2001
Noteholder and the 2005 Noteholder, together with their respective successors
and assigns, are herein sometimes collectively called the "LENDERS" and
individually called a "LENDER"), and Bank One, in its capacity as contractual
representative for the Lenders hereunder (the "COLLATERAL AGENT"). Capitalized
terms used herein but not defined herein shall have the meanings set forth in
the "Bank Credit Agreements", the "2001 Note Agreement", and the "2005 Note
Agreement" (each as defined below).

                                    RECITALS:

                  WHEREAS, Ag-Chem Equipment Co., Inc., a Minnesota corporation
(herein called the "COMPANY"), the Banks listed as "Short-Term Lenders" on Annex
I hereto, and the Agent have entered into that certain Short Term Revolving
Credit Agreement dated as of June 4, 1999 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "SHORT-TERM BANK
CREDIT AGREEMENT"), pursuant to which, among other things, the Short-Term
Lenders have agreed to make certain advances to the Company (the "SHORT-TERM
LOANS");

                  WHEREAS, the Company, Ag-Chem Equipment Canada, Ltd., Ag-Chem
Europe, B.V. (Ag-Chem Europe, B.V., together with Ag-Chem Equipment Canada,
Ltd., the "SUBSIDIARY BORROWERS"), the Banks listed as "Long-Term Lenders" on
Annex II hereto, and the Agent have entered into that certain Third Amended and
Restated Long Term Revolving Credit Agreement, dated as of June 4, 1999 (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, the "LONG-TERM BANK CREDIT AGREEMENT", and together with the Short-Term
Bank Credit Agreement, the "BANK CREDIT AGREEMENTS"), pursuant to which, among
other things, the Long-Term Lenders have agreed to make certain advances to the
Company and the Subsidiary Borrowers (the "LONG-TERM LOANS" and together with
the Short-Term Loans, the "LOANS") and to issue letters of credit for the
account of the Company (the "LETTERS OF CREDIT");

                  WHEREAS, the 2001 Noteholder is the holder of the Company's
6.83% Series A Senior Notes, with an initial aggregate principal amount of
$15,000,000, due April 6, 2001 (the "2001 NOTES") issued pursuant to a Note
Agreement, dated as of April 6, 1994, between the Company and the 2001
Noteholder (as the same may be amended, restated, supplemented or

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otherwise modified from time to time, the "2001 NOTE AGREEMENT", and together
with the 2005 Note Agreement defined below, the "NOTE AGREEMENTS");

                  WHEREAS, the 2005 Noteholder is the holder of the Company's
7.25% Series A Senior Notes, with an initial aggregate principal amount of
$15,000,000, due April 6, 2005 (the "2005 NOTES" and together with the 2001
Notes, the "NOTES") issued pursuant to a Note Agreement, dated as of October 10,
1995, between the Company and the 2005 Noteholder (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the "2005 NOTE
AGREEMENT", and together with the 2001 Note Agreement, the 2001 Notes, the 2005
Notes, and the Bank Credit Agreements, the "LENDER DOCUMENTS");

                  WHEREAS, pursuant to the terms of the Collateral Documents,
each of the Company, Ag-Chem Equipment Canada, Ltd. and the entities (the
"GUARANTORS") set forth on Annex IV hereto that have guaranteed the repayment of
all amounts due and payable under the Lender Documents, shall on the date hereof
grant a security interest in certain of its assets to the Agent on behalf of the
Lenders; and

                  WHEREAS, the Lenders desire to agree to the relative priority
of the application of payments received pursuant to the terms of the Collateral
Documents with respect to the Obligations (as defined below), and certain other
rights and interests;

                  NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Agent, the Lenders and the Collateral
Agent hereby agree as follows:

                  1. Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:

                  "ACTIONABLE DEFAULT" means, under either Bank Credit Agreement
or either Note Agreement, (a) an Event of Default (as defined therein) shall
have occurred thereunder as a result of (i) the nonpayment of amounts owing
thereunder, (ii) noncompliance with any financial covenant set forth therein,
including, without limitation, those financial covenants set forth in Section
5.2 of each Bank Credit Agreement and in Section 7.1 of the 2005 Note Agreement
, or (iii) the bankruptcy or insolvency of the Company or any of its affiliates,
(b) a notice shall have been delivered to the Company and/or a Subsidiary
Borrower by the Agent under either Bank Credit Agreement or a Noteholder under
its respective Note Agreement indicating that an Event of Default (as defined
therein) has occurred and is continuing and the Obligations due under such
Agreement are immediately due and payable, or (c) a default shall have occurred
under any Collateral Document or Guaranty and the Agent, the Collateral Agent,
or a Lender, as applicable, shall have caused the amounts owing thereunder to
become immediately due and payable.

                  "AGENT'S EXPENSES" means all of the fees, costs and expenses
of the Collateral Agent (including, without limitation, the reasonable fees and
disbursements of its counsel) (i) arising in connection with the preparation,
execution, delivery, modification, restatement, amendment or termination of this
Agreement and each Collateral Document, if not previously reimbursed, or the
enforcement (whether in the context of a civil action, adversary proceeding,
workout or otherwise) of any of the provisions hereof or thereof, or (ii)
incurred or required to be

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advanced in connection with the sale or other disposition or the custody,
preservation or protection of the Collateral pursuant to any Collateral Document
and the exercise or enforcement of the Collateral Agent's rights under this
Agreement and in and to the Collateral.

                  "COLLATERAL" means all property of the Company, Ag-Chem
Equipment Canada, Ltd., or any Guarantor in which the Agent or the Collateral
Agent shall have been granted a security interest or lien under any of the
Collateral Documents.

                  "COLLATERAL ACCOUNT" means the collateral account established
and maintained by the Collateral Agent pursuant to Section 8.

                  "COLLATERAL DOCUMENTS" means any and all security agreements,
financing statements, and other similar instruments executed by the Company,
Ag-Chem Equipment Canada, Ltd., or a Guarantor in favor of the Collateral Agent
from time to time pursuant hereto, in each case as such agreements and
instruments may be amended, modified, supplemented and/or restated, and together
in each case with any other agreements, instruments and documents incidental
thereto.

                  "DISTRIBUTION DATE" means the second business day in each
calendar week, commencing with the first such business day following receipt by
the Collateral Agent of a Notice of Actionable Default.

                  "GUARANTY" means any guaranty entered into by a Guarantor in
favor of the Agent, the Collateral Agent, and/or any Lender guaranteeing the
repayment of the Obligations due and payable under a Lender Document.

                  "L/C INTERESTS" means, with respect to any Bank constituting a
Long-Term Lender, such Bank's direct or participation interests in all unpaid
reimbursement obligations with respect to Letters of Credit and such Bank's
direct obligations or risk participations with respect to undrawn amounts of all
outstanding Letters of Credit, provided that the undrawn amounts of outstanding
Letters of Credit shall be considered to have been reduced to the extent of any
amount on deposit with the Agent at any time as provided in Section 9(b) hereof.

                  "NOTICE OF ACTIONABLE DEFAULT" means a written notice to the
Collateral Agent from any Lender or Lenders stating that it is a "Notice of
Actionable Default" hereunder and certifying that an Actionable Default has
occurred and is continuing. A Notice of Actionable Default may be included in a
written direction to the Collateral Agent from the Requisite Lenders pursuant to
Section 5.

                  "NOTICE OF DEFAULT" means a written notice to the Collateral
Agent from any Lender or Lenders stating that it is a "Notice of Default"
hereunder and certifying that an Event of Default (as defined in either of the
Bank Credit Agreements or either of the Note Agreements) has occurred and is
continuing.

                  "OBLIGATIONS" means all of the monetary obligations owed by
the Company, the Subsidiary Borrowers, and the Guarantors to the Lenders and the
Agent under the Bank Credit

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Agreements, the Note Agreements, the Notes, the Guarantees, the Collateral
Documents, and related agreements, documents, and instruments, including,
without limitation, (1) the outstanding principal amount of, accrued and unpaid
interest on, and any unpaid Make Whole Amount (as defined in the Note
Agreements) or other breakage or prepayment indemnification due with respect to,
the Loans and the Notes, (2) any unpaid reimbursement obligations with respect
to any Letters of Credit, (3) any undrawn amounts of any outstanding Letters of
Credit, and (4) any other unpaid amounts (including amounts in respect of fees,
expenses, indemnification, hedging obligations permitted under the Bank Credit
Agreements and reimbursement) due from the Company, the Subsidiary Borrowers and
the Guarantors under any of the Note Agreements, Notes, Bank Credit Agreements,
Guarantees or Collateral Documents; provided that the undrawn amounts of any
outstanding Letters of Credit shall be considered to have been reduced to the
extent of any amount on deposit with the Agent at any time as provided in
Section 9(b) hereof.

                  "PRINCIPAL EXPOSURE" means, with respect to any Lender at any
time (i) if such Lender is a Bank, the aggregate amount of such Lender's
Commitments under each of the Bank Credit Agreements, or, if the Banks shall
then have terminated the Commitments or if the Collateral Agent shall then have
received a Notice of Actionable Default that shall not have been withdrawn, the
sum of (x) the outstanding principal amount of such Lender's Loans and (y) the
outstanding face and/or principal amount of such Lender's L/C Interests at such
time, and (ii) if such Lender is a Noteholder, the outstanding principal amount
of such Lender's Notes at such time.

                  "PRO RATA SHARE" means, with respect to any Lender at any
time, a fraction (expressed as a percentage), the numerator of which is the
amount of such Lender's Principal Exposure at such time, and the denominator of
which is the aggregate amount of the Principal Exposure of all of the Lenders at
such time.

                  "REQUISITE LENDERS" means, at any time, (i) with respect to
the aggregate Pro Rata Shares of the Banks, such Banks whose Pro Rata Shares
exceed fifty percent of such aggregate amount plus (ii) with respect to the
aggregate Pro Rata Shares of the Noteholders, such Noteholders whose Pro Rata
Shares exceed fifty percent of such aggregate amount.

                  2. Appointment; Nature of Relationship. Each of the Lenders
hereby designates and appoints Bank One as its Collateral Agent under this
Agreement and the Collateral Documents, and each of the Lenders hereby
irrevocably authorizes the Collateral Agent to take such action on its behalf
under the provisions of this Agreement and the Collateral Documents and to
exercise such powers as are set forth herein or therein, together with such
other powers as are incidental thereto. The Collateral Agent agrees to act as
such on the express terms and conditions contained in this Agreement.
Notwithstanding the use of the defined term "Collateral Agent," it is expressly
understood and agreed that the Collateral Agent shall not have any fiduciary
responsibilities to any Lender by reason of this Agreement and that the
Collateral Agent is merely acting as the representative of the Lenders with only
those duties as are expressly set forth in this Agreement and the Collateral
Documents. In its capacity as the Lenders' contractual representative, the
Collateral Agent (i) does not assume any fiduciary

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duties to any of the Lenders, (ii) is a "representative" of the Lenders within
the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is acting
as an independent contractor, the rights and duties of which are limited to
those expressly set forth in this Agreement and the Collateral Documents. Each
of the Lenders agrees to assert no claim against the Collateral Agent on any
agency theory or any other theory of liability for breach of fiduciary duty, all
of which claims each Lender waives.

                  3. Powers and Duties. The Collateral Agent shall have and may
exercise such powers under the Collateral Documents as are specifically
delegated to the Collateral Agent by the terms hereof and thereof, together with
such powers as are reasonably incidental thereto. The Collateral Agent shall
have no implied duties to the Lenders, or any obligation to the Lenders to take
any action hereunder or under any of the Collateral Documents, except any action
specifically required by this Agreement or any of the Collateral Documents to be
taken by the Collateral Agent or directed by the Requisite Lenders in accordance
with the terms hereof. The Collateral Agent shall not take any action which is
in conflict with any provisions of applicable law or of this Agreement or any
Collateral Document.

                  4. Authorization to Execute Collateral Documents. If the
Collateral Agent receives written notice from either the Agent or a Noteholder
at any time or from time to time hereunder that Collateral Documents are
required pursuant to the Bank Credit Agreements or the Note Agreements in
connection with the grant of a security interest in and lien against the assets
of the Company, Ag-Chem Equipment Canada, Ltd., and/or a Guarantor, the
Collateral Agent is authorized to and shall execute and deliver such Collateral
Documents as the Agent or such Noteholder shall direct requiring execution and
delivery by it and is authorized to and shall accept delivery from the Company
of such Collateral Documents as the Agent or the Noteholder shall direct which
do not require execution by the Collateral Agent.

                  5. Direction by Requisite Lenders. Except as otherwise
provided in this Section 5, the Collateral Agent shall take any action with
respect to the Collateral and the Collateral Documents directed in writing by
(and only as directed in writing by) the Requisite Lenders. Notwithstanding the
foregoing, the Collateral Agent shall not be obligated to take any such action
(i) which is in conflict with any provisions of applicable law or of this
Agreement or any Collateral Document or (ii) with respect to which the
Collateral Agent, in its opinion, shall not have been provided adequate security
and indemnity against the costs, expenses and liabilities that may be incurred
by it as a result of compliance with such direction. Under no circumstances
shall the Collateral Agent be liable for following the written direction of the
Requisite Lenders. In each instance in which the Requisite Lenders deliver a
written direction to the Collateral Agent pursuant hereto, the Collateral Agent
shall promptly send a copy of such written direction to each Lender that is not
included in such Requisite Lenders.

                  6. Notice of Actionable Default. Any Lender or Lenders may
give the Collateral Agent a Notice of Default or a Notice of Actionable Default
in the manner provided in Section 32 and shall give a copy of such Notice of
Default or Notice of Actionable Default to each of the other Lenders. If and
only if the Collateral Agent shall have received a Notice of Actionable Default,
the Collateral Agent shall, if directed in writing by the Requisite Lenders,

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exercise the rights and remedies provided in this Agreement and in any of the
Collateral Documents.

                  7. Remedies. Each of the Lenders hereby irrevocably agrees
that the Collateral Agent shall be authorized, after the occurrence of an
Actionable Default and at the direction of the Requisite Lenders or incidental
to any such direction, for the purpose of carrying out the terms of this
Agreement and any of the Collateral Documents, to take any and all appropriate
action and to execute any and all documents and instruments that may be
necessary or desirable to accomplish the purposes hereof and thereof, including,
without limiting the generality of the foregoing, to the extent permitted by
applicable law, to do the following:

                           (i) to ask for, demand, sue for, collect, receive and
                  give acquittance for any and all moneys due or to become due
                  with respect to the Collateral (except that, without the
                  consent of all Lenders, the Collateral Agent shall not accept
                  any Obligations in whole or partial consideration from the
                  disposition of any Collateral),

                           (ii) to receive, take, endorse, assign and deliver
                  any and all checks, notes, drafts, acceptances, documents and
                  other negotiable and nonnegotiable instruments, documents and
                  chattel paper taken or received by the Collateral Agent in
                  connection with this Agreement or any of the Collateral
                  Documents,

                           (iii) to commence, file, prosecute, defend, settle,
                  compromise or adjust any claim, suit, action or proceeding
                  with respect to the Collateral,

                           (iv) to sell, transfer, assign or otherwise deal in
                  or with the Collateral or any part thereof pursuant to the
                  terms and conditions of this Agreement and the Collateral
                  Documents, and

                           (v) to do, at its option and at the expense and for
                  the account of the Lenders (to the extent the Collateral Agent
                  shall not be reimbursed by the Company) at any time or from
                  time to time, all acts and things which the Collateral Agent
                  deems reasonably necessary to protect or preserve the
                  Collateral and to realize upon the Collateral.

                  8. The Collateral Account. Upon receipt by the Collateral
Agent of a Notice of Actionable Default, and until such time as the Event of
Default described therein is cured, the Collateral Agent shall establish and
maintain at its principal office an interest-bearing account that shall be
entitled the "Ag-Chem Collateral Account." All moneys received by the Collateral
Agent with respect to Collateral after receipt of a Notice of Actionable Default
shall be deposited in the Collateral Account and thereafter shall be held,
applied and/or disbursed by the Collateral Agent in accordance with Section 9.
In addition, any other payments received, directly or indirectly, by any Lender
of or with respect to any of the Obligations (including, without limitation, any
payment by any Guarantor under any Guaranty) after giving or receiving a Notice
of Actionable Default (excluding any payments distributed to any Lender by the
Collateral Agent in accordance with Section 9) or after the Banks have
terminated the Commitments, any payment

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received by any Lender with respect to any of the Obligations in an insolvency
or reorganization proceeding with respect to the Company or any Guarantor, and
any amount set off by any Lender with respect to any of the Obligations, shall
promptly be delivered to the Collateral Agent and thereafter shall be held,
applied and/or disbursed by the Collateral Agent in accordance with Section 9.
The Collateral Account at all times shall be subject to the exclusive dominion
and control of the Collateral Agent.

                  9. Application of Moneys. (a) All moneys held by the
Collateral Agent in the Collateral Account shall be distributed by the
Collateral Agent on each Distribution Date as follows:

                           FIRST: To the Collateral Agent in an amount equal to
                  the Agent's Expenses that are unpaid as of such Distribution
                  Date, and to any Lender that has theretofore advanced or paid
                  any such Agent's Expenses in an amount equal to the amount
                  thereof so advanced or paid by such Lender prior to such
                  Distribution Date;

                           SECOND: To the Lenders and the Agent pro rata in
                  proportion to the respective amounts of the Obligations owed
                  by the Company to the Lenders and the Agent under the Lender
                  Documents as of such Distribution Date; and

                           THIRD: Any surplus remaining after payment in full in
                  cash of all Agent's Expenses and all of the Obligations shall
                  be paid to the Company, or to whomever may be lawfully
                  entitled to receive the same, or as a court of competent
                  jurisdiction may direct, provided that if any Lender shall
                  have notified the Collateral Agent in writing that a claim is
                  pending for which such Lender is entitled to the benefits of
                  an indemnification, reimbursement or similar provision under
                  which amounts are not yet due but with respect to which the
                  Company continues to be contingently liable, and amounts
                  payable by the Company with respect thereto are secured by the
                  Collateral, the Collateral Agent shall continue to hold the
                  amount specified in such notice in the Collateral Account
                  until the Company's liability with respect thereto is
                  discharged or released to the satisfaction of such Lender.

NOTWITHSTANDING THE FOREGOING, EXCEPT FOR ANY SURPLUS UNDER CLAUSE THIRD ABOVE,
THE COLLATERAL AGENT SHALL NOT BE REQUIRED (UNLESS DIRECTED BY THE REQUISITE
LENDERS) TO MAKE A DISTRIBUTION ON ANY DISTRIBUTION DATE IF THE BALANCE IN THE
COLLATERAL ACCOUNT AVAILABLE FOR DISTRIBUTION ON SUCH DISTRIBUTION DATE IS LESS
THAN $1,000. THE COLLATERAL AGENT SHALL NOT BE RESPONSIBLE FOR ANY LENDER'S
APPLICATION (OR ORDER OF APPLICATION) OF PAYMENTS RECEIVED BY SUCH LENDER FROM
THE COLLATERAL AGENT HEREUNDER TO THE OBLIGATIONS OWING TO SUCH LENDER. FOR THE
PURPOSE OF DETERMINING THE AMOUNTS TO BE DISTRIBUTED PURSUANT TO CLAUSE SECOND
OF SUBSECTION (a) ABOVE WITH RESPECT TO THE UNDRAWN AMOUNTS OF THE OUTSTANDING
LETTERS OF CREDIT, SUCH UNDRAWN AMOUNTS SHALL BE REDUCED BY ANY AMOUNTS HELD AS
COLLATERAL PURSUANT TO SUBSECTION (b) OF THIS SECTION 9.

                  (b) Any distribution pursuant to clause SECOND of subsection
(a) above with respect to the undrawn amount of any outstanding Letter of Credit
shall be paid to the Agent to be held as collateral for the Banks constituting
Long-Term Lenders and disposed of as provided in this subsection (b). On each
date on which a payment is made to a beneficiary pursuant to a

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draw on a Letter of Credit, the Agent shall distribute to the Banks constituting
Long-Term Lenders from the amounts held pursuant to this subsection (b) for
application to the payment of the reimbursement obligation due to such Banks
with respect to such draw an amount equal to the product of (1) the total amount
then held pursuant to this subsection (b), and (2) a fraction, the numerator of
which is the amount of such draw and the denominator of which is the aggregate
undrawn amount of all outstanding Letters of Credit immediately prior to such
draw. On each date on which a reduction in the undrawn amount of any outstanding
Letter of Credit occurs other than on account of a payment made to a beneficiary
pursuant to a draw on such Letter of Credit, the Agent shall distribute from the
amounts held pursuant to this subsection (b) an amount equal to the product of
(1) the total amount then held pursuant to this subsection (b) and (2) a
fraction the numerator of which is the amount of such reduction and the
denominator of which is the aggregate undrawn amount of all outstanding Letters
of Credit immediately prior to such reduction, which amount shall be distributed
as provided in clause SECOND of subsection (a) above. At such time as no Letters
of Credit are outstanding, any remaining amount held pursuant to this subsection
(b), after the distribution therefrom as provided above, shall be distributed as
provided in clause SECOND of subsection (a) above.

                  10. Information from Lenders. Each of the Lenders hereby
agrees, promptly upon request by the Collateral Agent, to provide to the
Collateral Agent in writing such information regarding the Obligations held by
such Lender as may be reasonably required by the Collateral Agent at any time to
determine such Lender's Pro Rata Share or to calculate distributions to such
Lender from the Collateral Account. Each Lender shall notify the Collateral
Agent in writing promptly following the repayment in full of all Obligations
owing to such Lender.

                  11. Limitation on Collateral Agent's Duties in Respect of
Collateral. Other than the Collateral Agent's duties set forth in this Agreement
and the Collateral Documents as to the custody of Collateral and the proceeds
thereof received by the Collateral Agent hereunder and thereunder and the
accounting to the Company, the Guarantors, Ag-Chem Equipment Canada, Ltd. and
the Lenders therefor, the Collateral Agent shall have no duty to the Company,
the Guarantors, Ag-Chem Equipment Canada, Ltd. or the Lenders with respect to
any Collateral in its possession or control or in the possession or control of
its agent or nominee, any income thereon, or the preservation of rights against
prior parties or any other rights pertaining thereto.

                  12. Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Collateral Agent or any other
Lender and based on the financial information provided by the Company and its
Subsidiaries and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Collateral Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the Collateral Documents.

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                  13. Exculpation. Neither the Collateral Agent nor any of its
directors, officers, affiliates, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (i) any statement, warranty
or representation made by the Company, Ag-Chem Equipment Canada, Ltd., or any
Guarantor in connection with any Collateral Document or Guaranty; (ii) the
performance or observance of any of the covenants or agreements of the Company,
Ag-Chem Equipment Canada, Ltd., or any Guarantor under any Collateral Document
or Guaranty; (iii) the satisfaction or observance of any condition or covenant
specified in any of the Lender Documents; (iv) the existence or possible
existence of any default under any of the Lender Documents or any Actionable
Default; (v) the validity, enforceability, effectiveness or genuineness of any
Collateral Document, Guaranty or any other instrument or writing furnished in
connection herewith; (vi) the validity, perfection or priority of any security
interest or lien created under any Collateral Document; or (vii) the financial
condition of the Company or any of its Subsidiaries.

                  14. Employment of Agents and Counsel. The Collateral Agent may
execute any of its duties as the Collateral Agent hereunder and under any
Collateral Document by or through employees, agents, and attorneys-in-fact and
shall not be answerable to the Lenders, except as to money or securities
received by it or its authorized agents, for the default or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. The
Collateral Agent shall be entitled to advice of counsel concerning the
contractual arrangement between the Collateral Agent and the Lenders and all
matters pertaining to the Collateral Agent's duties hereunder and under the
Collateral Documents.

                  15. Reliance on Documents and Counsel. The Collateral Agent
shall be entitled to rely upon any notice, consent, certificate, affidavit,
letter, telegram, statement, paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and, in
respect to legal matters, upon the opinion of counsel selected by the Collateral
Agent, which may be employees of the Collateral Agent.

                  16. Collateral Agent's Reimbursement and Indemnification. The
Lenders agree to reimburse and indemnify the Collateral Agent ratably in
proportion to their respective Pro Rata Shares as of the date of the occurrence
of the event as to which such reimbursement or indemnification is being made (i)
for any amounts not reimbursed by the Company, Ag-Chem Equipment Canada, Ltd.,
or any Guarantor, under its Collateral Documents or Guaranty, as applicable,
(ii) for any other expenses incurred by the Collateral Agent, on behalf of the
Lenders, in connection with the preservation or protection of the Collateral or
the validity, perfection or priority of the Collateral Agent's interest therein
or the enforcement of the Collateral Documents and (iii) for any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Collateral Agent in any way relating to
or arising out of the Collateral Documents or any other document delivered in
connection therewith or the transactions contemplated thereby, or the
enforcement of any of the terms thereof or of any such other documents, provided
that no Lender shall be liable for any of the foregoing to the extent any of the
foregoing is found in a final non-appealable judgment by a court of competent
jurisdiction to have arisen solely from the gross negligence or willful
misconduct of the

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Collateral Agent. The agreements in this Section 16 shall survive the repayment
of the Obligations and the termination of the other provisions of this
Agreement.

                  17. Rights as a Lender. Notwithstanding that Bank One is
acting as the Collateral Agent hereunder, Bank One in its individual capacity
shall have the same rights and powers hereunder as any Lender and may exercise
the same as though it were not the Collateral Agent, and the term "Lender" or
"Lenders" shall include Bank One in its individual capacity.

                  18. Successor Collateral Agent. The Collateral Agent may
resign at any time by giving not less than thirty days' prior written notice
thereof to the Lenders and the Company, Ag-Chem Equipment Canada, Ltd., and the
Guarantors, and the Collateral Agent may be removed at any time with or without
cause by written notice received by the Collateral Agent from the Requisite
Lenders. Upon any such resignation or removal, the Requisite Lenders shall have
the right to appoint, on behalf of the Lenders, a successor Collateral Agent. If
no successor Collateral Agent shall have been so appointed by the Requisite
Lenders and shall have accepted such appointment within thirty days after the
retiring Collateral Agent's giving notice of resignation, then the retiring
Collateral Agent may appoint, on behalf of the Lenders, a successor Collateral
Agent. Upon the acceptance of any appointment as the Collateral Agent hereunder
by a successor Collateral Agent, such successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Collateral Agent, and the retiring Collateral Agent shall be
discharged from its duties and obligations hereunder and under the Collateral
Documents. No resignation or removal of the Collateral Agent shall become
effective until a replacement Collateral Agent shall have been selected as
provided herein and shall have assumed in writing the obligations of the
Collateral Agent hereunder and under the Collateral Documents. Any replacement
Collateral Agent shall be a bank, trust company, or insurance company having
capital, surplus, and undivided profits of at least $250,000,000. After any
retiring Collateral Agent's resignation hereunder as Collateral Agent, the
provisions of this Agreement shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as the
Collateral Agent hereunder and under the Collateral Documents.

                  19. Partial Release. If the Collateral Agent receives written
notice from the Agent and the Noteholders that the lien on any Collateral
granted pursuant to any Collateral Document is required to be released pursuant
to a transaction permitted by the terms of the Bank Credit Agreements and the
Note Agreements, the Collateral Agent shall promptly release such Collateral in
accordance with the directions of the Agent and the Noteholders.

                  20. Release and Termination. All of the Collateral shall be
released and this Agreement shall be terminated on the earlier of:

                  (a) the date on which (i) the Collateral Agent shall have
         received from each of the Lenders written notice that all Obligations
         owing to such Lender have been paid in full and (ii) all Agent's
         Expenses shall have been paid in full; or

                  (b) the date on which (i) the Collateral Agent shall have
         received written notice from the Agent and the Noteholders directing
         the

                                       10
<PAGE>

         Collateral Agent to release the Collateral and stating that the Banks
         and the Noteholders have consented to such release under the terms of
         the Bank Credit Agreements and the Note Agreements, and (ii) all
         Agent's Expenses shall have been paid in full.

                  21. Amendments and Waivers of Collateral Documents. The
Collateral Agent shall not execute or deliver any amendment or waiver with
respect to any Collateral Document except at the direction or with the consent
of the Requisite Lenders.

                  22. No Liability to Noteholders. Notwithstanding any other
provision of this Agreement or any provision of any Collateral Document, none of
the Banks, the Agent or the Collateral Agent shall have any liability to any
Noteholder as a result of any invalidity or lack of perfection or priority with
respect to any Collateral.

                  23. Notices With Respect to Lender Documents. Each of the
Agent and each Noteholder agrees to use its best efforts to give to the other
(a) copies of any notice of the occurrence or existence of any default in
payment of the Obligations sent to the Company and/or any Subsidiary of the
Company, simultaneously with the sending of such notice to the Company and/or
such Subsidiary, and (b) notice of any acceleration of the Loans or the Notes,
promptly upon such acceleration, but the failure to give any of the foregoing
notices shall not affect the validity of such notice of default or such
acceleration or create a cause of action against or cause a forfeiture of any
rights of the party failing to give such notice or create any claim or right on
behalf of any third party.

                  24. No Other Security. Neither the Agent nor any Lender shall
take or receive a security interest in or lien upon any of the property or
assets of the Company or any of its Subsidiaries as security for the Obligations
other than pursuant to this Agreement and the Collateral Documents or as
security for any other obligations of the Company or any of its Subsidiaries
other than the Obligations. Neither the Agent nor any Lender shall take or
receive any guaranty for the benefit of any obligations of the Company or its
Subsidiaries other than the Guarantees. The existence of rights of setoff shall
not be prohibited; provided, that neither the Agent nor any Lender shall
exercise any such rights of setoff against the property of the Company or any of
its Subsidiaries or any Guarantor unless (i) a Notice of Actionable Default has
been given and the Requisite Lenders shall have consented in writing to such
exercise and (ii) all amounts realized from such exercise are delivered to the
Collateral Agent as required by Section 8.

                  25. Accounting; Invalidated Payments. (a) The Agent and each
Lender agrees to render an accounting to any of the others of the outstanding
amounts of the Obligations, of receipts of payments from the Company, any
Subsidiary of the Company and any Guarantor and of other items relevant to the
provisions of this Agreement upon the reasonable request from one of the others
as soon as reasonably practicable after such request.

                  (b) To the extent that any payment received by any Lender
pursuant to a distribution under Section 9(a) hereof is subsequently
invalidated, declared fraudulent or preferential, set aside or required to be
paid to a trustee, receiver, or any other party under any

                                       11
<PAGE>

bankruptcy act, state or federal law, common law or equitable cause, then each
other Lender that received a payment pursuant to such distribution shall
purchase from the Lender whose payment was invalidated (the "AFFECTED LENDER"),
at such time as the Affected Lender is required to return or repay such payment,
an undivided participation interest in the Affected Lender's Obligations in an
amount such that after such purchase the amount of such distribution (after
deduction of the invalidated payment) shall have been shared ratably among the
Lenders as contemplated by Section 9(a) hereof.

                  26. Continuing Agreement. This Agreement shall in all respects
be a continuing, absolute, unconditional and irrevocable agreement, and shall
remain in full force and effect until terminated in accordance with Section 20.
Without limiting the generality of the foregoing, this Agreement shall survive
the commencement of any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar
proceeding involving the Company, a Subsidiary of the Company or a Guarantor.
The Agent and each Lender agrees that this Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any payment (in
whole or in part) of any of the Obligations pursuant to any distribution
hereunder is rescinded or must otherwise be restored by the Agent or any Lender,
upon the insolvency, bankruptcy or reorganization of the Company, a Subsidiary
of the Company or a Guarantor or otherwise, as though such payment had not been
made.

                  27. Representations and Warranties. Each of the parties hereto
severally represents and warrants to the other parties hereto that it has full
corporate power, and has taken all action necessary, to execute and deliver this
Agreement and to fulfill its obligations hereunder, and that no governmental or
other authorizations are required in connection herewith, and that this
Agreement constitutes its legal, valid and binding obligation, enforceable in
accordance with its terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium, regulatory and similar laws of general application
and by general principles of equity.

                  28. Binding Effect. This Agreement shall be binding upon, and
inure to the benefit of and be enforceable by, the Collateral Agent, the Agent,
the Lenders and each of their respective successors, transferees and assigns.
Without limiting the generality of the foregoing sentence, if any Lender assigns
or otherwise transfers (in whole or in part) to any other person or entity the
Obligations to such Lender under the Bank Credit Agreements or the Note
Agreements, such other person or entity shall thereupon become vested with all
rights and benefits, and become subject to all the obligations, in respect
thereof granted to or imposed upon such Lender under this Agreement.

                  29. No Reliance by Company. None of the Company, any
Subsidiary of the Company, or any Guarantor shall have any rights under this
Agreement or be entitled, in any manner whatsoever, to rely upon or enforce, or
to raise as a defense, the provisions of this Agreement or the failure of the
Collateral Agent, the Agent or any Lender to comply with such provisions.

                                       12
<PAGE>

                  30. Other Proceedings. Nothing contained herein shall limit or
restrict the independent right of the Agent or any Lender to initiate an action
or actions in any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar
proceeding in its individual capacity and to appear or to be heard on any matter
before the bankruptcy or other applicable court in any such proceeding,
including, without limitation, with respect to any questions concerning the
post-petition usage of collateral and post-petition financing arrangement;
provided that neither the Agent nor any Lender shall contest the validity or
enforceability of or seek to avoid, have declared fraudulent or have set aside
any of the Obligations. The Collateral Agent shall not have the right to
compromise the pre-petition adequate protection rights of the Lenders with
respect to the post-petition usage of cash collateral or other post-petition
financing without the consent of the Requisite Lenders.

                  31. Amendments and Waivers. No amendment to or waiver of any
provision of this Agreement, nor consent to any departure by any Lender, the
Agent or the Collateral Agent herefrom, shall in any event be effective unless
the same shall be in writing and signed by each Noteholder, the Agent, on behalf
of the Banks, and the Collateral Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No consent of the Company, a Subsidiary Borrower, or a Guarantor shall be
required for any such amendment, waiver or departure unless it relates to a
provision of this Agreement expressly binding upon the Company, such Subsidiary
Borrower, or such Guarantor.

                  32. Notices. All notices and other communications provided to
any party under this Agreement shall be in writing or by facsimile and
addressed, delivered or transmitted to such party at its address or facsimile
number set forth (a) in the case of the Agent, the Collateral Agent and each of
the Banks, on Annex I hereto, (b) in the case of the 2001 Noteholder, on Annex
II hereto, (c) in the case of the 2005 Noteholder, on Annex III hereto, (d) in
the case of the Company, the Subsidiary Borrowers or any Guaranty, on Annex IV
hereto, or (e) in any case, at such other address or facsimile number as may be
designated by such party in a notice to the other parties. Any notice, if mailed
and properly addressed with postage prepaid or if properly addressed and sent by
prepaid courier service, shall be deemed given when received; and notice, if
transmitted by facsimile, shall be deemed given when transmitted if actually
received, and the burden or proving receipt shall be on the transmitting party.
So long as no default shall have occurred and be continuing under the Bank
Credit Agreements or the Note Agreements, each of the Agent and each Noteholder
agrees to use its best efforts to send to the Company a copy of any notice such
party gives to the other under this Agreement, but the failure to send such copy
to the Company shall not affect the validity of such notice or create a cause of
action against or cause a forfeiture of any rights of the party failing to send
such copy or create any claim or right on behalf of the Company or any of its
Subsidiaries.

                  33. No Waiver. No failure or delay on the part of any Lender,
the Agent or the Collateral Agent in exercising any power or right under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof of the exercise of any other power or right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

                                       13
<PAGE>

                  34. Severability. Whenever 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 such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

                  35. No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.

                  36. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION,
735 ILCS SECTION 105/5-1 ET SEQ., BUT OTHERWISE WITHOUT REGARD TO THE CONFLICTS
OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS. THIS AGREEMENT CONSTITUTES THE
ENTIRE UNDERSTANDING BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND SUPERSEDES ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.

                  37. Counterparts. This Agreement may be separately executed
and delivered in counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
constitute one and the same Agreement. Facsimile transmission of the signature
of any party hereto shall be effective as an original signature.

                  38. Headings. Section headings used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.

               The remainder of this page is intentionally blank.

                                       14
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers.

                                    BANK ONE, NA, having its principal office in
                                    Chicago, Illinois, formerly known as The
                                    First National Bank of Chicago, as Agent for
                                    itself an on behalf of the Banks and as
                                    Collateral Agent hereunder

                                    By:  /s/ Kevin Gillen
                                        ----------------------------------------
                                    Title:   Vice President
                                           -------------------------------------

                                    BANK ONE CANADA, as a Bank

                                    By:  /s/ Randall Taylor
                                        ----------------------------------------
                                    Title:   Sr. Vice President
                                           -------------------------------------

                                    HARRIS TRUST AND SAVINGS BANK, as a Bank

                                    By:  /s/ Catherine Ciolek
                                        ----------------------------------------
                                    Title:   Vice President
                                           -------------------------------------

                                    COOPERATIEVE CENTRALE RAIFFEISEN-
                                    BOERENLEENBANK B.A., "RABOBANK
                                    INTERNATIONAL", NEW YORK BRANCH, as a Bank

                                    By:
                                        ----------------------------------------
                                    Title:
                                           -------------------------------------

                                    C.M. LIFE INSURANCE COMPANY, as a 2001
                                    Noteholder

                                    By: David Babson and Company Incorporated,
                                    as Investment Sub-Adviser

<PAGE>

                                    By:  /s/ Richard E. Spencer II
                                        ----------------------------------------
                                    Title:   Managing Director
                                           -------------------------------------

                                    THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
                                    as a 2005 Noteholder

                                    By:  /s/ William S. Engelking
                                        ----------------------------------------
                                    Title:   Vice President
                                           -------------------------------------

Acknowledged by:

AG-CHEM EQUIPMENT CO., INC.

By:  /s/ John Retherford
    -------------------------------------
Title:   CFO
       ----------------------------------

AG-CHEM EQUIPMENT CANADA, LTD.

By:  /s/ John Retherford
    -------------------------------------
Title:   CFO
       ----------------------------------

AG-CHEM EUROPE, B.V.

By:  /s/ John Retherford
    -------------------------------------
Title:   CFO
       ----------------------------------

AG-CHEM SALES CO., INC.

By:  /s/ John Retherford
    -------------------------------------
Title:   CFO
       ----------------------------------

LOR*AL PRODUCTS, INC.

By:  /s/ John Retherford
    -------------------------------------
Title:   CFO
       ----------------------------------

AG-CHEM MANUFACTURING, INC.

By:  /s/ John Retherford
    -------------------------------------
Title:   CFO
       ----------------------------------

<PAGE>

ANNEX I

SHORT-TERM LENDERS: The following are the "Short-Term Lenders":

Bank One, NA
1 Bank One Plaza
Chicago, Illinois 60670
Attention: Jenny Gilpin
Facsimile: 312-732-1117

Cooperatieve Centrale Raiffeisen-Boerenleenbank
  B.A., "Rabobank International", New York branch
245 Park Avenue
New York, New York 10167
Attention: Corporate Services Department
Facsimile: 212-818-0233

Harris Trust and Savings Bank
111 West Monroe Street
10th Floor West
Chicago, Illinois 60603
Attention: Andrew Claar
Facsimile: 312-293-5040

LONG-TERM LENDERS: The Short-Term Lenders and the following constitute the
"Long-Term Lenders":

Bank One Canada
161 Bay Street, Suite 4240
Toronto, Ontario M5J 2S1
Canada
Attention: Jerry Hynes
Facsimile: 416-363-7574

<PAGE>

                                    ANNEX II

2001 NOTEHOLDER:  The following is the "2001 Noteholder":

C.M. Life Insurance Company
c/o The Bank of New York
P.O. Box 19266
Attention: P&I Department
Newark, NJ 07195

<PAGE>

                                    ANNEX III

2005 NOTEHOLDER:  The following is "2005 Noteholder":

The Prudential Insurance Company of America
c/o Prudential Capital Group
Two Prudential Capital Group
180 N. Stetson Street - Suite 5600
Chicago, Illinois 60601-6716
Attention:  Managing Director
Facsimile: 312-540-4272

<PAGE>

                                    ANNEX IV

GUARANTORS: The following are "Guarantors":

Ag-Chem Sales Co., Inc.
Ag-Chem Equipment Canada, Ltd.
Lor*Al Products, Inc.
Ag-Chem Manufacturing, Inc.

NOTICE INFORMATION: Any notice or other information required to be delivered
hereunder to the Company, the Subsidiary Borrowers, and/or any Guarantor shall
be delivered to the following:

Ag-Chem Equipment Co., Inc.
5720 Smetana Drive
Minnetonka, Minnesota 55343
Attention:  John Retherford
Facsimile: 612-933-8799EXHIBIT 10.21

                               SECURITY AGREEMENT
                            DATED AS OF MAY 15, 2000

                                     between

                           AG-CHEM EQUIPMENT CO., INC.

                                       AND

                                  BANK ONE, NA
                                    AS AGENT

<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

SECTION 1. Defined Terms.......................................................1
SECTION 2. Grant of Security...................................................2
SECTION 3. [RESERVED]..........................................................5
SECTION 4. Grantor Remains Liable..............................................5
SECTION 5. Representations and Warranties......................................5
SECTION 6. Perfection and Maintenance of Security Interests and Liens..........6
SECTION 7. Financing Statements................................................7
SECTION 8. Filing Costs........................................................7
SECTION 9. Schedule of Collateral..............................................8
SECTION 10. Equipment and Inventory............................................8
SECTION 11. Accounts...........................................................8
SECTION 12. Leased Real Property...............................................9
SECTION 13. General Covenants.................................................10
SECTION 14. The Agent Appointed Attorney-in-Fact..............................10
SECTION 15. The Agent May Perform.............................................11
SECTION 16. The Agent's Duties................................................11
SECTION 17. Remedies..........................................................11
SECTION 18. Exercise of Remedies..............................................12
SECTION 19. License...........................................................12
SECTION 20. Injunctive Relief.................................................13
SECTION 21. Interpretation and Inconsistencies; Merger........................13
SECTION 22. Expenses..........................................................13
SECTION 23. Amendments, Etc...................................................13
SECTION 24. Notices...........................................................13
SECTION 25. Continuing Security Interest; Termination.........................13
SECTION 26. Severability......................................................14
SECTION 27. GOVERNING LAW.....................................................14
SECTION 28. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL...........14
     (A) NON-EXCLUSIVE JURISDICTION...........................................14
     (B) VENUE................................................................15
     (C) WAIVER OF JURY TRIAL.................................................15

                                        i
<PAGE>

EXHIBITS
--------

Exhibit A-1      Form of Landlord Agreement
Exhibit A-2      Form of Mortgagee Agreement
Exhibit B        Form of Bailee Letter

SCHEDULES
---------

Schedule 1       Locations of Collateral
Schedule 1-A     Third Party Locations
Schedule 1-B     Financing Statement Filing Locations
Schedule 2       Trade Names
Schedule 3       Pledged Debt

                                       ii
<PAGE>

                               SECURITY AGREEMENT

         This SECURITY AGREEMENT (the "Agreement"), dated as of May 15, 2000 is
made by AG-CHEM EQUIPMENT CO., INC., a Minnesota corporation (the "Grantor"), in
favor of BANK ONE, NA, having its principal office in Chicago, Illinois,
formerly known as The First National Bank of Chicago (the "Agent"), for its
benefit and for the benefit of the "Holders of Secured Obligations" (as defined
below) who are, or may hereafter become, parties to either of the Credit
Agreements or Note Agreements referred to below.

                              PRELIMINARY STATEMENT

         The Grantor entered into a Third Amended and Restated Long Term
Revolving Credit Agreement, dated as of June 4, 1999, (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
"Multicurrency Agreement") among the Grantor, the institutions from time to time
party thereto as lenders (the "Long Term Lenders"), the Agent, as contractual
representative for the Long Term Lenders, and Ag-Chem Equipment Canada Ltd. and
Ag-Chem Europe B.V. (Ag-Chem Europe B.V., together with Ag-Chem Equipment
Canada, the "Multicurrency Subsidiaries"). The Grantor also entered into a Short
Term Revolving Credit Agreement, dated as of June 4, 1999 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
"Short Term Agreement," and taken together with the Multicurrency Agreement, the
"Credit Agreements"), among the Grantor, the institutions from time to time
party thereto as Lenders (the "Short Term Lenders", and together with the Long
Term Lenders, the "Lenders"), and the Agent.

         The Grantor also entered into (i) a Note Agreement, dated as of April
6, 1994, with C.M. Life Insurance Company and (ii) a Note Agreement, dated as of
October 10, 1995, with The Prudential Insurance Company of America (together,
the "Note Agreements").

         The Credit Agreements and the Note Agreements provide for the making of
loans, advances and/or other financial accommodations (such loans, advances and
other financial accommodations being hereinafter referred to collectively as the
"Loans") to or for the benefit of the Grantor. The Grantor has agreed to grant
to the Agent on behalf of the Holders of Secured Obligations the security
interest contemplated by this Agreement.

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

         SECTION 1. Defined Terms. Unless otherwise defined herein, terms
defined in the Credit Agreements are used herein as therein defined, and the
following terms shall have the following meanings (such meanings being equally
applicable to both the singular and the plural forms of the terms defined):

<PAGE>

         "Agreement" shall mean this Security Agreement, as the same may from
time to time be amended, restated, modified or supplemented, and shall refer to
this Agreement as the same may be in effect at the time such reference becomes
operative.

         "Collateral" shall mean all property and rights in property now owned
or hereafter at any time acquired by the Grantor in or upon which a Lien is
granted in favor of the Agent by the Grantor under this Agreement, including,
without limitation, the property described in Section 2.

         "Collateral Sharing Agreement" shall mean the Collateral Sharing
Agreement, dated as of the date hereof, as the same may be amended, restated,
supplemented, or otherwise modified from time to time, among the Holders of
Secured Obligations and the Agent, as acknowledged by the Grantor and certain of
its affiliates.

         "Event of Default" shall mean an "Event of Default" as defined in the
Credit Agreements and the comparable term as it is set forth in the Note
Agreements.

         "Holders of Secured Obligations" shall mean the holders of the Secured
Obligations from time to time and shall include their respective successors,
transferees and assigns.

         "Lien" shall mean any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or security
agreement of any kind or nature whatsoever (including, without limitation, the
interest of a vendor or lessor under any conditional sale, Capital Lease, or
other title retention agreement).

         "Pledged Debt" shall have the meaning set forth in Section 2 of this
Agreement.

         "Secured Obligations" shall mean the aggregate "Obligations" as defined
in the Collateral Sharing Agreement.

         "UCC" shall mean the Uniform Commercial Code as the same may, from time
to time, be in effect in the State of Illinois; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Agent's and the Holders of Secured Obligations'
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of Illinois, the term "UCC"
shall mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions.

         SECTION 2. Grant of Security. To secure the prompt and complete
payment, observance and performance of the Secured Obligations, the Grantor
hereby assigns and pledges to the Agent, for the benefit of itself and the
Holders of Secured Obligations, and hereby grants to the Agent, for the benefit
of itself and the Holders of Secured Obligations, a security interest in all of
the Grantor's right, title and interest in and to the following, whether now
owned or existing or hereafter arising or acquired and wheresoever located:

                                       2
<PAGE>

         ACCOUNTS: All "accounts" as such term is defined in Section 9-106 of
the UCC, whether now owned or hereafter acquired or arising; the Grantor intends
that the term "accounts", as used herein, be construed in its broadest sense,
and such term shall include, without limitation, all present and future
accounts, accounts receivable and other rights of the Grantor to payment for
goods sold or leased or for services rendered (except those evidenced by
instruments or chattel paper), whether now existing or hereafter arising and
wherever arising, and whether or not they have been earned by performance
(collectively, "Accounts");

         INVENTORY: All "inventory" as defined in Section 9-109(4) of the UCC,
whether now owned or hereafter acquired or arising; the Grantor intends that the
term "inventory", as used herein, be construed in its broadest sense, and such
term shall include, without limitation, all goods now owned or hereafter
acquired by the Grantor (wherever located, whether in the possession of the
Grantor or of a bailee or other person for sale, storage, transit, processing,
use or otherwise and whether consisting of whole goods, spare parts, components,
supplies, materials, or consigned, returned or repossessed goods) which are held
for sale or lease, which are to be furnished (or have been furnished) under any
contract of service or which are raw materials, work in process or materials
used or consumed in the Grantor's business (collectively, "Inventory");

         EQUIPMENT: All "equipment" as such term is defined in Section 9-109(2)
of the UCC, whether now owned or hereafter acquired or arising; the Grantor
intends that the term "equipment", as used herein, be construed in its broadest
sense, and such term shall include, without limitation, all machinery, all
manufacturing, distribution, selling, data processing and office equipment, all
furniture, furnishings, appliances, tools, tooling, molds, dies, and all other
goods of every type and description (other than Inventory), in each instance
whether now owned or hereafter acquired by the Grantor and wherever located
(collectively, "Equipment"), but in no case shall include fixtures located on
real property subject to "Permitted Liens" (as defined in the Bank Credit
Agreements);

         GENERAL INTANGIBLES: All "general intangibles" as defined in Section
9-106 of the UCC, whether now owned or hereafter acquired or arising; the
Grantor intends that the term "general intangibles", as used herein, be
construed in its broadest sense, and such term shall include, without
limitation, all rights, interests, choses in action, causes of actions, claims
and all other intangible property of the Grantor of every kind and nature (other
than Accounts), in each instance whether now owned or hereafter acquired by the
Grantor and however and whenever arising, including, without limitation, all
corporate and other business records; all loans, royalties, and other
obligations receivable; customer lists, credit files, correspondence, and
advertising materials; firm sale orders, other contracts and contract rights;
all interests in partnerships and joint ventures; all tax refunds and tax refund
claims; all right, title and interest under leases, subleases, licenses and
concessions and other agreements relating to real or personal property; all
payments due or made to the Grantor in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of any property by any person
or governmental authority; all deposit accounts (general or special) with any
bank or other financial institution, including, without limitation, any deposits
or other sums at any time credited by or due to the

                                       3
<PAGE>

Grantor from any of the Holders of Secured Obligations or any of their
respective Affiliates with the same rights therein as if the deposits or other
sums were credited by or due from such Holder of Secured Obligations; all
credits with and other claims against carriers and shippers; all rights to
indemnification; all patents, and patent applications (including all reissues,
divisions, continuations and extensions); all service marks and service mark
applications; all trade secrets and inventions; all copyrights and copyright
applications (including all computer software and related documentation); all
rights and interests in and to trademarks, trademark registrations and
applications therefor, trade names, corporate names, brand names, slogans, all
goodwill associated with the foregoing; all license agreements and franchise
agreements, all reversionary interests in pension and profit sharing plans and
reversionary, beneficial and residual interest in trusts; all proceeds of
insurance of which the Grantor is beneficiary; and all letters of credit,
guaranties, liens, security interests and other security held by or granted to
the Grantor; and all other intangible property, whether or not similar to the
foregoing;

         LAB PROCESSING AND ENGINEERING INFORMATION: All rights and interests in
and to processes, lab journals, and notebooks, data, trade secrets, know-how,
product formulae and information, manufacturing, engineering and other drawings
and manuals, technology, blueprints, research and development reports, agency
agreements, technical information, technical assistance, engineering data,
design and engineering specifications, and similar materials recording or
evidencing expertise used in or employed by the Grantor (including any license
for the foregoing);

         CONTRACT RIGHTS: All rights and interests in and to any pending or
executory contracts, requests for quotations, invitations for bid, agreements,
leases and arrangements of which the Grantor is a party to or in which the
Grantor has an interest;

         CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper, leases,
all instruments, including, without limitation, the notes and debt instruments
described in SCHEDULE 3 (the "Pledged Debt") and all payments thereunder and
instruments and other property from time to time delivered in respect thereof or
in exchange therefor, and all bills of sale, bills of lading, warehouse receipts
and other documents of title, in each instance whether now owned or hereafter
acquired by the Grantor;

         INTEREST AND CURRENCY CONTRACTS: Any and all interest rate or currency
exchange agreements or derivative agreements, including without limitation, cap,
collar, floor, forward or similar agreements or other rate protection
arrangements;

         INVESTMENT PROPERTY: Any and all investment property (as defined in
Section 9-115(1)(f) of the UCC) of the Grantor, including any instruments,
certificates of deposit, equity interests or investments of any kind; and

         OTHER PROPERTY: All property or interests in property now owned or
hereafter acquired by the Grantor which now may be owned or hereafter may come
into the possession, custody or control of the Agent or any of the Holders of
Secured Obligations or any agent or

                                       4
<PAGE>

Affiliate of any of them in any way and for any purpose (whether for
safekeeping, deposit, custody, pledge, transmission, collection or otherwise);
and all rights and interests of the Grantor, now existing or hereafter arising
and however and wherever arising, in respect of any and all (i) notes, drafts,
letters of credit, stocks, bonds, and debt and equity securities, whether or not
certificated, investment property and warrants, options, puts and calls and
other rights to acquire or otherwise relating to the same; (ii) money; (iii)
proceeds of loans, including, without limitation, loans made under the Credit
Agreements; and (iv) insurance proceeds and books and records relating to any of
the property covered by this Agreement; together, in each instance, with all
accessions and additions thereto, substitutions therefor, and replacements,
proceeds and products thereof.

         The Collateral upon which the Agent has been granted a Lien hereunder
shall not include property and rights in property subject to "Permitted Liens"
(as defined in the Credit Agreements) so long as such property and rights in
property are subject to such Permitted Liens.

         SECTION 3. [RESERVED].

         SECTION 4. Grantor Remains Liable. Anything herein to the contrary
notwithstanding, (a) the Grantor shall remain solely liable under the contracts
and agreements included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Agent of any of
its rights hereunder shall not release the Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) neither the Agent nor the Holders of Secured Obligations shall have any
responsibility, obligation or liability under the contracts and agreements
included in the Collateral by reason of this Agreement, nor shall the Agent or
the Holders of Secured Obligations be required or obligated, in any manner, to
(i) perform or fulfill any of the obligations or duties of the Grantor
thereunder, (ii) make any payment, or make any inquiry as to the nature or
sufficiency of any payment received by the Grantor or the sufficiency of any
performance by any party under any such contract or agreement or (iii) present
or file any claim, or take any action to collect or enforce any claim for
payment assigned hereunder.

         SECTION 5. Representations and Warranties. The Grantor represents and
warrants, as of the date of this Agreement and as of each date hereafter (except
for changes permitted or contemplated by this Agreement) until termination of
this Agreement pursuant to Section 25:

         (a) The correct corporate name of the Grantor is set forth in the first
paragraph of this Agreement. The locations listed on SCHEDULE 1 constitute all
locations at which Inventory and/or Equipment is located and the Grantor has
exclusive possession and control of such Equipment and Inventory, except for (i)
such Inventory and Equipment which is (A) temporarily in transit between such
locations, or (B) temporarily stored with third parties or held by third parties
for processing, storage, engineering, evaluation or repairs, the proper
corporate names of which third parties, the location of such Inventory and/or
Equipment, and the nature of the relationship between the Grantor and such third
parties are set forth on SCHEDULE 1-A, as such SCHEDULE 1-A may be amended or
supplemented from time to time, or have been otherwise provided to the

                                       5
<PAGE>

Agent, (ii) Equipment sold to and subsequently repurchased from a third party by
the Grantor for the period beginning on the date of such repurchase and ending
on the date of the re-sale of such Equipment to a different third party, (iii)
Equipment transferred from a third party to the Grantor (such Equipment,
"Trade-In Equipment") in partial satisfaction of the purchase price for
Equipment sold by the Grantor to such third party for the period beginning on
the date of the transfer of such Trade-In Equipment and ending on the date the
Grantor sells such Trade-In Equipment, and (iv) Equipment used by the Grantor in
connection with demonstrations to prospective purchasers of such Equipment;
provided, that the aggregate value of the Equipment described in clauses (ii),
(iii), and (iv) does not exceed $10,000,000. The chief place of business and
chief executive office of the Grantor are located at the address of the Grantor
set forth below the Grantor's signatures on the Credit Agreements. All records
concerning any Accounts and all originals of chattel paper which evidence any
Account are located at the addresses listed on SCHEDULE 1 and none of the
Accounts is evidenced by a promissory note or other instrument except for such
notes and other instruments delivered to the Agent.

         (b) The Grantor is the legal and beneficial owner of the Collateral
free and clear of all Liens except for Liens permitted as of the date hereof
under the Credit Agreements and the Note Agreements. The Grantor currently
conducts business under the name Ag-Chem Equipment Co., Inc., and, in certain
areas and for certain operations, the additional trade names listed on SCHEDULE
2. The Grantor uses no trade names or fictitious names, except as set forth on
SCHEDULE 2.

         (c) This Agreement creates in favor of the Agent a legal, valid and
enforceable security interest in the Collateral. When financing statements have
been filed in the appropriate offices against the Grantor in the locations
listed on SCHEDULE 1-B, the Agent will have a fully perfected first priority
lien on, and security interest in, the Collateral in which a security interest
may be perfected by such filing, subject only to Liens permitted as of the date
hereof under the Credit Agreements and the Note Agreements.

         (d) No authorization, approval or other action by, and no notice to or
filing with, any Governmental Authority that has not already been taken or made
and is in full force and effect is required (i) for the grant by the Grantor of
the security interest in the Collateral granted hereby; (ii) for the execution,
delivery or performance of this Agreement by the Grantor; or (iii) for the
exercise by the Agent of any of its rights or remedies hereunder.

         (e) The Pledged Debt issued by any Affiliate of the Grantor, and to the
best of the Grantor's knowledge, all other Pledged Debt, has been duly
authorized, issued and delivered, and is the legal, valid, binding and
enforceable obligation of the respective issuer thereof.

         SECTION 6. Perfection and Maintenance of Security Interests and Liens.
The Grantor agrees that until all of the Secured Obligations (other than
contingent indemnity Obligations) have been fully satisfied and each of the
Credit Agreements and the Note Agreements has been terminated, the Agent's
security interests in and Liens on and against the Collateral and all proceeds
and products thereof shall continue in full force and effect. The Grantor shall
perform

                                       6
<PAGE>

any and all steps reasonably requested by the Agent to perfect, maintain and
protect the Agent's security interests in and Liens on and against the
Collateral granted or purported to be granted hereby or to enable the Agent to
exercise its rights and remedies hereunder with respect to any Collateral,
including, without limitation, (i) executing and filing financing or
continuation statements, or amendments thereof, in form and substance reasonably
satisfactory to the Agent, (ii) delivering to the Agent all certificates, notes,
and other instruments (including, without limitation, all letters of credit on
which the Grantor is named as a beneficiary) representing or evidencing
Collateral, which certificates, notes, and other instruments have been duly
endorsed or are accompanied by duly executed instruments of transfer or
assignment, including, but not limited to, note powers, all in form and
substance satisfactory to the Agent, (iii) at the reasonable direction of Agent,
delivering to the Agent warehouse receipts covering that portion of the
Collateral, if any, located in warehouses and for which warehouse receipts are
issued, (iv) after the occurrence and during the continuance of an Event of
Default, transferring Inventory and Equipment to warehouses designated by the
Agent or taking such other steps as are reasonably deemed necessary by the Agent
to maintain the Agent's control of the Inventory and Equipment, (v) upon the
reasonable request of the Agent, marking conspicuously each document, contract,
chattel paper and all records pertaining to the Collateral with a legend, in
form and substance satisfactory to the Agent, indicating that such document,
contract, chattel paper, or other record pertaining to the Collateral is subject
to the security interest granted hereby, (vi) obtaining waivers of Liens and
access agreements in substantially the following forms: (a) EXHIBIT A-1 hereto
(or such other form as may be agreed to by the Agent) from landlords with
respect to all leases executed after the date hereof, (b) EXHIBIT A-2 hereto (or
such other form as may be agreed to by the Agent) from mortgagees with respect
to all leases executed after the date hereof and (3) EXHIBIT B hereto (or such
other form as may be agreed to by the Agent) from the appropriate Person with
respect to all arrangements pursuant to which Inventory will be stored in public
warehouse facilities after the date hereof, and (vii) executing and delivering
all further instruments and documents, and taking all further action, as the
Agent may reasonably request.

         SECTION 7. Financing Statements. To the extent permitted by applicable
law, the Grantor hereby authorizes the Agent to file one or more financing or
continuation statements and amendments thereto, disclosing the security interest
granted to the Agent under this Agreement without the Grantor's signature
appearing thereon, and the Agent agrees to notify the Grantor when such a filing
has been made. The Grantor agrees that a carbon, photographic, photostatic, or
other reproduction of this Agreement or of a financing statement is sufficient
as a financing statement. If any Inventory or Equipment is in the possession or
control of any warehouseman or the Grantor's agents or processors, the Grantor
shall, upon the Agent's request, notify such warehouseman, agent or processor of
the Agent's security interest in such Inventory and Equipment and, upon the
Agent's request, instruct them to hold all such Inventory or Equipment for the
Agent's account and subject to the Agent's instructions.

         SECTION 8. Filing Costs. The Grantor shall pay the costs of, or
incidental to, all recordings or filings of all financing statements, including,
without limitation, any filing expenses incurred by the Agent pursuant to
Section 7.

                                       7
<PAGE>

         SECTION 9. Schedule of Collateral. The Grantor shall furnish to the
Agent from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Agent may reasonably request, all in reasonable detail.

         SECTION 10. Equipment and Inventory. The Grantor covenants and agrees
with the Agent that from the date of this Agreement and until termination of
this Agreement pursuant to Section 25, the Grantor shall:

         (a) Keep the Equipment and Inventory (other than Equipment or Inventory
sold or disposed of as permitted by the Credit Agreements and the Note
Agreements) at the places specified in Section 5(a), except for (i) Equipment
and Inventory (A) temporarily in transit between such locations or (B)
temporarily stored with the third parties or held by third parties for
processing, storage, engineering, evaluation, or repairs as set forth on
SCHEDULE 1-A, and deliver written notice to the Agent at least thirty (30) days
prior to establishing any other location at which it reasonably expects to
maintain Inventory and/or Equipment in which location or with which third party
all action required by this Agreement shall have been taken with respect to all
such Equipment and Inventory, (ii) Equipment sold to and subsequently
repurchased from a third party by the Grantor for the period beginning on the
date of such repurchase and ending on the date of the re-sale of such Equipment
to a different third party, (iii) Equipment transferred from a third party to
the Grantor (such Equipment, "Trade-In Equipment") in partial satisfaction of
the purchase price for Equipment sold by the Grantor to such third party for the
period beginning on the date of the transfer of such Trade-In Equipment and
ending on the date the Grantor sells such Trade-In Equipment and (iv) Equipment
used by the Grantor in connection with demonstrations to prospective purchasers
of such Equipment; provided, that the aggregate value of the Equipment described
in clauses (ii), (iii) and (iv) does not exceed $10,000,000;

         (b) Maintain or cause to be maintained in good repair, working order,
and condition, excepting ordinary wear and tear and damage due to casualty, all
of the Equipment, and make or cause to be made all appropriate repairs, renewals
and replacements thereof, as quickly as practicable after the occurrence of any
loss or damage thereto which are necessary or desirable to such end; and

         (c) Comply with the terms of the Credit Agreements and the Note
Agreements with respect to such Equipment and Inventory, including, without
limitation, the maintenance and insurance provisions set forth in Section 5.1(c)
of each of the Credit Agreements.

         SECTION 11. Accounts. The Grantor covenants and agrees with the Agent
that from and after the date of this Agreement and until termination of this
Agreement pursuant to Section 25, the Grantor:

         (a) Shall keep its chief place of business and chief executive office
and the office where it keeps its records concerning the Accounts at its address
set forth below the Grantor's signature

                                       8
<PAGE>

on the Credit Agreements, and keep the offices where it keeps all originals of
all chattel paper which evidence Accounts at the locations therefor specified in
Section 5(a) or, upon thirty (30) days' prior written notice to the Agent, at
such other locations within the United States in a jurisdiction where all
actions required by Section 6 shall have been taken with respect to the
Accounts. The Grantor will hold and preserve such records (in accordance with
the Grantor's usual document retention practices) and chattel paper and will
permit representatives of the Agent at any time during normal business hours to
inspect and make abstracts from such records and chattel paper;

         (b) Shall in any suit, proceeding or action brought by the Agent under
any Account comprising part of the Collateral, the Grantor will save, indemnify
and keep each of the Holders of Secured Obligations harmless from and against
all expenses, loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the obligor
thereunder, arising out of a breach by the Grantor of any obligation or arising
out of any other agreement, indebtedness or liability at any time owing to or in
favor of such Holder of Secured Obligations from the Grantor, and all such
obligations of the Grantor shall be and shall remain enforceable against and
only against the Grantor and shall not be enforceable against any of the Holders
of Secured Obligations; and

         (c) Shall not sell, transfer, assign or encumber any account,
instrument or chattel paper other than pursuant to the terms of the Credit
Agreements and the Note Agreements.

         SECTION 12. Leased Real Property. The Grantor covenants and agrees with
the Agent that from and after the date of this Agreement and until termination
of this Agreement pursuant to Section 25, that:

         (a) Promptly following, but not later than ninety (90) days after, the
close of each fiscal year the Grantor will furnish to the Agent a report
certified to be true and correct by the Grantor containing a list of each of the
Grantor's leased premises; the name or names of all owners; rentals being paid;
and whether the Grantor has obtained waivers of Liens and access agreements from
landlords with respect to such premises in accordance with Section 6; and

         (b) The Grantor agrees that, after the occurrence and during the
continuation of an Event of Default, the Agent may, but need not, make any
payment or perform any act hereinbefore required of the Grantor with respect to
the Grantor's leased premises in any form and manner deemed expedient. All money
paid for any of the purposes herein authorized and all other moneys advanced by
the Agent to protect the lien hereof shall be additional Secured Obligations
secured hereby and shall become immediately due and payable without notice and
shall bear interest thereon at the default interest rate as provided in the
Credit Agreement until paid to the Agent in full.

         (c) The Grantor agrees that it will not amend any lease in a manner
that has a material adverse affect on the interests of the Holders of Secured
Obligations without the Agent's prior written consent.

                                       9
<PAGE>

         SECTION 13. General Covenants. The Grantor covenants and agrees with
the Agent that from and after the date of this Agreement and until termination
of this Agreement pursuant to Section 25, the Grantor shall:

         (a) Keep and maintain at the Grantor's own cost and expense
satisfactory and complete records of the Grantor's Collateral in a manner
consistent with the Grantor's current business practice, including, without
limitation, a record of all payments received and all credits granted with
respect to such Collateral. The Grantor shall, for the Agent's further security,
deliver and turn over to the Agent or the Agent's designated representatives at
any time following the occurrence and during the continuation of an Event of
Default, any such books and records (including, without limitation, any and all
computer tapes, programs and source and object codes relating to such Collateral
in which the Grantor has an interest or any part or parts thereof); and

         (b) The Grantor will not create, permit or suffer to exist, and will
defend the Collateral against, and take such other action as is necessary to
remove, any Lien on such Collateral other than Liens permitted as of the date
hereof under the Credit Agreements and the Note Agreements, and will defend the
right, title and interest of the Agent in and to the Grantor's rights to such
Collateral, including, without limitation, the proceeds and products thereof,
against the claims and demands of all Persons whatsoever.

         SECTION 14. The Agent Appointed Attorney-in-Fact. The Grantor hereby
irrevocably appoints the Agent as the Grantor's attorney-in-fact, with full
authority in the place and stead of the Grantor and in the name of the Grantor
or otherwise, following the occurrence and during the continuation of an Event
of Default, in the Agent's discretion, to take any action and to execute any
instrument which the Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, to:

                  (i) obtain and adjust insurance required to be paid to the
         Agent or any Holders of Secured Obligations pursuant to the Credit
         Agreements and the Note Agreements;

                  (ii) ask, demand, collect, sue for, recover, compromise,
         receive and give acquittance and receipts for moneys due and to become
         due under or in respect of any of the Collateral;

                  (iii) receive, endorse, and collect any drafts or other
         instruments, documents and chattel paper, in connection with clause (i)
         or (ii) above; and

                  (iv) file any claims or take any action or institute any
         proceedings which the Agent may deem necessary or desirable for the
         collection of any of the Collateral, or otherwise to enforce the rights
         of the Agent with respect to any of the Collateral;

In addition, the Agent may at any time:

                                       10
<PAGE>

                  (i) obtain access to records maintained for the Grantor by
         computer services companies and other service companies or bureaus;

                  (ii) send requests under the Grantor's, the Agent's or a
         fictitious name to the Grantor's customers or account debtors for
         verification of Accounts provided that the Agent gives the Grantor
         notice prior to initiating any such verifications; and

                  (iii) do all other things reasonably necessary to carry out
         this Agreement.

         SECTION 15. The Agent May Perform. If the Grantor fails to perform any
agreement contained herein or in the Credit Agreements or the Note Agreements,
the Agent may, upon three days' prior notice to the Grantor, perform, or cause
performance of, such agreement, and the expenses of the Agent incurred in
connection therewith shall be payable by the Grantor under Section 22.

         SECTION 16. The Agent's Duties. The powers conferred on the Agent
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Agent shall not have any duty as to any
Collateral. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which the Agent accords its
own property, it being understood that the Agent shall be under no obligation to
take any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral, but may do so at its option, and all
reasonable expenses incurred in connection therewith shall be for the sole
account of the Grantor and shall be added to the Secured Obligations.

         SECTION 17. Remedies. (a) If any Event of Default shall have occurred
and be continuing:

                  (i) The Agent shall have, in addition to other rights and
         remedies provided for herein or otherwise available to it, all the
         rights and remedies of a secured party upon default under the UCC
         (whether or not the UCC applies to the affected Collateral) and
         further, the Agent may, without notice, demand or legal process of any
         kind (except as may be required by law), all of which the Grantor
         waives, at any time or times, (x) enter the Grantor's owned or leased
         premises where Collateral is located and take physical possession of
         the Collateral and maintain such possession on the Grantor's owned or
         leased premises, at no cost to the Agent or any of the Holders of
         Secured Obligations, or remove the Collateral, or any part thereof, to
         such other place(s) as the Agent may desire, (y) require the Grantor
         to, and the Grantor hereby agrees that it will at its expense and upon
         request of the Agent forthwith, assemble all or any part of the
         Collateral as directed by the Agent and make it available to the Agent
         at a place to be designated by the Agent which is reasonably convenient
         to the Agent and (z) without notice except as specified

                                       11
<PAGE>

         below, sell, lease, assign, grant an option or options to purchase or
         otherwise dispose of the Collateral or any part thereof at public or
         private sale, at any exchange, broker's board or at any of the offices
         of the Agent or elsewhere, for cash, on credit or for future delivery,
         and upon such other terms as the Agent may deem commercially
         reasonable. The Grantor agrees that, to the extent notice of sale shall
         be required by law, at least ten (10) days' notice to the Grantor of
         the time and place of any public sale or the time after which any
         private sale is to be made shall constitute reasonable notification.
         The Agent shall not be obligated to make any sale of Collateral
         regardless of notice of sale having been given. The Agent may adjourn
         any public or private sale from time to time by announcement at the
         time and place fixed therefor, and such sale may, without further
         notice, be made at the time and place to which it was so adjourned;

                  (ii) The Agent shall apply all cash proceeds received by the
         Agent in respect of any sale of, collection from, or other realization
         upon all or any part of the Collateral (after payment of any amounts
         payable to the Agent pursuant to Section 22), for the benefit of the
         Holders of Secured Obligations, against all or any part of the Secured
         Obligations in such order as is required by the Collateral Sharing
         Agreement, or, to the extent not specified therein, as is determined by
         the Holders of Secured Obligations, and, with respect to the
         application of such proceeds subsequent to satisfaction of the
         conditions set forth in the Collateral Sharing Agreement or as agreed
         to by the Holders of Secured Obligations, as applicable, in such order
         as may be required under the Credit Agreement with respect to amounts
         remitted to the Lenders and each Note Agreement with respect to amounts
         remitted to the parties thereto. Any surplus of such cash or cash
         proceeds held by the Agent and remaining after payment in full of all
         the Secured Obligations shall be paid over to the Grantor or to
         whomsoever may be lawfully entitled to receive such surplus;

         (b) The Grantor waives all claims, damages and demands against the
Agent arising out of the repossession, retention or sale of any of the
Collateral or any part or parts thereof, except any such claims, damages and
awards arising out of the gross negligence or willful misconduct of the Agent or
any of the Holders of Secured Obligations, as the case may be, as determined in
a final non-appealed judgment of a court of competent jurisdiction; and

         (c) The rights and remedies provided under this Agreement are
cumulative and may be exercised singly or concurrently and are not exclusive of
any rights and remedies provided by law or equity.

         SECTION 18. Exercise of Remedies. In connection with the exercise of
its remedies pursuant to Section 17, the Agent may, (i) exchange, enforce, waive
or release any portion of the Collateral and any other security for the Secured
Obligations; (ii) apply such Collateral or security and direct the order or
manner of sale thereof as the Agent may, from time to time, determine; and (iii)
settle, compromise, collect or otherwise liquidate any such Collateral or
security in any manner following the occurrence and during the continuation of
an Event of Default, without affecting or impairing the Agent's right to take
any other further action with respect to any Collateral or security or any part
thereof.

         SECTION 19. License. The Agent is hereby granted a license or other
right to use, following the occurrence and during the continuance of an Event of
Default, without charge, (a)

                                       12
<PAGE>

the Grantor's labels, patents, copyrights, trade secrets, trade names,
trademarks, service marks, customer lists and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral, provided that
the Agent uses quality standards at least substantially equivalent to those of
the Grantor for the manufacture, advertising, sale and distribution of the
Grantor's products and services and (b) the Grantor's rights under all licenses.

         SECTION 20. Injunctive Relief. The Grantor recognizes that in the event
the Grantor fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy of law may prove to be inadequate
relief to the Holders of Secured Obligations; therefore, the Grantor agrees that
the Agent shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.

         SECTION 21. Interpretation and Inconsistencies; Merger. (a) The rights
and duties created by this Agreement shall, in all cases, be interpreted
consistently with, and shall be in addition to (and not in lieu of), the rights
and duties created by the Credit Agreements, the Note Agreements, the Collateral
Sharing Agreement and the other Loan Documents. In the event that any provision
of this Agreement shall be inconsistent with any provision of any other Loan
Document, such provision of the other Loan Document shall govern.

         (b) Except as provided in subsection (a) above, this Agreement
represents the final and entire agreement of the Grantor and the Agent with
respect to the matters contained herein.

         SECTION 22. Expenses. The Grantor will upon demand pay to the Agent the
amount of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, as provided in the
Credit Agreements, the Note Agreements, and/or the Collateral Sharing Agreement.

         SECTION 23. Amendments, Etc. No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Grantor herefrom shall in any
event be effective unless the same shall be in writing and signed by the Agent
(in accordance with the Collateral Sharing Agreement) and the Grantor, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.

         SECTION 24. Notices. All notices and other communications provided for
hereunder shall be delivered in the manner set forth in Section 8.2 of each of
the Credit Agreements.

         SECTION 25. Continuing Security Interest; Termination. (a) Except as
provided in Section 25(b), this Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect until
the later of the payment or satisfaction in full of the Secured Obligations
(other than contingent indemnity Obligations) and the termination of each of the
Credit Agreements and the Note Agreements, (ii) be binding upon the Grantor, its
successors and assigns and (iii) except to the extent that the rights of any
transferor or assignor are limited by the terms of each of the Credit Agreements
and the Note Agreements, inure,

                                       13
<PAGE>

together with the rights and remedies of the Agent hereunder, to the benefit of
the Agent and any of the Holders of Secured Obligations. Nothing set forth
herein or in any other Loan Document is intended or shall be construed to give
any other Person any right, remedy or claim under, to or in respect of this
Agreement or any other Loan Document or any Collateral. The Grantor's successors
and assigns shall include, without limitation, a receiver, trustee or
debtor-in-possession thereof or therefor.

         (b) The security interest granted hereby shall terminate and all rights
to the Collateral shall revert to the Grantor on the earlier of the date on
which (i) the Agent shall have received from each Holder of Secured Obligations
written notice that all "Obligations" (as defined in the Collateral Sharing
Agreement) owing to such Holder of Secured Obligations have been paid in full or
(ii) the Agent shall have received written notice from the Holders of Secured
Obligations directing the Agent to release the Collateral and stating that the
Holders of Secured Obligations have consented to such release under the terms of
the Credit Agreements and the Note Agreements; provided, that no such
termination shall occur prior to the payment in full of all of the Agent's
"Expenses" (as defined in the Collateral Sharing Agreement). Upon the
termination of the security interest, the Grantor shall be entitled to the
prompt return, upon its request and at its expense, of such of the Collateral
held by the Agent as shall not have been sold or otherwise applied pursuant to
the terms hereof and the Agent will, at the Grantor's expense, promptly execute
and deliver to the Grantor such other documents as the Grantor shall reasonably
request to evidence such termination. In connection with any sales of assets
permitted under the Credit Agreements and the Note Agreements, the Agent will
promptly release and terminate the liens and security interests granted under
this Agreement with respect to such assets.

         SECTION 26. Severability. Any provision in this Agreement that is held
to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to
that jurisdiction, be inoperative, unenforceable, or invalid without affecting
the remaining provisions in that jurisdiction or the operation, enforceability,
or validity of that provision in any other jurisdiction, and to this end the
provisions of this Agreement are declared to be severable.

         SECTION 27. GOVERNING LAW. ANY DISPUTE BETWEEN THE GRANTOR AND THE
AGENT ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE LAWS (INCLUDING 735 ILCS SECTION 105/5-1 ET SEQ. BUT
OTHERWISE WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES) OF THE STATE OF
ILLINOIS.

         SECTION 28. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.

         (A) NON-EXCLUSIVE JURISDICTION. EACH OF THE PARTIES HERETO AGREES THAT
ALL DISPUTES BETWEEN THEM ARISING OUT OF, CONNECTED

                                       14
<PAGE>

WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH, THIS AGREEMENT WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR
OTHERWISE, MAY BE RESOLVED NON-EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN
CHICAGO, ILLINOIS, BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM
THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF CHICAGO,
ILLINOIS. EACH OF THE PARTIES HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO
THIS SUBSECTION (A) ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
CONSIDERING THE DISPUTE.

         (B) VENUE. THE GRANTOR IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
IN ANY JURISDICTION SET FORTH IN PARAGRAPH (A) ABOVE.

         (C) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

                                       15
<PAGE>

         IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

                                       AG-CHEM EQUIPMENT CO., INC.

                                       By: /s/ John Retherford
                                           -------------------------------------
                                           Name:  John Retherford
                                           Title: CFO

                                       BANK ONE, NA, having its principal office
                                       in Chicago, Illinois, formerly known as
                                       The First National Bank of Chicago, as
                                       Agent

                                       By: /s/ Kevin Gillen
                                           -------------------------------------
                                           Name:  Kevin Gillen
                                           Title: Vice President

                   Borrower Security Agreement Signature Page

<PAGE>

                                   EXHIBIT A-1
                                       To
                               Security Agreement

                           Form of Landlord Agreement

Bank One, NA
1 Bank One Plaza
Chicago, IL 60670
Attention: Jenny Gilpin

Ladies and Gentlemen:

         AG-CHEM EQUIPMENT CO., INC., a Minnesota corporation ("Borrower"), the
lessee under that certain lease dated _____________________ between the
Borrower, and the undersigned, covering certain premises owned by the
undersigned and located at _________________ (the "Premises") more fully
described in the lease attached hereto as Exhibit A (the "Lease"). Borrower has
certain of its assets located on the Premises.

         Borrower has entered into certain financing arrangements with a group
of lenders ("Lenders") including Bank One, NA, as contractual representative for
the Lenders (the "Agent") and the Agent and the Lenders require, among other
things, that Borrower grant liens in favor of the Agent for the benefit of
itself and the Lenders on all of Borrower's property located on the Premises
("Collateral").

         To induce the Agent and the Lenders (together with their respective
agents, successors and assigns) to continue said financing arrangements, and for
other good and valuable consideration, the undersigned hereby agrees that:

                  (i) it will not assert against any of Borrower's assets any
         statutory or possessory liens, including, without limitation, rights of
         levy or distraint for rent, all of which it hereby waives;

                  (ii) none of the Collateral located on the Premises shall be
         deemed to be fixtures;

                  (iii) if Borrower defaults on its obligations to the Agent or
         any Lender and, as a result, the Agent undertakes to enforce its
         security interest in the Collateral, the undersigned will cooperate
         with the Agent in its efforts to assemble all of the Collateral located
         on the Premises, will permit the Agent to remain on the Premises for
         ninety (90) days after the Agent gives the undersigned notice of
         default, provided the Agent pays the rental payments due under the
         Lease for the period of time the Agent uses the Premises, or, at the
         Agent's option, to remove the Collateral from the Premises within a
         reasonable time, not to exceed ninety (90) days after the Agent gives
         the undersigned notice of default, provided the Agent pays the rental
         payments due under the Lease for the period

<PAGE>

         of time the Agent uses the Premises, and will not hinder the Agent's
         actions in enforcing its liens on the Collateral;

                  [it will allow the Agent thirty (30) days from the Agent's
         receipt of notice in which to cure or cause Borrower to cure any
         defaults on Borrower's lease obligations to the undersigned; provided
         if such default cannot reasonably be cured within the thirty (30) day
         period, and provided the Agent is diligently pursuing a cure, then the
         Agent shall have a reasonable period to cure such default;]

                  [(iv) if, for any reason whatsoever, the undersigned either
         deems itself entitled to redeem or to take possession of the Premises
         during the term of Borrower's lease or intends to sell or otherwise
         transfer all or any part of its interest in the Premises, the
         undersigned will notify the Agent five (5) days before taking such
         action;]

                  [(v) the undersigned shall accept performance by the Agent of
         the Borrower's obligations under the Lease as though the same had been
         performed by the holder of the Borrower's interest therein at the time
         of such performance. Upon the cure of any such default, any notice
         advising of any default or any action of the undersigned to terminate
         the Lease or to interfere with the occupancy, use or enjoyment of the
         Premises by reason thereof, which action has not been completed, shall
         be deemed rescinded and the Lease shall continue in full force and
         effect. The undersigned shall not be required to continue any
         possession or continue any action to obtain possession upon the cure of
         any such default;]

         Any notice(s) required or desired to be given hereunder shall be
directed to the party to be notified at the address stated herein.

         The agreements contained herein shall continue in force until all of
Borrower's obligations and liabilities to the Agent and the Lenders are paid and
satisfied in full and all financing arrangements among the Agent, the Lenders
and Borrower have been terminated.

         The undersigned will use reasonable efforts to notify all successor
owners, transferees, purchasers and mortgagees of the existence of this waiver.
The agreements contained herein may not be modified or terminated orally and
shall be binding upon the successors, assigns and personal representatives of
the undersigned, upon any successor owner or transferee of the Premises, and
upon any purchasers, including any mortgagee, from the undersigned.

         The undersigned agrees that nothing contained in this waiver shall be
construed as an assumption by the Agent or any of the other lenders of any
obligations of Borrower contained in the Lease.

         Executed and delivered this ___ day of ___________, at _______________.

                                       2
<PAGE>

                  THIS WAIVER SHALL NOT IMPAIR OR OTHERWISE AFFECT BORROWER'S
                  OBLIGATIONS TO PAY RENT AND ANY OTHER SUMS PAYABLE BY BORROWER
                  OR TO OTHERWISE PERFORM ITS OBLIGATIONS TO THE LESSOR PURSUANT
                  TO THE TERMS OF THE LEASE.

                                       [Name of Lessor]

                                       By:
                                           -------------------------------------
                                       Title:
                                              ----------------------------------

                                       Address:
                                                --------------------------------

                                                --------------------------------

                                                --------------------------------

AGREED & ACKNOWLEDGED:

[                              ]
 ------------------------------

By:
    -------------------------------------
Title:
       ----------------------------------

Address:
         --------------------------------

         --------------------------------

         --------------------------------

                                       3
<PAGE>

                                    EXHIBIT A
                                       to
                               Landlord Agreement

                                      Lease
                                (attached hereto)

<PAGE>

                                    EXHIBIT B
                                       to
                               Landlord Agreement

                               Leasehold Mortgage
                                (attached hereto)

<PAGE>

                           [ACKNOWLEDGMENT (CORPORATE)

STATE OF                         )
         ------------------------
                                 )SS
COUNTY OF                        )
          -----------------------

         Before me, a Notary Public in and for said County, personally appeared
__________________, a _________________ corporation, by the ____________________
of such corporation, who acknowledged that (s)he did sign the foregoing
instrument on behalf of said corporation and that said instrument is the
voluntary act and deed of said corporation and his/her voluntary act and deed as
such officer of said corporation.

         IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed my
official seal this ____ day of ____________, at _____________, ________________.

                                       -----------------------------------------
                                       Notary Public
                                       My Commission Expires:]

(Notarial Seal)

<PAGE>

                           [ACKNOWLEDGMENT (CORPORATE)

STATE OF                         )
         ------------------------
                                 )SS
COUNTY OF                        )
          -----------------------

         Before me, a Notary Public in and for said County, personally appeared
____________, a ______________ corporation, by the _________________________ of
such corporation, who acknowledged that (s)he did sign the foregoing instrument
on behalf of said corporation and that said instrument is the voluntary act and
deed of said corporation and his/her voluntary act and deed as such officer of
said corporation.

         IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed my
official seal this ____ day of ____________, at _____________, ________________.

                                       -----------------------------------------
                                       Notary Public
                                       My Commission Expires:]

(Notarial Seal)

<PAGE>

                                   EXHIBIT A-2
                                       To
                               Security Agreement

                           Form of Mortgagee Agreement

Bank One, NA
1 Bank One Plaza
Chicago, IL  60670
Attention: Jenny Gilpin

  Ladies and Gentlemen:

         AG-CHEM EQUIPMENT CO., INC., a Minnesota corporation ("Borrower"), is
the lessee under that certain lease dated ____________ between the Borrower, and
____________________ (the "Landlord[s]"), covering certain premises located at
_________________ (the "Premises") as more fully described on Exhibit A(1)
attached hereto (the "Lease"). The undersigned is the mortgagee under a mortgage
between the Landlord[s] and the undersigned covering the Premises (the
"Mortgage"). The undersigned is the sole mortgagee of the Premises. Borrower has
certain of its assets located on the Premises.

         Borrower has entered into certain financing arrangements with a group
of lenders ("Lenders") including Bank One, NA, as contractual representative for
the Lenders (the "Agent") and the Agent and the Lenders require, among other
things, that Borrower grant liens in favor of the Agent for the benefit of
itself and the Lenders on all of Borrower's property located on the Premises
("Collateral").

         By its signature below, the undersigned agrees that:

                  (i) it will not assert against any of the Collateral any
         statutory or possessory liens, including, without limitation, rights of
         levy or distraint for rent, all of which it hereby waives;

                  (ii) none of the Collateral located on the Premises shall be
         deemed to be fixtures;

                  [(iii) it will allow the Agent thirty (30) days from the
         Agent's receipt of notice in which to cure or cause Borrower to cure
         any such defaults on its mortgage obligations; provided if such default
         cannot reasonably be cured within the thirty

--------------------------
(1)      Please attach legal description of premises for recordation purposes.

<PAGE>

         (30) day period, and provided the Agent is diligently pursuing a cure,
         then the Agent shall have a reasonable period to cure such default;]

                  [(iv) if, for any reason whatsoever, the undersigned either
         deems itself entitled to take possession of the Premises during the
         term of the Mortgage or intends to sell or otherwise transfer all or
         any part of its interest in the Premises, the undersigned will notify
         the Agent five (5) days before taking such action;]

                  (v) if Borrower defaults on its obligations to the Agent or
         any Lender and, as a result, the Agent undertakes to enforce its
         security interest in the Collateral, the undersigned will cooperate
         with the Agent in its efforts to assemble all of the Collateral located
         on the Premises, will permit the Agent to remain on the Premises for
         ninety (90) days after the Agent gives the undersigned notice of
         default, provided the Agent pays the Lease payments to the Landlord[s]
         due under the Lease for the period of time the Agent uses the Premises,
         or, at the Agent's option, to remove the Collateral from the Premises
         within a reasonable time, not to exceed ninety (90) days after the
         Agent gives the undersigned notice of default, provided the Agent pays
         the rental payments to the Landlord[s] due under the Lease for the
         period of time the Agent uses the Premises, and will not hinder the
         Agent's actions in enforcing its liens on the Collateral; and

         Any notice(s) required or desired to be given hereunder shall be
directed to the party to be notified at the address stated herein.

         The agreements contained herein shall continue in force until all of
Borrower's obligations and liabilities to the Agent and the Lenders are paid and
satisfied in full and all financing arrangements among the Agent, the Lenders
and Borrower have been terminated.

         The undersigned will notify all successor owners, transferees,
purchasers and mortgagees of the existence of this waiver. The agreements
contained herein may not be modified or terminated orally and shall be binding
upon the successors, assigns and personal representatives of the undersigned,
upon any successor owner or transferee of the Premises, and upon any purchasers,
including any mortgagee, from the undersigned.

         [The undersigned consents to the granting of the Leasehold Mortgage to
the Agent and to the liens, security interests and encumbrances created by and
resulting from the Leasehold Mortgage or other documents collateral thereto in
the form attached hereto as Exhibit B.]

         The undersigned agrees that nothing contained in this waiver shall be
construed as an assumption by the agent or any of the other lenders of any
obligations of the landlord contained in the mortgage.

                                       2
<PAGE>

         Executed and delivered this ____ day of ________, at _________________.

                  THIS WAIVER SHALL NOT IMPAIR OR OTHERWISE AFFECT BORROWER'S
                  OBLIGATIONS TO PAY RENT AND ANY OTHER SUMS PAYABLE BY BORROWER
                  OR TO OTHERWISE PERFORM ITS OBLIGATIONS TO THE LANDLORD
                  PURSUANT TO THE TERMS OF THE LEASE.

                                       [Name of Mortgagee]

                                       By:
                                           -------------------------------------
                                       Title:
                                              ----------------------------------

                                       Address:
                                                --------------------------------

                                                --------------------------------

                                                --------------------------------

AGREED & ACKNOWLEDGED:

[                              ]
 ------------------------------

By:
    -------------------------------------
Title:
       ----------------------------------

Address:
         --------------------------------

         --------------------------------

         --------------------------------

                                       3
<PAGE>

                                    EXHIBIT A
                                       to
                               Landlord Agreement

                                      Lease
                                (attached hereto)

<PAGE>

                                    EXHIBIT B
                                       to
                               Landlord Agreement

                               Leasehold Mortgage
                                (attached hereto)

<PAGE>

STATE OF                         )
         ------------------------
                                 )SS
COUNTY OF                        )
          -----------------------

         The foregoing letter agreement was acknowledged before me this ___ day
of _____________, by _____________________, a _______________ of ______________,
a ____________________, on behalf of such _________________.

                                       -----------------------------------------
                                       Notary Public
                                       ________ County, _____________
                                       My commission expires:_______]

<PAGE>

                                    EXHIBIT B
                                       To
                               Security Agreement

                              Form of Bailee Letter

Bank One, NA
1 Bank One Plaza
Chicago, IL  60670
Attention: Jenny Gilpin

  Ladies and Gentlemen:

         AG-CHEM EQUIPMENT CO., INC., a Minnesota corporation ("Borrower"), now
does or hereafter may store certain of its merchandise, inventory, or other of
its personal property at premises located at _______________ (the "Premises")
owned or leased by the undersigned.

         Borrower has entered into certain financing arrangements with a group
of lenders (the "Lenders") including Bank One, NA (the "Agent") and, as a
condition to continuing the loans and other financial accommodations of the
Lenders to Borrower, the Agent and the Lenders require, among other things, that
Borrower grant liens in favor of the Agent for the benefit of the Agent and the
Lenders on all of Borrower's property located on the Premises ("Collateral").

         To induce the Agent and the Lenders (together with their respective
agents, successors and assigns) to enter into said financing arrangements, and
for other good and valuable consideration, the undersigned hereby agrees that:

                  (i) it will not assert against any of Borrower's assets any
         statutory or possessory liens, including, without limitation, rights of
         levy or distraint for rent, all of which it hereby waives;

                  (ii) the Collateral shall be identifiable as being owned by
         Borrower and kept reasonably separate and distinct from other property
         in the possession of the undersigned;

                  (iii) none of the Collateral located on the Premises shall be
         deemed to be fixtures; and

                  (iv) if Borrower defaults on its obligations to the Lenders or
         the Agent and, as a result, the Agent undertakes to enforce its
         security interest in the Collateral, the undersigned (a) will cooperate
         with the Agent in its efforts to assemble all of the Collateral located
         on the Premises, (b) will permit the Agent to either remain on the
         Premises for ninety (90) days after the Agent gives the undersigned
         notice of default or, at the Agent's option, to remove the Collateral
         from the Premises within a reasonable time, not to exceed ninety

<PAGE>

         (90) days after the Agent gives the undersigned notice of default,
         provided in either instance that the Agent leaves the Premises in the
         same condition as existed immediately prior to such ninety (90) day
         period, and the Agent shall indemnify the undersigned for any damages
         arising solely out of its occupancy of the Premises, and (c) will not
         hinder the Agent's actions in enforcing its liens on the Collateral.

         Any notice(s) required or desired to be given hereunder shall be
directed to the party to be notified at the address stated herein.

         The agreements contained herein shall continue in force until all of
Borrower's obligations and liabilities to the Agent and Lenders are paid and
satisfied in full and all financing arrangements among the Agent, the Lenders
and Borrower have been terminated.

         The undersigned will notify all successor owners, transferees,
purchasers and mortgagees of the existence of this agreement. The agreements
contained herein may not be modified or terminated orally and shall be binding
upon the successors, assigns and personal representatives of the undersigned,
upon any successor owner or transferee of any of the Premises, and upon any
purchasers, including any mortgagee, from the undersigned.

         Executed and delivered this ____ day of ____________, at _____________.

                                       [Name and Address of Bailee]

                                       (By)
                                           -------------------------------------

                                       2
<PAGE>

                                   SCHEDULE 1
                                       To
                               Security Agreement

                             Locations of Collateral
                                    Attached

<PAGE>

                                  SCHEDULE 1-A
                                       To
                               Security Agreement

                             Third Party Locations:

<PAGE>

                                  SCHEDULE 1-B
                                       To
                               Security Agreement

                      Financing Statement Filing Locations:

<PAGE>

                                   SCHEDULE 2
                                       To
                               Security Agreement

                                  Trade Names:

<PAGE>

                                   SCHEDULE 3
                                       To
                               Security Agreement

                                  Pledged Debt:

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