Environmental Indemnity Agreement

ALLSTATE LIFE INSURANCE COMPANY
LOAN NO. 121873


ENVIRONMENTAL INDEMNITY AGREEMENT
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THIS ENVIRONMENTAL INDENDTITY AGREEMENT (the "Agreement") is dated as of this _____ day of September, 2000, among AG-CHEM EQUIPMENT CO., INC., a Minnesota Corporation ("Borrower") (Borrower is also referred to herein as "Indemnitor") and ALLSTATE LIFE INSURANCE COMPANY ("Lender").


RECITALS
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A. Borrower is the present owner of the real and personal property commonly known as Brenwood I, II, III, and IV, in Minnetonka, Minnesota, and legally described in EXHIBIT A attached hereto (the "Property");


B. Pursuant to Lender's commitment letter dated July 20, 2000, Borrower has executed and delivered to Lender a mortgage note of even date herewith (the "Note"), in the principal sum of $9,000,000.00, secured by a Mortgage, Assignment of Leases, Rents and Contracts, Security Agreement and Fixture Filing (the "Mortgage") on the Property. Borrower will benefit from the disbursement of the loan (the "Loan") evidenced by the Note and secured by the Mortgage and Collateral as defined in the Mortgage;


C. As a condition precedent to funding the Loan, Lender requires the execution of this Agreement.


AGREEMENTS
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NOW THEREFORE, in order to induce Lender to accept the Property as security for the Loan and to enter into the Loan and to disburse the proceeds of the Loan, and in consideration of the matters described in the foregoing Recitals, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


1. Recitals. The Recitals are incorporated herein by this reference.


2. Definitions. For purposes of this Agreement, "Hazardous Materials" means and includes asbestos or any substance containing asbestos, polychlorinated biphenyls, any explosives, radioactive materials, chemicals known or suspected to cause cancer or reproductive toxicity, pollutants, effluents, contaminants, emissions, infectious wastes, any petroleum or petroleum-derived waste or product or related materials and any items defined as hazardous, special or toxic materials, substances or waste under any Hazardous Material Law, or any material which shall be removed from the Property pursuant to any administrative order or


enforcement proceeding or in order to place the Property in a condition that is suitable for ordinary use. "Hazardous Material Laws" collectively means and includes any present and future local, state, federal or international law or treaty relating to public health, safety or the environment including without limitation, the Resource Conservation and Recovery Act, as amended ("RCRA"), 42 U.S.C. ss. 6901 et seq., the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801 et seq., the Clean Water Act, 33 U.S.C. ss. 125 1 et seq., the Clean Air Act, as amended 42 U.S.C. ss. 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq., the Safe Drinking Water Act, 42 U.S.C. ss. 300f et seq., the Uranium Mill Tailings Radiation Control Act, 42 U.S.C. ss. 7901 et seq., the Occupational Safety and Health Act, 29 U.S.C. ss. 655 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. ss. 136 et seq., the National Environmental Policy Act, 42 U.S.C. ss. 4321 et seq., the Noise Control Act, 42 U.S.C. ss. 4901 et seq., and the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. ss. 11001 et seq., and the amendments, regulations, orders, decrees, permits, licenses or deed restrictions now or hereafter promulgated thereunder.


3. Indemnification. Indemnitor hereby jointly and severally agrees, at its sole cost and expense, to unconditionally indemnify, defend, and hold Lender, its directors, officers, employees and agents harmless against any loss, liability, damage (whether direct or consequential), expenses, claims, penalties, fines, injunctions, suits, proceedings, disbursements or expenses (including, without limitation, reasonable attorneys' and experts' fees and disbursements and court costs) (collectively, the "Liabilities") arising under any Hazardous Material Law, or any other Liabilities which may be incurred by or asserted against Lender directly or indirectly resulting from the presence of Hazardous Material on the Property.


Indemnitor shall assume the burden and expense of defending all suits, administrative proceedings and disputes of any description with all persons, entities, political subdivisions or government agencies arising out of the matters to be indemnified under this Agreement. Indemnitor shall pay, promptly upon entry, any nonappealable order, judgment or other final resolution of any claim or dispute arising out of the matters to be indemnified under this Agreement and shall pay promptly when due any fines, penalties or agreed settlements arising out of the matters to be indemnified under this Agreement. In the event that such payment is not made, Lender, at its sole discretion, may proceed to file suit against Indemnitor to compel such payment.


Promptly following completion of any actions imposed upon Indemnitor under any Hazardous Material Law, Indemnitor shall obtain and deliver to Lender, an environmental report in form and substance acceptable to Lender from an environmental consultant acceptable to Lender, stating that all required action has been taken, and that upon completion of such action, the Property is, to the knowledge of such professional, then in compliance with the applicable Hazardous Material Laws.


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4. Duration of Indemnity. The duration of the indemnification hereunder shall be indefinite unless (a) in the case of payment of the Note, Borrower delivers to Lender, after payment of the principal, interest and all other amounts due under the Note, an environmental report from an environmental consultant acceptable to Lender showing neither any violation of Hazardous Material Laws nor the presence of any Hazardous Materials on the Property (other than Hazardous Materials in quantities and of types reasonably and customarily associated with general office use that are stored, used and disposed of in compliance with Hazardous Material Law and do not require compliance with any reporting requirements under any Hazardous Material Law) and in all other respects acceptable in form and substance to Lender or (b) in the case of a foreclosure, trustee's sale, deed-in-lieu of foreclosure or payment of the Note in full, no notice of any violation of the Hazardous Material Laws or the presence of any Hazardous Materials on the Property has been received by the Borrower from Lender within five years after such foreclosure, trustee's sale, acceptance of a deed-in-lieu of foreclosure or payment of the Note in full (the "Cut-off Date"); provided that, if prior to the Cut-off Date, Lender has notified Indemni ...