<PAGE>
 
                                                                    EXHIBIT 10.8

              NORWEST BANK MINNESOTA NORTH, NATIONAL ASSOCIATION

                               CREDIT AGREEMENT

THIS CREDIT AGREEMENT (the "Agreement") dated as of  May 22, 1997 (the
"Effective Date") is between Norwest Bank Minnesota North, National Association
(the "Bank") and A.S.V., Inc. (the "Borrower").

BACKGROUND

The Borrower has asked the Bank to provide a Two Million and 00/100 Dollars
($2,000,000.00) line of credit to be used for working capital.  The Bank is
agreeable to meeting the Borrower's request provided that the Borrower agrees to
the term and conditions of this Agreement.  For the purposes of this Agreement,
all promissory notes that evidence indebtedness of the Borrower to the Bank and
which are documented under this Agreement and defined below shall collectively
be referred to as the Notes.

The Notes, this Agreement and all "Security Documents" described in Exhibit A-1
shall be referred to collectively as the "Documents".

In consideration of the above premises, the Bank and the Borrower agree as
follows:

1.  LINE OF CREDIT

1.1  LINE OF CREDIT AMOUNT.  During the Line Availability Period defined below,
     the Bank agrees to provide a revolving line of credit (the "Line") to the
     Borrower. Outstanding amounts under the Line shall not, at any one time,
     exceed the lesser of the Borrowing Base or Two Million Dollars
     ($2,000,000.00) The Borrowing Base is defined in Exhibit A-2 to this
     Agreement.

1.2  LINE AVAILABILITY PERIOD.  The "Line Availability Period" shall mean the
     period of time from the Effective Date or the date on which all conditions
     precedent described in this Agreement have been met, whichever is later, to
     the Line Expiration Date of June 1, 1998.

1.3  MANDATORY PREPAYMENT.  If at any time the principal outstanding under the
     Revolving Note exceeds the Borrowing Base, the Borrower must immediately
     prepay the Revolving Note in an amount sufficient to eliminate the excess.

  FEE AND EXPENSES

     COMMITMENT FEE.  During the Line Availability Period the Borrower shall pay
     the Bank a commitment fee of .125% per annum on the daily unused amount of
     the Line. This fee shall be calculated on the basis of actual days elapsed
     in a 360 day year and paid quarterly beginning July 1, 1997.
 
                                      1.
<PAGE>
 
     DOCUMENTATION EXPENSE. The Borrower agrees to reimburse the Bank for its
     reasonable expenses relating to the preparation of the Documents and any
     possible future amendments to the Documents, which reimbursement may
     include, but shall not be limited to, reimbursement of reasonable
     attorneys' fees including the costs of the Bank in-house counsel, which
     shall not be in the excess of $500.00.

     Despite such reimbursement the Borrower acknowledges that the Bank's
     counsel is engaged solely to represent the Bank and does not represent the
     Borrower.

     COLLECTION EXPENSE.  In the event the Borrower fails to pay the Bank any
     amounts due under this Agreement or under the Documents, the Borrower shall
     pay all costs of collection. including reasonable attorney's fees and legal
     expenses incurred by the Bank.

     MISCELLANEOUS EXPENSE. The Borrower agrees to reimburse the Bank for its
     expenses incurred in perfecting any security interest in property granted
     by the Borrower to the Bank.

ADVANCES AND PAYMENTS

     REQUEST FOR ADVANCES, DISBURSEMENTS AND PAYMENTS.

     Any line advance requested under the terms of this Agreement shall be
     requested by telephone or in a writing delivered to the Bank (or
     transmitted via facsimile) by any person reasonably believed by the Bank to
     be authorized by the Borrower to do so. The Bank will not consider any such
     request following an event which is, or with notice or the lapse of time
     would be, an event of default under this Agreement. Proceeds shall be
     deposited into the Borrower's account at the Bank or disbursed in such
     other manner as the parties may agree.

     PAYMENTS. All principal, interest and fees due under the Documents shall be
     paid by the direct debit of available funds deposited in the Borrower's
     account with the Bank. The Bank shall debit the account on the date the
     payments become due. If a due date does not fall on a day on which the Bank
     is open for substantially all of its business (a "Banking Day"), the Bank
     shall debit the account on the next Banking Day and interest shall continue
     to accrue during the extended period. If there are insufficient funds in
     the account on the day the Bank enters any debit authorized by this
     Agreement, the debit will be reversed and the payment shall be due
     immediately without necessity of demand by direct payment of immediately
     available funds.



                                      2.
<PAGE>
 
SECURITY
 
     During the time period that credit is available under this Agreement, and
     afterward until all amounts due under the Documents are paid in full,
     unless the Bank shall otherwise agree in writing, all amounts due under
     this Agreement and the Documents shall be secured at all times as provided
     in Exhibit A-1. The Borrower hereby grants the Bank a security interest
     (independent of the Bank's right of set-off) in its deposit accounts at the
     Bank and in any other debt obligations of the Bank to the Borrower.


CONDITIONS PRECEDENT

     The Borrower must deliver to the Bank the Documents described in Exhibit 
     A-2 properly executed in form and content acceptable to the Bank, prior to
     the Bank's initial advance or disbursement under this Agreement.

REPRESENTATIONS AND WARRANTIES

     To induce the Bank to enter into this Agreement, the Borrower, to the best
     of its knowledge and upon due inquiry, makes the representations and
     warranties contained in the Company's financial information provided
     through March 31, 1997.

     Each request for an advance or a disbursement under this Agreement
     following the Effecitive Date constitutes a reaffirmation of these
     representations and warranties.
 
     Organiational Status. The Borrower is a corporation duly formed and in good
     standing under the Laws of the State of Minnesota.

     Authorization. This Agreement, and the execution and delivery of the
     Documents required hereunder, is within the Borrowers powers, and has been
     duly authorized and does not conflict with any of its organizational papers
     or any other agreement by which the Borrower is bound.

     Financial Reports.  The Borrower has provided the Bank with its annual
     audited financial statement dated December 31, 1996, and this statement
     fairly represents the financial condition of the Borrower as of its dated
     and was prepared in accordance with GAAP.

     Financial Projections. The Borrower has provided the Bank with its four (4)
     year projections dated December 6, 1996 and these projections fairly
     represent the Borrowers projections for these periods

     Litigation. There is no litigation or governmental proceeding pending or
     threatened against the Borrower which could have a material adverse effect
     on the Borrower's financial condition or business.

     Taxes.  The Borrower has paid when due, all federal, state and local taxes.

     No default. There is no event which is, or with notice or the lapse of time
     would be, an event of default under this Agreement.

                                      3.
<PAGE>
 
     Erisa.  The borrower is in compliance in all material respects with ERISA
     and has
     received no notice contrary from the PBGC or other governmental area.

     Environmental Matters. To the best of the Borrower's knowledge following
     diligent inquiry: 1) the Borrower is in compliance in all material respects
     with all applicable environmental, health, and safety statutes and
     regulations, 2) the Borrower is not the subject of any "Superfund"
     evaluations, and 3) the Borrower has not incurred, directly or indirectly,
     any material contingent liability in connection with the release of any
     toxic or hazardous waste or substance into the environment.
 

COVENANTS

1.   FINANCIAL INFORMATION AND REPORTING

     Except as otherwise stated in this Agreement, all financial information
     provided to the Bank shall be compiled using generally accepted accounting
     principles consistently applied.

     During the time period that credit is available under this Agreement, and
     afterward until all amounts due under the Documents are paid in full,
     unless the Bank shall otherwise agree in writing, the Borrower agrees to:

     Annual Financial Statements. Provide the Bank within 90 days of the
     Borrower's fiscal year end, the Borrower's annual statements for the fiscal
     year then ending, in form acceptable to the Bank. The statements must be
     audited with an unqualified opinion by a certified public accountant
     acceptable to the Bank.

     Interim Financial Statements. Provide the Bank within 20 days of each month
     end, the Borrower's interim financial statements for the interim period
     then ending. The statements must be current through the end of that period
     and must be prepared on a consolidated basis and be certified as correct by
     an officer of the Borrower in form acceptable to the Bank

     Borrowing Base Certificate. Provide the Bank within 20 days of each month
     end, a Borrowing Base Certificate in the form of Exhibit A-3, current
     through the end of that period and certified as correct by an officer of
     the Borrower acceptable to the Bank.

     Accounts Receivable Aging. Provide the Bank within 20 days of each month
     end, an accounts receivable aging report in form acceptable to the Bank,
     current through the end of that period and certified as correct by an
     officer of the Borrower acceptable to the Bank.

     Accounts Payable Aging. Provide the Bank within 20 days of each month end,
     an accounts payable aging report in form acceptable to the Bank, current
     through the end of that period and certified as correct by an office of the
     Borrower acceptable to the Bank.

     Inventory List. Provide the Bank within 20 days of each month end an
     inventory reconciliation in form acceptable to the Bank, current through
     the end of that period and certified as correct by an of officer of the
     Borrower acceptable to the Bank. On a semi-annual basis, borrower to
     provide complete copy of the detail list on January 20 and July 20. 

                                      4.
<PAGE>
 
     Financial Projections. Provide the Bank no later than 30 days prior to each
     fiscal year end, financial projections for the Borrowers operations in the
     next fiscal year in for acceptable to the Bank.
 
     SEC Reporting. Provide the Bank within 15 days of filing with the
     Securities and Exchange Commission, copies of its Form 10-K Annual Report
     Form 10-Q Quarterly Report and 8-K Current Report.

     Notices of Default. Provide the Bank prompt written notice of: 1) any event
     which has or might after the passage of time or the giving of notice, or
     both, constitute an event of default under any of the Documents; 2) any
     future event that would cause the representations andwarranties contained
     in this Agreement to be untrue when applied to the Borrowerscircumstances
     as of the date of such event. 3) its discovery of any unpermitted release,
     emission, discharge or disposal of any material of environmental concern.
     or 4) its receipt of a claim from any governmental entity or third party
     alleging noncompliance with environmental laws applicable to its operations
     or properties.
 
     Additional Information. Provide the Bank with such other information as it
     may reasonably request, and permit the Bank to visit and inspect its
     properties and examine its books and records.

2.   FINANCIAL COVENANTS

     During the time period that credit is available under this Agreement, and
     afterward until all amounts due under the Documents are paid in full,
     unless the Bank shall otherwise agree in writing, the Borrower agrees to
     comply with the financial covenants described below, which shall be
     calculated using generally accepted accounting principles consistently
     applied, except as that may be otherwise modified by the following
     capitalized definitions:

     "Current Assets" means current assets less receivables and investments in
     or other amounts due from any shareholder, director, officer, employee or
     any person or entity related to or affiliated with the Borrower.

     "Current Liabilities" means current liabilities less any portion of such
     current liabilities that constitute Subordinated Debt.

     "Current Maturities Long Term Debt" means that principal portion of the
     Borrower's long term debt and capital leases payable within 12 months of
     the determination date.

     "Financing Costs" means dividends paid (except stock dividends) plus
     interest.

     "Net Cash After Operations" means net cash from operating activities under
     the indirect method described in FASB 95, plus interest paid net of amounts
     capitalized under FASB 95.

     "Net Working Capital" means Current Assets less Current Liabilities.

     "Subordinated Debt" means debt that is expressly subordinated to the Bank
     in a writing acceptable to the Bank.

                                      5.
 
 
<PAGE>
 
     "Tangible Net Worth" means total assets less liabilities and less the
     following types of assets; (1) leasehold improvements capped at net value
     not to exceed $750M; (2) receivables and other investments in or amounts
     due from any shareholder, director, officer, employee or other person or
     entity related to or affiliated with the Borrower; (3) goodwill, patents,
     copyrights, mailing lists, trade names, trademarks, servicing rights,
     organizational and franchise costs, bond underwriting costs and other like
     assets properly classified as intangible.

 
     "Traditional Cash Flow" means the aggregate amount of the following: (1)
     net income after taxes; (2) amortization expense; (3) depreciation and
     depletion expense; (4) deferred tax expense and (5) similar non-cash
     charges against income which the Bank determines in its discretion to be
     appropriate "add-backs".

     Cash Flow Coverage Ratio. Maintain a ratio of after tax net profit plus
     depreciation and amortization to Current Maturities of Long Term Debt of at
     least 1.25 to 1.0 as of the end of each fiscal year.

     Tangible Net Worth. Maintain a minimum Tangible Net Worth of at least
     $5,900,000 as of the end of each fiscal year.

     Current Ratio. Maintain a ratio of Current Assets to Current Liabilities of
     at least 3.0 to 1.0 as of the end of each fiscal year.

     Quick Ratio. Maintain a ratio of cash plus marketable securities plus net
     accounts receivable to Current Liabilities of at least 1.5 to 1.0 as of the
     end of each fiscal year.

     Total Liabilities to Net Worth Ratio. Maintain a ratio of total liabilities
     to total assets less total liabilities equal to or less than 2.0 to 1.0 as
     of the end of each fiscal year.

     OTHER COVENANTS

     During the time period that credit is available under this Agreement, and
     afterward until all amounts due under the Documents are paid in full,
     unless the Bank shall otherwise agree in writing, the Borrower agrees to:

     Insurance. Cause its properties to be adequately insured by a reputable
     insurance company against loss or damage and to carry such other insurance
     (including business interruption, flood, or environmental risk insurance)
     as is required of or usually carried by persons engaged in the same or
     similar business. Such insurance must, with respect to the Bank's
     collateral security, include a lender's loss payable endorsement in favor
     of the Bank in form acceptable to the Bank.

     Change of Ownership. Refrain from permitting or suffering any change,
     direct or indirect, in its capital ownership.

     Collateral Audits. Permit the Bank to conduct audits of all collateral
     pledged to the Bank by the Borrower at such intervals as the Bank may
     reasonably require, but not in excess of two times each calendar year. The
     audits may be performed by employees of the Bank or independent contractors
     retained by the Bank.

 
                                      6.

 
<PAGE>
 
     Nature of Business. Refrain from engaging in any line of business
     materially different from that presently engaged in by the Borrower.

     Loans to Officers.  Refrain from making any loans or advances to any of its
     executives, officers, directors or shareholders.
 
     Sale of Assets. Refrain from selling or leasing during any fiscal year
     assets with a cumulative value in excess of $50,000, other than sales of
     inventory in the ordinary course of business.

     Deposit Accounts.  Maintain its principal deposit accounts with the Bank
 
     Form of Organization and Mergers. Refrain from changing its legal form of
     organization, or consolidating, merging, pooling, syndicating or otherwise
     combining with any other entity.

     Maintenance of Properties. Make all repairs, renewals or replacements
     necessary to keep its plant, properties and equipment in good working
     condition.

     Books and Records. Maintain adequate books and records, refrain from making
     any material changes in its accounting procedures for tax or other
     purposes, and permit the Bank to inspect same upon reasonable notice.

     Compliance with Laws. Comply in all material respects with all laws
     applicable to its form of organization, business, and the ownership of its
     property.

     Preservation of Rights. Maintain and preserve all permits, licenses,
     rights, privileges, charters and franchises that it now owns.

     These covenants were negotiated by the Bank and Borrower based on
     information provided to the Bank by the Borrower. A breach of a covenant is
     an indication that the risk of the transaction has increased. As
     consideration for any waiver or modification of these covenants, the Bank
     may require: additional collateral, guaranties or other credit support;
     higher fees or interest rates; and possible modifications to the Documents
     and the monitoring of the Agreement. The waiver or modification of any
     covenant that has been violated by the Borrower shall be made at the sole
     discretion of the Bank. These options do not limit the Bank's right to
     exercise its rights under any other Section of this Agreement.

     EVENTS OR DEFAULT AND REMEDIES

 .1   DEFAULT

     Upon the occurrence of any one or more of the following events of default,
     or at any time afterward unless the default has been cured, the Bank may
     declare each revolving facility documented in this Agreement to be
     terminated and in its discretion accelerate and declare the unpaid
     principal, accrued interest and all other amounts payable under the
     Revolving Note and the Documents to be immediately due and payable:

(a)  Failure by the Borrower to make any payment of principal or interest due
     under the Revolving Note which continues for 15 days after its due date.

                                      7.
<PAGE>
 
(b)  Default by the Borrower in the observance or performance of any covenant or
     agreement contained in this Agreement, and continuance for more than 15
     days.

(c)  Any representation or warranty made by the Borrower to the Bank is untrue
     in any material respect.
 
(d)  Any litigation or governmental proceeding against the Borrower seeking an
     amount in excess of $100,000 which is not insured or subject to indemnity
     by a solvent third party either 1) results in a judgment equal to or in
     excess of that amount against the Borrower, or 2) remains unresolved on the
     270th day following the date of service on the Borrower, unless as of that
     date no judgment has been rendered and the contingent liability arising as
     a result is classified as "remote" by Borrower's counsel as defined in FASB
     5 in a signed opinion addressed to the Bank.

(e)  A garnishment, levy or writ of attachment, or any local, state, or federal
     notice of tax lien or levy is made or issues against the Borrower, or any
     post judgment process or procedure is commenced or any supplementary remedy
     for the enforcement of a judgment is employed against the Borrower or the
     Borrower's property.

(f)  A material adverse change occurs in the Borrower's financial condition or
     ability to repay its obligations to the Bank.

 .2   IMMEDIATE DEFAULT

     If, with or without the Borrower's consent, a custodian, trustee or
     receiver is appointed for any of the Borrower's properties, or if a
     petition is filed by or against the Borrower under the United States
     Bankruptcy Code, or the Borrower is dissolved, liquidated, or winds up its
     business, then the unpaid principal, accrued interest, and all other
     amounts payable under the Revolving Note and the Documents shall become
     immediately due and payable without notice or demand.
 

     MISCELLANEOUS

(a)  No Waiver; Cumulative Remedies.  No failure or delay by the Bank in
     exercising any rights under this Agreement shall be deemed a waiver of
     those rights. The remedies provided for in the Agreement are cumulative and
     not exclusive of any remedies provided by law.

(b)  Amendments or Modifications.  Any amendment or modification of this
     Agreement must be in writing and signed by the Bank and Borrower. Any
     waiver of any provision in this Agreement must be in writing and signed by
     the Bank.

(c)  Binding Effect:  Assignment.  This Agreement and the Documents are binding
     on the successors and assigns of the Borrower and Bank. The Borrower may
     not assign its rights under this Agreement and the Documents without the
     Bank's

 
                                      8.
<PAGE>
 
(d)  Minnesota Law.  This Agreement and the Documents shall be governed by the
     substantive laws of the State of Minnesota.

(e)  Severability of Provisions.  If any part of this Agreement or the Documents
     are unenforceable, the rest of this Agreement or the Documents may still be
     enforced.

(f)  Integration.  This Agreement and the Documents describes the entire
     understanding and agreement of the parties and supersedes all prior
     agreements between the Bank and the Borrower relating to each credit
     facility subject to this Agreement, whether verbal or in writing.



IMPORTANT: READ BEFORE SIGNING.  THE TERMS OF THIS AGREEMENT SHOULD BE READ
CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE.  NO OTHER TERMS
OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED.
YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
THIS NOTICE ALSO APPLIES TO ANY OTHER CREDIT AGREEMENTS (EXCEPT CONSUMER LOANS
OR OTHER EXEMPT TRANSACTIONS) NOW IN EFFECT BETWEEN YOU AND THIS LENDER.

Address for notices to Bank:        Address for notices to Borrower:

Norwest Bank Minnesota North,       A.S.V., Inc.
National Association                840 Lily Lane
220 First Avenue Northwest          PO Box 5160
Grand Rapids, MN  55744             Grand Rapids, MN 55744
Attention:  Gerald K. Johnson       Attention:  Mr. Thomas Karges

NORWEST BANK MINNESOTA NORTH,              A.S.V., INC.
 NATIONAL ASSOCIATION

BY:  /S/ GERALD K. JOHNSON                     BY:  /S/ THOMAS R. KARGES
     ---------------------                          --------------------
ITS:      VICE PRESIDENT                       ITS:        C.F.O.
     --------------------                           --------------------
<PAGE>
 
                                  EXHIBIT A-1


CONDITIONS PRECEDENT TO THE INITIAL ADVANCE

Promissory Note.  The Revolving Note executed by the Borrower.

Security Agreement.  A security agreement (the "Security Agreement") signed by
the Borrower granting the Bank a first lien security interest in the Borrower's
accounts, inventory, and general intangibles.  The Borrower will also execute
financing statements sufficient to perfect the security interest granted to the
Bank.

Corporate Certificate of Authority.  A certificate of the Borrower's corporate
secretary as to the incumbency and signatures of the officers of the Borrower
signing the Documents and containing a copy of resolutions of the Borrower's
board of directors authorizing execution of the Documents and performance in
accordance with the terms of the Agreement.

Articles of Incorporation and By-Laws.  A certified copy of the Borrower's
Articles of Incorporation and By-laws and any amendments, if applicable.

Certificate of Good Standing.  A copy of the Borrower's Certificate of Good
Standing, certified within 30 days of the Effective Date by the Minnesota
Secretary of State.

Arbitration Agreement.  The Bank's standard form of arbitration agreement (the
"Arbitration Agreement") signed by the Bank and Borrower, subjecting to binding
arbitration potential controversies between the Bank and Borrower relating to
the Documents and the Agreement, as more fully described in the Arbitration
Agreement.

Evidence of Insurance.  Evidence that the insurance required under the Covenant
Section of this Agreement is in force, including a binder showing the Bank as
loss payee with respect to the collateral subject to its security interest.

CONDITIONS PRECEDENT TO SUBSEQUENT ADVANCES

Borrowing Base Certificate.  Concurrent with each request for credit under the
First Line and the Second Line, the Borrower will deliver a borrowing base
certificate to the Bank in form identical to the borrowing base certificate
attached as an exhibit to this Agreement, unless the Bank is in possession of a
borrowing base certificate current within 30 days of the requested advance.
<PAGE>
 
                                  EXHIBIT A-2

                                  A.S.V., INC.

                           BORROWING BASE CERTIFICATE


TO:  NORWEST BANK
     220 N.W. 1ST AVE.
     GRAND RAPIDS, MN  55744

The Borrower certifies that the following computation of the Borrowing Base was
computed pursuant to the terms of the Agreement, and in accordance with the
definitions detailed above, as of _________________,19___.

Total Accounts Receivable                    $_____________

     Less:  1)  Greater than 90 days in age  $_____________
            2)  Other ineligibles            $_____________

     Eligible Accounts Receivable                               $_____________

INVENTORY:
Total production parts & materials           $_____________
Total Finished Goods & service parts         $_____________
Used equipment                               $_____________

     Less:  Ineligible Inventory             $_____________
          
     Eligible Inventory                                         $_____________

     75% of Eligible Accounts Receivable     $_____________

     50% of Eligible Inventory               $_____________

     Total Borrowing Base                                       $_____________

     Total Line Outstandings                                    $_____________

     Excess (Deficit)                                           $_____________



A.S.V., INC.


BY:_______________________

ITS:______________________
<PAGE>
 
                                 A-2 Continued

BORROWING BASE DEFINITION

Borrowing Base means the sum of 75% of Eligible Accounts Receivable (as defined
below) plus 50% of Eligible Inventory (as defined below).

Eligible Accounts Receivable means all accounts receivable except those which
are:

    1)    Greater than 90 days past the invoice date.
    2)    Due from an account debtor, 10% or more of whose accounts owed to the
          Borrower are more than 90 days past the Invoice date.
    3)    Subject to offset or dispute.
    4)    Due from an account debtor who is subject to bankruptcy proceeding.
    5)    Owed by a shareholder of 10% or more, subsidiary, affiliate, officer
          or employee of the Borrower.
    6)    Not subject to a perfected security interest in favor of the Bank.
    7)    Due from an account debtor located outside the United States and not
          supported by a standby letter of credit acceptable to the Bank.
    8)    Due from a unit of foreign government.

Eligible Inventory means all inventory of the Borrower, at the lower of cost or
market as determined by generally accepted accounting principles, except
inventory which is:

    1)    In transit; or located at any warehouse not approved by the Bank.
    2)    Covered by a warehouse receipt, bill of lading or other document of
          title.
    3)    On consignment to or from any other person or subject to any bailment.
    4)    Damaged, obsolete or not salable in the Borrower's ordinary course of
          business.
    5)    Subject to a security interest in favor of any third party.
    6)    In the process of being returned.
    7)    Otherwise deemed ineligible by the Bank in its reasonable discretion.
<PAGE>
 
NORWEST BANK MINNESOTA NORTH, NATIONAL ASSOCIATION

REVOLVING NOTE

===============================================================================

$2,000,000.00

FOR VALUE RECEIVED, A.S.V., Inc. (the "Borrower") promises to pay to the order
of Norwest Bank Minnesota North, National Association (the "Bank"), at its
principal office or such other address as the Bank or holder may designate from
time to time, the principal sum of Two Million Dollars. ($2,000,000.00), or the
amount shown on the Bank's records to be outstanding, plus interest (calculated
on the basis of actual days elapsed in a 360-day year) accruing each day  on the
unpaid principal balance at the annual interest rate defined below.  Absent
manifest error, the Bank's records shall be conclusive evidence of the principal
and accrued interest owing hereafter.

INTEREST RATE.  The principal outstanding under this Revolving Note shall bear
interest at an annual rate equal to the Base Rate.  Base rate means the rate of
interest established by the Bank from time to time as its "base" rate or "prime"
rate of interest at its principal office of Norwest Bank Minnesota, National
Association.

INTEREST.  Interest shall be payable on the 1st day of each month beginning June
1, 1997. Principal shall be due on the earlier of DEMAND or June 1, 1998.

ADDITIONAL TERMS AND CONDITIONS.  This revolving note is issued pursuant to a
Credit Agreement of even date between the Bank and the Borrower (the
"Agreement").  The Agreement, and any amendments or substitutions, contains
additional terms and conditions, including default and acceleration provisions,
which are incorporated into this Revolving Note by reference. Capitalized terms
not expressly defined herein shall have the meanings given them in the
Agreement.  The Borrower agrees to pay all costs of collection, including
reasonable attorneys' fee and legal expenses incurred by the Bank if this
Revolving Note is not paid as provided above.  This Revolving Note shall be
governed by the substantive laws of the State of Minnesota.

WAIVER AND PRESENTMENT AND NOTICE OF DISHONOR.  Borrower and any other person
who signs, guarantees or endorses this Revolving Note, to the extent allowed by
law, hereby waives presentment, demand for payment, notice of dishonor, protest,
and any notice relating to the acceleration of the maturity of this Revolving
Note.

A.S.V., Inc.

By:   /s/ Thomas R. Karges
     ---------------------

Its, C.F.O.   May 22, 1997
     ---------------------



Disputes arising from obligations evidenced by this note are subject to
arbitration per the terms of a signed Arbitration Agreement.