<PAGE>
                                                                 EXHIBIT 10.2




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                                 LOAN AGREEMENT

                                       BY

                         ECONOMIC DEVELOPMENT AUTHORITY
                                       OF
                       THE CITY OF BELLE PLAINE, MINNESOTA

                                       AND

              EXCELSIOR-HENDERSON MOTORCYCLE MANUFACTURING COMPANY





                            DATED AS OF JULY 1, 1998



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This instrument was drafted by:
KENNEDY & GRAVEN, Chartered
470 Pillsbury Center
200 South Sixth Street
Minneapolis, Minnesota 55402


<PAGE>

                                                                 EXHIBIT 10.2
                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                        Page
                                                                        ----
<S>               <C>                                                   <C>
PARTIES...................................................................1

RECITALS..................................................................1

                                   ARTICLE ONE
                                   Definitions

Section 1.01.     Defined Terms...........................................3
Section 1.02.     Rules of Interpretation.................................5

                                   ARTICLE TWO
                                 Representations

Section 2.01.     Representations by the Issuer...........................6
Section 2.02.     Representations by the Borrower.........................7
Section 2.03.     Lender May Rely on Representations......................8
Section 2.04.     Other Agreements and Instruments........................9

                                  ARTICLE THREE
                                    The Loan

Section 3.01.     Amount and Source of Loan; Repayment...................10
Section 3.02.     Borrower's Obligations Unconditional...................10
Section 3.03.     Borrower's Remedies....................................10
Section 3.04.     Additional Payments....................................11
Section 3.05.     Escrow Agreement; Loan Disbursement....................11
Section 3.06.     Interest Upon Default..................................11


                                  ARTICLE FOUR
                              Borrower's Covenants

Section 4.01.     Covenants..............................................12
Section 4.02.     Indemnity..............................................14
Section 4.03.     Reports to Governmental Agencies.......................15
Section 4.04.     Security Agreement.....................................15
Section 4.05.     Concerning the Facility................................15
Section 4.06.     Alterations and Disposal of Equipment..................15
Section 4.07.     INTENTIONALLY OMITTED..................................15
Section 4.08.     Use of Facility........................................15
Section 4.09.     Maintenance and Possession of Equipment by Borrower....16
Section 4.10.     Observance of Covenants and Terms of Resolution
                  and the Bond...........................................16
Section 4.11.     Notice of Defaults.....................................16
Section 4.12.     Borrower to Execute Further Documents..................16

                                     i

<PAGE>
                                                                 EXHIBIT 10.2

Section 4.13.     Borrower to Maintain Certain Standards.................16
Section 4.14.     Mergers and Consolidations.............................16
Section 4.15.     Insurance..............................................16
Section 4.16.     Taxes..................................................18

                                  ARTICLE FIVE
                               Borrower's Options

Section 5.01.     Prepayments............................................19
Section 5.02.     Assignment.............................................19

                                   ARTICLE SIX
                         Events of Default and Remedies

Section 6.01.     Events of Default......................................20
Section 6.02.     Remedies in the Event of Default.......................21
Section 6.03.     Disposition of Funds...................................21
Section 6.04.     Manner of Exercise.....................................21
Section 6.05.     Effect of Waiver.......................................22
Section 6.06.     Notice to Borrower of Event of Default.................22

                                  ARTICLE SEVEN
                                     General

Section 7.01.     Notices................................................23
Section 7.02.     Binding Effect.........................................23
Section 7.03.     Severability...........................................23
Section 7.04.     Amendments, Changes and Modifications..................23
Section 7.05.     Execution; Counterparts................................24
Section 7.06.     Concerning the Bond....................................24
Section 7.07.     Limitation of Issuer's Liability.......................24
Section 7.08.     Assignment by the Issuer...............................24
Section 7.09.     Survival of Certain Provisions.........................25
Section 7.10      Publicity..............................................25


SIGNATURES        .......................................................26
</TABLE>


                                      ii
<PAGE>
                                                                 EXHIBIT 10.2

                                 LOAN AGREEMENT

         THIS LOAN AGREEMENT, dated as of July 1, 1998, is made and entered 
into by EXCELSIOR-HENDERSON MORTORCYCLE MANUFACTURING COMPANY (the 
"Borrower") and ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BELLE PLAINE, 
MINNESOTA (the "Issuer").

         WHEREAS, the Municipal Industrial Development Act, Minnesota 
Statutes, Sections 469.152 to 469.165 (the "Act"), declares and provides that 
the welfare of the State of Minnesota requires active promotion, attraction, 
encouragement and development of economically sound industry and commerce 
through governmental action to prevent, so far as possible, emergence of 
blighted lands and areas of chronic unemployment, and it is the policy of the 
State of Minnesota to facilitate and encourage action by local government 
units to prevent the economic deterioration of such areas to the point where 
the process can be reversed only by total redevelopment through the use of 
local, state and federal funds derived from taxation with the attendant 
necessity of relocating displaced persons and of duplicating public services 
in other areas; and

         WHEREAS, the Act further finds and declares that such governmental 
action is required by technological change that has caused a shift to a 
significant degree in the area of opportunity for educated youth to 
processing, transporting, marketing, service and other industries, and unless 
existing and related industries are retained and new industries are developed 
to use the available resources in each community, a large part of the 
existing investment of the community and of the State of Minnesota as a whole 
in educational and public service facilities will be lost, and the movement 
of talented, educated personnel of mature age to areas where their services 
may be effectively used and compensated and the lessening attraction of 
persons and businesses from other areas for purposes of industry, commerce 
and tourism will deprive the community and the State of Minnesota of the 
economic and human resources needed as a base for providing governmental 
services and facilities for the remaining population; and

         WHEREAS, the Act further finds and declares that such governmental 
action is required by the increase in the amount and cost of governmental 
services and the need for more intensive development and use of land to 
provide an adequate tax base to finance these costs; and

         WHEREAS, the Issuer is a "redevelopment agency," as such term is 
defined in the Act, authorized by the Act to enter into a revenue agreement 
with any person, firm, or public or private corporation or federal or state 
governmental subdivision or agency in such manner that payments required 
thereby to be made by the contracting party shall be fixed, and revised from 
time to time as necessary, so as to produce income and revenue sufficient to 
provide for the prompt payment of principal of and interest on all revenue 
bonds issued under the Act when due, and the revenue agreement shall also 
provide that the contracting party shall be required to pay all expenses of 
the operation and maintenance of the "project" (as defined in the Act) 
including adequate insurance thereon and insurance against all liability for 
injury to persons or property arising from the operation thereof, and all 
taxes and special assessments levied upon or with respect to the project and 
payable during the term of the revenue agreement; and

         WHEREAS, the Issuer is further authorized under the Act to issue 
revenue bonds, in anticipation of the collection of revenues of a project, to 
finance, in whole or in part, the cost of acquisition, construction, 
reconstruction, improvement, betterment, or extension of such project; and

                                  1

<PAGE>

                                                                 EXHIBIT 10.2

         WHEREAS, the Issuer proposes to finance the acquisition and 
installation of certain manufacturing equipment and tooling (the 
"Equipment"), installed or to be installed in the manufacturing and 
distribution facility of the Borrower (the "Facility"), under the Act through 
the issuance of a revenue bond of the Issuer (the "Bond") under the 
Resolution, as hereinafter defined; and

         WHEREAS, the Bond issued under the Resolution will be secured by a 
reserve fund pursuant to an escrow deposit agreement and a security agreement 
with respect to the Equipment, and by an assignment of the revenues derived 
by the Issuer from the Loan Agreement, as hereinafter defined, and the Bond 
and the interest on the Bond shall be payable solely from the revenue pledged 
therefor and the Bond shall not constitute a debt of the Issuer within the 
meaning of any constitutional or statutory limitation nor shall the Bond 
constitute nor give rise to a pecuniary liability of the Issuer or a charge 
against its general credit or taxing powers and shall not constitute a 
charge, lien, or encumbrance, legal or equitable, upon any property of the 
Issuer other than the Issuer's interest in the Loan Agreement; and

         WHEREAS, the Borrower has acquired and installed portions of the 
Equipment and proposes to acquire and install the remainder of the Equipment, 
and the Issuer desires to finance the acquisition and installation of the 
Equipment upon the terms and conditions as required by the Act and as 
hereinafter in this Loan Agreement set forth; and

         WHEREAS, the execution, delivery and performance of this Loan 
Agreement have been duly authorized by the Issuer, and all conditions, acts 
and things necessary and required by the Constitution or statutes of the 
State of Minnesota or otherwise, to exist, to have happened, or to have been 
performed precedent to and in the execution and delivery of this Loan 
Agreement and in the issuance of the Bond, do exist, have happened and have 
been performed in regular form, time and manner;

         NOW THEREFORE, in consideration of the mutual promises herein 
contained, the parties to this Agreement agree as follows:

                                  2

<PAGE>

                                                                 EXHIBIT 10.2

                              ARTICLE ONE
                                          
                              DEFINITIONS

     Section 1.01. DEFINED TERMS.  As used in this Loan Agreement, the 
following terms shall have the following respective meanings:

     ACT:  the Municipal Industrial Development Act, Minnesota Statutes, 
Sections 469.152 to 469.165, as amended.

     ASSIGNMENT OF LOAN AGREEMENT:  the Assignment of Loan Agreement, dated 
as of July 1, 1998, executed by the Issuer, assigning certain interests of 
the Issuer in this Loan Agreement to the Lender.

     BOND:  the revenue Bond issued in the original principal amount of 
$6,100,000 pursuant to the Act by the Issuer and designated as the Economic 
Development Authority of the City of Belle Plaine, Minnesota, Taxable 
Industrial Development Revenue Bond (Excelsior-Henderson Project), Series 
1998.

     BORROWER:  Excelsior-Henderson Motorcycle Manufacturing Company, a 
Minnesota corporation, and its successors and assigns.

     BUILDING:  the buildings and all other structures and facilities owned 
by the Borrower, located on the Land, and forming a part of the Facility.

     CITY:  the City of Belle Plaine, Minnesota, and its successors.

     CLOSING DATE:  the date on which the Lender purchases the Bond from the 
Issuer.

     COSTS:  with respect to the application of the proceeds of the Bond, 
shall be deemed to include reimbursement of or payment for the costs of 
acquisition and installation of the Equipment approved for disbursement by 
the Lender pursuant to the Escrow Deposit Agreement, and shall also include 
amounts paid or incurred for other items authorized by the Act, including but 
not limited to:

          (a)  obligations of the Borrower incurred for labor and materials 
(including obligations payable to the Borrower) in connection with the 
acquisition and installation of the Equipment;

          (b)  the cost of contract bonds and of issuance thereof of all 
kinds that may be required or necessary during the course of installation of 
the Equipment;

          (c)  all costs of architectural and engineering services, including 
the costs of the Borrower for test borings, surveys, estimates, plans and 
specifications and preliminary investigations therefor, and for supervising 
installation, as well as for the performance of all other duties required by 
or consequent upon the proper installation of the Equipment;

          (d)  all expenses incurred in connection with the issuance of the 
Bond for the purpose of providing funds for the acquisition and installation 
of the Equipment, including without limitation, legal expenses and fees, and 
recording and filing fees, including any mortgage registration tax;


                                  3

<PAGE>

                                                                 EXHIBIT 10.2

          (e)  any sums required to reimburse the Issuer or the Borrower for 
advances made by or on behalf of either of them for any of the above items or 
for any other costs incurred and for work done by either of them which are 
properly chargeable to the Equipment; and

          (f)  interest incurred by the Borrower on loans made with respect 
to the acquisition and installation of the Equipment.

     ENVIRONMENTAL INDEMNITY AGREEMENT:  the Environmental Indemnity 
Agreement, dated as of July 1, 1998, executed by the Borrower and providing 
for the environmental indemnification of the Lender and the Issuer.

     EQUIPMENT:  those items of manufacturing machinery, equipment, tooling, 
and related property, referred to in the Security Agreement, and replacements 
and substitutions thereof as permitted by this Loan Agreement and the 
Security Agreement, acquired and to be acquired and installed in the Building 
or elsewhere on or in connection with the Land with the proceeds from the 
sale of the Bond for use in the motorcycle manufacturing business of the 
Borrower.

     ESCROW AGENT:  National City Bank, N.A., and its successor and assigns.

     ESCROW DEPOSIT AGREEMENT:  the Escrow Deposit Agreement, dated as of 
July 1, 1998, executed by the Borrower, the Lender, and the Escrow Agent, and 
providing for the escrow and disbursement of the proceeds of the Bond.

     EVENT OF DEFAULT:  any event defined as such in Section 6.01 of this 
Loan Agreement.

     FACILITY:  the Land and the Building.

     HOLDER:  the Lender or any subsequent holder of the Bond.

     ISSUER:  the Economic Development Authority of the City of Belle Plaine, 
Minnesota.

     LAND:  the real estate described in Exhibit A.

     LEASE: the lease for the Land between the Borrower and Ryan Belle 
Plaine, LLC dated as of April 21, 1997, as supplemented as of the date of 
this Loan Agreement.

     LENDER:  FINOVA Public Finance, Inc., its successors and assigns.

     LOAN:  the loan of the proceeds of the Bond from the Issuer to the 
Borrower pursuant to this Loan Agreement.

     LOAN AGREEMENT:  this Loan Agreement, as the same may be amended, 
modified, or supplemented from time to time.

     RESERVE FUND:  the fund by such name established with the Escrow Agent 
pursuant to the Escrow Deposit Agreement required by Section 3.05 of this 
Loan Agreement.

     RESOLUTION:  Resolution No. 98-07 of the Issuer adopted on June 15, 
1998, authorizing the issuance of the Bond, prescribing the form of the Loan 
Agreement and the Security Agreement, and 


                                  4

<PAGE>

                                                                 EXHIBIT 10.2

determining other matters in connection with the issuance of the Bond and the 
execution and delivery of and performance under the other aforesaid documents.

     SECURITY AGREEMENT:  the Security Agreement, dated as of July 1, 1998, 
executed by the Borrower, granting a security interest in the Equipment to 
the Lender.

     STATE:  the State of Minnesota

     WARRANT AND FEE AGREEMENT:  the Warrant and Fee Agreement, dated as of 
July 1, 1998, executed by the Borrower, granting the Holder rights to certain 
payments and stock warrants as described therein.

     Section 1.02.  RULES OF INTERPRETATION.  (a) This Loan Agreement shall 
be interpreted in accordance with and governed by the laws of the State.

     (b)  Unless the context clearly requires otherwise, the singular shall 
include the plural and vice versa, and the masculine shall include the 
feminine and vice versa.

     (c)  The words "herein" and "hereof" and words of similar import, 
without reference to any particular section or subdivision, refer to this 
Loan Agreement as a whole rather than to any particular section or 
subdivision hereof.

     (d)  References herein to any particular section or subdivision hereof 
are to the section or subdivision of this instrument as originally executed.

     (e)  The headings of articles and sections herein are for convenience of 
reference only and are not a part of this Loan Agreement.

                                  5
<PAGE>

                                                                 EXHIBIT 10.2

                              ARTICLE TWO

                            REPRESENTATIONS


     Section 2.01.  REPRESENTATIONS BY THE ISSUER.  The Issuer makes the 
following representations as the basis for its covenants herein:

        (a)  the Issuer is an economic development authority, organized and
     existing under the Constitution and laws of the State (including Minnesota
     Statutes, Sections 469.090-469.1081) and has power to issue the Bond under
     the Act;
   
        (b)  the Equipment comprises personal properties useful in connection 
     with the operation of a revenue-producing enterprise as contemplated by
     the Act;
   
        (c)  on the basis of information provided to the Issuer by the 
     Borrower, it appears, and the Issuer hereby finds, that the effect of 
     the acquisition and installation of the Equipment will be to encourage
     the development of economically sound commerce in the City, to increase 
     the taxable value of property within the City, and to increase current 
     employment opportunities for residents of the City, all to the benefit
     of the residents and taxpayers of the City, the school district, Scott 
     County, and the State;
   
        (d)  the financing of the Equipment, the issuance and sale of the Bond,
     the execution and delivery of this Loan Agreement, the Assignment of Loan
     Agreement, and the performance of all covenants and agreements of the
     Issuer contained in the Bond, this Loan Agreement, the Assignment of Loan
     Agreement, and all other documents that have been executed by the Issuer in
     connection with this Loan Agreement and the transactions contemplated
     hereby (collectively, all such documents are referred to herein as the
     "Issuer Documents"), and of all other acts and things required under the
     Constitution and laws of the State to make the Issuer Documents valid and
     binding obligations of the Issuer in accordance with their terms are
     authorized by the Act and, where necessary to be valid and binding, have
     been duly authorized by a resolution of the Board of Commissioners of the
     Issuer adopted at a meeting duly called and held by the affirmative vote of
     not less than a majority of its members;
   
        (e)  the Issuer Documents are the legal, valid, and binding obligations
     of the Issuer, enforceable against it in accordance with their respective
     terms;
   
        (f)  the Facility will add to the tax base of the City, and will
     accordingly be of direct benefit to the taxpayers of the Issuer;
   
        (g)  to provide funds to be loaned to finance Costs related to 
     acquisition and installation of the Equipment, in anticipation of the 
     repayment thereof, the Issuer has duly authorized the Bond in the 
     principal amount of not to exceed $8,500,000 to be issued upon the terms
     set forth in the Resolution, under the provisions of which the Issuer has
     agreed to assign its interest in this Loan Agreement and grant a security
     interest therein to the Lender as security for the payment of the 
     principal of and interest on the Bond;
   
        (h)  pursuant to the Resolution, the Issuer has authorized and directed
     the Lender to disburse the proceeds of the Bond directly to the Borrower 
     and such other parties as may be entitled to 

                                  6

<PAGE>

                                                                 EXHIBIT 10.2

     payment, upon receipt of such supporting documentation as the Lender may 
     deem reasonably necessary, including compliance with all conditions set
     forth herein; 
   
        (i)  the execution and delivery of the Issuer Documents will not 
     conflict with or constitute on the part of the Issuer a breach of, or a
     default under, any existing law, or any existing agreement, indenture, 
     mortgage, lease, or other instrument to which the Issuer is subject or 
     is a party or by which it is bound and do not and will not constitute a 
     default under any of the foregoing, or result in the creation or imposition
     of any lien, charge, or encumbrance of any nature upon any of the property
     or assets of the Issuer contrary to the terms of any instrument or 
     agreement; and
   
        (j)  there are no proceedings, pending or threatened, contemplating the
     liquidation or dissolution of the Issuer or threatening its existence or
     powers or threatening the validity of the Issuer Documents.

     Section 2.02.  REPRESENTATIONS BY THE BORROWER.  The Borrower makes the 
following representations as the basis for its agreements and covenants 
herein:

     (a)  the execution and delivery of this Loan Agreement, the Security 
Agreement, the Escrow Deposit Agreement, the Environmental Indemnity 
Agreement, and all other documents that have been executed by the Borrower in 
connection with this Loan Agreement and the transactions contemplated hereby 
(collectively, all such documents are referred to herein as the "Borrower 
Documents"), the consummation of the transactions contemplated hereby, and 
the fulfillment of the terms and conditions hereof do not and will not 
conflict with or result in a breach of any of the terms or conditions of any 
mortgage, indenture, loan agreement, or instrument to which the Borrower is 
now a party or to which any property of the Borrower is subject, and do not 
and will not constitute a default under any of the foregoing, or result in 
the creation or imposition of any lien, charge, or encumbrance of any nature 
upon any of the property or assets of the Borrower contrary to the terms of 
any instrument or agreement;

     (b)  the Loan to be made by the Issuer will induce the Borrower to 
undertake the acquisition and installation of the Equipment in the Facility;

     (c)  the proceeds of the Bond, together with any other funds to be 
contributed to the payment of Costs by the Borrower, will be sufficient to 
pay the costs of acquiring and installing the Equipment in the Facility for 
use in the motorcycle manufacturing business of the Borrower, and the 
proceeds of the Bond and the Loan will be used only for purposes authorized 
by the Act;

     (d)  the Borrower does not rely on any warranty of the Issuer or Lender, 
either express or implied, that the Equipment will be suitable to the 
Borrower's needs, and recognizes that under the Act the Issuer is not 
authorized to own and operate the Equipment or to expend any funds thereon 
other than the revenues received by it therefrom or the proceeds of the Bond 
or other funds granted to it for purposes contemplated in the Act;

     (e)  there is not pending, or to the best knowledge of the Borrower 
threatened, any suit, action, or proceeding against or affecting the Borrower 
before or by any court, arbitrator, administrative agency, or other 
governmental authority which materially and adversely affects the validity, 
as to the Borrower, of any of the transactions contemplated hereby, or the 
ability of the Borrower to perform its obligations hereunder or contemplated 
hereby, or the financial condition or status of the Borrower, or any material 
contracts to which the Borrower is a party;


                                  7

<PAGE>

                                                                 EXHIBIT 10.2

     (f)  to the best of the Borrower's knowledge, the Facility and the 
Equipment will meet, on the date hereof, all material requirements of law, 
including requirements of any federal, State, Scott County, Issuer, or other 
governmental authority having jurisdiction over the Borrower or the Facility 
or Equipment, including, but not limited to any applicable zoning, safety, or 
health regulations;

     (g)  neither the Borrower Documents nor any other document provided to 
the Lender for its use in considering whether to and agreeing to purchase the 
Bond, contains any untrue statement of a material fact, and there is no fact 
presently known to the Borrower which materially adversely affects or in the 
future may (so far as the Borrower can now foresee) materially adversely 
affect the business, operations, affairs, or condition of the Borrower or any 
of its material properties which have not been set forth in the Borrower 
Documents or otherwise provided to the Lender by the Borrower; 

     to the best knowledge of the Borrower, no member of the Board of 
Commissioners of the Issuer or any officer or employee of the Issuer has an 
unlawful direct or indirect financial interest in or will personally gain an 
unlawful financial benefit from the Facility or the Equipment or from the 
issuance of the Bond;

     (i)  the Borrower is a corporation, duly organized and in good standing 
under the laws of the State, is not in violation of any provisions of its 
articles of incorporation or bylaws, or the laws of the State, is duly 
authorized to transact business within the State, has power to enter into the 
Borrower Documents, and has duly authorized the execution, delivery, and 
performance of the Borrower Documents by proper action of its board; 

     (j)  the Facilities are serviced by all utilities necessary to operate 
the Equipment, including, but not limited to, electricity, sewer and water, 
and heating and cooling;

     (k)  the Borrower shall take all action necessary to assure that there 
will be no material adverse change to the Borrower's business by reason of 
the advent of the year 2000, including without limitation, that all 
computer-based systems, imbedded microchips, and other processing 
capabilities effectively recognize and process dates after April 1, 1999.  At 
the Lender's request, the Borrower shall provide to the Lender assurance 
reasonably acceptable to the Lender that the Borrower's computer-based 
systems, imbedded microchips, and other processing capabilities are year 2000 
compatible;

     (l)  the Borrower possesses all necessary patents, licenses, trademarks, 
trademark rights, trade names, trade name rights and copyrights to conduct 
its business as now conducted, without known conflict with any patent, 
license, trademark, trade name or copyrights of any other person;

     (m)  the audited financial statements provided to the Lender in 
connection with the transactions contemplated hereby have been prepared in 
accordance with generally accepted accounting principles consistently applied 
(or, with regard to unaudited financial statements, have been in accordance 
with standard reporting and auditing practices) and substantially comply with 
usual and customary fiscal reporting practices for similar publicly held 
companies; 

     Section 2.03.  LENDER MAY RELY ON REPRESENTATIONS.  The Issuer and the 
Borrower agree that the representations contained in this Article Two are for 
the use and benefit of the Holder, and the Holder shall be entitled to rely 
thereon.  The Borrower agrees that the representations contained in Section 
2.02 hereof are for the benefit of and may be relied upon by the Issuer.

                                  8

<PAGE>

                                                                 EXHIBIT 10.2

     Section 2.04.  OTHER AGREEMENTS AND INSTRUMENTS.  The Borrower 
acknowledges and represents that the Borrower Documents and all other 
agreements and instruments securing the Bond and executed and delivered in 
contemplation of the issuance and delivery of the Bond shall be valid and 
legally binding on the Borrower and shall inure to the benefit of the Lender 
or any subsequent Holder of the Bond.

                                  9

<PAGE>

                                                                 EXHIBIT 10.2

                             ARTICLE THREE
                                     
                               THE LOAN

     Section 3.01.  AMOUNT AND SOURCE OF LOAN; REPAYMENT.  The Issuer agrees 
to issue the Bond and sell the Bond to the Lender.  The Issuer agrees to loan 
to the Borrower and the Borrower agrees to borrow from the Issuer, the 
proceeds of the Bond upon the terms and conditions set forth herein.  The 
source of such Loan shall be the Bond proceeds, which proceeds shall be 
advanced by the Lender, for the account of the Issuer, to or on behalf of the 
Borrower in payment of Costs, all subject to and in accordance with the 
provisions of this Loan Agreement.  The Borrower agrees that it will repay 
the Loan of the proceeds of the Bond by making repayments to the Holder 
thereof for the account of the Issuer at the times and in the amounts 
necessary to pay in full the principal of, prepayment premium, if any, and 
interest on the Bond when due, at maturity or upon a mandatory redemption or 
acceleration of maturity under the Bond, the Assignment, or this Loan 
Agreement.  The Borrower may prepay the Bond, for the account of the Issuer, 
in accordance with the terms of the Bond.  The Borrower agrees to be bound by 
all of the terms and conditions of the Bond, including without limiting the 
generality of the foregoing, terms specifying the interest rate, maturity 
date, the installment payment amount, and provisions for redemption and 
prepayment.  The provisions of the Bond are incorporated by reference herein 
and made a part hereof.

     All payments received from the Borrower are to be applied first to 
interest then due and then to the principal balance.  In any event, the 
payments hereunder shall be sufficient to enable the Issuer to pay all 
principal and interest due on the Bond as such principal and interest become 
due, at maturity, upon redemption or otherwise.  Interest shall be computed 
on the basis of the actual number of days elapsed in a 360-day year.

     All payments hereunder shall be made directly to the Lender at its 
principal office for the account of the Issuer.  All payments received by the 
Lender shall be applied to the indebtedness secured by the Bond.

     Section 3.02.  BORROWER'S OBLIGATIONS UNCONDITIONAL.  All payments 
required of the Borrower hereunder shall be paid without notice or demand and 
without setoff, counterclaim, abatement, deduction or defense.  The Borrower 
will not suspend or discontinue any payments, and will perform and observe 
all of its other agreements in this Loan Agreement and, except as expressly 
permitted herein, will not terminate this Loan Agreement for any cause, 
including, but not limited to, any acts or circumstances that may constitute 
failure of consideration, destruction or damage to the Facility, eviction by 
paramount title, commercial frustration of purpose, bankruptcy or insolvency 
of the Issuer or the Lender, change in the tax or other laws or 
administrative rulings or actions of the United States of America or of the 
State or any political subdivision thereof, or failure of the Issuer to 
perform and observe any agreement, whether express or implied, or any duty, 
liability or obligation arising out of or connected with this Loan Agreement.

     Section 3.03.  BORROWER'S REMEDIES.  Nothing contained in this Article 
and no Payments made by the Borrower pursuant to Section 3.02, shall be 
construed to release the Issuer from the performance of any of its agreements 
in this Loan Agreement or to be a waiver of any of Borrower's rights, claims 
or causes of action as would otherwise exist, and if the Issuer should fail 
to perform any such agreement, the Borrower may institute such action against 
the Issuer as the Borrower may deem necessary so long as 

                                  10

<PAGE>

                                                                 EXHIBIT 10.2

such action shall not violate the Borrower's agreements in Section 3.02; 
provided that no action taken by the Borrower hereunder shall affect the 
Borrower's obligations under this Loan Agreement.

     Section 3.04.  ADDITIONAL PAYMENTS.  The Borrower agrees to pay the 
following amounts to the following persons as additional payments under this 
Loan Agreement:

     (a)  to the Holder when due, all reasonable expenses, including without 
limitation legal fees, of the Holder incurred in enforcing the Borrower 
Documents, and all fees and expenses payable or which may become payable by 
the Borrower pursuant to said instruments; and

     (b)  to the Issuer and the Holder as additional payments under this Loan 
Agreement, all reasonable expenses incurred by the Issuer and the Holder in 
relation to the Facility and the issuance and sale of the Bond which are not 
otherwise required to be paid by the Borrower under the terms of this Loan 
Agreement, including the fees and expenses of bond counsel fees and attorneys 
representing the Issuer and the Holder and all permit and license fees 
required under regulations or codes of the Issuer; 

     All fees payable under this Section 3.04 of this Loan Agreement are due 
without regard to the payment or defeasance of the Bond, the exercise of any 
remedy under the Security Agreement, termination of this Loan Agreement, or 
any other event.

     Section 3.05.  ESCROW DEPOSIT AGREEMENT.

     (a)  In order to establish the Reserve Fund and the Project Fund under 
the Escrow Deposit Agreement, the proceeds of the Bond will be paid to the 
Escrow Agent on the Closing Date.

     (b)  The proceeds of the Bond will be disbursed by the Escrow Agent to 
the Borrower in accordance with the terms and conditions of the Escrow 
Deposit Agreement.

     (c)  The Issuer consents to the transfer of the Bond proceeds to the 
Escrow Agent pursuant to the terms of the Escrow Deposit Agreement and 
further consents to the disbursement of the Bond proceeds pursuant to the 
terms of the Escrow Deposit Agreement.

     Section 3.06.  INTEREST UPON DEFAULT.  In the event the Borrower should 
fail to make any of the payments required by Sections 3.01 or 3.04 of this 
Loan Agreement, or any payment required by the Environmental Indemnity 
Agreement, the item in default shall continue as an obligation of the 
Borrower until the amount in default shall have been fully paid, and the 
Borrower agrees to pay the same with interest thereon until paid at the 
lesser of 18% or the highest rate permitted by applicable law.


                                  11
<PAGE>

                                                                 EXHIBIT 10.2

                              ARTICLE FOUR
                                          
                           BORROWER'S COVENANTS

Section 4.01.  COVENANTS.  The Borrower covenants, warrants, represents and 
agrees:

     (a)  that the Loan will be used solely to pay Costs;

     (b)  that the Facility shall comply with all applicable ordinances, 
regulations and laws of all governments having jurisdiction over the Facility 
and the Facility does not and shall not violate any enforceable private 
restrictions or covenants or encroach upon or interfere with easements 
affecting the Land;

     (c)  that the Borrower has completed or will complete the acquisition 
and installation of the Equipment free from all mechanics', laborers' and 
materialmen's liens and in a good and workmanlike manner;

     (d)  that the Borrower will keep, perform, enforce and maintain in full 
force and effect all of the terms, covenants, conditions and requirements of 
all agreements between the Lender, or any other Holder, and the Borrower with 
respect to the Equipment;

     (e)  that, subject to the Borrower's right under the Security Agreement, 
the Borrower will not create, permit to be created or allow to exist any 
liens, charges, or encumbrances on the Equipment, other than such 
encumbrances as may be approved in writing by the Lender or any other Holder;
     
     (f)  that the Borrower will not assign this Loan Agreement or any 
interest herein except as herein expressly set forth or as may be approved in 
writing by the Holder;

     (g)  that there have not been any adverse material changes in the 
Borrower's financial or operating condition since March 31, 1998, and that no 
such changes will occur prior to the Closing Date;

     (h)  that the Borrower will deliver to the Holder: (i) annual audited 
financial statements of the Borrower within 120 days of the end of the fiscal 
year end of the Borrower; (ii) unaudited quarterly financial statements 
prepared by management of the Borrower within forty-five days after the end 
of each fiscal quarter of the Borrower; (iii) unaudited monthly financial 
statements and compliance certificates (such compliance certificates to be in 
a form mutually acceptable to Holder and Borrower) within thirty days after 
the end of each fiscal month; and (iv) such other related information as is 
reasonably requested by the Holder;

     (i)  that the Borrower will have on hand at least $1,500,000 in cash and 
cash equivalents at the end of each fiscal month during fiscal year 1998;

     (j)  that the Borrower will maintain a current ratio (defined as the 
ratio of the Borrower's current assets to its current liabilities) of no less 
than 1.0:1.0 at all times, measured as of the end of each fiscal month, as 
long as the Loan is outstanding and unpaid;

     (k)  that the Borrower's tangible net worth (defined as the Borrower's 
total assets, minus its intangible assets and total liabilities, plus debt 
subordinated to the Loan Agreement and the Bond) shall 

                                  12

<PAGE>

                                                                 EXHIBIT 10.2

be:  (i) as of the end of each fiscal month through its fiscal June, 1999, at 
least $12,000,000; (ii) at the end of each fiscal month from the beginning of 
its fiscal July, 1999 through the end of its fiscal December, 1999, at least 
the greater of  $12,000,000 or eighty percent of the Borrower's tangible net 
worth as of the end of  its fiscal June, 1999; (iii) at the end of each 
fiscal month thereafter, at least the greater of the minimum tangible net 
worth required under this Section 4.01(k) on the last day of its immediately 
preceding fiscal December or eighty percent of the Borrower's actual tangible 
net worth as of the immediately preceding fiscal year end.

     (l)  that the ratio of the Borrower's total liabilities to total 
stockholders equity less any intangible assets will not exceed 3.0:1.0 at the 
end of any fiscal month;

     (m)  that in its fiscal 1999, Borrower will maintain an annual debt 
service coverage ratio of at least 1.25 (calculated by dividing the sum of 
net income after tax, plus depreciation, amortization, and interest by the 
sum of interest and total current maturities of long-term debt/capital 
leases);

     (n)  that for all fiscal years subsequent to the end of its 1999 fiscal 
year, Borrower will maintain an annual debt service coverage ratio of at 
least 1.25 (calculated by dividing the sum of net income after tax, 
depreciation, amortization, and interest (less nonfinanced capital 
expenditures) by interest and total current maturities of long-term 
debt/capital leases);

     (o)  that the Borrower shall, prior to any disbursement to the Borrower 
being made pursuant to the Escrow Deposit Agreement, provide the Holder with 
a production plan showing its projected monthly production of motorcycles 
through 1999 (and projected annual production of motorcycles through 2002) 
and certified to be its true and correct production plan, and that the 
Borrower will provide the Holder, prior to the first day of the last month of 
fiscal 1999 and the first day of the last month of each fiscal year 
thereafter through fiscal 2004, a monthly plan, certified to be the 
Borrower's true and correct projected production plan, and covering at least 
the immediately next fiscal year (each such plan referred to herein as a 
"Plan");

     (p)  that the Borrower will report to the Holder if the Borrower's 
actual production of motorcycles in any fiscal month is less than eighty 
percent of the production projected by the Plan for that fiscal month, with 
such report made in a form reasonably satisfactory to the Holder and within 
thirty days of the end of the month in which the shortfall occurs;

     (q)  the Borrower's actual production of motorcycles in any fiscal 
quarter will not be less than eighty percent of the production projected by 
the Plan for that fiscal quarter;

     (r)  that the Borrower will obtain regulatory approval from all state 
and federal governmental bodies with regulatory authority over the commercial 
production of motorcycles by no later than December 31, 1998, except that 
regulatory approval from the State of California will be obtained by December 
31, 1999;

     (s)  that the Borrower will maintain, through June 30, 2000, key man 
life insurance coverage of at least $1,000,000 each on Allan Hurd and Tom 
Rootness;

     (t)  that the Borrower will raise at least $5,000,000, gross, in 
combined equity and debt subordinate to the Bond (as shown on a balance sheet 
audited in accordance with generally accepted accounting principles) between 
the Closing Date and December 31, 1998;

                                  13

<PAGE>

                                                                 EXHIBIT 10.2

     (u)  that the Borrower has maintained and will, for purposes of this 
Loan Agreement, maintain fiscal months, fiscal quarters, fiscal years, 
financial statements, and practices that comply with generally accepted 
accounting principles consistently applied (or, with regard to unaudited 
financial statements, that comply with standard reporting and auditing 
practices) and substantially comply with usual and customary fiscal reporting 
practices for similar publicly held companies; 

     (v)  that the Borrower's obligations to deliver financial information to 
the Holder pursuant to this Section 4.01 are contingent upon the Holder 
executing and delivering to the Borrower a confidentiality agreement in 
substantially the form shown at Exhibit B to this Loan Agreement; 
     
     (w)  that the Borrower will not incur any long-term debt subsequent to 
the date of this Loan Agreement unless no Event of Default exists under this 
Loan Agreement and unless a 1.25 debt service coverage ratio will exist on 
the proposed additional debt plus existing debt (calculated by dividing the 
sum of net income after tax, plus depreciation, amortization, and interest 
less nonfinanced capital expenditures by the sum of interest and total 
current maturities of long-term debt/capital leases);
     
     (x)  that any debt owed by the Borrower to any one or more of its 
shareholders is and will be subordinate to the interest and obligations 
created by this Loan Agreement and the Security Agreement; and
     
     (y)  that the Borrower will notify the Holder, in writing, within two 
(2) business days upon receipt of a written late payment notice from Ryan 
Belle Plaine, LLC or its successors for payments due by the Borrower under 
the Lease.

     Section 4.02.  INDEMNITY.  To the fullest extent permitted by law, the 
Borrower will pay, and will protect, indemnify, and save the Issuer and the 
members of its Board of Commissioners, the City and the members of its City 
Council, the respective officers, employees, agents, and attorneys of the 
Issuer and City, and any past and present Holder, and its officers, 
employees, agents, attorneys, and any "Controlling Person" of any past or 
present Holder (as defined in 15 U.S.C. Section 77o) (each an "Indemnified 
Party") harmless from and against all liabilities, losses, damages, costs, 
expenses (including attorneys' fees), causes of action, suits, claims, 
demands, and judgments of any nature arising from the Facility or this Loan 
Agreement, including but not limited to:  (i) any injury, death, or property 
damage arising from any actions or failures to act by the Borrower or arising 
out of or connected with the Facility; (ii) violation of any contract, 
agreement, or restriction to which the Borrower is a party relating to the 
Facility; (iii) violation of any law, ordinance, or regulation affecting the 
Facility, or the ownership, occupancy, or use of the Facility, including any 
licensing of the Facility; and (iv) the use of the proceeds of the Bond, the 
use of the Facility, or the use of the proceeds derived from the disposition 
of the Facility or any part thereof.  Without limiting the generality of the 
foregoing, the Borrower agrees to pay all costs of the Indemnified Parties, 
including the fees of attorneys, financial advisors, and accountants, and all 
other costs of the Indemnified Parties (including staff time and 
out-of-pocket expenses) with respect to any audit conducted by the Internal 
Revenue Service (or the Minnesota Department of Revenue) related to the Bond, 
the Borrower, or the Facility, or with respect to any enforcement action 
conducted by the Securities and Exchange Commission (or the Minnesota 
Department of Commerce) with respect to the offer or sale of the Bond or the 
offer or sale of any related separate security, or with respect to the 
investment of the gross proceeds of the Bond.

     Promptly after receipt by the Issuer, the City, or any other Indemnified 
Party, of notice of the commencement of any action in respect of which 
indemnity may be sought against the Borrower under this Section 7, such 
Indemnified Party will notify the Borrower in writing of the commencement 
thereof, 

                                  14

<PAGE>

                                                                 EXHIBIT 10.2

and, subject to the provisions hereinafter stated, the Borrower shall assume 
the defense of such action (including the employment of counsel who shall be 
counsel satisfactory to the Indemnified Party claiming indemnification) and 
the payment of expenses. Insofar as such action shall relate to any alleged 
liability in respect of which indemnity may be sought against the Borrower, 
the Indemnified Party claiming indemnity shall have the right to employ 
separate counsel in any such action and to participate in the defense 
thereof, and the fees and expenses of such counsel shall be at the expense of 
the Borrower.  The Borrower shall not be liable to indemnify any Indemnified 
Party for any settlement of any such action effected without its consent.  
The Borrower shall be entitled to negotiate a settlement of any action, suit, 
claim or demand giving rise to indemnity hereunder, and the consent of an 
Indemnified Party shall not be required thereto if:  (a) no liability will be 
imposed upon or will result to the Indemnified Party; or (b) the Borrower 
fully reimburses the Indemnified Party for any liability arising from such 
settlement.

     The provisions of this Section 4.02 shall survive the payment and 
discharge of the Bond.

     Section 4.03.  REPORTS TO GOVERNMENTAL AGENCIES.  The Borrower will 
furnish to agencies of the State, including, but not limited to, the 
Commissioner of the Minnesota Department of Trade and Economic Development 
and to the Lender, the City, and the Issuer, such periodic reports or 
statements as they may reasonably require throughout the term of this Loan 
Agreement.  The Borrower shall notify the Issuer of any request by the 
Borrower for the Holder's consent to alterations to the Equipment, or to the 
sale, assignment or other disposition of the Equipment, and of the Holder's 
action in response to such requests.

     Section 4.04.  SECURITY AGREEMENT.  As additional security for the 
Lender, and to induce the Issuer to issue and deliver the Bond, the Borrower 
agrees to execute and deliver, or cause to be executed and delivered, to the 
Lender:  (i) the Security Agreement; and (ii) such other agreements or 
documents as may be required by the Lender.

     Section 4.05.  CONCERNING THE FACILITY.  The Borrower agrees to pay all 
expenses of the operation and maintenance of the Facility including, but 
without limitation, adequate insurance thereon and insurance against all 
liability for injury to persons or property arising from the operation 
thereof, and all taxes and special assessments levied upon or with respect to 
the Facility and payable during the term of this Loan Agreement.

     Section 4.06.  ALTERATIONS TO AND DISPOSAL OF EQUIPMENT.  The Borrower 
shall not dispose of any Equipment without the prior written consent of the 
Lender and in no event shall the Borrower do any act or thing which would 
unduly impair or depreciate the value of  the Equipment.  All work done by 
the Borrower in connection with any alterations or repairs to the Equipment 
shall be done promptly and in good workmanlike manner and in compliance with 
the building and zoning laws of the Issuer, the City, and other governmental 
subdivisions wherein the Facility and the Equipment are situated, and with 
all laws, ordinances, orders, rules, regulations and requirements of all 
federal, State and municipal governments and the appropriate departments, 
commissions, boards and officers thereof, and shall keep any policy of 
insurance covering the Building and the Equipment in full force and effect, 
and the work shall be prosecuted with reasonable dispatch, unavoidable delays 
excepted.

     Section 4.07.  OMITTED.  This Section intentionally omitted.

     Section 4.08.  USE OF FACILITY.  The Borrower will use the Facility only 
in furtherance of lawful purposes and will use and operate the Equipment only 
as a revenue producing enterprise, eligible to be and defined as a "project" 
under the Act.  The Borrower will not use or permit any person to use the 


                                  15

<PAGE>

                                                                 EXHIBIT 10.2

Equipment or the Building for any use or purpose in violation of the laws of 
the United States, the State, or any identifiable redevelopment plan of the 
Issuer or the City, and agrees to comply with all the orders, rules, 
regulations and requirements of the Board of Fire Underwriters and of the 
City, the Issuer, Scott County, or the State, or other governmental authority 
having jurisdiction over the Facility.  The Borrower shall have the right to 
contest by appropriate legal proceedings, without cost or expense to the 
Issuer, the validity of any law, ordinance, order, rule, regulation or 
requirement of the nature herein referred to.

     Section 4.09.  MAINTENANCE AND POSSESSION OF EQUIPMENT BY BORROWER.  The 
Borrower agrees that so long as the Bond is outstanding, the Borrower will 
keep the Equipment in good repair and good operating condition at its own 
cost, including without limitation making such repairs and replacements as 
are necessary in the judgment of the Borrower so that the Equipment will 
remain a "project" under the Act.

     Section 4.10.  OBSERVANCE OF COVENANTS AND TERMS OF THE RESOLUTION AND 
THE BOND.  The Borrower will not do, in any manner, anything which will cause 
or permit to occur any default under the Resolution or the Bond, but will 
faithfully observe and perform, and will do all things necessary so that the 
Issuer may observe and perform, all the conditions, covenants and 
requirements of the Resolution and the Bond.  The Issuer agrees that it will 
observe and perform all obligations imposed upon it by this Loan Agreement 
and the Resolution and the Bond, and will not suffer or permit any default to 
occur thereunder; provided that the Issuer has no obligation to use its own 
funds or funds of the State to perform or cause performance of any such 
obligations.

     Section 4.11.  NOTICE OF DEFAULTS.  The Borrower will furnish to the 
Holder and the Issuer, immediately after the Borrower has obtained knowledge 
of the occurrence, notice of each Event of Default or each event which with 
the giving of notice or lapse of time or both would constitute an Event of 
Default, which is continuing on the date of such notice, the notice of the 
Borrower setting forth details of such Event of Default or event and the 
action which the Borrower take with respect thereto.

     Section 4.12. BORROWER TO EXECUTE FURTHER DOCUMENTS.  The Borrower 
agrees that it shall execute and deliver to the Issuer and the Holder such 
further financing statements, acknowledgments, certificates and agreements as 
shall be reasonably requested from time to time by the Issuer or the Holder 
to protect the security provided for the payment of the Bond and to further 
the transactions contemplated by this Loan Agreement.

     Section 4.13. BORROWER TO MAINTAIN CERTAIN STANDARDS.  The Borrower 
agrees that it will at all times maintain its corporate existence and good 
standing, and will at all times remain qualified to do business in all places 
within the United States, where failure to be so qualified would have a 
material adverse effect on the Borrower's business or financial condition.

     Section 4.14. MERGERS AND CONSOLIDATION.  The Borrower agrees that it 
shall not enter into any merger, consolidation, combination, sale of all or 
substantially all of its assets, or any other change in its corporate form if 
doing so would result in an Event of Default under this Loan Agreement, 
including without limitation the provisions of Section 5.02(d), (and the 
provisions of Sections 4.01(i), 4.01(j), 4.01(l), and 4.01(m), if the 
standards set forth in those Sections were applied on the day of the merger 
or consolidation).

     Section 4.15.  INSURANCE.  (a) The Borrower, at its sole cost and 
expense, will maintain continuously in effect with respect to the Equipment 
policies of insurance against such risks and in such 

                                  16

<PAGE>

                                                                 EXHIBIT 10.2

amounts as are acceptable to the Lender.  Without limiting the generality of 
the foregoing provision, the Borrower shall maintain insurance of the 
following character:
     
        (i)    Insurance on the Equipment now existing and on the fixtures and
               personal property included in the definition of Equipment against
               loss by fire, and other hazards covered by the so-called
               "all-risk" form of policy with no co-insurance clause, in an
               amount equal to the actual replacement cost thereof, without
               deduction for physical depreciation;
          
        (ii)   If the Land that the Equipment resides on is located in a
               designated official flood-hazardous area, flood insurance
               insuring the buildings and improvements now existing or hereafter
               erected on the Land in an amount equal to the actual replacement
               of the cost thereof without deduction for physical depreciation;
          
        (iii)  Comprehensive general liability insurance including product
               liability and contractual liability protecting against
               claims arising from any accident or occurrence in an amount
               of not less than $2,000,000 in the aggregate and per
               occurrence in connection with the operations of the
               Borrower;
          
        (iv)   Worker's compensation insurance with statutory coverages and
               Employer's Liability at a limit of $1,000,000 per occurrence
               covering all persons engaged in the construction or installation
               of the Project or the operations of the Borrower;
          
        (v)    Business interruption insurance with a limit sufficient to insure
               not less than a 6 month loss of income, or extra expense
               insurance;
          
        (vi)   Comprehensive Automobile Liability insurance in an amount not
               less than $1,000,000 per occurrence covering all titled motor
               vehicles used in the operations of the Borrower's business, such
               insurance to include coverage for non-owned and hired vehicles;
               and
          
        (vii)  such other insurance with respect to the Collateral (as
               defined in the Security Agreement) as may be required by the
               Lender.
     
     (b)  The insurance described in Sections 4.15(a)(i), 4.15(a)(ii), and 
4.15(a)(v) shall:
     
        (i)    include a clause naming the Lender as Loss Payee;
          
        (ii)   identify the Equipment insured; and
          
        (iii)  state the applicable amount of insurance. 
          
          
     (c)  The insurance described in Sections 4.15(a)(v) and 4.15(a)(vi) shall
include clauses which:
     
        (i)    name the Lender as an Additional Insured; and

                                  17

<PAGE>

                                                                 EXHIBIT 10.2

        (ii)   provide that all insurance, except the limits of liability,
               operate as if there were a separate policy covering each insured.

     (d)  All insurance required by this Section 4.15 shall:

        (i)    be provided with insurers rated "A IX" by A.M. Best Company, Inc.
               (or the future equivalent thereof) or as otherwise approved by
               the Lender;
          
        (ii)   provide the Lender with thirty (30) days advance written notice
               of cancellation and/or material change in coverage directly from
               insurers;
          
        (iii)  be primary and without the right of contribution from any
               other insurance not specifically purchased by the Borrower
               to be excess of, or in contribution with the insurances
               required herein;
          
        (iv)   include a waiver of any subrogation rights the Borrower's
               insurers may have against the Lender;
          
        (v)    provide that all insurance shall insure the interest of the
               Lender regardless of any breach or violation by the Borrower or
               any other party or entity of any warranties, declarations, or
               conditions contained in such policies; and 
          
        (vi)   be satisfactory in form, substance, limits, deductibles and
               retentions to Lender.

     Section 4.16.  TAXES.  The Borrower shall pay all taxes on the Equipment 
and the Facility before such taxes become delinquent.


                                  18
<PAGE>

                                                                 EXHIBIT 10.2

                              ARTICLE FIVE
                                          
                           BORROWER'S OPTIONS

     Section 5.01.  PREPAYMENTS. (a) In the event of mandatory prepayment or 
acceleration of the Bond in accordance with the terms of the Bond, the 
Borrower agrees to prepay the Loan in such amount and on such dates as will 
permit the Issuer to pay the principal, premium, if any, and accrued interest 
on the Bond when due.  The prepayment premium on the Loan in the event of 
mandatory prepayment or acceleration shall be equal to the prepayment premium 
payable on the Bond determined in accordance with the terms of the Bond.

     (b)  The Borrower may prepay the principal of the Loan at such times, in 
such amounts, and subject to all other terms applicable to optional 
prepayments of the Bond by the Issuer.  The Issuer agrees to immediately 
apply all optional prepayments of the Loan by the Borrower to prepayments of 
the Bond.  The Issuer hereby authorizes the Borrower to pay all optional 
prepayments on the Loan directly to the Holder.

     Section 5.02.  ASSIGNMENT.  (a) The Borrower will not, during the term 
of the Bond, sell the Equipment or assign its rights or interests in any part 
thereof, or otherwise convey, dispose of or mortgage in any manner the 
Equipment or any part thereof, without: (i) providing satisfactory 
replacement collateral to secure the Holder's interest in the Equipment to be 
sold or assigned; (ii) obtaining the Holder's written consent (such consent 
not to be unreasonably withheld); and (iii) providing notice to the Issuer.
  
     (b)  Notwithstanding the foregoing, Equipment with a combined fair 
market value of no more than $25,000 may be sold in any fiscal year without 
Borrower's compliance with the terms of Section 5.02(a).
     
     (c)  In the event the Borrower sells, conveys, transfers, further 
mortgages or encumbers or disposes of the Equipment or any part thereof, or 
any interest therein, or agrees so to do, in violation of the terms and 
conditions of this Section 5.02 and if the Holder declares the amount owing 
on the Bond to be due and payable in full and calls for payment of the same 
in full at once, the Borrower shall immediately pay on the Loan an amount 
equal to same, plus any prepayment premium due.
     
     (d)  The Borrower will not, during the term of the Bond, sell or assign 
its right or interest in this Loan Agreement, or any part thereof without the 
written consent of the Holder and notice to the Issuer.  If such sale or 
assignment of the Borrower's interest in this Loan Agreement does not purport 
to and does not release the Borrower from any of its obligations under this 
Loan Agreement, the Holder's consent will not be unreasonably withheld.  If 
such sale or assignment of the Borrower's interest in this Loan Agreement 
purports to or does release the Borrower from any of its obligations under 
this Loan Agreement, the Holder will have sole discretion with regard to 
giving its consent.


                                  19

<PAGE>

                                                                 EXHIBIT 10.2

                              ARTICLE SIX
                                          
                     EVENTS OF DEFAULT AND REMEDIES


     Section 6.01.  EVENTS OF DEFAULT.  Subject to the notice and cure 
provisions of Section 6.06, any one or more of the following events is, upon 
expiration of the applicable cure period, an Event of Default under this Loan 
Agreement:

  (a)  if the Borrower shall fail to make any payments required under this 
Loan Agreement on the date that the payment is due, provided:
  
       (i)   If the Borrower fails to make any payment required under this Loan
     Agreement within five (5) days of the date that the payment is due, then,
     pursuant to the terms and conditions of the Escrow Deposit Agreement, the
     Escrow Agent shall: (i) make such payment on the Borrower's behalf, such
     payment to be made from the "Reserve Fund" (as defined in the Escrow
     Deposit Agreement); and (ii) give written notice of such payment to the
     Borrower.
                 
       (ii)  If the Escrow Agent makes any payment on the Borrower's behalf from
     the Reserve Fund, the Borrower will pay, within 7 days of such payment to
     the Escrow Agent an amount equal to such payment for the purpose of
     restoring the amount of the Reserve Fund to the balance in it prior to such
     payment.
                 
       (iii) If the Borrower complies with the terms of Sections 6.01(a)(i) and
     6.01(a)(ii), then no Event of Default shall exist; provided, however, that
     if the balance of the Reserve Fund is inadequate to make the payment on
     Borrower's behalf, or if the Escrow Agent makes three (3) or more payments
     from the Reserve Fund on the Borrower's behalf  in any three (3) month
     period, such condition or conditions shall be an Event of Default under
     this Loan Agreement.
  
  (b) if the Borrower shall fail to observe and perform (prior to any 
applicable cure period) the covenants described in sections 4.01(i), (j), (k) 
or (l) of this Loan Agreement for two consecutive months;

  (c) period, any other covenant, condition or agreement on its part under 
this Loan Agreement, the Lease, the Escrow Deposit Agreement, the Warrant and 
Fee Agreement, the Environmental Indemnity Agreement, any future working 
capital financing agreements, or any material contract or agreement;
  
  (d) if any representation or warranty made by the Borrower hereunder or by 
a representative of the Borrower in any document or certificate furnished the 
Lender or the Issuer in connection herewith or therewith or pursuant hereto 
or thereto, shall prove at any time to be incorrect or misleading in any 
material respect as of the date made;
  
  (e) if the Borrower shall file a petition in bankruptcy or for an 
arrangement pursuant to any present or future federal bankruptcy act or under 
any similar federal or state law, or shall be adjudicated a bankrupt or 
insolvent, or shall make an assignment for the benefit of its creditors or 
shall admit in writing its inability to pay its debts generally as they 
become due, or if a petition or answer proposing the adjudication of the 
Borrower as a bankrupt under any present or future federal bankruptcy act or 
any similar federal or state law shall be filed in any court and such 
petition or answer shall not be discharged or denied within sixty (60) days 
after the filing thereof, or a receiver, trustee or liquidator of all or 

                                  20

<PAGE>

                                                                 EXHIBIT 10.2

substantially all of the assets of the Borrower or of the Equipment shall be 
appointed in any proceeding brought against the Borrower and shall not be 
discharged within sixty (60) days after such appointment or if the Borrower 
shall consent to or acquiesce in such appointment, or if the estate or 
interest of the Borrower in the Equipment or a part thereof shall be levied 
upon or attached in any proceeding and such process shall not be vacated or 
discharged within sixty (60) days after such levy or attachment; or
  
  (f) if an Event of Default shall occur under the Security Agreement or any 
other instrument securing the Bond or if any representation or warranty made 
by the Borrower thereunder shall prove at any time to be incorrect or 
misleading in any material respect as of the date made.
  
     Section 6.02.  REMEDIES IN THE EVENT OF DEFAULT.  Whenever any Event of 
Default referred to in Section 6.01 shall have happened and be subsisting 
(subject to the cure provisions of Section 6.06), any one or more of the 
following remedial steps may be taken by the Holder directly or, upon written 
consent of the Holder, by the Issuer:

     (a)  all sums payable under this Loan Agreement (being an amount equal 
to that necessary to pay in full the Bond assuming acceleration of the Bond 
under the terms thereof and to pay all other indebtedness secured by the 
Security Agreement) may be declared to be immediately due and payable, 
whereupon the same shall become immediately due and payable by the Borrower; 
and

     (b)  whatever action at law or in equity or as provided in the Security 
Agreement or any other instrument securing the Bond that may appear necessary 
or appropriate to collect the amounts then due and thereafter to become due, 
or to enforce performance and observance of any obligation, agreement or 
covenant of the Borrower under this Loan Agreement may be taken.

     Section 6.03.  DISPOSITION OF FUNDS.  Any amounts collected pursuant to 
action taken under Section 6.02 shall be applied in such order as the Holder 
may determine; provided that in the event that the Holder advances sums in 
protecting the lien of the Security Agreement, in payment of taxes on the 
Facility, in payment of premiums with respect to insurance covering the 
Facility, in payment of principal and interest on prior liens against the 
Facility, in order to cure any Event of Default under this Loan Agreement or 
the Security Agreement or any default under the Lease (the Borrower hereby 
authorizing the Holder to make any such advance on its behalf), and in 
payment of expenses and attorneys' fees herein provided for and other sums 
advanced by the Holder for any other purpose authorized in the Security 
Agreement, the Borrower upon demand shall pay all such costs and expenses so 
incurred and advances so made to the Holder together with interest at the 
rate then payable on the Bond per annum (unless payment of such rate would be 
contrary to law in which event such sums shall bear interest at the lesser of 
18% or the highest rate permitted by applicable law).

     Section 6.04.  MANNER OF EXERCISE.  No remedy herein conferred upon or 
reserved to the Issuer is intended to be exclusive of any other available 
remedy or remedies, but each and every such remedy shall be cumulative and 
shall be in addition to every other remedy given under this Loan Agreement or 
now or hereafter existing at law or in equity by statute.  No delay or 
omission to exercise any right or power accruing upon any default shall 
impair any such right or power or shall be construed to be a waiver thereof, 
but any such right and power may be exercised from time to time and as often 
as may be deemed expedient.  In order to entitle the Issuer to exercise any 
remedy reserved to it in this Article, it shall not be necessary to give any 
notice, other than such notice as may be herein expressly required, but no 
remedy shall be exercised by the Issuer without the prior written consent of 
the Holder.


                                  21

<PAGE>

                                                                 EXHIBIT 10.2

     Section 6.05. EFFECT OF WAIVER.  In the event any agreement contained in 
this Loan Agreement should be breached by either party and thereafter waived 
by the other party, such waiver shall be limited to the particular breach so 
waived and shall not be deemed to waive any other breach hereunder.  If the 
Holder, at the Borrower's request, waives any breach of this Loan Agreement 
on the part of the Borrower, the Borrower will pay, upon the Holder's demand, 
$1,500 to the Holder as reimbursement for the Holder's cost of providing such 
a waiver.

     Section 6.06.  NOTICE TO BORROWER OF EVENT OF DEFAULT.  (a) The 
Borrower, except as otherwise specifically provided in this Article Six, 
shall have the right to written notice from the Issuer or the Lender of any 
alleged Event of Default (except an Event of Default under Section 6.01(a) of 
this Loan Agreement, for which no notice shall be necessary), and shall, 
except as provided in Section 6.06(b), have a period of thirty (30) days from 
receipt of said notice, unless a longer period of time is provided by the 
specific terms of this Loan Agreement, the Security Agreement, or the laws of 
the State of Minnesota, to cure or correct such alleged Event of Default or 
otherwise respond to said notice, and no Event of Default shall occur 
hereunder until the expiration of such cure period.

     (b)  Notwithstanding anything to the contrary in this Article VI, an 
Event of Default shall occur immediately upon the occurrence of any of the 
following: (i) an event under Section 6.01(a)(ii) or section 6.01(a)(iii) of 
this Loan Agreement; (ii) failure to carry or maintain insurance on the 
Equipment as required by section 4.15 of this Loan Agreement and by the 
Security Agreement; or (iii) any event described in Section 6.01(e) of this 
Loan Agreement.  The cure and notice provisions of Section 6.06(a) of this 
Loan Agreement  do not apply to the Events of Default referred to in this 
paragraph (b) or the Events of Default referred to in Section 6.01(a)(i).  

     (c)  Notice under this Section 6.06 shall be deemed received:

          (i)   if sent by facsimile before 4:00 p.m. Central Time on a 
                business day, on that business day;

          (ii)  if sent by facsimile after 4:00 p.m. Central Time on a business
                day, or on a nonbusiness day, on the next business day; and
     
          (iii) if sent by mail, 3 days after mailing

                                  22

<PAGE>

                                                                 EXHIBIT 10.2

                             ARTICLE SEVEN
                                          
                                GENERAL


     Section 7.01.  NOTICES.  All notices, certificates or other 
communications hereunder shall be sufficiently given and shall be deemed 
given when mailed by certified or registered mail, postage prepaid, with 
proper address as indicated below.  The Issuer, the Borrower and the Holder 
may, by written notice given by each to the others, designate any address or 
addresses to which notices, certificates or other communications to them 
shall be sent when required as contemplated by this Loan Agreement.  Until 
otherwise provided by the respective parties, all notices, certificates and 
communications to each of them shall be addressed as follows:

     To the Issuer:      Economic Development Authority
                         of the City of Belle Plaine, Minnesota 
                         420 East Main Street 
                         Belle Plaine, Minnesota 56011
                         Attn: City Administrator

     To the Borrower:    Excelsior-Henderson Motorcycle Manufacturing
                          Company
                         805 Hanlon Drive
                         Belle Plaine, Minnesota 56011
                         Attn: Chief Financial Officer

     with a copy to:     Gale Mellum 
                         Faegre & Benson 
                         2200 Norwest Center 
                         90 South Seventh Street 
                         Minneapolis, Minnesota 55402

     To the Lender:      FINOVA Public Finance, Inc. 
                         605 North Highway 169 
                         Suite 250
                         Plymouth, Minnesota 55441
                         Attn: President

     Section 7.02. BINDING EFFECT.  This Loan Agreement shall inure to the 
benefit of and shall be binding upon the Issuer and the Borrower and their 
respective successors and assigns.

     Section 7.03.  SEVERABILITY.  In the event any provision of this Loan 
Agreement shall be held invalid or unenforceable by any court of competent 
jurisdiction, such holding shall not invalidate or render unenforceable any 
other provision hereof.

     Section 7.04.  AMENDMENTS, CHANGES AND MODIFICATIONS.  Except as 
otherwise provided in this Loan Agreement or in the Resolution, subsequent to 
the initial issuance of the Bond and before the Bond are satisfied and 
discharged in accordance with its terms, this Loan Agreement may not be 
effectively amended, changed, modified, altered, or terminated without the 
written consent of the Holder.


                                  23

<PAGE>

                                                                 EXHIBIT 10.2

     Section 7.05.  EXECUTION; COUNTERPARTS.  This Loan Agreement may be 
simultaneously executed in several counterparts, each of which shall be an 
original and all of which shall constitute but one and the same instrument.

     Section 7.06.  CONCERNING THE BOND.  The Borrower agrees to be bound by 
all of the terms and conditions set forth in the Bond.

     Section 7.07.  LIMITATION OF ISSUER'S LIABILITY.  It is understood and 
agreed by Borrower and the Lender that no covenant of the Issuer herein shall 
give rise to any liability of the Issuer, other than from revenues derived 
from this Loan Agreement, or constitute a charge against the general credit 
or taxing powers of the Issuer.  It is further understood and agreed by the 
Borrower and the Lender that the Issuer shall incur no liability other than 
from proceeds derived from this Loan Agreement hereunder, and shall not be 
liable for any expenses related hereto, all of which the Borrower agrees to 
pay.

     Section 7.08.  ASSIGNMENT BY THE ISSUER; ASSIGNMENT BY THE LENDER. (a)  
The Borrower recognizes that the Issuer, pursuant to the Assignment of Loan 
Agreement, has granted a security interest in all of its interest in, to, and 
under this Loan Agreement (including all Loan repayments hereunder but 
excluding any of its rights to indemnification and payment of costs or 
expenses provided in Sections 3.04, 4.02 and 7.07 hereof) to the Lender as 
security for the prompt payment of the principal, premium, if any, and 
interest on the Bond, and hereby consents to such grant.  The Borrower has 
reviewed and hereby approves and consents to the terms of the Assignment of 
Loan Agreement.  The Issuer and the Borrower consent to any future 
assignments by the Lender of the Issuer's interest in, to, and under this 
Loan Agreement to any future Holder of the Bond.

     (b)  The Holder may not assign, transfer, sell, or otherwise convey this 
Loan Agreement, the Bond, and the Security Agreement in whole, unless any 
such assignment, transfer, sale, or conveyance complies with all state and 
federal laws, rules, and regulations.

     (c)  Notwithstanding anything to the contrary in this Loan Agreement, 
the Lender will not assign, transfer, sell, or otherwise convey a partial 
interest or partial right in this Loan Agreement, the Bond, the Security 
Agreement, or any related partial interest or partial right unless such 
assignment, transfer, sale, or conveyance:

          (i)  complies with all state and federal laws, rules, and regulations;

          (ii) is to only one other party and no third party shall have any
          partial interest or partial right in the Loan Agreement, the Bond, the
          Security Agreement, unless the Borrower approves in writing and at its
          sole discretion, an additional assignment, transfer, sale or
          conveyance; and  

          (iii) contains a condition in a form reasonably satisfactory to
          the Borrower, that either the Lender or its assignee, but not both,
          has and will exercise authority to act on the other's behalf with
          regard to the Borrower's obligations under the Borrower Documents;
          provided that this Section 7.08(c)(ii) shall not apply to assignment
          by the Lender or Holder to the Issuer when such assignment is
          expressly permitted by this Loan Agreement.

                                  24

<PAGE>

                                                                 EXHIBIT 10.2

     Section 7.09.  SURVIVAL OF CERTAIN PROVISIONS.   The provisions of 
Section 4.02, Section 4.01(v), and the Environmental Indemnity Agreement 
shall survive the payment and discharge of the Bond and any termination of 
this Loan Agreement.

     Section 7.10.  PUBLICITY.  The Lender may, upon the consent of the 
Borrower (such consent to be given or withheld at the Borrower's sole 
discretion) and in compliance with all state and federal laws, rules, and 
regulations, publicize the Lender's purchase of the Bond and the purposes for 
which it was purchased.


                                  25

<PAGE>

                                                                 EXHIBIT 10.2

     IN WITNESS WHEREOF, the Issuer and the Borrower have caused this Loan 
Agreement to be executed in their respective names as of the date first above 
written.

                              EXCELSIOR-HENDERSON MOTORCYCLE
                              MANUFACTURING COMPANY




                              By                  
                                -------------------------------------

                              Its                 
                                -------------------------------------

                                  26

<PAGE>

                                                                 EXHIBIT 10.2

Loan Agreement signature page of the Issuer. 



                             ECONOMIC DEVELOPMENT AUTHORITY
                             OF THE CITY OF BELLE PLAINE, MINNESOTA





                              By                  
                                -------------------------------------

                              Its                 
                                -------------------------------------



                              By                  
                                -------------------------------------

                              Its                 
                                -------------------------------------



<PAGE>

                                                                 EXHIBIT 10.2

                               EXHIBIT A
                                          
                       LEGAL DESCRIPTION OF LAND


     Lot 1, Block 1 and Lot 3, Block Two, Excelsior-Henderson Industrial Park 
Subdivision, according to the recorded plat thereof, Scott County, Minnesota.


<PAGE>

                                                                 EXHIBIT 10.2

                                     EXHIBIT B
                                          
                        CONFIDENTIALITY AGREEMENT GOES HERE