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Excelsior-Henderson Announces Private Placement Of Series B Convertible Preferred Stock

8 September 1998

Excelsior-Henderson Motorcycle Manufacturing Company Announces The Private Placement Of $10 Million Of Series B Convertible Preferred Stock
    BELLE PLAINE, Minn., Sept. 8 --  Excelsior-Henderson
Motorcycle Manufacturing Company today announced the closing
of the private placement of $10 million of Series B Convertible Preferred
Stock with a single institutional investor.  The investor has committed to
make an additional $3 million investment in the Company upon the achievement
of certain market price goals and certain other conditions.  The financing was
arranged by Shoreline Pacific Institutional Finance, the Institutional
Division of Financial West Group of Sausalito, Calif.
    "The proceeds of this private placement will be used primarily to fund
working capital needs and for general corporate purposes," said Thomas M.
Rootness, Senior Vice President and Chief Financial Officer.  "This represents
another milestone accomplished within our financial plan," added Rootness.
    The conversion price of the Series B Preferred Stock is $7.47, a 10%
premium over the recent market price, and is fixed for at least the first
twelve months after closing.  Thereafter, the conversion price may vary based
upon the market price of the Company's Common Stock during the period
immediately preceding conversion.
    At the closing of this transaction, Excelsior-Henderson had approximately
13.0 million common shares outstanding.  Depending on the ultimate conversion
price, the number of common shares issuable in satisfaction of conversion of
the $10 million Series B Preferred Stock could range from a low of 1,338,500
to a high, without obtaining prior shareholder approval, of 2,600,000.  The
agreements also provide for optional cash redemption by Excelsior-Henderson of
any unconverted Series B Preferred Stock.
    Excelsior-Henderson Motorcycle Manufacturing Company is a pre-revenue
company which plans to manufacture, market and sell premium heavyweight
American cruisers and touring motorcycles, as well as related parts, apparel
and accessories branded with a name that evokes an authentic American
motorcycling heritage and lifestyle.  The Company will distribute its products
through a quality, nationally recognized dealer network.  Excelsior-Henderson
is one of only two authentic American motorcycle companies exclusively
committed to the manufacture of motorcycles.  The production-intent 1999 Super
X motorcycle was unveiled August 3, 1998, during Sturgis Rally and Races.
Motorcycle production is scheduled to begin during the fourth quarter of 1998.
    Notes Concerning Forward Looking Statements:
    This press release contains forward-looking statements regarding the plan
of the Company to produce and sell the first 1999 Super X motorcycles during
the fourth quarter of 1998 that involve risks and uncertainties.  The
Company's actual results could differ materially from those anticipated in
these forward-looking statements as a result of the factors set forth below
and the factors described from time to time in the Company's reports on file
with the Securities and Exchange Commission, including but not limited to the
Company's Annual Report on Form 10-K for the fiscal year ended January 3, 1998
and the Company's Quarterly Reports on Form 10-Q for the quarter ended April
4, 1998 and the quarter ended July 4, 1998.
    Factors that may affect the timing of production of the Super X include
problems in acquisition, installation and successful operation of the
motorcycle production equipment, the ability of the Company to locate
competent suppliers or obtain adequate quantities of components and supplies
at reasonable costs, the ability of the Company to obtain working capital
financing as needed, the ability of the Company to hire additional qualified
personnel and the ability of the Company's engineering and manufacturing staff
to design, engineer and produce the Super X.  In addition, for the Company to
be successful, its products must be manufactured to meet high quality
standards in production volumes.  The transition from prototype to mass
production will involve various risks and uncertainties that may not be
apparent at this time and there can be no assurance that the Company will be
able to successfully react to unanticipated difficulties and commence mass
production in late 1998.  In addition, the Company will be required to obtain
certain government approvals and certifications prior to sales of the Super X.
Potential delays and costs that could result from obtaining such approvals
could result in a delay in motorcycle production.