10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C.   20549

                                 FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the Quarter Ended May 31, 2003                 Commission File No. 0-5131

                     ART'S-WAY MANUFACTURING CO., INC.
            (Exact name of registrant as specified in its charter)

                 DELAWARE                          42-0920725
          State of Incorporation         I.R.S. Employer Identification No.

      Hwy 9 West, Armstrong, Iowa                   50514
 Address of principal executive offices            Zip Code

Registrant's telephone number, including area code: (712) 864-3131

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days.  Yes  X  No __

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2).   Yes  __  No  X

Number of common shares outstanding as of March 21, 2003:  1,938,176


                      ART'S-WAY MANUFACTURING CO., INC.
                      CONDENSED STATEMENTS OF OPERATIONS
                               (Unaudited)

		               Three Months Ended             Year to Date
		              May 31,       May 31,        May 31,      May 31,
			         2003          2002            2003        2002

Net Sales               $ 2,432,516   $ 2,252,621    $ 4,941,393  $ 4,894,513
Cost of goods sold        1,634,639     1,611,101      3,505,088    3,682,393
Gross Profit          797,877       641,520      1,436,305    1,212,120
Operating Expenses:
Engineering                  15,256        15,758         34,179       30,637
Selling                     152,041       130,539        280,235      251,436
General and administrative  327,402       398,738        679,829      807,363
Total expenses          494,699       545,035        994,243    1,089,436
Income from operations    303,178        96,485        442,062      122,684
Other expenses:
Interest expense             30,994        34,225         48,973       94,814
Total other expenses         40,776        66,021         64,820      140,721

Income (loss) before
income taxes                262,402        30,464        377,242      (18,037)
Income tax expense	       -             -	           2,031         -
Net income (loss)	       $  262,402    $   30,464     $  375,211   $  (18,037)
Net income (loss) per share:
Basic			       $     0.14    $     0.02     $     0.19   $    (0.01)
Diluted			 $     0.13    $     0.02     $     0.19   $    (0.01)

Common shares and equivalent outstanding:
Basic	                    1,938,176     1,938,176      1,938,176     1,677,956
Diluted		        1,950,438     1,944,368      1,948,646     1,677,956

See accompanying notes to financial statements.

                         ART'S-WAY MANUFACTURING CO., INC.
				    CONDENSED BALANCE SHEETS
				         (Unaudited)

			 	      	   May 31,		November 30,
					          2003		    2002
    ASSETS
Current Assets
Cash		        	           $    979,783 	$     75,358
Accounts receivable-customers,
net of allowance for doubtful
accounts of $59,000 and $50,000
in May and November, respectively       973,483 	      592,945
Other Receivables		                110,000 	         -
Inventories			              4,155,119           3,576,707
Other current assets	                 70,516 	       95,385
    Total current assets	        6,388,901 	    4,340,395

Property, plant and equipment,
at cost                              10,725,972          10,725,972
Less accumalated depreciation	        9,891,000 	    9,751,260
Net property, plant and equipment	    834,972 	      974,712

Inventories, noncurrent			    430,509 	      430,509
Other assets			          211,515             175,849
    Total Assets                  $   7,865,897        $  5,921,465

    LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable to bank		     $      -  		 $   319,222
Current portion of long-term debt	  122,254 		     356,669
Accounts payable			        252,352 		     523,492
Customer deposits			        984,267 		     249,756
Accrued expenses			        733,376 		     630,972
    Total current liabilities		2,092,249 		   2,080,111

Long-term liabilities			  159,777              187,204
Long-term debt, excluding
current portion				2,105,340              520,830
    Total liabilities		      4,357,366            2,788,145

    Stockholders' Equity
Common stock - $.01 par value.
Authorized 5,000,000 shares; issued
1,938,176 shares in May and
in November                            19,382               19,382
Additional paid-in capital		1,634,954 	         1,634,954
Retained earnings			      1,854,195 		   1,478,984
    Total stockholders' equity	3,508,531 		   3,133,320
    Total liabilities and
    stockholders' equity	    $	7,865,897 	       $ 5,921,465

See accompanying notes to financial statements.


                        CONDENSED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

					                   Six  Months  Ended
				       	           May 31,	    May 31,
					                  2003	           2002
CASH FLOW FROM OPERATIONS:
Net income (loss)	  	                  $   375,211 	$   (18,037)
Adjustment to reconcile net income
(loss) to net cash
provided by operating activities:
Depreciation and amortization		          139,740           121,908
Changes in working capital components:
(Increase) decrease in:
Accounts receivable	                     (380,538)          102,324
Other receivables			               (110,000)	       -
Inventories			                     (578,412)	    208,261
Other current assets		                (75,131)	   (246,972)
Other, Net                                    (35,666)	       -
Increase (decrease) in:
Accounts payable			               (271,140)	   (154,849)
Customer deposits			                734,511 	    786,601
Accrued expenses			                102,404 	     41,968
Net cash provided by (used in)
operating activities		                (99,021)          841,204

CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment       - 	             -

CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from (payments of) notes payable
to bank                                     1,322,668        (1,452,572)
Principal payments on term debt		   (319,222)         (178,409)
Proceeds from issuance of common stock
from treasury				             -               53,253
Proceeds from issuance of common stock 	       -    	    746,747
Net cash provided by (used in) financing
activities                                   1,003,446         (830,981)
Net increase in cash 			           904,425           10,223
Cash at beginning of period		            75,358 	      4,375
Cash at end of period	 		      $    979,783 	 $   14,598

Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest				            $     48,973      $     94,814
Income taxes					       3,301             4,032

See accompanying notes to financial statements.



                       ART'S-WAY MANUFACTURING CO., INC.
                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                                 (Unaudited)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement Presentation

The financial statements are unaudited and reflect all adjustments (consisting
only of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of the financial position and operating
results for the interim periods.  The financial statements should be read in
conjunction with the financial statements and notes thereto contained in the
Company's Annual Report on Form 10-K for the year ended November 30, 2002.
The results of operations for the second quarter and year to date ended May 31,
2003 are not necessarily indicative of the results for the fiscal year ending
November 30, 2003.

2.   INCOME (LOSS) PER SHARE

Basic net income (loss) per common share is computed on the basis of weighted
average number of common shares outstanding.  Diluted net income (loss) per
share has been computed on the basis of weighted average number of common
shares outstanding plus equivalent shares assuming exercise of stock options.

The difference in shares utilized in calculating basic and diluted net income
(loss) per share represents the number of shares issued under the Company's
stock option plans less shares assumed to be purchased with proceeds from the
exercise of the stock options. The reconciling item between the shares used in
the computation of basic and diluted earnings per share is 12,262 for the
second quarter ended May 31, 2003; 6,192 for the second quarter ended May 31,
2002; and 10,470 for the year to date period ended May 31, 2003 equivalent
shares for the effect of dilutive stock options.  Due to the net loss for the
year to date period ended May 31, 2002, the anti-dilutive effect of the
Company's stock option plans is not included in the calculation of diluted
loss per share for that period.

3.  INVENTORIES

Major classes of inventory are:           May 31,2003	   November 30, 2002

Raw material                              $   931,564         $ 1,065,166
Work-in-process	                          1,653,737	          1,209,007
Finished goods                              2,000,327           1,733,043
Total	                                    $ 4,585,628         $ 4,007,216
Less inventories classified as noncurrent     430,509		      430,509
Inventories, current	                  $ 4,155,119	        $ 3,576,707

4.   ACCRUED EXPENSES

Major components of accrued expenses are: May 31,2003	   November 30, 2002

Salaries, wages and commissions             $ 356,244		$ 294,220

Accrued warranty expense                       59,495          60,232

Other                                         317,637	        276,520

Total                                      $  733,376		$ 630,972

5.   LOAN AND CREDIT AGREEMENTS

On April 25, 2003 the Company obtained long-term financing through West Des
Moines State Bank (West Bank), West Des Moines, Iowa.  Credit facilities
consist of two loan agreements totaling $5,500,000.

Facility #1 is a revolving line of credit for $2,500,000 with advances funding
the working capital, letter of credit and corporate credit card needs.  It
renews annually with a maturity date of February 28, 2004.  The interest rate
will be West Bank's prime interest rate plus 1% adjusted daily.  Monthly
interest only payments will be required and the unpaid principal due on the
maturity date. In addition an annual fee of $12,500 will be paid for the use of
this credit facility.  Collateral consists of a first position on assets owned
by the Company including, but not limited to inventories, accounts receivable,
machinery and equipment.

Facility #2 is long-term financing for up to $3,000,000 that is supported by a
guarantee issued by the United States Department of Agriculture (USDA) for 75%
of the loan amount outstanding.  The loan refinanced existing debt to UPS
Capital (approximately $1,500,000), finance equipment (approximately $250,000),
provide permanent working capital (approximately $500,000) and satisfy closing
costs (approximately $50,000).  Approximately $700,000 will be reserved for
future acquisitions.  Maturity date is March 31, 2023.  The variable interest
rate will be West Bank's prime interest rate plus 1.5% adjusted daily.  Monthly
principal and interest payments will be amortized over 20 years, at which time
the loan will mature.  A one-time origination fee of 1% was also required.
Collateral for Facility #2 is primarily real estate with a second position on
assets of Facility #1.  The USDA subordinates collateral rights in all assets
other than real estate in an amount equal to West Bank's other credit
commitments.

J. Ward McConnell, Jr. was required to personally guarantee Facility #1 and
Facility #2 on an unlimited and unconditional basis.  The guarantee of Facility
#2 shall then be reduced after the first three years to a percentage
representing his ownership of the Company.  Mr. McConnell's guarantee shall be
removed from Facility #2 in the event that his ownership interest in the
Company is reduced to a level less than 20% after the first three years of the
loan.  The Company will compensate Mr. McConnell for his personal guarantee at
an annual percentage rate of 2% of the outstanding balance to be paid monthly.

Other terms and conditions are providing monthly internally prepared financial
reports including accounts receivable aging schedules and borrowing base
certificates and year-end audited financial statements.  The borrowing bases
shall limit advances from Facility #1 to 60% of accounts receivable less than
90 days, 60% of finished goods inventory, 50% of raw material inventory and 50%
of work-in-process inventory plus 40% of appraisal value of machinery and
equipment.  Covenants include debt service coverage ratio, debt/tangible net
worth ratio, current ratio, limit capital expenditures, and maintain a minimum
tangible net worth.

On April 25, 2003 the Company borrowed $2,000,000 against Facility #2.
$1,528,775 was used to payoff UPS Capital with $110,000 being held in reserve
for a letter of credit ($100,000) and any additional fees.  The balance of
$471,225 was used as working capital.  As of May 31, 2003, the Company has not
borrowed against Facility #1.

A summary of the Company's term debt is as follows:

                                          May 31,             November 30,
	                                     2003	                 2002
West Bank real estate loan payable in
monthly Installments of $17,776
including interest at Bank's prime
rate plus 1.5% (5.75%)                 $ 1,991,807	      $      -

Installment term debt payable in
monthly Installments of $23,700, plus
interest at four percent over the
bank's national money market rate
due on demand, secured	              $      -               $    605,371

State of Iowa Community Development
Block Grant promissory notes at zero
percent interest, maturity 2006,
with quarterly principal payments
of $11,111	                         $   144,444	       $   166,667

State of Iowa Community Development
Block Grant local participation
promissory notes at 4% interest,
Maturity 2006, with quarterly
payments of $7,007                   $    91,343	       $   105,461

Total term debt                      $ 2,227,594	       $   877,499
Less current portion of term debt    $   122,254	       $   356,669
Term debt, excluding current portion $ 2,105,340             $   520,830

6.	RELATED PARTY TRANSACTION

In February 2002, the Company sold common stock to an existing shareholder,
Mr. J. Ward McConnell, Jr., at estimated fair value.  Proceeds from the sale
of the stock were $800,000.  Mr. McConnell has agreed that without prior
approval of the Board of Directors, excluding himself and his son, he will
not acquire as much as fifty percent (50%) of the Company's common stock and
will not take the Company private.  Immediately after the transaction, Mr.
McConnell was elected as Chairman of the Board of Directors of the Company.
His son, Marc McConnell, is also a Board Member.

                                     Item 2

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATIONS

(a)  Liquidity and Capital Resources

The Company's main source of funds for the six months ended May 31, 2003 came
by securing long-term financing (see footnote 5 of the notes to the condensed
financial statements) and from receiving advance payments from customers on
sugar beet equipment to be delivered in the third quarter.

These sources were offset by increases of the accounts receivable, other
receivables and inventories.  The increase in accounts receivable results
from the sales of sugar beet equipment and parts stock orders in May 2003.
Other receivables of $110,000 is monies held in reserve for a letter of credit
that expired May 31, 2003 and additional fees associated with the UPS Capital
payoff.  Current production of sugar beet harvesters, the biggest single piece
of equipment produced, and finished goods in stock, mainly grinder/mixers,
defoliators and graders, are the reason for inventories increase.
Other offsets include the reduction of accounts payable.

The net cash from financing activities of $1,003,446 combined with the
negative cash flow from operation of $99,021 had a net increase in cash of
$904,425 for the six months ended May 31, 2003.  The Company had no material
commitments for capital expenditures.

On July 14, 2003 Art's-Way announced that it entered into an agreement to
purchase OBECO Incorporated, a manufacturer of steel truck bodies located in
Cherokee, Iowa.  The agreement includes the purchase of real estate, all
inventory, intellectual materials, machinery, tooling, fixtures and the
company name.  The name of the Company will change to Cherokee Truck Bodies,
Incorporated, but the truck bodies will continue to be sold under the
recognized name OBECO.  The company will continue to be located in Cherokee,
Iowa.

The United States Bankruptcy Court has approved the sale and the anticipated
closing date for the acquisition is set for July 25, 2003.  It is anticipated
that this transaction will cost approximately $500,000.

This acquisition fits in with Art's-Way metal fabrication capability and
provides diversification to its agricultural implement product offerings.
We believe this action will facilitate growing the business and improving
shareholder value.

(b) Results of Operations

Fiscal year 2003 second quarter and year to date net sales were 8% and 1%,
respectively, higher than for the comparable periods one-year ago.  The sales
mix of Art's-Way products and OEM products shifted.  OEM sales increased and
Art's-Way brand sales decreased by 15% when comparing second quarter 2003 to
2002 and 11% for the year to date 2003 and 2002.

Gross profit, as a percent of sales, was 33% for the quarter ended May 31, 2003,
as compared to 28% for the same period in 2002.  Year to date through May 31,
2003, gross profit was 29% compared to 25% for the prior year.  The increase of
labor efficiency by 15 points and continued cost reduction programs has resulted
in this increase.

Operating expenses were lower than last year.  As a percent of sales, operating
expenses were 20% and 24% for the three months ended May 31, 2003 and 2002,
respectively.  Year to date ended May 31, 2003 and 2002, operating expenses were
20% and 22%, respectively.  Selling expenses increased by $21,502 for the
quarter and $28,799 year to date compared to the same periods of the previous
year.  The Company has increased exposure of Art's-Way products both regionally
and nationally through advertisement, direct mailing and trade shows.  General
and administrative expenses decreased $71,336 for the quarter and $127,534 year
to date compared to the same periods of the previous year.  The decrease is
primarily due to changing the health insurance plan offered to the employees.

Other expenses decreased by $25,245 for the quarter and $75,901 year to date
from the previous year.  Reduction in bank borrowings combined with lower
interest rates and reduced volume in our financed accounts receivable resulted
in this reduction.

The order backlog as of May 31, 2003 is $2,798,000, compared to $2,994,000 one
year ago.  These orders primarily will be delivered in the third quarter of the
current fiscal year.  The current year backlog includes $1,232,000 in orders
for beet equipment compared to $1,376,000 last year at this time. Potato
harvester is $329,000 and OEM backlog is $284,000 to be shipped in the third
quarter.

(c)	Critical Accounting Policies

The Company's critical accounting policies involving the more significant
judgments and assumptions used in the preparation of the financial statements
as of May 31, 2003 have remained unchanged from November 30, 2002. These
policies involve revenue recognition, inventory valuation and income taxes.
Disclosure of these critical accounting policies is incorporated by reference
under Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operation" in the Company's Annual report on Form 10-K for the year
ended November 30, 2002.

                                  Item 3

                   QUANTITATIVE AND QUALITATIVE DISCLOSURES
                              ABOUT MARKET RISKS

The Company does not have any additional market risk exposure other than what
was outlined in the November 30, 2002, 10-K filing.

                                 Item 4
                   DISCLOSURE CONTROLS AND PROCEDURES

Within 90 days of the filing date of this quarterly report, the Company's
Chief Executive Officer and Finance Manager have evaluated the effectiveness
of the design and operation of the Company's disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14(c) and 15(d)-14(c)) and, based on
their evaluation, have concluded that the disclosure controls and procedures
are effective.  There were no significant changes in the Company's internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation, including any corrective action
with regard to significant deficiencies and material weaknesses.

Part II - Other Information

ITEM 1. LITIGATION AND CONTINGENCIES

Various legal actions and claims are pending against the Company.  In the
opinion of management, adequate provisions have been made in the accompanying
financial statements for all pending legal actions and other claims.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On April 24, 2003, the Company held an annual meeting of shareholders for the
purpose of:  (1) to elect seven (7) directors to serve until the next annual
meeting of shareholders or until such time as their successors are elected
and qualified; 2) to consider and vote upon a proposal to approve the 2001
Director Stock Option Plan; and 3) to consider and vote upon a proposal to
ratify the appointment of McGladrey & Pullen, LLP as independent public
accountants of the Company for the year ending November 30, 2003.

The following information is submitted:

(a) An annual meeting was held on April 24, 2003.

(b) The following directors were all of the nominees and were elected by the
shareholders:
David R. Castle			George A. Cavanaugh, Jr.
James L. Koley			Douglas McClellan
J. Ward McConnell, Jr.		Marc H. McConnell
Thomas E. Buffamante

(c) The shareholders voted on a motion to approve the 2001 Directors Stock
Option Plan.
Total number of shares authorized to vote: 1,938,176
Total number of shares voted in favor: 1,625,872
Total number of shares voted against: 33,906
Total number of abstentions: 14,721

(d) The shareholders voted on a motion to ratify the selection of McGladrey
& Pullen, LLP as independent public accountants for the year ending November
30, 2003.
Total number of shares authorized to vote: 1,938,176
Total number of shares voted in favor: 1,668,350
Total number of shares voted against: 5,849
Total number of abstentions: 300

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

10.7 Long-term financing agreements, mortgage note and guarantee for both
loans with West Bank
99.1	Certification of Financial Statements

(b) Reports on Form 8-K:
Long-term financing filed 5/2/03

                                SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

ART'S-WAY MANUFACTURING CO., INC.


Date:	April 14, 2003			By:	 /s/  John C. Breitung

						      John C. Breitung
					  President and Chief Executive Officer


Date:	April 14, 2003 			By:	/s/  Seth F. LaBore

			                             Seth F. LaBore
						     Finance Manager

	                       CERTIFICATIONS

I, John C. Breitung, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Art's-Way
Manufacturing Co., Inc.;

2.  Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5.  The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and

6.  The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

Date:    July 14, 2003
								/s/  John C. Breitung

						   President and Chief Executive Officer

OM504759.1

	                           CERTIFICATIONS

I, Seth F. LaBore, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Art's-Way
Manufacturing Co., Inc.;

2.  Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.  The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6.  The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date:    July 14, 2003
								/s/  Seth F. LaBore
                                                  Finance Manager
OM504760.1

EX-10

BUSINESS LOAN AGREEMENT
Principal - $2,500,000.00  Loan Date - 04/25/2003  Maturity 02/28/2004
Loan No. -  70290

References in the shaded area are for Lender's use only and do not limit
the applicability of this document to any particular loan or item.
Any item above containing "***" has been omitted due to text length
limitations.

Borrower: ART'S-WAY MANUFACTURING CO., INC.
(TIN: 42-0920725)
HWY 9 WEST, PO BOX 288
ARMSTRONG, IA 50514-0288

Lender:   WEST DES MOINES STATE BANK
MAIN BANK
1601 22ND STREET
WEST DES MOINES, IA 50266
(515) 222-2300

THIS BUSINESS LOAN AGREEMENT dated April 25, 2003, is made and executed
between ART'S-WAY MANUFACTURING CO., INC. ("Borrower") and WEST DES
MOINES STATE BANK ("Lender") on the following terms and conditions.
Borrower has received prior commercial loans from Lender or has applied
to Lender for a commercial loan or loans or other financial accommodations,
including those which may be described on any exhibit or schedule attached
to this Agreement ("Loan").  Borrower understands and agrees that:
(A) in granting, renewing, or extending any Loan, Lender is relying upon
Borrower's representations, warranties, and agreements as set forth in
this Agreement; (B) the granting, renewing, or extending of any Loan by
Lender at all times shall be subject to Lender's sole judgment and
discretion; and (C) all such Loans shall be and remain subject to the
terms and conditions of this Agreement.

TERM.  This Agreement shall be effective as of April 25, 2003, and
shall continue in full force and effect until such time as all of
Borrower's Loans in favor of Lender have been paid in full, including
principal, interest, costs, expenses, attorneys' fees, and other fees
and charges, or until such time as the parties may agree in writing
to terminate this Agreement.

CONDITIONS PRECEDENT TO EACH ADVANCE.  Lender's obligation to make the
initial Advance and each subsequent Advance under this Agreement shall
be subject to the fulfillment to Lender's satisfaction of all of the
conditions set forth in this Agreement and in the Related Documents.

Loan Documents.  Borrower shall provide to Lender the following
documents for the Loan: (1) the Note; (2) Security Agreements granting
to Lender security interests in the Collateral; (3) financing statements
and all other documents perfecting Lender's Security Interests;
(4) evidence of insurance as required below; (5) guaranties;
(6) together with all such Related Documents as Lender may require
for the Loan; all in form and substance satisfactory to Lender and
Lender's counsel.

Borrower's Authorization.  Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note
and the Related Documents.  In addition, Borrower shall have provided
such other resolutions, authorizations, documents and instruments as
Lender or its counsel, may require.

Payment of Fees and Expenses.  Borrower shall have paid to Lender
all fees, charges, and other expenses which are then due and payable
as specified in this Agreement or any Related Document.

Representations and Warranties.  The representations and warranties
set forth in this Agreement, in the Related Documents, and in any
document or certificate delivered to Lender under this Agreement
are true and correct.

No Event of Default.  There shall not exist at the time of any Advance
a condition which would constitute an Event of Default under this
Agreement or under any Related Document.

REPRESENTATIONS AND WARRANTIES.  Borrower represents and warrants
to Lender, as of the date of this Agreement, as of the date of each
disbursement of loan proceeds, as of the date of any renewal, extension
or modification of any Loan, and at all times any Indebtedness exists:
Organization.  Borrower is a corporation for profit which is, and at
all times shall be, duly organized, validly existing, and in good standing
under and by virtue of the laws of the State of Iowa.  Borrower is duly
authorized to transact business in all other states in which Borrower
is doing business, having obtained all necessary filings, governmental
licenses and approvals for each state in which Borrower is doing business.
Specifically, Borrower is, and at all times shall be, duly qualified as
a foreign corporation in all states in which the failure to so qualify
would have a material adverse effect on its business or financial condition.
Borrower has the full power and authority to own its properties and to
transact the business in which it is presently engaged or presently proposes
to engage.  Borrower maintains an office at HWY 9 WEST, PO BOX 288,
ARMSTRONG, IA 50514-0288.  Unless Borrower has designated otherwise in
writing, the principal office is the office at which Borrower keeps its
books and records including its records concerning the Collateral.
Borrower will notify Lender prior to any change in the location of
Borrower's state of organization or any change in Borrower's name.
Borrower shall do all things necessary to preserve and to keep in full
force and effect its existence, rights and privileges, and shall comply
with all regulations, rules, ordinances, statutes, orders and decrees of
any governmental or quasi-governmental authority or court applicable to
Borrower and Borrower's business activities.

Assumed Business Names.  Borrower has filed or recorded all documents
or filings required by law relating to all assumed business names used
by Borrower.  Excluding the name of Borrower, the following is a complete
list of all assumed business names under which Borrower does business:
None.

Authorization.  Borrower's execution, delivery, and performance of
this Agreement and all the Related Documents have been duly authorized
by all necessary action by Borrower and do not conflict with, result
in a violation of, or constitute a default under (1) any provision of
Borrower's articles of incorporation or organization, or bylaws, or
any agreement or other instrument binding upon Borrower or (2) any
law, governmental regulation, court decree, or order applicable to
Borrower or to Borrower's properties.

Financial Information.  Each of Borrower's financial statements
supplied to Lender truly and completely disclosed Borrower's financial
condition as of the date of the statement, and there has been no material
adverse change in Borrower's financial condition subsequent to the date
of the most recent financial statement supplied to Lender.  Borrower has
no material contingent obligations except as disclosed in such financial
statements.

Legal Effect.  This Agreement constitutes, and any instrument or agreement
Borrower is required to give under this Agreement when delivered will
against Borrower in accordance with their respective terms.

Properties.  Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender
and as accepted by Lender, and except for property tax liens for taxes
not presently due and payable, Borrower owns and has good title to all
of Borrower's properties free and clear of all Security Interests, and
has not executed any security documents or financing statements relating
to such properties.  All of Borrower's properties are titled in Borrower's
legal name, and Borrower has not used or filed a financing statement under
any other name for at least the last five (5) years.

Hazardous Substances.  Except as disclosed to and acknowledged by Lender
in writing, Borrower represents and warrants that: (1) During the period
of Borrower's ownership of Borrower's Collateral, there has been no use,
generation, manufacture, storage, treatment, disposal, release or
threatened release of any Hazardous Substance by any person on, under,
about or from any of the Collateral. (2) Borrower has no knowledge of,
or reason to believe that there has been (a) any breach or violation of
any Environmental Laws; (b) any use, generation, manufacture, storage,
treatment, disposal, release or threatened release of any Hazardous
Substance on, under, about or from the Collateral by any prior owners
or occupants of any of the Collateral; or (c) any actual or threatened
litigation or claims of any kind by any person relating to such matters.
(3) Neither Borrower nor any tenant, contractor, agent or other authorized
user of any of the Collateral shall use, generate, manufacture, store,
treat, dispose of or release any Hazardous Substance on, under, about
or from any of the Collateral; and any such activity shall be conducted
in compliance with all applicable federal, state, and local laws,
regulations, and ordinances, including without limitation all
Environmental Laws.  Borrower authorizes Lender and its agents to
enter upon the Collateral to make such inspections and tests as Lender
may deem appropriate to determine compliance of the Collateral with
this section of the Agreement.  Any inspections or tests made by Lender
shall be at Borrower's expense and for Lender's purposes only and shall
not be construed to create any responsibility or liability on the part
of Lender to Borrower or to any other person.  The representations and
warranties contained herein are based on Borrower's due diligence in
investigating the Collateral for hazardous waste and Hazardous
Substances.  Borrower hereby (1) releases and waives any future
claims against Lender for indemnity or contribution in the event
Borrower becomes liable for cleanup or other costs under any such laws,
and (2) agrees to indemnify and hold harmless Lender against any and
all claims, losses, liabilities, damages, penalties, and expenses
which Lender may directly or indirectly sustain or suffer resulting
from a breach of this section of the Agreement or as a consequence
of any use, generation, manufacture, storage, disposal, release or
threatened release of a hazardous waste or substance on the Collateral.
The provisions of this section of the Agreement, including the obligation
to indemnify, shall survive the payment of the Indebtedness and the
termination, expiration or satisfaction of this Agreement and shall
not be affected by Lender's acquisition of any interest in any of the
Collateral, whether by foreclosure or otherwise.

Litigation and Claims.  No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which
may materially adversely affect Borrower's financial condition or
properties, other than litigation, claims, or other events, if any,
that have been disclosed to and acknowledged by Lender in writing.

Taxes.  To the best of Borrower's knowledge, all of Borrower's tax returns
and reports that are or were required to be filed, have been filed,
and all taxes, assessments and other governmental charges have been
paid in full, except those presently being or to be contested by Borrower
in good faith in the ordinary course of business and for which adequate
reserves have been provided.

Lien Priority.  Unless otherwise previously disclosed to Lender in
writing, Borrower has not entered into or granted any Security Agreements,
or permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or indirectly securing repayment
of Borrower's Loan and Note, that would be prior or that may in any way
be superior to Lender's Security Interests and rights in and to such
Collateral.

Binding Effect.  This Agreement, the Note, all Security Agreements (if any),
and all Related Documents are binding upon the signers thereof, as well as
upon their successors, representatives and assigns, and are legally
enforceable in accordance with their respective terms.

AFFIRMATIVE COVENANTS.  Borrower covenants and agrees with Lender that,
so long as this Agreement remains in effect, Borrower will:

Notices of Claims and Litigation.  Promptly inform Lender in writing of
(1) all material adverse changes in Borrower's financial condition, and
(2) all existing and all threatened litigation, claims, investigations,
administrative proceedings or similar actions affecting Borrower or any
Guarantor which could materially affect the financial condition of Borrower
or the financial condition of any Guarantor.

Financial Records.  Maintain its books and records in accordance with
GAAP, applied on a consistent basis, and permit Lender to examine and
audit Borrower's books and records at all reasonable times.

Financial Statements.  Furnish Lender with the following:

Annual Statements.  As soon as available, but in no event later than
one-hundred-twenty (120) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended,
audited by a certified public accountant satisfactory to Lender.
Interim Statements.  As soon as available, but in no event later than
thirty (30) days after the end of each month, Borrower's balance sheet
and profit and loss statement for the period ended, prepared by Borrower.

Additional Requirements.  GUARANTOR FINANCIAL STATEMENTS DUE ANNUALLY
WITHIN 120 DAYS OF BORROWERS YEAR END.

All financial reports required to be provided under this Agreement shall
be prepared in accordance with GAAP, applied on a consistent basis, and
certified by Borrower as being true and correct.

Additional Information.  Furnish such additional information and
statements, as Lender may request from time to time.

Financial Covenants and Ratios.  Comply with the following covenants
and ratios:

Working Capital Requirements.  Borrower shall comply with the following
working capital ratio requirements:

Current Ratio.  Maintain a Current Ratio in excess of 1.000 to 1.000.
The term "Current Ratio" means Borrower's total Current Assets divided
by Borrower's total Current Liabilities.  This liquidity ratio will be
evaluated as of year-end.

Minimum Income and Cash flow Requirements.  Borrower shall comply with
the following cash flow ratio requirements:

Cash Flow / Current Maturity (LTD) Ratio.
Maintain a ratio of Cash Flow/Current Maturity (LTD) in excess of
1.500 to 1.000. The ratio "Cash Flow/Current Maturity (LTD)" means
Borrower's Net Profits plus Depreciation, Depletion and Amortization
divided by Borrower's Current Portion of Long Term Indebtedness.

Tangible Net Worth Requirements.  Maintain a minimum Tangible Net Worth
of not less than: $3,000,000.00. In addition, Borrower shall comply with
the following net worth ratio requirements:

Debt / Worth Ratio.  Maintain a ratio of Debt /Worth not in
excess of 3.000 to 1.000. The ratio "Debt / Worth" means
Borrower's Total Liabilities divided by Borrower's Tangible Net Worth.
This leverage ratio will be evaluated as of year-end.

Except as provided above, all computations made to determine compliance
with the requirements contained in this paragraph shall be made in
accordance with generally accepted accounting principles, applied on
a consistent basis, and certified by Borrower as being true and correct.

Insurance.  Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect
to Borrower's properties and operations, in form, amounts, coverages
and with insurance companies acceptable to Lender.  Borrower, upon
request of Lender, will deliver to Lender from time to time the policies
or certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without
at least thirty (30) days prior written notice to Lender.  Each insurance
policy also shall include an endorsement providing that coverage in
favor of Lender will not be impaired in any way by any act, omission
or default of Borrower or any other person.  In connection with all
policies covering assets in which Lender holds or is offered a security
interest for the Loans, Borrower will provide Lender with such lender's
loss payable or other endorsements as Lender may require.

Insurance Reports.  Furnish to Lender, upon request of Lender,
reports on each existing insurance policy showing such information as
Lender may reasonably request, including without limitation the following:
(1) the name of the insurer; (2) the risks insured; (3) the amount of the
policy; (4) the properties insured; (5) the then current property values
on the basis of which insurance has been obtained, and the manner of
determining those values; and (6) the expiration date of the policy.
In addition, upon request of Lender (however not more often than annually),
Borrower will have an independent appraiser satisfactory to Lender determine,
as applicable, the actual cash value or replacement cost of any Collateral.
The cost of such appraisal shall be paid by Borrower.

Guaranties.  Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans in favor of Lender, executed by the guarantor named
below, on Lender's forms, and in the amount and under the conditions set
forth in those guaranties.

      Name of Guarantor                         Amount
      J WARD MCCONNELL JR                    $2,500,000.00

Other Agreements.  Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.

Loan Proceeds.  Use all Loan proceeds solely for the following specific
purposes; WORKING CAPITAL.

Taxes, Charges and Liens.  Pay and discharge when due all of its
indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every
kind and nature, imposed upon Borrower or its properties, income,
or profits, prior to the date on which penalties would attach, and
all lawful claims that, if unpaid, might become a lien or charge upon
any of Borrower's properties, income, or profits.

Performance.  Perform and comply, in a timely manner, with all terms,
conditions, and provisions set forth in this Agreement, in the Related
Documents, and in all other instruments and agreements between Borrower
and Lender.  Borrower shall notify Lender immediately in writing of any
default in connection with any agreement.

Operations.  Maintain executive and management personnel with
substantially the same qualifications and experience as the present
executive and management personnel; provide written notice to Lender
of any change in executive and management personnel; conduct its
business affairs in a reasonable and prudent manner.

Environmental Studies.  Promptly conduct and complete, at Borrower's
expense, all such investigations, studies, samplings and testings
as may be requested by Lender or any governmental authority relative
to any substance, or any waste or by-product of any substance defined
as toxic or a hazardous substance under applicable federal, state,
or local law, rule, regulation, order or directive, at or affecting
any property or any facility owned, leased or used by Borrower.

Compliance with Governmental Requirements.  Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the conduct of Borrower's
properties, businesses and operations, and to the use or occupancy
of the Collateral, including without limitation, the Americans With
Disabilities Act.  Borrower may contest in good faith any such law,
ordinance, or regulation and withhold compliance during any proceeding,
including appropriate appeals, so long as Borrower has notified Lender
in writing prior to doing so and so long as, in Lender's sole opinion,
Lender's interests in the Collateral are not jeopardized.  Lender may
require Borrower to post adequate security or a surety bond, reasonably
satisfactory to Lender, to protect Lender's interest.

Inspection.  Permit employees or agents of Lender at any reasonable
time to inspect any and all Collateral for the Loan or Loans and
Borrower's other properties and to examine or audit Borrower's books,
accounts, and records and to make copies and memoranda of Borrower's
books, accounts, and records.  If Borrower now or at any time hereafter
maintains any records (including without limitation computer generated
records and computer software programs for the generation of such records)
in the possession of a third party, Borrower, upon request of Lender,
shall notify such party to permit Lender free access to such records
at all reasonable times and to provide Lender with copies of any records
it may request, all at Borrower's expense.

Compliance Certificates.  Unless waived in writing by Lender, provide
Lender within thirty (30) days after the end of each month, with a
certificate executed by Borrower's chief financial officer, or other
officer or person acceptable to Lender, certifying that the
representations and warranties set forth in this Agreement are true
and correct as of the date of the certificate and further certifying
that, as of the date of the certificate, no Event of Default exists
under this Agreement.

Environmental compliance and Reports.  Borrower shall comply in all
respects with any and all Environmental Laws; not cause or permit to
exist, as a result of an intentional or unintentional action or omission
on Borrower's part or on the part of any third party, on property owned
and/or occupied by Borrower, any environmental activity where damage may
result to the environment, unless such environmental activity is pursuant
to and in compliance with the conditions of a permit issued by the
appropriate federal, state or local governmental authorities;
shall furnish to Lender promptly and in any event within thirty (30)
days after receipt thereof a copy of any notice, summons, lien,
citation, directive, letter or other communication from any governmental
agency or instrumentality concerning any intentional or unintentional
action or omission on Borrower's part in connection with any
environmental activity whether or not there is damage to the environment
and/or other natural resources.

Additional Assurances.  Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, assignments, financing
statements, instruments, documents and other agreements as Lender or its
attorneys may reasonably request to evidence and secure the Loans and to
perfect all Security Interests.

LENDER'S EXPENDITURES.  If any action or proceeding is commenced that
would materially affect Lender's interest in the Collateral or if Borrower
fails to comply with any provision of this Agreement or any Related
Documents, including but not limited to Borrower's failure to discharge
or pay when due any amounts Borrower is required to discharge or pay under
this Agreement or any Related Documents, Lender on Borrower's behalf may
(but shall not be obligated to) take any action that Lender deems
appropriate, including but not limited to discharging or paying all taxes,
liens, security interests, encumbrances and other claims, at any time
levied or placed on any Collateral and paying all costs for insuring,
maintaining and preserving any Collateral.  All such expenditures incurred
or paid by Lender for such purposes will then bear interest at the rate
charged under the Note from the date incurred or paid by Lender to the
date of repayment by Borrower.  All such expenses will become a part of
the Indebtedness and, at Lender's option, will (A) be payable on demand;
(B) be added to the balance of the Note and be apportioned among and be
payable with any installment payments to become due during either
(1) the term of any applicable insurance policy; or (2) the remaining
term of the Note; or(C) be treated as a balloon payment which will be
due and payable at the Note's maturity.

NEGATIVE COVENANTS.  Borrower covenants and agrees with Lender that
while this Agreement is in effect, Borrower shall not, without the
prior written consent of Lender:

Capital Expenditures. Make or contract to make capital expenditures,
including leasehold improvements, in any fiscal year in excess of
$250,000.00 or incur liability for rentals of property (including
both real and personal property) in an amount which, together with
capital shall in any fiscal year exceed such sum.

Indebtedness and Liens. (1) Except for trade debt incurred in the
normal course of business and indebtedness to Lender
contemplated by this create, incur or assume indebtedness for
borrowed money, including capital leases, (2) sell, transfer,
mortgage, assign, pledge, lease, grant a security interest in,
or encumber any of Borrower's assets (except as allowed as
Permitted Liens), or (3) sell with recourse any of Borrower's
accounts, except to Lender.

Continuity of Operations. (1) Engage in any business activities
substantially different than those in which Borrower is presently
engaged, (2) cease operations, liquidate, merge, transfer, acquire
or consolidate with any other entity, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business,
or (3) pay any dividends on Borrower's stock (other than dividends
payable in its stock), provided, however that notwithstanding the
foregoing, but only so long as no Event of Default has occurred
and is continuing or would result from the payment of dividends,
if Borrower is a "Subchapter S Corporation" (as defined in the
Internal Revenue Code of 1986, as amended), Borrower may pay cash
dividends on its stock to its shareholders from time to time in
amounts necessary to enable the shareholders to pay income taxes
and make estimated income tax payments to satisfy their
liabilities under federal and state law which arise solely from
their status as Shareholders of a Subchapter S Corporation because
of their ownership of shares of Borrower's stock, or purchase or
retire any of Borrower's outstanding shares or alter or amend
Borrower's capital structure.

Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money
or assets, (2) purchase, create or acquire any interest in any other
enterprise or entity, or (3) incur any obligation as surety or guarantor
other than in the ordinary course of business.

CESSATION OF ADVANCES.  If Lender has made any commitment to make any Loan
to Borrower, whether under this Agreement or under any other agreement,
Lender shall have no obligation to make Loan Advances or to disburse Loan
proceeds if: (A) Borrower or any Guarantor is in default under the terms
of this Agreement or any of the Related Documents or any other agreement
that Borrower or any Guarantor has with Lender; (B) Borrower or any
Guarantor dies, becomes incompetent or becomes insolvent, files a petition
in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there
occurs a material adverse change in Borrower's financial condition, in the
financial condition of any Guarantor, or in the value of any Collateral
securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts
to limit, modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender; or (E) Lender in good faith deems itself
insecure, even though no Event of Default shall have occurred.

RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves
a right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account).  This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust
accounts for which setoff would be prohibited by law.  Borrower authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all
sums owing on the Indebtedness against any and all such accounts, and, at
Lender's option, to administratively freeze all such accounts to allow
Lender to protect Lender's charge and setoff rights provided in this
paragraph.

DEFAULT.  Each of the following shall constitute an Event of Default
under this Agreement:
Payment Default. Borrower fails to make any payment when due under the Loan.

Other Defaults. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Agreement or in any
of the Related Documents or to comply with or to perform any term,
obligation, covenant or condition contained in any other agreement
between Lender and Borrower.

Default in Favor of Third Parties.  Borrower or any Grantor defaults under
any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or
person that may materially affect any of Borrower's or any Grantor's
property or Borrower's or any Grantor's ability to repay the Loans
or perform their respective obligations under this Agreement or any of
the Related Documents.

False Statements. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this
Agreement or the Related Documents is false or misleading in any
material respect, either now or at the time made or furnished or
becomes false or misleading at any time thereafter.

Insolvency. The dissolution or termination of Borrower's existence
as a going business, the insolvency of Borrower, the appointment
of a receiver for any part of Borrower's property, any assignment
for the benefit of creditors, any type of creditor workout, or the
commencement of any proceeding under any bankruptcy or insolvency
laws by or against Borrower.

Defective Collateralization.  This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
document to create a valid and perfected security interest or lien) at any
time and for any reason.

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency
against any collateral securing the Loan.  This includes a garnishment
of any of Borrower's accounts, including deposit accounts, with Lender.
However, this Event of Default shall not apply if there is a good faith
dispute by Borrower as to the validity or reasonableness of the claim
which is the basis of the creditor or forfeiture proceeding and if Borrower
gives Lender written notice of the creditor or forfeiture proceeding and
deposits with Lender monies or a surety bond for the creditor or forfeiture
proceeding, in an amount determined by Lender, in its sole discretion,
as being an adequate reserve or bond for the dispute.

Events Affecting Guarantor.  Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
Guaranty of the Indebtedness.  In the event of a death, Lender, at its
option, may, but shall not be required to, permit the Guarantor's estate to
assume unconditionally the obligations arising under the guaranty in a
manner satisfactory to Lender, and, in doing so, cure any Event of Default.

Change in Ownership. Any change in ownership of twenty-five percent (25%)
or more of the common stock of Borrower.

Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of
the Loan is impaired.

Insecurity. Lender in good faith believes itself insecure.
Right to Cure. If any default, other than a default on Indebtedness,
is curable and if Borrower or Grantor, as the case may be, has not
been given a notice of a similar default within the preceding twelve
(12) months, it may be cured (and no Event of Default will have occurred)
if Borrower or Grantor, as the case may be, after receiving written notice
from Lender demanding cure of such default: (1) cure the default within
twenty (20) days; or (2) if the cure requires more than twenty (20) days,
immediately initiate steps which Lender deems in Lender's sole discretion
to be sufficient to cure the default and thereafter continue and complete
all reasonable and necessary steps sufficient to produce compliance as
soon as reasonably practical.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur,
except where otherwise provided in this Agreement or the Related
Documents, all commitments and obligations of Lender under this
Agreement or the Related Documents or any other agreement immediately
will terminate (including any obligation to make further Loan Advances
or disbursements), and, at Lender's option, all Indebtedness immediately
will become due and payable, all without notice of any kind to Borrower,
except that in the case of an Event of Default of the type described in
the "Insolvency" subsection above, such acceleration shall be automatic
and not optional.  In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity,
or otherwise.  Except as may be prohibited by applicable law, all of
Lender's rights and remedies shall be cumulative and may be exercised
singularly or concurrently.  Election by Lender to pursue any remedy
shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Borrower or
of any Grantor shall not affect Lender's right to declare a default and
to exercise its rights and remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
of this Agreement:

Amendments. This Agreement, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Agreement.  No alteration of or amendment to this Agreement
shall be effective unless given in writing and signed by the party or parties
sought to be charged or bound by the alteration or amendment.

Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of Lender's
costs and expenses, including Lender's attorneys' fees and Lender's legal
expenses, incurred in connection with the enforcement of this Agreement.
Lender may hire or pay someone else to help enforce this Agreement, and
Borrower shall pay the costs and expenses of such enforcement.  Costs
and expenses include Lender's attorneys' fees and legal expenses whether
or not there is a lawsuit, including attorneys' fees and legal expenses
for bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment
collection services.  Borrower also shall pay all court costs and such
additional fees as may be directed by the court.

Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.

Consent to Loan Participation. Borrower agrees and consents to Lender's sale
or transfer, whether now or later, of one or more participation interests
in the Loan to one or more purchasers, whether related or unrelated to
Lender.  Lender may provide, without any limitation whatsoever, to any one
or more purchasers, or potential purchasers, any information or knowledge
Lender may have about Borrower or about any other matter relating to the
Loan, and Borrower hereby waives any rights to privacy Borrower may have
with respect to such matters.  Borrower additionally waives any and all
notices of sale of participation interests, as well as all notices of any
repurchase of such participation interests.  Borrower also agrees that the
purchasers of any such participation interests will be considered as the
absolute owners of such interests in the Loan and will have all the rights
granted under the participation agreement or agreements governing the sale
of such participation interests.  Borrower further waives all rights of
offset or counterclaim that it may have now or later against Lender or
against any purchaser of such a participation interest and unconditionally
agrees that either Lender or such purchaser may enforce Borrower's
obligation under the Loan irrespective of the failure or insolvency
of any holder of any interest in the Loan.  Borrower further agrees that
the purchaser of any such participation interests may enforce its interests
irrespective of any personal claims or defenses that Borrower may have
against Lender.

Governing Law. This Agreement will be governed by, construed and enforced
in accordance with federal law and the laws of the State of Iowa.  This
Agreement has been accepted by Lender in the State of Iowa.

Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender's request
to submit to the jurisdiction of the courts of POLK County, State of Iowa.

No Waiver by Lender. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed by
Lender.  No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right.  A waiver by
Lender of a provision of this Agreement shall not prejudice or constitute
a waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement.  No prior waiver by
Lender, nor any course of dealing between Lender and Borrower, or between
Lender and any Grantor, shall constitute a waiver of any of Lender's rights
or of any of Borrower's or any Grantor's obligations as to any future
transactions.  Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall
not constitute continuing consent to subsequent instances where such
consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.

Notices. Any notice required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered, when
actually received by telefacsimile (unless otherwise required by law),
when deposited with a nationally recognized overnight courier, or, if
mailed, when deposited in the United States mail, as first class, certified
or registered mail postage prepaid, directed to the addresses shown near
the beginning of this Agreement.  Any party may change its address for
notices under this Agreement by giving formal written notice to the other
parties, specifying that the purpose of the notice is to change the party's
address.  For notice purposes, Borrower agrees to keep Lender informed at
all times of Borrower's current address.  Unless otherwise provided or
required by law, if there is more than one Borrower, any notice given by
Lender to any Borrower is deemed to be notice given to all Borrowers.

Severability.  If a court of competent jurisdiction finds any provision
of this Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision illegal,
invalid, or unenforceable as to any other circumstance.  If feasible,
the offending provision shall be considered modified so that it becomes
legal, valid and enforceable.  If the offending provision cannot be so
modified, it shall be considered deleted from this Agreement.  Unless
otherwise required by law, the illegality, invalidity, or
unenforceability of any provision of this Agreement shall not affect
the legality, validity or enforceability of any other provision of this
Agreement.

Subsidiaries and Affiliates of Borrower.  To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower"
as used in this Agreement shall include all of Borrower's subsidiaries and
affiliates. Notwithstanding the foregoing however, under no circumstances
shall this Agreement be construed to require Lender to make any Loan or
other financial accommodation to any of Borrower's subsidiaries or
affiliates.

Successors and Assigns. All covenants and agreements contained by or
on behalf of Borrower shall bind Borrower's successors and assigns and
shall inure to the benefit of Lender and its successors and assigns.
Borrower shall not, however, have the right to assign Borrower's rights
under this Agreement or any interest therein, without the prior written
consent of Lender.

Survival of Representations and Warranties.  Borrower understands and
agrees that in extending Loan Advances, Lender is relying on all
representations, warranties, and covenants made by Borrower in this
Agreement or in any certificate or other instrument delivered by Borrower
to Lender under this Agreement or the Related Documents.  Borrower further
agrees that regardless of any investigation made by Lender, all such
representations, warranties and covenants will survive the extension of
Loan Advances and delivery to Lender of the Related Documents, shall be
continuing in nature, shall be deemed made and redated by Borrower at the
time each Loan Advance is made, and shall remain in full force and effect
until such time as Borrower's Indebtedness shall be paid in full, or until
this Agreement shall be terminated in the manner provided above, whichever
is the last to occur.

Time is of the Essence. Time is of the essence in the performance of this
Agreement.

DEFINITIONS. The following capitalized words and terms shall have the
following meanings when used in this Agreement.  Unless specifically stated
to the contrary, all references to dollar amounts shall mean amounts in
lawful money of the United States of America.  Words and terms used in the
singular shall include the plural, and the plural shall include the singular,
as the context may require.  Words and terms not otherwise defined in this
Agreement shall have the meanings attributed to such terms in the Uniform
Commercial Code.  Accounting words and terms not otherwise defined in this
Agreement shall have the meanings assigned to them in accordance with
generally accepted accounting principles as in effect on the date of this
Agreement:

Advance. The word "Advance" means a disbursement of Loan funds made, or
to be made, to Borrower or on Borrower's behalf on a line of credit or
multiple advance basis under the terms and conditions of this Agreement.

Agreement. The word "Agreement" means this Business Loan Agreement,
as this Business Loan Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached to this Business
Loan Agreement from time to time.

Borrower. The word "Borrower" means ART'S-WAY MANUFACTURING CO., INC.,
and all other persons and entities signing the Note in whatever capacity.

Collateral. The word "Collateral" means all property and assets granted
as collateral security for a Loan, whether real or personal property,
whether granted directly or indirectly, whether granted now or in the
future, and whether granted in the form of a security interest, mortgage,
collateral mortgage, deed of trust, assignment, pledge, crop pledge,
chaftel mortgage, collateral Chaftel mortgage, chaftel trust, factor's
lien, equipment trust, conditional sale, trust receipt, lien, charge,
lien or title retention contract, lease or consignment intended as a
security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.

Environmental Laws. The words "Environmental Laws" mean any and all
state, federal and local statutes, regulations and ordinances relating
to the protection of human health or the environment, including without
limitation the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986,
Pub.  L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act,
49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal
laws, rules, or regulations adopted pursuant thereto.

Event of Default.  The words "Event of Default" mean any of the events of
default set forth in this Agreement in the default section of this Agreement.

GAAP. The word "GAAP" means generally accepted accounting principles.

Grantor. The word "Grantor" means each and all of the persons or entities
granting a Security Interest in any Collateral for the Loan, including
without limitation all Borrowers granting such a Security Interest.

Guarantor.  The word "Guarantor" means any guarantor, surety, or
accommodation party of any or all of the Loan.

Guaranty.  The word "Guaranty" means the guaranty from Guarantor to Lender,
including without limitation a guaranty of all or part of the Note.

Hazardous Substances.  The words "Hazardous Substances" mean materials that,
because of their quantity, concentration or physical, chemical or infectious
characteristics, may cause or pose a present or potential hazard to human
health or the environment when improperly used, treated, stored, disposed
of, generated, manufactured, transported or otherwise handled.  The words
"Hazardous Substances" are used in their very broadest sense and include
without limitation any and all hazardous or toxic substances, materials
or waste as defined by or listed under the Environmental Laws.  The term
"Hazardous Substances" also includes, without limitation, petroleum and
petroleum by-products or any fraction thereof and asbestos.

Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
the Note or Related Documents, including all principal and interest together
with all other indebtedness and costs and expenses for which Borrower
is responsible under this Agreement or under any of the Related Documents.

Lender.  The word "Lender" means WEST DES MOINES STATE BANK, its successors
and assigns.

Loan.  The word "Loan" means any and all loans and financial accommodations
from Lender to Borrower whether now or hereafter existing, and however
evidenced, including without limitation those loans and financial
accommodations described herein or described on any exhibit or schedule
attached to this Agreement from time to time.

Note. The word "Note" means the Note executed by ART'S-WAY MANUFACTURING
CO., INC. in the principal amount of $2,500,000.00 dated April 25, 2003,
together with all renewals of, extensions of, modifications of,
refinancings of, consolidations of, and substitutions for the note or
credit agreement.

Permitted Liens. The words "Permitted Liens" mean (1) liens and security
interests securing Indebtedness owed by Borrower to Lender; (2) liens for
taxes, assessments, or similar charges either not yet due or being contested
in good faith; (3) liens of materialmen, mechanics, warehousemen, or
carriers, or other like liens arising in the ordinary course of business
and securing obligations which are not yet delinquent; (4) purchase money
liens or purchase money security interests upon or in any property acquired
or held by Borrower in the ordinary course of business to secure
indebtedness outstanding on the date of this Agreement or permitted to be
incurred under the paragraph of this Agreement titled "Indebtedness and
Liens"; (5) liens and security interests which, as of the date of this
Agreement, have been disclosed to and approved by the Lender in writing;
and (6) those liens and security interests which in the aggregate constitute
an immaterial and insignificant monetary amount with respect to the net
value of Borrower's assets.

Related Documents. The words "Related Documents" mean all promissory notes,
credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Loan.

Security Agreement.  The words "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements, understandings
or other agreements, whether created by law, contract, or otherwise,
evidencing, governing, representing, or creating a Security Interest.

Security Interest. The words "Security Interest" mean, without limitation,
any and all types of collateral security, present and future, whether in
the form of a lien, charge, encumbrance, mortgage, deed of trust, security
deed, assignment, pledge, crop pledge, chattel mortgage, collateral
chattel mortgage, chattel trust, factor's lien, equipment trust,
conditional sale, trust receipt, lien or title retention contract,
lease or consignment intended as a security device, or any other
security or lien interest whatsoever whether created by law, contract,
or otherwise.

Tangible Net Worth.  The words "Tangible Net Worth" mean Borrower's
total assets excluding all intangible assets (i.e., goodwill, trademarks,
patents, copyrights, organizational expenses, and similar intangible
items, but including leaseholds and leasehold improvements)less total debt.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS
LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN
AGREEMENT IS DATED APRIL 25, 2003.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS BUSINESS
LOAN AGREEMENT AND ALL OTHER DOCUMENTS RELATING TO THIS DEBT.

BORROWER:

ART'S-WAY MANUFACTURING CO., INC.

By:
JOHN C BREITUNG, PRESIDENT of ART'S-WAY
MANUFACTURING CO., INC.

LENDER:

WEST DES MOINES STATE BANK

By:
Authorized Signer

EX-10

Exhibit 10.7

LOAN AGREEMENT

THIS LOAN AGREEMENT, dated as of April 25, 2003, is between Art's-Way
Manufacturing Co.,Inc. and WEST DES MOFNES STATE BANK.

Article 1.   DEFINITIONS

Section 1.1 Defined Terms.  As used herein:

"Accounts", "Inventory", "Equipment", "General Intangibles",
"Chattel Paper",

"Documents", "Deposit Accounts", "Fixtures", "Goods", "Instruments",
"Investment Property", "Letter of Credit Rights", "Supporting Obligations"
and "Proceeds" shall have the meaning ascribed in the Security Agreement.

"Affiliate" means any Person that, directly or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control
with Borrower.

"Agreement" means this Loan Agreement, as amended from time to time.

"Bank" means West Des Moines State Bank, an Iowa banking corporation, its
successors and assigns.

"Banking Day" means a day on which the principal domestic office of the
Bank is open for the purpose of conducting substantially all of its business
activities.

"Borrower" means Art's-Way Manufacturing Co., Inc., a Delaware corporation.

"Change Date" The interest rate will be adjusted monthly

"Default" means any of the events specified in Section 7.1.

"Environmental Laws" means all provisions of laws, statutes, ordinances,
rules, regulations, permits, licenses, judgments, writs, injunctions,
decrees, orders, awards and standards promulgated by any Governmental
Authority concerning health, safety and protection of, or regulation
of the discharge or substances into, the environment.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time-to-time.

"ERISA Affiliate" means any trade or business, whether or not incorporated,
which together with Borrower would be treated as a single employer under
ERISA.

"Financial Statements" means the balance sheet of Borrower as of December
31, 2002, and the statement of income and surplus of Borrower for the
period then ending, and any accompanying statements, including, without
limitation, statement of cash flows, and notes to such financial
statements, and any other documents or data furnished to the Bank in
connection therewith.

"GAAP" means generally accepted accounting principles in the United
States of America from time to time as promulgated by the Financial
Standards Accounting Board and recognized and interpreted by the
American Institute of Certified Public Accountants.

"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to any government, including, without limiting the generality
of the foregoing, any agency, body, commission, court or department
thereof whether federal, state, local or foreign.

"Guarantors" means, collectively, J. Ward McConnell, Jr..

"Guaranty' means, as to each Guarantor, the Unlimited Continuing Guaranty
in substantially the form of Exhibit F hereto, duly executed by each
Guarantor in favor of the Bank to guarantee the Obligations, including
any amendment, modification, renewal, extension, substitution or
replacement thereof.

"Hazardous Substances" means asbestos, polychlorinated biphenyls and
petroleum products and any other hazardous or toxic materials, wastes
and substances which are defined, determined or identified as such in
any Environmental Laws (whether now existing or hereafter enacted or
promulgated).

"Indebtedness" means (a) all indebtedness or other obligations of any
Person for borrowed money or for the deferred purchase price of property
or services, (b) all indebtedness or other obligations of any other Person
for borrowed money or for the deferred purchase price of property or
services, the payment or collection of which the subject Person has
guaranteed (except by reason of endorsement for collection in the ordinary
course of business) or in respect of which the subject Person is liable,
contingently or otherwise, including, without limitation, liability by way
of agreement to purchase, to provide funds for payment, to supply funds to
or otherwise to invest in such other Person, or otherwise to assure a
creditor against loss, and (c) all indebtedness or other obligations of any
other Person for borrowed money or for the deferred purchase price of
property or services secured by (or for which the holder of such indebtedness
has an existing right, contingent or otherwise, to be secured by) any
mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance upon or in property (including, without limitation, Accounts)
owned by the subject Person, whether or not the subject Person has assumed
or become liable for the payment of such indebtedness or obligations.

"Indemnity Agreement" means the Environmental Certificate and Indenmity in
substantially the form of Exhibit D hereto, duly executed by Borrower to the
Bank to secure the Obligations, including any amendments and modifications
thereto.

"Loan" means the mortgage loan in the principal amount of Two Million
Dollars ($2,000,000) governed by this Agreement, including any renewal or
extension hereof.

"Loan Documents" means this Agreement, the Note, the Mortgage, the Lease
Assignment, the Security Agreement, the Indemnity Agreement, any UCC
financing statements and all other documents executed and delivered by
Borrower to govern, evidence or secure the Loan.

"Loss" shall have the meaning ascribed in Section 8.9 hereof.

"Maturity Date" means the earlier to occur of (a) April 25, 2023, or (b)
the date on which the repayment of the Obligations is accelerated pursuant
to the terms of this Agreement, the Note and the other Loan Documents.

"Mortgage" means the Mortgage and Security Agreement duly executed by
Borrower in favor of the Bank, dated April 25, 2003 and recorded April 29,
2003 in the Office of the Recorder of Emmet County, Iowa, as Instrument No.
00983 a copy of which is attached hereto as Exhibit B-1, as amended by
a certain Mortgage and Security Agreement in substantially the form of
Exhibit B-2 hereto, between Borrower and the Bank to secure the
Obligations, includin2 anv further amendments and modifications thereof.

"Note" means the Mortgage Note in substantially the form of Exhibit A
hereto, duly executed by Borrower made payable to the order of the Bank
to evidence the Loan, including any amendment, modification, renewal,
extension or replacement thereof.

"Obligations" means all unpaid principal and accrued and unpaid interest
under the Note, all accrued and unpaid fees hereunder and all other
obligations and liabilities of Borrower to the Bank of every kind and
description, direct or indirect, now or hereafter arising, absolute or
contingent, whether or not arising in connection with the Loan or
otherwise, whether or not arising under the Loan Documents and whether or
not contemplated by Borrower or the Bank as of the date hereof,
including, without limitation, all reasonable costs of collection and
enforcement of any and all thereof, including reasonable attorneys' fees.

"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to ERISA, or any successor entity.

"Permitted Encumbrances" means (a) liens for taxes or assessments which
are not yet due, liens for taxes or assessments or liens of judgments
which are being contested, appealed or reviewed in good faith by
appropriate proceedings which prevent foreclosure of any such lien or levy
of execution thereunder and against which liens, if any, adequate insurance
or reserves have been provided; (b) pledges or deposits to secure payment
of workers' compensation obligations and deposits or indemnities to secure
public or statutory obligations or for similar purposes; (c) liens and
other security interests in favor of the Bank; and (d) those further
encumbrances (if any) shown on Schedule I (a codv of West Des Moines.
State Bank Mort2age of $2,500,000) attached hereto.

"Person" means and includes an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated association and
a Governmental Authority.

"Prime Rate" means the rate of interest from time to time published
in the "Money Rates" section of The Wall Street Journal as the "Prime
Rate" for corporate loans at large U.S. money center commercial banks
(or a comparable rate selected by the Bank in writing and furnished to
Borrower if such published rate is not available).

"Qualified Investments" means (a) short term obligations of, or fully
guaranteed by, the United States of America, (b) commercial paper rated
A-1 or better by Standard & Poor's Corporation or P-1 or better by
Moody's Investors Service, Inc., (c) demand deposit accounts maintained
in the ordinary course of business, and (d) certificates of deposit
issued by commercial banks having capital and surplus in excess of
One Hundred Million Dollars ($100,000,000).

"Real Estate" means the real estate and improvements located at 5556
Hwy 9 W., Armstrong, Iowa 50514, as more particularly described in
Exhibit A to the Mortgage.

"Security Agreement" means the Security Agreement in substantially the
form of Exhibit E hereto, duly executed by Borrower in favor of the Bank
to secure the Obligations, including any amendments or modifications
thereof.

"Unfunded Capital Expenditures" means expenditures for fixed asset
acquisition not funded by long term debt or Capital Leases, as shown on
the balance sheet furnished to the Bank from time to time pursuant to
Section 5.2.1 hereof.

"Unmatured Default" means any event which with notice, or lapse of time,
or both, would constitute a Default.

Section 1.2 Other Definitions; Rules of Construction.  Terms defined in
the introductory paragraph of this Agreement and used herein shall have
the respective meanings ascribed in such introductory paragraph.  The
foregoing definitions shall be equally applicable to both the single and
plural forms of the defined terms.  Use of the terms "herein", "hereof',
and "hereunder" shall be deemed referenced to this Agreement in its
entirety and not to the Section clause in which such term appears.

Section 1.3 Accounting Terms.  All accounting terms not specifically
defined herein shall be construed in accordance with GAAP except the
accounting of real and personal property taxes, which shall be
construed on a tax basis consistent with those applied in the
preparation of the Financial Statements.

Article 2.      LOAN

Section 2.1 Loan.  Subject to the terms and conditions of this Agreement,
the Bank shall make the Loan to Borrower in the principal amount of Two
Million Dollars ($2,000,000).  The Loan shall be evidenced by the Note.

Section 2.2 Interest.

2.2.1. Loan.  Prior to the Maturity Date or Default, as of each Change
Date, the outstanding principal balance of the Loan from time to time shall
bear interest at a rate per annum (which rate shall remain in effect until
the next Change Date or the Maturity Date, whichever first occurs) equal to
the Prime Rate+ 1.50%.

2.2.2. General.  Interest shall be due and payable for the exact number
of days principal is outstanding and shall be calculated on the basis of a
three hundred sixty five (365) day year.  Any change in the interest rates
occasioned by a change in the Prime Rate shall be effective on each Change
Date.  After the Maturity Date, or while and so long as there shall exist
any uncured Default under the Loan, the Loan shall bear interest at a per
annum rate equal to Three Percent (3%) above the otherwise applicable rate.

2.2.3. Maximum Interest.  In no event whatsoever shall the aggregate
of all amounts deemed interest hereunder or under the Note and charged or
collected pursuant to the terms of this Agreement or pursuant to the Note
exceed the highest rate permissible under any law which a court of
competent jurisdiction shall, in a final determination, deem applicable
hereto.  In the event that such a court determines that the Bank has
charged or received interest hereunder in excess of the highest
applicable rate, the rate in effect hereunder shall automatically be
reduced to the maximum rate permitted by applicable law, and the Bank
shall promptly refund to Borrower any interest received by
the Bank in excess of the maximum lawful rate or, if so requested by
Borrower, shall apply such excess to the principal balance of the
Obligations.  It is the intent hereof that Borrower not pay or contract
to pay, and that the Bank not receive or contract to receive, directly
or indirectly in any manner whatsoever, interest in excess of that
which may be paid by Borrower under applicable law.

Section 2.3 Payments of Principal and Interest.

2.3.1. Loan.  On or before May 1, 2003, Borrower shall pay to Bank an
amount equal to the interest which would accrue on this Note during the
period which begins on the date hereof and ends on April 30, 2003.
Borrower shall make equal monthly installment payments of principal and
interest which shall be computed based upon a two hundred forty (240)
month amortization schedule (referred herein collectively as the
"Installments", and individually as the "Installment"), with such
Installments to commence and be due and payable on June 1, 2003, and
to be due and payable thereafter on the first day of each successive
calendar month until the Maturity Date, at which time the entire
remaining principal balance of the Loan and all accrued, unpaid
interest shall be due and payable in full.  On each Change Date,
the amount of the Installments shall be recomputed based on the
time remaining on the above amortization schedule and any fluctuation
in the Prime Rate.

2.3.2.  Method of Payment.  All payments of principal and interest
hereunder shall be made in immediately available funds to the Bank at the
Bank's address set forth on the signature page hereof or at any other place
specified in writing by the Bank to Borrower, by 1:00 p.m. (Iowa time) on
the date when due.  The Bank is hereby authorized to charge the account
of Borrower for each payment of principal and interest as it becomes due.

2.3.3.  Banking Day.  If any installment of principal or interest provided
herein becomes due and payable on a date other than a Banking Day, the
maturity of the installment of principal or interest shall be extended to
the next succeeding Banking Day, and interest shall be payable during such
extension of maturity.

Section 2.4 Prepayment.  The first three years of the Loan requires the
following prepayment penalty if the principal balance of the Loan is paid
in advance of the scheduled amortization of Year I = 5%  of the prepaid
principal balance, Year 2=3% of the prepaid principal balance and
Year 3 = 1% of the prepaid principal balance.  Borrower may prepay the
principal balance of the Loan, in whole or in part, at any time, and
from time to time, in any multiple after year three commences.  After
year three the amounts prepaid may not be reborrowed and partial
prepayments shall be credited to installments of principal in the
inverse order of their maturities.

Section 2.5 Use of Proceeds.  The proceeds of the Loan shall be used to
repay the certain debt on the business and the Real Estate.

Article 3. SECURITYAND GUARANTY

Section 3.1 Security. The obligations shall be secured by:
(a)) the Mortgage constituting a first mortgage lien upon the Real
Estate, subject only to Permitted Encumbrances;

(b) the Lease Assignment constituting a primary collateral assignment
of rents and leases relative to the Real Estate, subject only to
Permitted Encumbrances;

(c) the Indemnity Agreement constituting an indemnity in favor of the
Bank against any liability related to environmental matters

(d) The Security Agreement constituting a second priority security
interest junior and inferior to the security interest of West Des Moines
State Bank in all Accounts, Inventory, Equipment, General Intangibles,
Chattel Paper, Deposit Accounts, Documents, Fixtures, Goods, Instruments,
Investment Property, Letter of Credit Rights, Supporting Obligations,
and all other personal property of Borrower and all Proceeds thereof,
all subject only to Permitted Encumbrances; and

(e) such other security interests as may be described in the Loan
Documents in respect of the Obligations.

Section 3.2 Guaranty.  The Obligations shall be jointly and severally,
personally and unconditionally guaranteed by each of the Guarantors
pursuant to their respective Guaranties.

Article 4.  REPRESENTATIONS AND WARRANTIES

Borrower represents, covenants and warrants to the Bank as follows:

Section 4.1 Due Corporation.  Borrower is a corporation duly
incorporated and validly existing under and by virtue of the laws of
the State of Delaware.

Section 4.2 Due Qualification.  Borrower is qualified, in good
standing and authorized to do business as a corporation in such other
states wherein non-qualification would have a material adverse effect
on Borrower or its operations.

Section 4.3 Power.  Borrower possesses the requisite power to enter
into the Loan Documents, to borrow there under, to execute and deliver
the Loan Documents and to perform its obligations there under.

Section 4.4 Authority.  Borrower has taken the necessary company action
to authorize the execution and delivery of the Loan Documents and the
borrowings there under and the granting of the security interests
therein, and none of the provisions of the Loan Documents violates,
breaches, contravenes, conflicts with, or causes a default under any
provision of the articles of organization or operating agreement of
Borrower or any provision of any existing note, bond, mortgage,
debenture, indenture, trust, license, lease, instrument, decree,
order, judgment, or agreement to which Borrower is a party or by
which it or its assets may be bound or affected.

Section 4.5 Financial Statements.  The Financial Statements were
prepared in accordance with GAAP, unless specifically otherwise noted
thereon, and fairly present the financial condition of Borrower as of
the date thereof and the results of its operations for the period
then ended.

Section 4.6 No Material Adverse Change.  The information submitted by
Borrower to the Bank discloses all known or anticipated
liabilities, direct or contingent, of Borrower as of the dates
thereof, and, to the best knowledge of Borrower, since such dates,
there has been no material adverse change in Borrower's financial
condition.

Section 4.7 Subsidiaries.  Borrower has no subsidiary or other ownership
interest in any Person.

Section 4.8 Binding Obligations.  Each of the Loan Documents, when issued
for value, will constitute a legal, valid and binding obligation of
Borrower enforceable against Borrower in accordance with its terms.

Section 4.9 Marketable Title.  Borrower has good title to all of its
properties and assets shown on the Financial Statements or acquired by
Borrower since the date of such Financial Statements, except such
properties or assets as have been disposed of since the date of such
Financial Statements in the ordinary course of business.  Except for
Permitted Encumbrances, none of the assets of Borrower is subject to any
mortgage, pledge, security interest, title retention lien or other
encumbrance, and, except for Permitted Encumbrances, the security interests
in favor of the Bank under the Loan Documents will constitute first, senior
and prior perfected security interests in the collateral therein described.

Except to evidence Permitted Encumbrances, no financing statement or
similar instrument which names Borrower as debtor or relates to any of its
property, has been filed in any state or other jurisdiction and remains
unreleased, and Borrower has not signed any financing statement or similar
instrument or security agreement authorizing the secured party thereunder
to file any such financing statement or similar instrument.

Section 4.10 Indebtedness.  Except (a) as shown on the Financial
Statements, (b) trade debt incurred in the ordinary course of business, and
(c) Indebtedness to the Bank, Borrower has no outstanding Indebtedness.

Section 4.11 Default.  Borrower has not committed or suffered to exist,
and after giving effect to the initial ftmding of the Loan, there shall not
exist any default or any circumstance which with notice, lapse of time, or
both, would constitute a material default under the terms and conditions
agreement, order, decree, or judgment to which Borrower is a party or by
which it or its assets may be bound or affected.

Section 4.12 Tax Returns.  All tax returns or reports of Borrower required
by law have been filed, and all taxes, assessments, contributions, fees and
other governmental charges (other than those presently payable without
penalty or interest and those currently being contested in good faith and
against which adequate reserves have been established) upon Borrower assets,
properties or income, which are payable, have been paid.

Section 4.13 Litigation.  No litigation or proceedings of any Governmental
Authority or other Person are presently pending or threatened, nor have any
claim or claims been asserted against Borrower which, if adversely
determined, have a material adverse effect on the business, operations,
financial condition, properties or prospects of Borrower taken as a whole.

Section 4.14 ERISA.  Borrower and each ERISA Affiliate is in compliance
in all material respects with all applicable provisions of ERISA, and
neither Borrower nor any ERISA Affiliate has incurred any liability to the
PBGC.  Neither a "reportable event", nor a "prohibited transaction", has
occurred under, nor has there occurred any complete or partial withdrawal
from, nor has there occurred any other event which would constitute
grounds for termination of or the appointment of a trustee to
administer any "employee benefit plan" (including any "multiemployer plan")
maintained for employees of Borrower or any ERISA Affiliate, all within
the meanings ascribed by ERISA.

Section 4.15 Full Disclosure.  No information, exhibit, memorandum, or
report (excluding estimated future operating results) furnished by
Borrower to the Bank in connection with the negotiation of the Loan
contains any material misstatement of fact, or omits to state any fact
necessary to make the statements contained therein not materially
misleading, and all estimated future operating results, if furnished,
were prepared on the basis of assumptions, data, information, tests or
other conditions believed to be valid or accurate or to exist at the
time such estimates were prepared and furnished.  There presently exists
no fact or circumstance relative to Borrower, whether or not disclosed,
which is presently anticipated to have a material adverse effect upon
the business, operations, financial condition, properties or prospects
of Borrower or the ability of Borrower to fully perform its obligations
under the Loan Documents.

Section 4.16 Contracts of Surety.  Except for the endorsements of
Borrower of negotiable instruments for deposit or collection in the
ordinary course of business, Borrower is not a party to any contract
of guaranty or surety.

Section 4.17 Licenses.  Borrower possesses such franchises,
licenses, permits, patents, copyrights, trademarks, and consents of
appropriate Governmental Authorities to own its property and as are
necessary to carry on its business.

Section 4.18 Compliance with Law.  Borrower is in substantial
compliance with all applicable requirements of law and of all
Governmental Authorities noncompliance with which would have a
materially adverse effect upon the business, operations, financial
condition, properties or prospects of Borrower.

Section 4.19 Force Majeure.  Neither the business nor the properties
of Borrower are presently affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other
casualty materially adversely affecting the business, operations,
financial condition, properties or prospects of Borrower.

Section 4.20 Margin Stock.  Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System), and no part of the proceeds of the
Loan will be used, either directly or indirectly, for the purpose,
whether immediate, incidental or remote, of purchasing or carrying
any margin stock or of extending credit to others for the purpose of
purchasing or carrying any margin stock, and Borrower shall furnish
to the Bank, upon its request, a statement in conformity with the
requirements of Federal Reserve Board Fon-n U- I referred to in
Regulation U. Further, no part of the proceeds of the Loan will be
used for any purpose that violates, or which is inconsistent with,
the provisions of Regulations G, T, U or X of the Board of Governors.

Section 4.21 Approvals.  Borrower acknowledges by signing this loan
agreement that the "Bank" has received a conditional commitment from the
USDA to give a guaranty upon default of this loan.  The bank can require
additional authorization, consent, approval or any form of exemption from
the appropriate Governmental Authority in connection with the execution and
delivery by Borrower of the Loan Documents, the borrowings and performance by
Borrower thereunder or the issuance of the Note.

Section 4.22 Insolvency.  Borrower is not "insolvent" within the meaning of
that term as defined in 101 (29) of the Federal Bankruptcy Code and is able
to pay its debts as they mature.

Section 4.23 Regulation.  Borrower is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or a "holding
company" or an "affiliate of a holding company" or a "subsidiary of a holding
company" within the meanings of the Public Utility Holding Company Act of
1935, as amended.

Section 4.24 Environmental Compliance.  To the best knowledge, information
and belief of Borrower, after the exercise of all requisite diligence,
Borrower is in substantial compliance with all Environmental Laws,
including, without limitation, all Environmental Laws in jurisdictions
in which Borrower owns or operates, or has owned or operated, a facility or
site, arranges or has arranged for disposal or treatment of hazardous
substances, solid waste or other waste, accepts or has accepted for
transport any hazardous substances, solid waste or other wastes or
holds or has held any interest in real property or otherwise.  No
litigation or proceeding arising under, relating to or in connection
with any Environmental Law is pending or threatened against Borrower,
any real property which Borrower holds or has held an interest or any
past or present operation of Borrower.  No release, threatened release
or disposal or hazardous waste, solid waste or other wastes is occurring,
or has occurred, on, under or to any real property in which Borrower holds
any interest or performs any of its operations, in violation of any
Environmental Law.  As used in this Section, "litigation or proceeding"
means any demand, claim, notice, suit, suit in equity, action,
administrative action, investigation or inquiry whether brought by a
Governmental Authority or other Person.

Section 4.25 Material Transactions.  Except as set forth in the
Financial Statements, Borrower has not entered into any material
transaction other than in the ordinary course of business or as
contemplated by this Agreement.

Section 4.26 Accounting Methods. Borrower has not made any change
in its accounting methods, principles or procedures from the date
of the Financial Statements.

Section 4.27 General. All statements contained in any certificate
or financial statement delivered by or on behalf of Borrower to the
Bank under any Loan Document shall constitute representations and
warranties made by Borrower hereunder.

Article 5. COVENANTS

Section 5.1 Negative Covenants. During the term of the Loan, without
the prior written consent of the Bank, Borrower shall not:

5.1.1.  Dispose of Property. Except in the ordinary course of
business, sell, transfer, lease or otherwise dispose of Borrower's
assets or properties, or discount, with or without recourse, any
Accounts of Borrower.

5.1.2.  Further Encumber.  Except for Permitted Encumbrances,
create or suffer to exist any mortgage, pledge, lien or other
encumbrance upon any of its properties or assets, real or personal,
tangible or intangible, whether now owned or hereafter acquired.

5.1.3.  Merge, Etc.  Enter into any consolidation or merger with,
or acquisition of, any Person or any substantial portion of its assets.

5.1.4.  Purchase Stock.  Purchase, redeem, retire or otherwise
acquire any outstanding shares of its capital stock.

5.1.5.  Sale of Shares.  Issue, sell or otherwise dispose of any
shares of its capital stock or other securities, or rights, warrants
or options to purchase or acquire any such shares or securities.

5.1.6.  Sell and Leaseback.  Enter into any arrangements,
directly or indirectly, with a Person whereby Borrower shall
sell or transfer any property used or useful in its business
and then or thereafter rent or lease such property for substantially
the same purpose as the property sold or transferred.

5.1.7.  Borrowings.  Create, incur, assume or suffer to exist
any Indebtedness except (a) trade accounts and normal business
accruals payable in the ordinary course of business, and (b)
Indebtedness to the Bank.

5.1.8.  Loans, Etc.  Make any loan, disbursement or advance to,
or investment in, any Person, except (a) extensions of trade
credit in the ordinary course of business, and (b) Qualified
Investments.

5.1.9.  Guaranties.  Assume, guarantee or otherwise become
liable as a guarantor or surety for the obligations of any
Person, except (a) endorsements by Borrower of negotiable
instruments for deposit or collection in the ordinary course
of business, and (b) guaranties in favor of the Bank.

5.1.IO. Dividends. Declare or pay any dividend or make any
distribution on account of membership units or in respect to
ownership in Borrower, in cash or other property if such dividend
or distribution would have a material adverse effect on the
financial condition of Borrower or so long as there exists a
Default or Unmatured Default or a Default or Um-natured Default
would be occasioned thereby.

5.1.1 1. Change Name or Place of Business. Change its name or
principal place of business.

5.1.12.  Special Corporate Transactions.  Engage in any transaction
with any Person other than in the ordinary course of business.

5.1.13.  Accounting Policies.  Change its fiscal year or any of
its significant accounting policies, except to the extent necessary
to comply with GAAP.

5.1.14.  Change of Business.  Make any material change in the
nature of its business as carried on at the date of this Agreement.

5.1.15.  Adversity.  Permit any event to occur or condition to
exist which has a materially adverse effect upon the business,
operations, financial condition, properties or prospects of Borrower.

5.1.16.  Benefit Plans.  Permit any condition to exist in connection
with any employee benefit plan which might constitute grounds for
the PBGC to institute proceedings to have the employee benefit plan
terminated or a trustee appointed to administer the employee benefit
plan; or engage in, or permit to exist or occur any other
condition, event or transaction with respect to any employee benefit
plan which could result in Borrower incurring any material liability,
fine or penalty.

Section 5.2 Affirmative Covenants.  During the term of the Loan,
unless expressly waived in writing by the Bank, Borrower shall:

5.2.1. Financial Reporting.  Fumish, or cause to be furnished, to the
Bank:

(a) as soon as practicable, but in any event within one hundred twenty
(120)	days after the end of each fiscal year, financial statements of
Borrower audited by independent certified public accountants acceptable
to the Bank, including a balance sheet, statement of income and retained
earnings and a statement of cash flows, with accompanying Note to financial
statements, accompanied by the certificate of an officer of Borrower familiar
with such matters that such financial statements present fairly the financial
condition of Borrower as of the date thereof and the results of its operations
for the period then ended, all prepared in accordance with GAAP on a basis
consistent with prior years unless specifically noted thereon, and further
accompanied by the certificate of an officer of Borrower familiar with such
matters that there exists no Default or Unirnatured Default under the Loan
Documents, or if any Default or Umnatured Default exists, stating the nature
and status thereof,

(b) on a monthly basis, within thirty (30) days of month end commences
monthly internally prepared balance sheets, income statements, accounts
receivable aging schedules, and borrowing base certificates.  The borrowing
base shall be that of the conditions set forth in the commitment letter dated
April 7, 2003.

(C) As soon as possible, but in any event within one hundred twenty (120)
days after the end of each fiscal year, personal financial statement of
J. Ward McConnell, Jr. and any other stated conditions outlined in that
certain commitment letter dated April 7, 2003.

(d) as soon as possible, but in any event within five (5) days after
Borrower becomes aware thereof, a written statement signed by an
officer of Borrower familiar with such matters as to the occurrence
of any Default or Umatured Default stating the specific nature thereof,
Borrowers' intended action to cure the same and the time period in which
such cure is to occur;

(e) as soon as possible, but in any event within thirty (30) days
after the commencement thereof, a written statement of an officer of
Borrower familiar with such matters describing any litigation instituted
by or against Borrower which, if adversely determined, may have a material
effect upon the business, operations, financial condition, properties or
prospects of Borrower;

(f) as soon as possible, but in any event within ten (10) days after
Borrower becomes aware thereof, a written statement describing any

(g)	such other information as the Bank may from time to time
reasonably request, including, without limitation, an annual business
plan, accounts receivable agings, accounts payable agings, inventory
reports and capital expenditure budgets.

5.2.2. Good Standing.  Maintain its company existence and right to do
business in its state of incorporation and in such other jurisdictions
wherein non-qualification would have a material adverse effect on the
business, operations or properties of Borrower.

5.2.3. Taxes, Etc.  Pay and discharge all taxes, assessments, judgments,
orders, and govermuental charges or levies imposed upon Borrower or on
its income or profits or upon its property prior to the date on which
penalties attach thereto and all lawful claims which, if unpaid, may
become a lien or charge upon the property of Borrower, provided that
Borrower shall not be required to pay any tax, assessment, charge,
judgment, order, levy or claim, if such payment is being contested
diligently, in good faith, and by appropriate proceedings which will
prevent foreclosure or levy upon its property and adequate reserves
against such liability have been established.

5.2.4. Maintain Properties.  Maintain all properties and assets used by,
or useful to, Borrower in the ordinary course of its business in good
working order and condition and suitable for the purpose for which it
is intended, and from time to time, make any necessary repairs and
replacements.

5.2.5. Insurance.  Maintain in full force and effect public liability
insurance and casualty insurance, and cause Art's-Way Manufacturing Co.,
Inc. to maintain in full force and effect public liability insurance,
business interruption insurance, worker's compensation insurance and
casualty insurance policies with coverages and with such companies as
are acceptable to the Bank.

5.2.6. Books and Records.  Keep proper books of account in which full,
true and correct entries will be made of all dealings and transactions
of and in relation to the business and affairs of Borrower, and, at all
reasonable times, and as often as the Bank may request, permit authorized
representatives of the Bank to (a) have access to the premises and
properties of Borrower and to the records relating to the operations of
Borrower; (b) make copies of or excerpts from such records; (c) discuss
the affairs, finances and accounts of Borrower with and be advised as to
the same by the chief executive and financial officers of Borrower;
and (d) audit and inspect such books, records, accounts, memoranda and
correspondence at all reasonable times, to make such abstracts and
copies thereof as the Bank may deem necessary, and to furnish copies of
all such information to any proposed purchaser of or participant in the
Loan.

5.2.7. Reports.  File, as appropriate, on a timely basis, annual reports,
operating records and any other reports or filings required to be made
with any Governmental Authority.

5.2.8. Licenses.  Maintain in full force and effect all operating permits,
licenses, franchises, and rights used by Borrower in the ordinary course
of business.

5.2.9. Compliance with Law.  Comply with, conform to, and obey all material
laws, ordinances, rules, regulations and other legal requirements applicable
to Borrower, including, without limitation, ERISA and all Environmental Laws.

5.2.10. Trade Accounts.  Pay all trade accounts in accordance with
standard industry practices.

5.2.1	1. Use of Proceeds.  Use the proceeds of the Loan solely for
the purposes herein described.

5.2.12. Loan Payments.  Duly and punctually pay or cause to be paid
principal and interest on the Loan in lawful money of the United States
at the time and places and in the manner specified herein according to
the stated terms and the true intent and meaning hereof.

5.2.13.  Notice of Environmental Matters.  Borrower shall notify the
Bank immediately upon obtaining knowledge that:

(a) any premises which have at any time been owned or occupied by or
(b)Borrower has been named or is threatened to be named as a party
responsible for the possible contamination of any real property or
ground water with Hazardous Substances, including, but not limited
to the contamination of past and present waste disposal sites.

If Borrower is notified of any event described at items (a) or (b) above,
Borrower shall, upon request of the Bank, immediately engage a firm or
firms of engineers or environmental consultants appropriately qualified
to determine as quickly as practical the extent of contamination and the
potential financial liability of Borrower with respect thereto, and the
Bank shall be provided with a copy of any report prepared by such firm
or by any Govenimental Authority as to such matters as soon as any such
report becomes available to Borrower.  The selection of any engineers or
environmental consultants engaged pursuant to the requirements of this
Section 5.2.13 shall be subject to the approval of the Bank, which
approval shall not be unreasonably withheld.

Article 6. CONDITIONS PRECEDENT

Section 6.1 Conditions to Loan.  The obligation of the Bank to make
the Loan is subject to each of the following conditions precedent:

6.1.1. Authorization.  Borrower shall have fumished, or cause to
be furnished, to the Bank, and the Bank shall have approved, certified
copies of Borrower's articles of incorporation and by-law's, both as
amended, accompanied by a recent certificate of existence issued by the
Secretary of State of Iowa and certificates of good standing from those
states in which Borrower owns property or maintains an office and a
certified copy of resolutions adopted by its members authorizing the
Loan and specifying the names and capacities of those Persons authorized
to execute the Loan Documents.

6.1.2. Insurance.  Borrower shall have furnished, or cause to have been
furnished, to the Bank evidence of the insurance required by this
Agreement.

6.1.3. Loan Documents; Guaranty.  Each of the Loan Documents shall have
been executed and delivered by Borrower to the Bank.  Each Guaranty shall
have been executed and delivered by the respective Guarantor party
thereto to the Bank.

6.1.4. Lease. n/a

6.1.5. Certificates.  The Bank shall have received an Incumbency
Certificate, executed by the Secretary or Assistant Secretary of
Borrower which shall identify the name and title and bear the signature
of the officers of Borrower authorized to sign the Loan Documents,
and the Bank shall be entitled to rely upon such certificates until
informed of any change in writing by Borrower.

6.1.6. UCC Searches.  The Bank shall have received satisfactory return
after search in accordance with the Uniform Commercial Code or other
applicable law in such govenunental offices as the Bank shall have
deemed appropriate.

6.1.7. Solvency.  The Bank shall have determined to its satisfaction,
based upon information furnished by Borrower or compiled by the Bank,
the fair net salable value of the tangible assets of Borrower, and
the solvency of Borrower.

6.1.8. Environmental Compliance.  The Bank shall have received such
evidence as the Bank may reasonably require that Borrower is in compliance
with all Environmental Laws.

6.1.9. Consents.  All consents necessary for the financing transaction
contemplated by this Agreement to close pursuant to the terms hereof and
pursuant to the Loan Documents shall have been obtained.

6.1.10. No Default.  As of the date hereof, and after giving effect to the
initial funding of the Loan, there shall not exist a default in any of
Borrower's obligations (including the Loan) or in Borrower's compliance
with any applicable legal requirement.

6. 1.1 1. Material Adverse Change.  As of the date hereof, there shall
have occurred no material adverse change in the financial condition or
business operation of Borrower.

6.1.12. Survey.  The Bank has the right to request an ALTA minimum
standard detail survey or (final recorded plat) of the Real Estate
with the signature and seal of a registered Iowa engineer or surveyor
affixed showing all easements and other matters affecting the Real Estate
or apparent thereon, the relation of the Real Estate to public
thoroughfares for access purposes, and such other matters as the
Bank may reasonably request.  Such survey shall further certify that,
except as shown thereon, the Real Estate is not located within a flood
hazard area as defined by the Flood Disaster Protection Act of 1973, as
amended by the 1994 National Flood Insurance Reform Act, and as otherwise
amended and shall show the number of the Flood Insurance Rate Map on which
the Real Estate is shown and the date of such map.

6.1.13. Title Insurance.  The Bank shall have received an A.L.T.A. Form B
(or other form acceptable to the Bank) mortgage policy of title insurance
or binder issued by a title insurance company satisfactory to the Bank
insuring (or undertaking to insure, in the case of a binder) that the
Mortgage creates and constitutes a valid first lien against the Real Estate
in favor of the Bank, subject only to exceptions acceptable to the Bank,
with such endorsements and affirmative insurance as the Bank may reasonably
request.

6.1.14. Appraisal.  The Bank shall have received a written appraisal of
the fair market value of the Real Estate on an as-completed basis of not
less than Four Million Two Hundred Seventy-Five Thousand Dollars
($4,275,000) (the "Appraisal") performed by an appraiser acceptable to
the Bank.  The Appraisal shall be prepared in accordance with the
Uniform Standards of Professional Appraisal Practice applicable to
Federally Related Transactions as set out in Appendix A to the real
estate appraisal regulations adopted by the Office of the Comptroller
of the Currency pursuant to the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 (Sub-part C of 12 C.F.R. 34).

6.1.15. Additional Documentation. The Bank shall have received such
other documents and consents as the Bank may reasonably request.

Article 7. DEFAULT AND REMEDY

Section 7.1 Default.  The occurrence of any of the following events shall
be deemed a Default hereunder:

(a)	any representation or warranty made by or on behalf of Borrower
or any Affiliate to the Bank under or in connection with any Loan Document
shall be false in any material respect as of the date on which made;

(b)	Borrower fails to make any payment of principal of or interest
on the Loan when due;

(c)	the breach by Borrower of any of the covenants in Article 5;

(d)	the breach by Borrower of any other terms or provisions of the
Loan Documents other than a breach which constitutes a Default
under Section 7. 1 (a), (b) or (c) not cured within thirty (30)
days after written notice from the Bank to Borrower specifying such
breach;

(e)	the failure of Borrower or any Guaranty to pay any other
material Indebtedness when due or within any applicable grace or
cure period, or the default by Borrower or any Guaranty in the
performance of any other term, provision or condition contained
in any agreement under which any such Indebtedness was created or is
governed the effect of which is to permit the holder or holders of such
Indebtedness to cause such Indebtedness to become due prior to its
stated maturity, unless such default is waived in writing by the
holder or holders of such Indebtedness; or any such Indebtedness
shall be validly declared to be due and payable or required to be
prepaid prior to the stated maturity thereof;

(f)	Borrower or any Guaranty shall (i) have an order for relief entered
with respect to it under the Federal Bankruptcy Code, (ii) not pay, or admit
in writing its inability to pay, its debts generally as they become due,
(iii) make an assignment for the benefit of creditors, (iv) apply for,
seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it
or any substantial part of its property, (v) institute any proceeding
seeking an order for relief under the Federal Bankruptcy Code or seeking
to adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment
or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors or fail to file an
answer or other pleading denying the material allegations of any such
proceeding filed against it, or (vi) suspend operations as presently
conducted or discontinue doing business as an ongoing concern;

(g)	without the application, approval or consent of Borrower
or any Guaranty, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for Borrower or any Guaranty, or any
substantial part of its property, or a proceeding described in
item (g) shall be instituted against Borrower or any Guaranty and
such appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of thirty (30) consecutive days;

(h)	any Governmental Authority shall condemn, seize or otherwise
appropriate, or take custody or control of all or any substantial
portion of the property of Borrower or any Guaranty which has a
material adverse effect on the financial condition of Borrower
or any Guaranty;

(i)	Borrower shall fail within thirty (30) days to pay, bond or
otherwise discharge any judgment or order for the payment of money
which is not stayed on	appeal or otherwise being appropriately
contested in good faith;

(j)	there occurs a "reportable event" or a "prohibited transaction"
under ERISA relative to Borrower;

(k)	the Bank, in good faith, deems itself insecure;

(l)	a Guarantor dies; or

(m)  the Lease is terminated, assigned or otherwise transferred, or
the Real Estate becomes subject to a sublease, without the prior
written consent of the Bank.

Section 7.2 Remedy.

7.2.1. Acceleration. If any Default, item (f) or (g) occurs, the
commitment of the Bank to make advances hereunder shall automatically
terminate and the Obligations shall immediately become due and payable
without any election or action on the part of the Bank.  If any other
Default occurs, the Bank may terminate its commitments hereunder and
declare the Obligations to be due and payable, whereupon the Obligations
shall become immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which Borrower hereby expressly
waives.

7.2.2. Remedy.  Upon the occurrence of a Default, the Bank may immediately
proceed to exercise all remedies available to it under the Loan Documents,
or otherwise under applicable law.  No right or remedy conferred upon or
reserved to the Bank under the Loan Documents, is intended to be exclusive
of any other available remedy or right, but each and every remedy
shall be cumulative and concurrent and shall be in addition to every
other remedy now or hereafter existing at law or in equity.  No single
or partial exercise of any power or right shall preclude any further
or other exercise of any power or right.

7.2.3. Preservation of Rights.  No delay or omission of the Bank to
exercise any power or right under the Loan Documents shall impair such
power or right or be construed to be a waiver of any Default or an
acquiescence therein, and any single or partial exercise of any power
or right shall not preclude other or further exercise thereof or the
exercise of any other power or right.  No advance hereunder shall
constitute a waiver of any of the conditions of the Bank's obligation
to make further advances, nor, in the event Borrower is unable to satisfy
any such condition, shall a waiver of such condition in any one instance
have the effect of precluding the Bank from thereafter declaring such
inability to be a Default.  No course of dealing shall be binding
upon the Bank.

Article 8. GENERAL PROVISIONS

Section 8.1 Benefit of Agreement. The Bank will accept the Note as
evidence of a loan made in the ordinary course of its commercial banking
business. The terms and provisions of this Agreement, the Note and the
other Loan Documents shall be binding upon and inure to the benefit of
Borrower and the Bank and their respective successors and assigns of
their entire interests, except that Borrower shall not have the right
to assign this Agreement.

Section 8.2 Survival of Representations. All representations, warranties
and agreements of Borrower contained in the Loan Documents shall survive
delivery of the Note and the making of the Loan.

Section 8.3 Governmental Regulation. Anything contained in this Agreement
to the contrary notwithstanding, the Bank shall not be obligated to extend
credit to Borrower in violation of any limitation or prohibition provided
by any applicable statute or regulation.

Section 8.4 Taxes.  Any taxes (excluding taxation of the overall net
income of the Bank) payable or ruled payable by any Governmental
Authority in respect of the Loan Documents shall be paid by Borrower,
together with interest and penalties, if any.

Section 8.5 Choice of Law.  The Loan Documents (other than those
containing a contrary express choice of law provision) shall be
construed in accordance with the laws of the State of Indiana
(but giving effect to federal laws applicable to national banks).

Section 8.6 Headings.  Section headings in the Loan Documents are
for convenience of reference only and shall not govern the interpretation
of any of the provisions of the Loan Documents.

Section 8.7 Entire Agreement.  The Loan Documents embody the entire
agreement and understanding between Borrower and the Bank and
supersede all prior agreements and understandings between Borrower
and the Bank relating to the subject matter thereof.

Section 8.8 Expenses.  The Bank shall pay any and all reasonable costs,
charges and outof-pocket expenses (including attorneys' fees and time
charges of attorneys for the Bank), incurred by the Bank in connection
with the preparation, review and negotiation of the Loan Docwnents.
Borrower shall reimburse the Bank for any and all reasonable costs,
charges and out-of-pocket expenses (including attorneys' fees and
time charges of attorneys for the Bank), paid or incurred by the
Bank in connection with the review, amendment, modification,
administration, collection and enforcement of the Loan Documents
occurring after the date of this Agreement.  The Bank may pay or
deduct from the loan proceeds any of such expenses, and any proceeds
so applied shall be deemed to be advances under this Agreement and
secured by the Loan Documents, shall bear interest at the rate of
interest provided in the Note, and shall be payable on demand.

Section 8.9 Indemnification.  Borrower agrees to inden-tnify the Bank,
and its successors and assigns (including any purchaser of a participation
in the Loan), and their directors, officers and employees, against all
losses, claims, costs, damages, liabilities and expenses, including,
without limitation, all expenses of litigation or preparation therefor
(a "Loss"), which they may pay or incur in connection with or arising
out of the direct or indirect application of the proceeds of the Loan
hereunder.  The indemnity set forth herein shall be in addition to any
other Obligations of Borrower to the Bank hereunder or at common law or
otherwise, and shall survive any ten-nination of this Agreement, the
expiration of the obligation of the Bank to make the Loan and the
payment of all Obligations.

Section 8.10 Confidentiality.  The Bank agrees to treat all information
received by it in connection with the Loan Documents (except such
information which is generally available or has been made available
to the public and except for responses by the Bank to standard credit
reference requests) as confidential, provided, however, that nothing
in this Section 8.10 shall prohibit the Bank from, or subject the Bank
to liability for, disclosing any such information to any Governmental
Authority to whose jurisdiction the Bank may be subject, and provided
further that the Bank may provide such information to proposed purchasers
of or participants in the Loan from time to time, if such proposed
purchaser or participants agree to keep such information confidential.

Section 8.11 Giving Notice. Any notice required or permitted to be
given under this Agreement may be, and shall be deemed, given when
deposited in a receptacle of the United States mail, postage prepaid,
or a receptacle of a reputable rapid delivery service, or by facsimile
when delivered to the appropriate office for transmission, charges
prepaid, addressed to Borrower or the Bank at the addresses indicated
aside their signatures to this Agreement.  Borrower and the Bank may
each change the address for service of notice upon it by a notice in
writing to the other parties hereto.

Section 8.12 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one agreement,
and any of the parties hereto may execute this Agreement by signing any
such counterpart.  This Agreement shall be effective when it has been
executed by Borrower and the Bank.

Section 8.13 Incorporation by Reference.  All Exhibits and Schedules
hereto are incorporated herein by this reference.  Each of the other
Loan Documents shall be made subject to all of the terms, covenants,
conditions, obligations, stipulations and agreements contained in
this Agreement to the same extent and effect as if fully set forth
therein, and this Agreement is made subject to all of the terms,
covenants, conditions, obligations, stipulations and agreements
contained in the other Loan Documents to the same extent and effect
as if fully set forth therein.  The provisions of this Agreement,
including, without limitation, provisions relating to maintenance
of insurance, are in addition to, and not a limitation upon, the
requirements of any other Loan Document or any subordination agreement.

Section 8.14 Time of Essence. Time is of the essence under the Loan
Documents.

Section 8.15 Set Off.  Borrower hereby grants to the Bank,
as security for the Obligations, a continuing lien upon all monies,
securities and other property of Borrower now or hereafter held
or received by, or in transit to, the Bank from or for Borrower.
Upon the occurrence of any Default, the Bank is authorized at any
time and from time to time thereafter, without notice to Borrower,
to set off, appropriate and apply any and all such items against
any Obligation in such order or manner as the Bank may reasonably
determine.

Section 8.16 No Joint Venture.  Notwithstanding anything to the
contrary herein contained or implied, the Bank, by this Agreement,
or by any action pursuant hereto, shall not be deemed to be a
partner of, or a joint venturer with, Borrower, and Borrower hereby
indemnities and agrees to defend and hold the Bank harmless,
including the payment of reasonable attorneys' fees, from any Loss
resulting from any judicial construction of the parties' relationship
as such.

Section 8.17 Severability.  In the event any provision of this
Agreement or any of the Loan Documents shall be held invalid or
unenforceable by any court of competent jurisdiction, such holding
shall not affect the validity, enforceability or legality of the
remaining provisions hereof or thereof, all of which shall continue
unaffected and unimpaired thereby.

Section 8.18 Gender.  As used herein, the masculine gender shall be
deemed to include the feminine and the neuter and the singular number
shall also include the plural.

Section 8.19 Waiver and Amendment.  Borrower and the Bank may enter
into agreements supplemental hereto for the purpose of adding or
modifying provisions of this Agreement or changing the respective
rights, powers, privileges, duties, liabilities, covenants or
obligations of the Bank or Borrower or waiving any Default
hereunder, provided, however, that no such agreements supplemental
shall be binding unless in writing and duly signed by the parties
hereto, and then only to the extent specifically set forth therein.

Section 8.20 Conflict.  This Agreement and the other Loan Documents
shall be interpreted, wherever possible, in a manner consistent
with one another, but in the event of any irreconcilable
inconsistency, this Agreement shall control.

Section 8.21 Bank Not in Control.  None of the covenants or other
provisions contained in the Loan Documents shall, or shall be deemed
to, give the Bank the rights or powers to exercise control over the
affairs and/or management of Borrower or any of its subsidiaries,
the power of the Bank being limited to the right to exercise the
remedies provided in the Loan Documents; provided, however, that
if the Bank becomes the owner of any stock or other equity interest
in, any Person whether through foreclosure or otherwise, the Bank
shall be entitled (subject to requirements of law) to exercise such
legal rights as it may have by being owner of such stock, or other
equity interest in, such Person.

Section 8.22 JURY TRIAL WAIVER.  THE BANK AND BORROWER, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER
OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON
OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY
OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE
OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR
ACTIONS OF EITHER OF THEM.  NEITHER THE BANK NOR BORROWER SHALL
SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION
WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH
A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.  THESE PROVISIONS
SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR
RELINQUISHED BY EITHER THE BANK OR BORROWER EXCEPT BY A WRITTEN
INSTRUMENT EXECUTED BY BOTH OF THEM.

IN WITNESS WHEREOF, Borrower and the Bank have caused this
Agreement to be executed by their respective officers duly
authorized as of the date first above written.

"BORROWER"

ART'S WAY MANUFACTURING CO., INC.
an Delaware corporation

/s/ John C. Breitung
By:
John C. Breitung, President
Address:
Art's Way Manufacturing Co., Inc.
5556 Hwy 9 W.
Armstrong, IA 50514
Attention:	John Breitung
Facsimile:	(712) 864-3154

"Bank"

WEST DES MOINES STATE BANK

/s/ Kevin J. Smith
By:
Kevin J. Smith,
Senior Vice President
Address:
1601 22nd Street
West Des Moines, IA 50266
Attention:	Kevin J. Smith
Facsimile:	(515) 222-2346

Mortgage Note
$2,000,000                                         Date: April 25, 2003
                                                    Due: April 25, 2023


FOR VALUE RECEIVED, ART'S-WAY MANUFACTURING CO., INC., an Delaware
corporation ("Maker"), promises to pay to the order of WEST DES MOINES
STATE BANK ("Holder"), its successors or assigns, in lawful money of the
United States of America, the principal sum of Two Million Dollars
($2,000,000) on account of the indebtedness evidenced hereby, together
with interest thereon as follows:

I . Certain Definitions.  As used herein, the following terms shall
have the indicated meanings:

"Change Date" The interest rate will be adjusted monthly

"Default Rate" shall have the meaning ascribed thereto in Section 2
hereof.

"Loan" shall mean the loan by Holder to Maker pursuant to the Loan
Agreement and evidenced by this Note.

"Loan Agreement" shall mean that certain Loan Agreement of even date
herewith between Maker and Holder, pursuant to which this Note has
been issued.

"Loan Documents" shall have the meaning assigned to that term in the
Loan Agreement.

"Maturity Date" shall mean (a) the earlier of April 25, 2023, or (b)
the date on which the repayment of this Note is accelerated pursuant
to the terms of the Loan Agreement, this Note and the other Loan
Documents.

"Mortgage' shall mean that certain Mortgage and Security Agreement
given by Maker to Holder, dated Aprii 25, 2003, and recorded in the
Office of the Recorder of Emmet County, Iowa, on April 29, 2003, as
Instrument No. 00983, a copy of which is attached hereto as Exhibit B-1,
as Mortgage and Security Agreement between Maker and Holder of even
date herewith, to secure this Note encumbering certain real estate
located in Emmet County, Iowa, as the same may be ftifther amended or
modified from time to time.

"Prime Rate" means the rate of interest from time to time published in the
"Money Rates" section of The Wall Street Journal as the "Prime Rate" for
corporate loans at large U.S. money center commercial banks (or a
comparable rate selected by the Holder in writing and furnished to Maker
if such published  rate is not available).

2.	Rate of Interest.  Prior to the Maturity Date or Default, as of
each Change Date, the unpaid principal amount of this Note shall,
subject to the terms and conditions hereinafter set forth, bear
interest at a per annum rate (which rate shall remain in effect until
the next Change Date or the Maturity Date, whichever first occurs)
equal to the Prime Rate + 1.50%. After the Maturity Date, and while
and so long as there shall exist any uncured Default under this Note
or the Loan Documents, the outstanding principal balance of this Note
shall bear interest at the rate of Three Percent (3%) per annum
costs of collection, reasonable attorneys' fees and without relief
from valuation or appraisement laws.  All such interest shall be due
and payable for the exact number of days such principal remains
outstanding and shall be calculated on the basis of a three hundred
sixty five (365) day year.

3.	Payments of Principal and Interest.  On or before May 1, 2003,
Maker shall pay to Holder an amount equal to the interest which would
accrue on this Note during the period which begins on the date hereof
and ends on April 3O,2003.  Maker shall make equal monthly installment
payments of principal and interest which shall be computed based upon
a two hundred forty (240) month amortization schedule (referred herein
collectively as the "Installments", and individually as the
"Installment"), with such Installments to cominence and be due and
payable on June 1, 2003 and to be due and payable thereafter on the
first day of each successive calendar month until the Maturity Date,
at which time the entire remaining principal balance of this Note and
all accrued, unpaid interest shall be due and payable in full.
On each Change Date, the amount of the Installments shall be recomputed
based on the time remaining on the above amortization schedule and any
fluctuation in the Prime Rate.  All payments of principal and interest
hereunder shall be made in immediately available funds to the Holder
at the Holder's address set forth on the signature page of the Loan
Agreement or at any other place specified in writing by the Holder
to Maker, by 1:00 p.m. (Iowa time) on the date when due.  The Holder
is hereby authorized to charge the account of Maker for each payment
of principal and interest as it becomes due. If any installment of
principal or interest provided herein becomes due and payable on a
date other than a Banking Day, the maturity of the installment of
principal or interest shall be extended to the next succeeding
Banking Day, and interest shall be payable during such extension
of maturity.

4.	Prepayments.  The first three years of the loan requires the
following prepayment of Year I = 5%, Year 2=3% and Year 3 =1%.
Borrower may prepay the principal balance of the Loan, in whole or
in part, at any time, and from time to time, in any multiple after
year three commences.  After year three the amounts prepaid may not
be reborrowed and partial prepayments shall be credited to
installments of principal in the inverse order of their maturities.

5 . Place of Payments;Holidays. Payments of both principal and
interest shall be made in lawful money of the United States of
America in immediately available funds at 1601 22nd Street,
West Des Moines, IA 50266.  If any payment of principal or
interest shall become due on a day other than a Banking Day,
such payment shall be made on the next succeeding Banking Day
and such extension of time shall in such case be included in
computing interest in connection with such payment.

6. Mortgage; Loan Agreement.  This Note is secured, inter alia,
by the Mortgage and by certain other collateral described in the
Loan Agreement.  The aggregate amount of the indebtedness
evidenced hereby is to be advanced to Maker pursuant to and in
accordance with the terms and conditions of the Loan Agreement.
This Note is the "Note" referred to in the Loan Agreement, and
is subject to the terms and conditions of the Loan Agreement.
This Note is entitled to the benefits of and the security
required to be provided in and by the Loan Agreement.  The Loan
Agreement contains provisions, among others, for the acceleration
of the maturity hereof upon the happening of certain stated events.

The Mortgage shall secure the indebtedness described herein, and
any future loans or advances that may be made to or on behalf of
Maker by Holder at any time or times hereafter under the Mortgage
or the Loan Agreement.  Any such loans or advances shall bear
interest at the same rate per annum as the principal indebtedness
hereunder, unless a greater rate is expressly provided for in the
Mortgage or the Loan Agreement.  Maker agrees to promptly pay when
due all of the foregoing principal indebtedness and future loans
and advances and interest thereon.

7.  Default.  In the event of the default by Maker in the
payment of any installment of interest, principal, or principal
and interest under this Note when the same is due or in the event
of the occurrence of a Default as defined in the Loan
debt, additional loans or advances and all other sums paid by
Holder to or on behalf of Maker pursuant to the terms of this
Note, the Mortgage, the Loan Agreement or any other Loan Document,
together with unpaid interest thereon, shall at the option of
Holder become immediately due and payable without further notice
or demand, without relief from any applicable valuation and
appraisement laws and Holder may forthwith exercise the remedies
available to Holder at law and in equity as well as those
remedies set forth in this Note, the Mortgage, the Loan
Agreement and the other Loan Documents; and no failure on the
part of Holder to exercise any of Holder's rights hereunder
or under any other Loan Documents shall be deemed a waiver of
any such rights or of any default.

In the event Maker shall fail to pay any installment of
principal and/or interest when due under this Note and such
failure continues for a period of ten (10) days, Maker
pay to Holder a late payment charge equal to five percent
(5%) of the delinquent payment amount.

8.  Miscellaneous.  Maker and all endorsers, guarantors and
sureties of this Note, if any, and each of them, hereby waive
diligence, demand, presentment for payment, notice of
non-payment, protest, notice of dishonor, and notice of protest,
and specifically consent to, and waive, notice of any renewals
or extensions of this Note, whether made to or in favor of
Maker or any other person or persons, and hereby waive any
defense by reason of extension of time for payment or other
indulgence granted by Holder.

This Note may not be changed, amended or modified orally.

This Note is to be construed and enforced in all respects in
accordance with the laws of the State of Iowa.  If any revision
of this Note is held to be invalid or unenforceable by a court
of competent jurisdiction, the other provisions of this Note
shall remain in full force and effect.

Time is of the essence with respect to all of Maker's obligations and
agreements under this Note.

Whenever used, the words "Maker" and "Holder" shall be deemed to include
the respective successors and assigns of Maker and of Holder.

This obligation shall bind Maker and its successors and assigns, and the
benefits hereof shall inure to Holder and its successors and assigns.

MAKER, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH
COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS
NOTE OR ANY OTHER LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY
THIS NOTE OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS, WHETHER ORAL OR
WRITTEN, OR ACTIONS OF MAKER OR HOLDER.  MAKER SHALL NOT SEEK TO
CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN WHICH A JURY TRIAL
HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR
HAS NOT BEEN WAIVED.  THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN
MODIFIED IN ANY RESPECT OR RELINQUISHED BY HOLDER EXCEPT BY WRITTEN
INSTRUMENT EXECUTED BY BOTH MAKER AND HOLDER.

IN WITNESS WHEREOF, Maker has caused this Note to be executed by its
duly authorized officer as of the day and year first hereinabove written.

ART'S-WAY MANUFACTURING CO., INC.

By:/s/John C. Breitung, President

UNLIMITED CONTINUING GUARANTY

GUARANTY:	To induce WEST DES MOINES STATE BANK, or any of its
affiliates (the "Bank"), of West Des Moines, Iowa, at its option, to
make loans, extend or continue credit or some other benefit, including
letters of credit and foreign exchange contracts, present or future,
direct or indirect, and whether several, joint or joint and several
(referred to collectively as "Liabilities"), to ART'S-WAY MANUFACTURING
CO., INC., an Delaware corporation and its successors (the "Borrower"),
and because the undersigned (collectively, the "Guarantor") has
determined that executing this Guaranty is in Guarantor's interest and
to Guarantor's financial benefit, the Guarantor absolutely and
unconditionally guaranties to the Bank, as primary obligor and not
merely as surety, that the Liabilities will be paid when due, whether
by acceleration or otherwise.  The Guarantor will not only pay the
Liabilities, but will also reimburse the Bank for accrued and unpaid
interest, and any expenses, including reasonable attorneys' fees, that
the Bank may pay in collecting from the Borrower or the Guarantor, and
for liquidating any collateral.

LIMITATION:	The Guarantor's obligation under this Guaranty is
UNLIMITED, Except as specifically limited and applied to the obligation
under that certain Mortgage and Note of even date herewith.  Unless
otherwise specified below, the Guarantor's obligation shall be payable
in U.S. Dollars.

SPECIAL CONDITION OF GUARANTY: The Guarantor's obligation under this
Guaranty is unlimited and unconditional for the first three years of
the loan beginning April 25, 2003.  Commencing April 25, 2006 the
guaranty shall then be reduced to a percentage representing the
ownership of J.Ward McConnell, Jr. in the Borrower. This guaranty
shall be removed completely after year three in the event that
guarantor's ownership interest in the Borrower is reduced to a level
less than 20%.

CONTINUED RELIANCE: The Bank may continue to make loans or extend
credit to the Borrower based on this Guaranty until it receives
written notice of termination from the Guarantor.  That notice shall
be effective at the opening of the Bank for business on the day
after receipt of the notice.  If terminated, the Guarantor will
continue to be liable to the Bank for any Liabilities created,
assumed or committed to at the time the termination becomes effective,
and all subsequent renewals, extensions, modifications and amendments
of the Liabilities.

ACTION REGARDING BORROWER: If any monies become available that the
Bank can apply to the Liabilities, the Bank may apply them in any
manner it chooses.  The Bank may take any action against the
Borrower, any collateral, or any other person liable for any of
the Liabilities.  The Bank may release the Borrower or anyone else
from the Liabilities, either in whole or in part, or release any
collateral, and need not perfect a security interest in any
collateral.  The Bank does not have to exercise any rights that it
has against the Borrower or anyone else, or make any effort to
realize on any collateral or right of set-off.  If the Borrower
requests more credit or any other benefit, the Bank may grant it
and the Bank may grant renewals, extensions, modifications and
amendments of the Liabilities and otherwise deal with the Borrower
or any other person as the Bank sees fit and as if this Guaranty
were not in effect.

The Guarantor's obligations under this Guaranty shall not be
released or affected by (a) any act or omission of the Bank,
(b) the voluntary or involuntary liquidation, sale or other
disposition of all or substantially all of the assets of the
Borrower, or any receivership, insolvency, bankruptcy,
reorganization, or other similar proceedings affecting the Borrower
or any of its assets, or (c) any change in the composition or
structure of the Borrower or Guarantor, including a merger or
consolidation with any other person or entity.

NATURE OF GUARANTY: This Guaranty is a continuing guaranty of
payment and not of collection.  Therefore, the Bank may insist
that the Guarantor pay immediately, and the Bank is not required
to attempt to collect first from the Borrower, any collateral,
or any other person liable for the Liabilities, all without relief
from valuation or appraisement laws.  The obligation of the
Guarantor shall be unconditional and absolute, regardless of
(a) the unenforceability of any provisions of any agreement between
the Borrower and the Bank, (b) the existence of any defense,
setoff or counterclaim which the Borrower may assert, (c) the
absence of any attempt by the Bank to collect or enforce the
Liabilities, (d) the waiver or consent by the Bank with respect
to any provision of any agreement between the Borrower and the Bank,
(e) the Bank's failure to perfect and maintain a security interest
in, or preserve, enforce or exhaust its rights to, or the release
by the Bank of any Collateral, (f) the Bank's failure to take new,
additional or substitute Collateral, (g) any borrowing or the grant
of a security interest by the Borrower as debtor-inpossession
the Bankruptcy Code, (h) any circumstances which might constitute
a legal or equitable discharge or defense of a guarantor or surety,
or (i) the death of any guarantor.  The books and records of the
Bank shall be received as conclusive evidence of the amount of the
Liabilities absent manifest error.

OTHER GUARANTORS: If there is more than one Guarantor, the
obligations under this Guaranty shall be joint and several.
In addition, each Guarantor shall be jointly and severally liable
with any other guarantor of the Liabilities.  If the Bank elects
to enforce its rights against less than all guarantors of the
Liabilities, that election shall not release Guarantor from
Guarantor's obligations under this Guaranty.  The compromise or
release of any of the obligations of any of the other guarantors
or the Borrower shall not serve to waive, alter or release the
Guarantor's obligations.

WAIVER OF SUBROGATION: Notwithstanding the payment or performance
by the Guarantor of all or any part of the Liabilities, the
Guarantor shall not have a right of subrogation to the rights of
the Bank against any other person liable on the Liabilities until
the entire outstanding principal and all accrued interest of the
Liabilities, even if they are not covered by this Guaranty, shall
have been paid, and the Borrower shall have fully performed all
of its obligations to the Bank.

The Guarantor further agrees that should any payments to the Bank
on the Liabilities be in whole or in part, invalidated, declared
to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any
bankruptcy act or code, state or federal law, common law or
equitable doctrine, this Guaranty and any Collateral shall remain
in full force and effect (or be reinstated as the case may be)
until payment in full of any such amounts, which payment shall be
due on demand.


WAIVERS: The Guarantor waives any right Guarantor may have to
receive notice of the following matters before the Bank enforces
any of its rights: (a) the Bank's acceptance of this Guaranty,
(b) any credit that the Bank extends to the Borrower, (c) the
borrower's default, (d) any demand, or(e) any action that the
Bank takes regarding the Borrower, anyone else, any collateral,
or any Liability, which Guarantor might be entitled to by law or
under any other agreement.  Any waiver shall affect only the
specific terms and time period stated in the waiver.  The Bank
may waive or delay enforcing any of its rights without losing
them.  No modification or waiver of this Guaranty shall be
effective unless it is in writing and signed by the party against
whom it is being enforced.

REPRESENTATIONS BY GUARANTOR: If the Guarantor is a corporation,
it represents that it is a corporation duly organized and
existing under the laws of the state of its incorporation,
and that the execution and delivery of this Guaranty and the
performance of the obligations it imposes are within its
corporate powers, have been duly authorized by all necessary
action, and none of the provisions of this Guaranty contravene
or conflict with any provision of its articles of incorporation
or by-laws.  If the Guarantor is a general or limited partnership,
it represents that it is duly organized and existing and that
the execution and delivery of this Guaranty and the performance
of the obligations it imposes do not contravene or conflict
with any provision of its partnership agreement and have
Guarantor represents that the execution and delivery of this
Guaranty and the performance of the obligations it imposes do
not violate any law, do not conflict with any agreement by
which Guarantor is bound, do not require the consent or approval
of any governmental authority or any third party, and that this
Guaranty is a valid and binding agreement, enforceable according
to its terms.  Each Guarantor further represents that all
balance sheets, profit and loss statements, and other
information, if any, furnished to the Bank are accurate and
fairly reflect the financial condition of the organizations
and persons to which they apply on their effective dates,
including contingent liabilities of every type, which
financial condition has not changed materially and
adversely since those dates.

REINSTATEMENT: If the Bank receives any payment or payments
on account of the Liabilities, which payment or payments of any
part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver, or any other party under any
bankruptcy act or code, state or federal law, common law or
equitable doctrine, then to the extent of any sum not finally
retained by the Bank, the Guarantor's obligations to the Bank
hereunder shall be reinstated and this Guaranty, and any
security therefore, shall remain in full force and effect
(or be reinstated) until payment of the Liabilities shall have
been made to the Bank, which payment shall be due on demand.
If any action or proceeding seeking such repayment is pending
or, in the Bank's sole judgment, threatened, this Guaranty and
any security therefore shall remain in full force and effect,
notwithstanding that Borrower may not then be obligated to
the Bank.

FINANCIAL COVENANT: Guarantor shall deliver to Bank, as soon as
possible, but in any event by April 30 of each calendar year,
the personal financial statements of Guarantor for the
immediately preceding calendar year, prepared in a
prescribed by the Bank and certified by Guarantor that all
information contained therein is true and correct.

NOTICES: Notice from one party to another relating to this
Guaranty shall be deemed effective if made in writing
(including telecommunications) and delivered to the recipient's
address, telex number or facsimile number set forth under such
party's name by any of the following means:
(a) hand delivery, (b) registered or certified mail, postage
prepaid, with return receipt requested, (c) first class or
express mail, postage prepaid, (d) Federal Express, Purolator
Courier or like overnight courier service or (e) facsimile,
telex or other wire transmission with request for assurance
of receipt in a manner typical with respect to communications
of that type.  Notice made in accordance with this section
shall be deemed delivered on receipt if delivered by hand or
wire transmission, on the third business day after mailing if
mailed by first class, registered or certified mail, or on the
next business day after mailing or deposit with an overnight
courier service if delivered by express mail or overnight courier.
Notwithstanding the foregoing, notice of termination of this Guaranty
shall be deemed received only upon the receipt of actual written
notice by the Bank in accordance with the paragraph above labeled
"Continued Reliance".

LAW AND JUDICIAL FORUM THAT APPLY: This agreement is governed by Iowa law.
The Guarantor agrees that any legal action or proceeding against Guarantor
with respect to any of Guarantor's obligations under this Guaranty may be
brought in any state or federal court located in the State of Indiana, as
the Bank in its sole discretion may elect.  By the execution and delivery
of this Guaranty, the Guarantor submits to and accepts, with regard to any
such action or proceeding, for Guarantor and in respect of Guarantor's
property, generally and unconditionally, the jurisdiction of those courts.
The Guarantor waives any claim that the State of Indiana is not a
convenient forum or the proper venue for any such suit, action or
proceeding.

MISCELLANEOUS: The Guarantor's liability under this Guaranty is
independent of Guarantor's liability under any other guaranty previously
or subsequently executed by the Guarantor or any one of them, singularly
or together with others, as to all or any part of the Liabilities, and may
be enforced for the full amount of this Guaranty regardless of the
Guarantor's liability under any other guaranty.  This Guaranty is binding
on the Guarantor's heirs, successors and assigns, and will operate to the
benefit of the Bank and its successors, assigns, transferees, endorsees
and participants with the Bank in any part or all of the Liabilities.
The use of headings shall not limit the provisions of this Guaranty.

WAIVER OF JURY TRIAL: THE BANK AND THE GUARANTOR, AFTER CONSULTING OR
HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER OF THEM MAY HAVE
TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS
GUARANTY OR ANY RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS GUARANTY, OR ANY COURSE OF CONDUCT,
DEALING, STATEMENT (WHETHER ORAL OR WRITTEN), OR ACTIONS OF EITHER OF
THEM.  NEITHER THE BANK NOR THE GUARANTOR SHALL SEEK TO CONSOLIDATE,
BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL
HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE
OR HAS NOT BEEN WAIVED.  THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE
BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY EITHER THE BANK OR THE
GUARANTOR EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY BOTH OF THEM.

Dated: April 25, 2003                  GUARANTOR:
                                        /s/ J. Ward McConnell, Jr.
                                            J. Ward McConnell, Jr.
Address:
PO Box 6246
Kinston, NC   28501


STATE OF IOWA
COUNTY OF Polk

Before me, a Notary Public in and for said County and State, personally
appeared J. WARD MCCONNELL, JR. and acknowledged the execution of the
foregoing Unlimited Continuing Guaranty as of his voluntary act and deed.

Witness my hand and Notarial Seal, this 25th day of April 2003.

                                      /s/Kevin J. Smith
                                      Notary Public - Signature
                                      /s/Kevin J. Smith
                                      Notary Public - Printed

My Commission Expires:                 My County of Residence:
 Kevin J. Smith                        Polk
 My Commission Expires
 7-13-05

EX-10

COMMERCIAL GUARANTY

Borrower:ART'S-WAY MANUFACTURING CO.,INC. Lender:WEST DES MOINES STATE BANK
	  (TIN:42-0920725)		             MAIN BANK
	  HWY 9 WEST, PO BOX 288		       1601 22ND STREET
	  ARMSTRONG,IA 50514-0288		       WEST DES MOINES, IA 50266
				                         (515)222-2300

Guarantor: J WARD MCCONNELL JR (SSN:###-##-####)
           PO BOX 6246
           KINSTON, NC 28501-0246

AMOUNT OF GUARANTY. This is a guaranty of payment of the Note, including
without limitation the principal Note amount of Two Million Five Hundred
Thousand & 00/100 Dollars ($2,500,000.00).

GUARANTY. For good and valuable consideration, J WARD MCCONNELL JR
("Guarantor") absolutely and unconditionally guarantees and promises to
pay to WEST DES MOINES STATE BANK ("Lender") or its order, in legal tender
of the United States of America, the Indebtedness (as that term is defined
below) of ART'S-WAY MANUFACTURING CO., INC. ("Borrower") to Lender on the
terms and conditions set forth in this Guaranty.

MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty
shall not exceed at any one time the amount of the Indebtedness described
herein, plus all costs and expenses of (A) enforcement of this Guaranty
and (B) collection and sale of any collateral securing this Guaranty.

The above limitation on liability is not a restriction on the amount of
the Indebtedness of Borrower to Lender either in the aggregate or at any
one time.  If Lender presently holds one or more guaranties, or hereafter
receives additional guaranties from Guarantor, Lender's rights under all
guaranties shall be cumulative. This Guaranty shall not (unless
specifically provided below to the contrary) affect or invalidate any
such other guaranties. Guarantor's liability will be Guarantor's aggregate
liability under the terms of this Guaranty and any such other unterminated
guaranties.

INDEBTEDNESS GUARANTEED. The Indebtedness guaranteed by this Guaranty
includes the Note, including (a) all principal, (b) all interest,
(c) all late charges, (d) all loan fees and loan charges, and
(e) all collection costs and expenses relating to the Note or to
any collateral for the Note.  Collection costs and expenses include
without limitation all of Lender's attorneys' fees.

DURATION OF GUARANTY. This Guaranty will take effect when received
by Lender without the necessity of any acceptance by Lender, or any
notice to Guarantor or to Borrower, and will continue in full force
until all Indebtedness shall have been fully and finally paid and
satisfied and all of Guarantor's other obligations under this Guaranty
shall have been performed in full.  Release of any other guarantor or
termination of any other guaranty of the Indebtedness shall not affect
the liability of Guarantor under this Guaranty. A revocation Lender
receives from any one or more Guarantors shall not affect the liability
of any remaining Guarantors under this Guaranty. This Guaranty covers
a revolving line of credit and it is specifically anticipated that
fluctuations will occur in the aggregate amount of Indebtedness owing
from Borrower to Lender.  Guarantor specifically acknowledges and
agrees that fluctuations in the amount of Indebtedness, even to
zero dollars ($0.00), shall not constitute a termination of this
Guaranty. Guarantor's liability under this Guaranty shall terminate
only upon (A) termination in writing by Borrower and Lender of the
line of credit, (B) payment of the Indebtedness in full in legal
tender, and (C) payment in full in legal tender of all of Guarantor's
other obligations under this Guaranty.

GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender,
without notice or demand and without lessening Guarantor's liability
under this Guaranty, from time to time: (A) to make one or more
additional secured or unsecured loans to Borrower, to lease equipment
or other goods to Borrower, or otherwise to extend additional credit
to Borrower: (B) to alter, compromise, renew, extend, accelerate,
or otherwise change one or more times the time for payment or other
terms of the Indebtedness or any part of the Indebtedness, including
increases and decreases of the rate of interest on the Indebtedness;
extensions may be repeated and may be for longer than the original
loan term: (C) to take and hold security for the payment of this
Guaranty or the Indebtedness, and exchange, enforce, waive,
subordinate, fail or decide not to perfect, and release any such
security, with or without the substitution of new collateral;
(D) to release, substitute, agree not to sue, or deal with any
one or more of Borrower's sureties, endorsers, or other guarantors
on any terms or in any manner Lender may choose; (E) to determine
how, when and what application of payments and credits shall be
made on the Indebtedness (F) to apply such security and direct
the order or manner of sale thereof, including without limitation,
any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion
may determine; (G) to sell, transfer, assign or grant participations
in all or any part of the Indebtedness; and (H) to assign or transfer
this Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and
warrants to Lender that (A) no representations or agreements of any
kind have been made to Guarantor which would limit or qualify in any
way the terms of this Guaranty; (B) this Guaranty is executed at
Borrower's request and not at the request of Lender; (C) Guarantor
has full power, right and authority to enter into this Guaranty;
(D) the provisions of this Guaranty do not conflict with or result
in a default under any agreement or other instrument binding upon
Guarantor and do not result in a violation of any law, regulation,
court decree or order applicable to Guarantor; (E) Guarantor has
not and will not, without the prior written consent of Lender,
sell, lease, assign, encumber, hypothecate, transfer, or otherwise
dispose of all or substantially all of Guarantor's assets, or any
interest therein; (F) upon Lender's request, Guarantor will provide
to Lender financial and credit information in form acceptable to
Lender, and all such financial information which currently has been,
and all future financial information which will be provided to
Lender is and will be true and correct in all material respects
and fairly present Guarantor's financial condition as of the
dates the financial information is provided; (G) no material
adverse change has occurred in Guarantor's financial condition
since the date of the most recent financial statements provided
to Lender and no event has occurred which may materially adversely
affect Guarantor's financial condition; (H) no litigation, claim,
investigation, administrative proceeding or similar action
(including those for unpaid taxes) against Guarantor is pending
or threatened; (1) Lender has made no representation to Guarantor
as to the creditworthiness of Borrower; and (J) financial
condition.  Guarantor agrees to keep adequately informed from
such means of any facts, events, or circumstances which might
in any way affect Guarantor's risks under this Guaranty, and
Guarantor further agrees that, absent a request for information,
Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of
its relationship with Borrower.

GUARANTOR'S WAIVERS. Except as prohibited by applicable law,
Guarantor waives any right to require Lender (A) to continue
lending money or to extend other credit to Borrower;
(B) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness
or of any nonpayment related to any collateral, or notice of
any action or nonaction on the part of Borrower, Lender,
any surety, endorser, or other guarantor in connection with
the Indebtedness or in connection with the creation of new
or additional loans or obligations; (C) to resort for payment
or to proceed directly or at once against any person, including
Borrower or any other guarantor; (D) to proceed directly against
or exhaust any collateral held by Lender from Borrower, any other
guarantor, or any other person; (E) to give notice of the terms,
time, and place of any public or private sale of personal property
security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (F) to pursue
any other remedy within Lender's power; or (G) to commit any act or
omission of any kind, or at any time, with respect to any matter
whatsoever.

Guarantor also waives any and all rights or defenses arising by
reason of (A) any "one action" or "anti-deficiency" law or any
other law which may prevent Lender from bringing any action,
including a claim for deficiency, against Guarantor, before or
after Lender's commencement or completion of any foreclosure
action, either judicially or by exercise of a power of sale;
(B) any election of remedies by Lender which destroys or
otherwise adversely affects Guarantor's subrogation rights
or Guarantor's rights to proceed against Borrower for
reimbursement, including without limitation, any loss of
rights Guarantor may suffer by reason of any law limiting,
qualifying, or discharging the Indebtedness; (C) any
disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the
cessation of Borrower's liability from any cause whatsoever,
other than payment in full in legal tender, of the
Indebtedness; (D) any right to claim discharge of the
Indebtedness on the basis of unjustified impairment of
any collateral for the Indebtedness; (E) any statute of
limitations, if at any time any action or suit brought
by Lender against Guarantor is commenced, there is
outstanding Indebtedness of Borrower to Lender which
is not barred by any applicable statute of limitations;
or (F) any defenses given to guarantors at law or in
equity other than actual payment and performance of
the Indebtedness.  If payment is made by Borrower,
whether voluntarily or otherwise, or by any third party,
on the Indebtedness and thereafter Lender is forced to
remit the amount of that payment to Borrower's trustee
in bankruptcy or to any similar person under any federal
or state bankruptcy law or law for the relief of debtors,
the Indebtedness shall be considered unpaid for the purpose
of the enforcement of this Guaranty.

Guarantor further waives and agrees not to assert or claim
at any time any deductions to the amount guaranteed under
this Guaranty for any claim of setoff, counterclaim, counter
demand, recoupment or similar right, whether such claim,
demand or right may be asserted by the Borrower, the
Guarantor, or both.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor
warrants and agrees that each of the waivers set forth above
is made with Guarantor's full knowledge of its significance
and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy
or law. If any such waiver is determined to be contrary
to any applicable law or public policy, such waiver shall
be effective only to the extent permitted by law or public
policy.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor
agrees that the Indebtedness of Borrower to Lender,
whether now existing or hereafter created, shall be
superior to any claim that Guarantor may now have or
hereafter acquire against Borrower, whether or not
Borrower becomes insolvent.  Guarantor hereby expressly
subordinates any claim Guarantor may have against Borrower,
upon any account whatsoever, to any claim that Lender may
now or hereafter have against Borrower.  In the event of
insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the
benefit of creditors, by voluntary liquidation, or
otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor
shall be paid to Lender and shall be first applied by
Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims
which it may have or acquire against Borrower or
against any assignee or trustee in bankruptcy of
Borrower; provided however, that such assignment
shall be effective only for the purpose of assuring
to Lender full payment in legal tender of the
Indebtedness.  If Lender so requests, any notes or
credit agreements now or hereafter evidencing any
debts or obligations of Borrower to Guarantor shall
be marked with a legend that the same are subject
to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender is hereby authorized,
in the name of Guarantor, from time to time to execute
and file financing statements and continuation statements
and to execute such other documents and to take such other
actions as Lender deems necessary or appropriate to perfect,
preserve and enforce its rights under this Guaranty.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions
are a part of this Guaranty:

Amendments. This Guaranty, together with any Related Documents,
constitutes the entire understanding and agreement of the parties
as to the matters set forth in this Guaranty. No alteration of
or amendment to this Guaranty shall be effective unless given
in writing and signed by the party or parties sought to be
charged or bound by the alteration or amendment.

Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand
all of Lender's costs and expenses, including Lender's
attorneys' fees and Lender's legal expenses, incurred in
connection with the enforcement of this Guaranty.
Lender may hire or pay someone else to help enforce this
Guaranty, and Guarantor shall pay the costs and expenses
of such enforcement. Costs and expenses include Lender's
attorneys' fees and legal expenses whether or not there
is a lawsuit, including attorneys' fees and legal expenses
for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), appeals,
and any anticipated post-judgment collection services.
Guarantor also shall pay all court costs and such additional
fees as may be directed by the court.

Caption Headings. Caption headings in this Guaranty are
for convenience purposes only and are not to be used to
interpret or define the provisions of this Guaranty.

Governing Law. This Guaranty will be governed by,
construed and enforced in accordance with federal
law and the laws of the State of Iowa. This Guaranty
has been accepted by Lender in the State of Iowa.

Choice of Venue. If there is a lawsuit, Guarantor
agrees upon Lender's request to submit to the
jurisdiction of the courts of POLK County, State of Iowa.

Integration. Guarantor further agrees that Guarantor
has read and fully understands the terms of this
Guaranty; Guarantor has had the opportunity to be
advised by Guarantor's attorney with respect to
this Guaranty; the Guaranty fully reflects Guarantor's
intentions and parol evidence is not required to
interpret the terms of this Guaranty. Guarantor
hereby indemnities and holds Lender harmless from
all losses, claims, damages, and costs (including
Lender's attorneys' fees) suffered or incurred by
Lender as a result of any breach by Guarantor of
the warranties, representations and agreements of
this paragraph.

Interpretation. In all cases where there is more
than one Borrower or Guarantor, then all words
used in this Guaranty in the singular shall be
deemed to have been used in the plural where
the context and construction so require; and
where there is more than one Borrower named
in this Guaranty or when this Guaranty is
executed by more than one Guarantor, the words
"Borrower" and "Guarantor" respectively shall
mean all and any one or more of them. The words
"Guarantor," "Borrower," and "Lender" include
the heirs, successors, assigns, and transferees
of each of them. If a court finds that any
provision of this Guaranty is not valid or
should not be enforced, that fact by itself
will not mean that the rest of this Guaranty
will not be valid or enforced. Therefore,
a court will enforce the rest of the provisions
of this Guaranty even if a provision of this
Guaranty may be found to be invalid or unenforceable.
If any one or more of Borrower or Guarantor are
corporations, partnerships, limited liability
companies, or similar entities, it is not necessary
for Lender to inquire into the powers of Borrower
or Guarantor or of the officers, directors, partners,
managers, or other agents acting or purporting
to act on their behalf, and any Loan indebtedness
made or created in reliance upon the professed
exercise of such powers shall be guaranteed under
this Guaranty.

Notices. Any notice required to be given under
this Guaranty shall be given in writing, and
shall be effective when actually delivered,
when actually received by telefacsimile (unless
otherwise required by law), when deposited with
a nationally recognized overnight courier, or,
if mailed, when deposited in the United States mail,
as first class, certified or registered mail postage
prepaid, directed to the addresses shown near the
beginning of this Guaranty. Any party may change
its address for notices under this Guaranty by
giving formal written notice to the other parties,
specifying that the purpose of the notice is to change
the party's address. For notice purposes, Guarantor
agrees to keep Lender informed at all times of
Guarantor's current address.  Unless otherwise provided
or required by law, if there is more than one Guarantor,
any notice given by Lender to any Guarantor is deemed
to be notice given to all Guarantors.

No Waiver by Lender. Lender shall not be deemed to
have waived any rights under this Guaranty unless
such waiver is given in writing and signed by Lender.
No delay or omission on the part of Lender in exercising
any right shall operate as a waiver of such right or any
other right.  A waiver by Lender of a provision of this
Guaranty shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance
with that provision or any other provision of this Guaranty.
No prior waiver by Lender, nor any course of dealing
between Lender and Guarantor, shall constitute a waiver
of any of Lender's rights or of any of Guarantor's
obligations as to any future transactions.  Whenever
the consent of Lender is required under this Guaranty,
the granting of such consent by Lender in any instance
shall not constitute continuing consent to subsequent
instances where such consent is required and in all
cases such consent may be granted or withheld in the
sole discretion of Lender.

Successors and Assigns. Subject to any limitations
stated in this Guaranty on transfer of Guarantor's
interest, this Guaranty shall be binding upon and
inure to the benefit of the parties, their
successors and assigns.

DEFINITIONS. The following capitalized words and
terms shall have the following meanings when used
in this Guaranty.  Unless specifically stated to
the contrary, all references to dollar amounts
shall mean amounts in lawful money of the United
States of America.  Words and terms used in the
singular shall include the plural, and the plural
shall include the singular, as the context may require.
Words and terms not otherwise defined in this Guaranty
shall have the meanings attributed to such terms in
the Uniform Commercial Code:

Borrower. The word "Borrower" means ART'S-WAY
MANUFACTURING CO., INC., and all other persons
and entities signing the Note in whatever capacity.

Guarantor. The word "Guarantor" means each and
every person or entity signing this Guaranty,
including without limitation J WARD MCCONNELL JR.

Guaranty. The word "Guaranty" means the guaranty
from Guarantor to Lender, including without limitation
a guaranty of all or part of the Note. Indebtedness.
The word "Indebtedness" means Borrower's indebtedness
to Lender as more particularly described in this Guaranty.

Lender. The word "Lender" means WEST DES MOINES STATE BANK,
its successors and assigns.

Note. The word "Note" means the promissory note dated
April 25, 2003, in the original principal amount of
$2,500,000.00 from Borrower to Lender, together with
all renewals of, extensions of, modifications of,
refinancings of, consolidations of, and substitutions
for the promissory note or agreement.

Related Documents. The words "Related Documents"
mean all promissory notes, credit agreements,
loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust,
security deeds, collateral mortgages, and all other
instruments, agreements and documents, whether now
or hereafter existing, executed in connection with
the Indebtedness.


EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ
ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS TERMS.
IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY
IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF
THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE
UNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION
TITLED "DURATION OF GUARANTY".  NO FORMAL ACCEPTANCE BY
LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE.
THIS GUARANTY IS DATED APRIL 25, 2003.

GUARANTOR ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF
THIS COMMERCIAL GUARANTY AND ALL OTHER DOCUMENTS
RELATING TO THIS DEBT.

GUARANTOR:

COPY
J WARD MCCONNELL JR, Individually

PROMISSORY NOTE
Borrower:ART'S-WAY MANUFACTURING CO., INC. Lender:WEST DES MOINES STATE BANK
         (TIN: 42-0920725)		              MAIN BANK
	   HWY 9 WEST, PO BOX 288		        1601 22ND STREET
	   ARMSTRONG,IA 50514-0288		        WEST DES MOINES, IA 60266
			                                   (515)222-2300

Principal Amount: $2,500,000.00	Initial Rate: 5.250%
Date of Note: April 25, 2003

PROMISE TO PAY. ART'S-WAY MANUFACTURING CO., INC. ("Borrower")
promises to pay to WEST DES MOINES STATE BANK ("Lender"),
or order, in lawful money of the United States of America,
the principal amount of Two Million Five Hundred Thousand
& 00/100 Dollars ($2,500,000.00) or so much as may be outstanding,
together with interest on the unpaid outstanding principal balance
of each advance. Interest shall be calculated from the date of each
advance until repayment of each advance.

PAYMENT. Borrower will pay this loan in one payment of all
outstanding principal plus all accrued unpaid interest
on February 28, 2004. In addition, Borrower will pay regular
monthly payments of all accrued unpaid interest due as of
each payment date, beginning May 28, 2003, with all subsequent
interest payments to be due on the same day of each month after
that. Unless otherwise agreed or required by applicable law,
payments will be applied first to accrued unpaid interest,
then to principal, and any remaining amount to any unpaid
collection costs and late charges. Interest on this Note
is computed on a 365/365 simple interest basis; that is,
by applying the ratio of the annual interest rate over
the number of days in a year, multiplied by the outstanding
principal balance, multiplied by the actual number of days
the principal balance is outstanding.  Borrower will pay
Lender at Lender's address shown above or at such other
place as Lender may designate in writing.

VARIABLE INTEREST RATE. The interest rate on this Note
is subject to change from time to time based on changes
in an index which is Lender's Prime Rate (the "Index").
This is the rate Lender charges, or would charge, on 90-day
unsecured loans to the most creditworthy corporate customers.
This rate may or may not be the lowest rate available from
Lender at any given time. Lender will tell Borrower the
current Index rate upon Borrower's request. The interest
rate change will not occur more often than each DAY.
Borrower understands that Lender may make loans based
on other rates as well. The Index currently is 4.250% per
annum. The interest rate to be applied to the unpaid
principal balance of this Note will be at a rate of
1.000 percentage point over the Index, resulting in
an initial rate of 5.250% per annum. NOTICE: Under
no circumstances will the interest rate on this
Note be more than the maximum rate allowed by applicable
law.

PREPAYMENT; MINIMUM INTEREST CHARGE.  Borrower agrees
that all loan fees and other prepaid finance charges are
earned fully as of the date of the loan and will not be
subject to refund upon early payment (whether voluntary
or as a result of default), except as otherwise required by
law. In any event, even upon full prepayment of this Note,
Borrower understands that Lender is entitled to a minimum
interest charge of $7.50. Other than Borrower's obligation
to pay any minimum interest charge, Borrower may pay without
penalty all or a portion of the amount owed earlier than it
is due. Early payments will not, unless agreed to by Lender
in writing, relieve Borrower of Borrower's obligation to
continue to make payments of accrued unpaid interest.
Rather, early payments will reduce the principal balance due.
Borrower agrees not to send Lender payments marked "paid in full",
"without recourse", or similar language.  If Borrower sends
such a payment, Lender may accept it without losing any of
Lender's rights under this Note, and Borrower will remain
obligated to pay any further amount owed to Lender.
All written communications concerning disputed amounts,
including any check or other payment instrument that
indicates that the payment constitutes "payment in full"
of the amount owed or that is tendered with other conditions
or limitations or as full satisfaction of a disputed amount
must be mailed or delivered to: WEST DES MOINES STATE BANK,
MAIN BANK, 1601 22ND STREET, WEST DES MOINES, IA 50266.

LATE CHARGE.  If a payment is 11 days or more late,
Borrower will be charged $15.00.

INTEREST AFTER DEFAULT. Upon default, including failure to pay
upon final maturity, Lender, at its option, may, if permitted
under applicable law, increase the variable interest rate on
this Note to 3.000 percentage points over the Index. The
interest rate will not exceed the maximum rate permitted
by applicable law.

DEFAULT.  Each of the following shall constitute an event
of default ("Event of Default") under this Note:

Payment Default. Borrower fails to make any payment
when due under this Note.

Other Defaults. Borrower fails to comply with or to
perform any other term, obligation, covenant or
condition contained in this Note or in any of the
related documents or to comply with or to perform
any term, obligation, covenant or condition contained
in any other agreement between Lender and Borrower.

Default in Favor of Third Parties. Borrower or any
Grantor defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or
any other agreement, in favor of any other creditor
or person that may materially affect any of Borrower's
property or Borrower's ability to repay this Note or
perform Borrower's obligations under this Note or any
of the related documents.

False Statements. Any warranty, representation or
statement made or furnished to Lender by Borrower
or on Borrower's behalf under this Note or the
related documents is false or misleading in any
material respect, either now or at the time made
or furnished or becomes false or misleading at
any time thereafter.

Insolvency. The dissolution or termination of
Borrower's existence as a going business, the insolvency
of Borrower, the appointment of a receiver for any part of
Borrower's property, any assignment for the benefit of creditors,
any type of creditor workout, or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings. Commencement of foreclosure
or forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by
any governmental agency against any collateral securing the loan.
This includes a garnishment of any of Borrower's accounts, including
deposit accounts, with Lender.  However, this Event of Default shall
not apply if there is a good faith dispute by Borrower as to the validity
or reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies
or a surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in its sole discretion, as being an adequate reserve
or bond for the dispute.

Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the indebtedness or any Guarantor
dies or becomes incompetent, or revokes or disputes the validity of,
or liability under, any guaranty of the indebtedness evidenced by
this Note. In the event of a death, Lender, at its option, may, but
shall not be required to, permit the Guarantor's estate to assume
unconditionally the obligations arising under the guaranty in a manner
satisfactory to Lender, and, in doing so, cure any Event of Default.

Change In Ownership. Any change in ownership of twenty-five percent
(25%) or more of the common stock of Borrower.

Adverse Change.  A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment
or performance of this Note is impaired.

Insecurity. Lender in good faith believes itself insecure.

Cure Provisions. If any default, other than a default in payment is
curable and if Borrower has not been given a notice of a breach of
the same provision of this Note within the preceding twelve (12) months,
it may be cured (and no event of default will have occurred) if Borrower,
after receiving written notice from Lender demanding cure of such default:
(1) cures the default within twenty (20) days; or (2) if the cure requires
more than twenty (20) days, immediately initiates steps which Lender deems
in Lender's sole discretion to be sufficient to cure the default and
thereafter continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid
principal balance on this Note and all accrued unpaid interest immediately
due, and then Borrower will pay that amount.

ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help
collect this Note if Borrower does not pay.  Borrower will pay Lender
that amount. This includes, subject to any limits under applicable law,
Lender's attorneys' fees and Lender's legal expenses, whether or not
there is a lawsuit, including without limitation all attorneys' fees
and legal expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), and appeals.
If not prohibited by applicable law, Borrower also will pay any court
costs, in addition to all other sums provided by law.

GOVERNING LAW. This Note will be governed by, construed and enforced
in accordance with federal law and the laws of the State of Iowa.
This Note has been accepted by Lender in the State of Iowa.

CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's
request to submit to the jurisdiction of the courts of POLK County,
State of Iowa.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender
reserves a right of setoff in all Borrower's accounts with Lender (whether
checking, savings, or some other account). This includes all accounts
Borrower holds jointly with someone else and all accounts Borrower
may open in the future.  However, this does not include any IRA or
Keogh accounts, or any trust accounts for which setoff would be
prohibited by law. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing
on the indebtedness against any and all such accounts, and, at
Lender's option, to administratively freeze all such accounts
to allow Lender to protect Lender's charge and setoff rights
provided in this paragraph.

COLLATERAL. Borrower acknowledges this Note is secured by REAL
ESTATE MORTGAGE DATED 4/25/03, SECURITY AGREEMENT DATED 4/25/03,
UNLIMITED GUARANTY OF J. WARD MCCONNELL JR., AND REFERENCE TERMS
OF COMMITMENT LETTER DATED 4/7/03.

LINE OF CREDIT.  This Note evidences a revolving line of credit.
Advances under this Note, as well as directions for payment from
Borrower's accounts, may be requested orally or in writing by Borrower
or by an authorized person.  Lender may, but need not, require that
all oral requests be confirmed in writing.  Borrower agrees to be
liable for all sums either: (A) advanced in accordance with the
instructions of an authorized person or (B) credited to any of
Borrower's accounts with Lender.  The unpaid principal balance
owing on this Note at any time may be evidenced by endorsements
on this Note or by Lender's internal records, including daily
computer print-outs.  Lender will have no obligation to advance
funds under this Note if: (A) Borrower or any guarantor is in
default under the terms of this Note or any agreement that Borrower
or any guarantor has with Lender, including any agreement made in
connection with the signing of this Note; (B) Borrower or any
guarantor ceases doing business or is insolvent; (C) any
guarantor seeks, claims or otherwise attempts to limit, modify
or revoke such guarantor's guarantee of this Note or any other
loan with Lender; (D) Borrower has applied funds provided pursuant
to this Note for purposes other than those authorized by Lender;
or (E) Lender in good faith believes itself insecure.

PURPOSE OF LOAN. The specific purpose of this loan is:
WORKING CAPITAL.

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon
Borrower, and upon Borrower's heirs, personal representatives,
successors and assigns, and shall inure to the benefit of Lender
and its successors and assigns.

GENERAL PROVISIONS. Lender may delay or forgo enforcing any of
its rights or remedies under this Note without losing them.
Borrower and any other person who signs, guarantees or endorses
this Note, to the extent allowed by law, waive presentment,
demand for payment, and notice of dishonor.  Upon any change
in the terms of this Note, and unless otherwise expressly stated
in writing, no party who signs this Note, whether as maker,
guarantor, accommodation maker or endorser, shall be released
from liability.  All such parties agree that Lender may renew or
extend (repeatedly and for any length of time) this loan or release
any party or guarantor or collateral; or impair, fail to realize
upon or perfect Lender's security interest in the collateral;
and take any other action deemed necessary by Lender without the
consent of or notice to anyone.  All such parties also agree that
Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made.
The obligations under this Note are joint and several.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE
PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.


BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS
PROMISSORY NOTE AND ALL OTHER DOCUMENTS RELATING TO THIS DEBT.

BORROWER:

ART'S-WAY MANUFACTURING CO., INC.

By: COPY
John C. Breitung, President of Art's-Way
Manufacturing Co., Inc.

EX-99

Exhibit 99.1


                     CERTIFICATION OF FINANCIAL STATEMENTS

	Pursuant to 18 U.S.C. 63 1350, the President/Chief Executive Officer and
the Finance Manager of Art's-Way Manufacturing Co., Inc. (the "Company"),
hereby certify that this Form 10-Q and the financial statements thereto fully
comply with the requirements of Sections 13(a) and 15(d) of the Securities
Exchange Act of 1934, and the information contained in the Form 10-Q and
the financial statements thereto fairly present, in all material respects,
the financial condition and results of operations of the Company.


By:  /s/    John C. Breitung		      By:    /s/    Seth F. LaBore
            John C. Breitung	                          Seth F. LaBore
President and Chief Executive Officer     Finance Manager
July 14, 2003					July 14, 2003