April 8, 2008

Mr. J. Ward McConnell, Jr., Chairman

Ms. Carrie Majeski, Secretary/CFO

Arts-Way Manufacturing Co., Inc.

5556 Highway 9 West

P.O. Box 288

Armstrong, IA 50514

Re:        Commitment Letter

Dear Ward and Carrie:

We are pleased to inform you that West Bank (“Bank”) commits to renew a $3,500,000 line of credit to Art’s-Way Manufacturing Company, Inc. and alt affiliated entities (“Borrower”) to provide working capital financing under the following terms and conditions:

FACILITY/PURPOSE:	$3,500,000 Revolving Line of Credit advances funding the working capital, letter of credit, and corporate credit card needs of Borrowers.
MATURITY DATE:	April 30, 2009
INTEREST RATE:	The Bank’s Prime Interest Rate (presently 5.25%) adjusted daily.
PAYMENT SCHEDULE:	Monthly interest only payments shall be required.  All remaining unpaid principal and interest shall be due on the maturity date of April 30, 2009.
COLLATERAL:	First and paramount security and mortgage interests in all assets owned by the Borrower and all subsidiary companies including, but not limited to cash, inventory, accounts, accounts receivable, equipment, and real estate.
OTHER TERMS AND CONDITIONS:	1) Borrowers agree to provide the Bank with the following financial reports:
	a)	A monthly internally prepared balance sheet, income statements, accounts receivable aging schedules, and borrowing base certificates.  The borrowing bases shall Limit the advances from Facility #1 to 60% of accounts receivable less than 90 days plus 60% of finished goods inventory and 50% of raw material inventories and work-in-process.

b)	CPA-prepared audited financial statement at the conclusion of Borrowers’ fiscal year-end.
2) Borrowers agree to maintain a minimum debt service coverage ratio (measured at the conclusion of Borrower’s year-end) of 1.5 times.
3) Borrowers shall maintain primary deposit accounts and credit card accounts at West Bank.
4) Borrowers agree to maintain a maximum debt/tangible net worth ratio of 1.25 times and a minimum tangible net worth of $8,500,000 by each fiscal year-end.

We appreciate the opportunity to provide this commitment for your consideration.  Please sign one copy of this letter where indicated below and return it to the Bank on or before April.  18, 2008 at which time this commitment shall expire unless otherwise extended in writing by the Bank.  The terms of this financing proposal are not to be shared with anyone other than the CPA, attorney, Board, or management team of the Borrower(s).

Please contact me at (515) 222-2322 with remaining questions or issues.

Sincerely,

/s/ Kevin J. Smith

Kevin J. Smith

Sr. Vice President

We accept the aforementioned terms of this commitment letter this 18th day of April 2008.

ART’S-WAY MANUFACTURING CO, INC.

By:	/s/ J. Ward McConnell, Jr.	/s/ Carrie Majeski
J. Ward McConnell, Jr., Chairman		Carrie Majeski, Presitient/CFO