Unassociated Document


    
       

      BUSINESS
LOAN AGREEMENT

       

      
        	
                Principal

                $1,498,062.50

              	
                Loan Date

                05-01-2008

              	
                Maturity

                05-01-2013

              	
                Loan No

                81290

              	
                Call / Coll

                 

              	
                Account

                0000128524

              	
                Officer

                322

              	
                Initials

                 

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

              


      

       

    

    
      
        
          	 Borrower:	
                  ART’S—WAY
      MANUFACTURING CO., INC.  

                  (TIN:
      42-0920725)

                  5556
      HIGHWAY 9 WEST, PO BOX 288

                  ARMSTRONG,
      IA 50514

                	 Lender:	
                  WEST
      BANK

                  MAIN
      BANK

                  1601
      22ND STREET

                  WEST
      DES MOINES, IA 50265

                  (515)
      222-2300

                   

                


        

      

    

     

    
      
        	
                Principal
      Amount:  $1,498,062.50

              	
                Interest
      Rate:  5.750%

              	
                Date
      of Agreement:  May 1,
2008

              


      

    

     

    DESCRIPTION OF EXISTING INDEBTEDNESS.
LOAN #81290 IN THE ORIGINAL AMOUNT OF $1,500,000.00 DATED 06/07/07 WITH A
MATURITY DATE OF 05/01/17.

     

    DESCRIPTION OF COLLATERAL.
UNLIMITED SECURED GUARANTEES OF ARTS-WAY SCIENTIFIC, INC, AND ARTS-WAY
VESSELS, INC.; SECURITY AGREEMENTS DATED 04/25/03 AND 04/20/07; REAL ESTATE
MORTGAGES DATED 04/25/03, 10/09/07, AND 11/30/07.

     

    DESCRIPTION OF CHANGE IN TERMS.
MODIFY MATURITY DATE, INTEREST RATE AND PAYMENTS.

     

    PROMISE
TO PAY.  ART’S-WAY MANUFACTURING CO., INC.  (“Borrower”)
promises to pay to WEST BANK (“Lender”), or order, in lawful money of the United
States of America, the principal amount of One Million Four Hundred Ninety-eight
Thousand Sixty-two & 50/100 Dollars ($1,498,062.50), together with interest
at the rate of 5.750% per annum on the unpaid principal balance from May 1,
2008, until paid in full.  The interest rate may change under the
terms and conditions of the “INTEREST AFTER DEFAULT” section.

     

    PAYMENT.  Borrower
will pay this loan in 59 regular payments of $12,550.00 each and one irregular
last payment estimated at $1,144,714.20.  Borrower’s first payment is
due June 1, 2008, and all subsequent payments are due on the same day of each
month after that.  Borrower’s final payment will be due on May 1,
2013, and will be for all principal and all accrued interest not yet
paid.  Payments include principal and interest.  Unless
otherwise agreed or required by applicable law, payments will be applied first
to any accrued unpaid interest; then to principal; then to any unpaid collection
costs; and then to any late charges.  Interest on this loan is
computed on a 365/360 simple interest basis; that is, by applying the ratio of
the annual interest rate over a year of 360 days, 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.

     

    MAXIMUM INTEREST RATE. Under
no circumstances will the interest rate on this loan exceed (except for any
higher default rate shown below) the lesser of 7.500% per annum or the maximum
rate allowed by applicable law.

     

    PREPAYMENT PENALTY; MINIMUM INTEREST
CHARGE. In any event, even upon full prepayment of this Agreement,
Borrower understands that Lender is entitled to a minimum interest charge of
$7.50.  Upon prepayment of this Agreement, Lender is entitled to the
following prepayment penalty:  3% IF REFINANCED
ELSEWHERE.  Other than Borrower’s obligation to pay any minimum
interest charge and prepayment penalty, Borrower may pay 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 under the payment schedule.  Rather, early
payments will reduce the principal balance due and may result in Borrower’s
making fewer payments.  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 Agreement, 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 BANK, MAIN
BANK, 1601 22ND STREET, WEST DES MOINES, IA 50265.

     

    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, the interest rate on this loan shall be increased by 2.000 percentage
points.  However, in no event will the interest rate exceed the
maximum interest rate limitations under applicable law.

     

    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
Indebtedness.

     

    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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              BUSINESS
      LOAN AGREEMENT

            	 
      
	
              Loan
      No.: 81290

            	
              (continued)

            	
              Page
      2

            


    

     

    Default in Favor of Third Parties.
Borrower 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 ability to perform Borrower’s 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.

     

    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 Indebtedness.  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, endorser, surety, or accommodation party of any of the
Indebtedness or any guarantor, endorser, surety, or accommodation party dies or
becomes incompetent, or revokes or disputes the validity of, or liability under,
any Guaranty of the Indebtedness evidenced by this Note.

     

    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 Indebtedness 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 Agreement within
the preceding twelve (12) months, it may be cured 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 under this Agreement 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 Agreement 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 Agreement
will be governed by federal law applicable to Lender and, to the extent not
preempted by federal law, the laws of the State of Iowa without regard to its
conflicts of law provisions.  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.

     

    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 Agreement is secured by UNLIMITED SECURED GUARANTEES OF
ARTS-WAY SCIENTIFIC, INC, AND ARTS-WAY VESSELS, INC.; SECURITY AGREEMENTS DATED
04/25/03 AND 04/20/07; REAL ESTATE MORTGAGES DATED 04/25/03, 10/09/07, AND
11/30/07.

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    
      	
               

            	
              BUSINESS
      LOAN AGREEMENT

            	 
      
	
              Loan
      No.: 81290

            	
              (continued)

            	
              Page
      3

            


    

     

    CONTINUING VALIDITY. Except as
expressly changed by this Agreement, the terms of the original obligation or
obligations, including all agreements evidenced or securing the obligation(s),
remain unchanged and in full force and effect.  Consent by Lender to
this Agreement does not waive Lender’s right to strict performance of the
obligation(s) as changed, nor obligate Lender to make any future change in
terms.  Nothing in this Agreement will constitute a satisfaction of
the obligation(s).  It is the intention of Lender to retain as liable
parties all makers and endorsers of the original obligation(s), including
accommodation parties, unless a party is expressly released by Lender in
writing.  Any maker or endorser, including accommodation makers, will
not be released by virtue of this Agreement.  If any person who signed
the original obligation does not sign this Agreement below, then all persons
signing below acknowledge that this Agreement is given conditionally, based on
the representation to Lender that the non-signing party consents to the changes
and provisions of this Agreement or otherwise will not be released by
it.  This waiver applies not only to any initial extension,
modification or release, but also to all such subsequent actions.

     

    SUCCESSORS AND
ASSIGNS.  Subject to any limitations stated in this Agreement
on transfer of Borrower’s interest, this Agreement shall be binding upon and
inure to the benefit of the parties, their successors and assigns.  If
ownership of the Collateral becomes vested in a person other than Borrower,
Lender, without notice to Borrower, may deal with Borrower’s successors with
reference to this Agreement and the Indebtedness by way of forbearance or
extension without releasing Borrower from the obligations of this Agreement or
liability under the Indebtedness.

     

    MISCELLANEOUS
PROVISIONS.  If any part of this Agreement cannot be enforced,
this fact will not affect the rest of the Agreement.  Lender may delay
or forgo enforcing any of its rights or remedies under this Agreement without
losing them.  Borrower and any other person who signs, guarantees or
endorses this Agreement, to the extent allowed by law, waive presentment, demand
for payment, and notice of dishonor.  Upon any change in the terms of
this Agreement, and unless otherwise expressly stated in writing, no party who
signs this Agreement, 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 Agreement are joint
and several.

     

    PRIOR
TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS AGREEMENT.  BORROWER AGREES TO THE TERMS OF THE
AGREEMENT.

     

    BORROWER
ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS CHANGE IN TERMS AGREEMENT AND
ALL OTHER DOCUMENTS RELATING TO THIS DEBT.

     

    BORROWER:

     

    
      
        
          	
                  By:  

                	COPY 
      
	 
      	
                  CARRIE
      L. MAJESKI, President of ART’S-WAY 

                  MANUFACTURING
      CO., INC.

                


        

      

    

     

    CARRIE L.
MAJESKI, President of ART’S-WAY MANUFACTURING CO., INC.

     

    
      
        
           


        

        
          
          

          
            

          

        

        
           


        

      

    

    

      BUSINESS
LOAN AGREEMENT

       

      
        	
                Principal

                $1,498,062.50

              	
                Loan Date

                05-01-2008

              	
                Maturity

                05-01-2013

              	
                Loan No

                81290

              	
                Call / Coll

                 

              	
                Account

                0000128524

              	
                Officer

                322

              	
                Initials

                 

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

              


      

       

    

    
      
        	
                Borrower:

              	
                ART’S—WAY
      MANUFACTURING CO., INC.

                (TIN:
      42-0920725)

                5556
      HIGHWAY 9 WEST, PO BOX 288

                ARMSTRONG,
      IA 50514

              	
                Lender:

              	
                WEST
      BANK

                MAIN
      BANK

                1601
      22ND STREET

                WEST
      DES MOINES, IA 50265

                (515)
      222-2300

              


      

    

    
LOAN TYPE.  This is
a Fixed Rate (5.750%) Nondisclosable Loan to a Corporation for $1,498,062.50 due
on May 1, 2013.  This is a secured renewal loan.

     

    PRIMARY PURPOSE OF
LOAN.  The primary purpose of this loan is for:

     

    o Personal, Family,
or Household Purposes or Personal Investment.

     

    x Business
(Including Real Estate Investment).

     

    SPECIFIC
PURPOSE.  The specific purpose of this loan
is:  CONSOLIDATION.

     

    DISBURSEMENT INSTRUCTIONS.
Borrower understands that no loan proceeds will be disbursed until all of
Lender’s conditions for making the loan have been satisfied.  Please
disburse the loan proceeds of $1,498,062.50 as follows:

     

    
      	
              Amount
      paid on Borrower’s account:

            	 	$	1,498,062.50	 
	
              $1,498,062.50
      Payment on Loan # 81290

            	 	 	 	 
	 
      	 	 	 	 
	
              Note
      Principal:

            	 	$	1,498,062.50	 


    

     

    BORROWER
ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS DISBURSEMENT REQUEST AND
AUTHORIZATION AND ALL OTHER DOCUMENTS RELATING TO THIS DEBT.

     

    FINANCIAL
CONDITION.  BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER’S FINANCIAL CONDITION
AS DISCLOSED IN BORROWER’S MOST RECENT FINANCIAL STATEMENT TO
LENDER.  THIS AUTHORIZATION IS DATED MAY 1, 2008.

     

    BORROWER:

     

    
      
        
          	
                  By:

                	
                  /s/
      Carrie L. Majeski

                	 
      
	 
      	
                  CARRIE
      L. MAJESKI, President of ART’S-WAY

                  MANUFACTURING
      CO., INC.