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