Document:

Exhibit
10.4

       

      PROMISSORY
NOTE

      

      
        
          
            
              	
                      Borrower:

                    	 
      	
                      ART’S-WAY MANUFACTURING COMPANY, INC.

                    	
                      Lender:

                    	 
      	
                      WEST
      BANK

                    
	 
      	 
      	
                      (TIN:  _________________)

                    	 
      	 
      	
                      MAIN
      BANK

                    
	 
      	 
      	
                      5556
      HIGHWAY 9 WEST, BOX 288

                    	 
      	 
      	
                      1601
      22ND STREET

                    
	 
      	 
      	
                      ARMSTRONG,
      IA 50514

                    	 
      	 
      	
                      WEST
      DES MOINES, IA 50266

                    
	 
      	 
      	
                       

                    	  
      	 
      	      
                      (515)
      222-2300 

                    

            

          

        

      

      
         

      

      
        

      

       

      
        	
                Principal
      Amount:  $6,000,000.00

              	
                Date
      of Note:  June 8, 2009

              

      

      

      PROMISE
TO PAY.  ART’S-WAY MANUFACTURING COMPANY, INC.  (“Borrower”)
promises to pay to WEST BANK (“Lender”), or order, in lawful money of the United
States of America, the principal amount of Six Million & 00/100 Dollars
($6,000,000.00) 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 April 30, 2010.  In addition, Borrower will pay
regular monthly payments of all accrued unpaid interest due as of each payment
date, beginning June 30, 2009, 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 any accrued unpaid
interest; then to principal; then to any unpaid collection costs; and then to
any late charges.  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 3.250% per
annum.  The interest rate to be applied to the unpaid principal
balance of this Note will be calculated as described in the “INTEREST
CALCULATION METHOD” paragraph using a rate equal to the Index, adjusted if
necessary for any minimum and maximum rate limitations described below,
resulting in an initial rate of 4.000% per annum based on a year of 360
days.  NOTICE:  Under no circumstances will the interest
rate on this Note be less than 4.000% per annum or more than the maximum rate
allowed by applicable law.

      

      INTEREST CALCULATION
METHOD.  Interest on this Note is computed on a 365/360 basis;
that is, by applying the ratio of the 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.  All interest payable
under this Note is computed using this method.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      PREPAYMENT; MINIMUM INTEREST
CHARGE.  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 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, the interest rate on this Note shall be increased by adding a 2.000
percentage point margin (“Default Rate Margin”).  The Default Rate
Margin shall also apply to each succeeding interest rate change that would have
applied had there been no default.  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 (“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.

      
        
           

        

        
          - 2
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      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, 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 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 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 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.

      
        
           

        

        
          - 3
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      GOVERNING LAW.  This
Note 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 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 04/25/03;
SECURITY AGREEMENT DATED 04/25/03; UNLIMITED SECURED GUARANTEES OF ARTS-WAY
VESSELS, INC. AND ART’S-WAY SCIENTIFIC, INC; LOAN AGREEMENT DATED
06/08/09.

      

      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.

      
        
           

        

        
          - 4
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      GENERAL
PROVISIONS.  If any part of this Note cannot be enforced, this
fact will not affect the rest of the Note.  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:

                
	 
      
	
                  ARTS-WAY
      MANUFACTURING COMPANY, INC.

                
	 
      	 
      
	
                  By:

                	
                  /s/ Carrie L. Majeski

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

                
	 
      	
                  MANUFACTURING
      COMPANY, INC.

                

        

      

      

      
        
           

        

        
          - 5
-Exhibit
10.5

    

    AGREEMENT
TO PROVIDE INSURANCE

    

    
      
        
          	
                  Borrower:

                	 
      	
                  ART’S-WAY MANUFACTURING COMPANY, INC.

                	
                  Lender:

                	 
      	
                  WEST
      BANK

                
	 
      	 
      	
                  (TIN:  _________________)
      

                	
                   

                	 
      	      
                  MAIN
      BANK  

                
	 
      	 
      	
                  5556
      HIGHWAY 9 WEST, BOX 288

                	
                   

                	 
      	      
                  1601
      22ND STREET  

                
	 
      	 
      	
                  ARMSTRONG,
      IA 50514

                	
                   

                	 
      	      
                  WEST
      DES MOINES, IA 50266  

                
	 
      	 
      	
                   

                	  
      	 
      	      
                  (515)
      222-2300 

                

        

      

    

    
       

      
        
          

        

         

      

    

    INSURANCE
REQUIREMENTS.  Grantor, ART’S-WAY MANUFACTURING COMPANY, INC.
(“Grantor”), understands that insurance coverage is required in connection with
the extending of a loan or the providing of other financial accommodations to
Grantor by Lender.  These requirements are set forth in the security
documents for the loan.  The following minimum insurance coverages
must be provided on the following described collateral (the
“Collateral”):

    

    
      
        	
                Collateral:

              	 
      	
                All
      Inventory and Equipment.

              
	 
      	 
      	
                Type:  All
      risks, including fire, theft and liability.

              
	 
      	 
      	
                Amount:  Loan
      Amount.

              
	 
      	 
      	
                Basis:  Replacement
      value.

              
	 
      	 
      	
                Endorsements:  Lender
      loss payable clause with stipulation that coverage will not be cancelled
      or diminished without a minimum of 30 days prior written notice to
      Lender.

              
	 
      	 
      	
                Latest Delivery
      Date:  By the loan closing date.

              
	 
      	 
      	 
      
	
                Collateral:

              	 
      	
                5555
      HIGHWAY 9 WEST, ARMSTRONG, IA 50514.

              
	 
      	 
      	
                Type:  Fire
      and extended coverage,

              
	 
      	 
      	
                Amount:  Loan
      Amount.

              
	 
      	 
      	
                Basis:  Replacement
      value.

              
	 
      	 
      	
                Endorsements:  Standard
      mortgagee’s clause with stipulation that coverage will not be cancelled or
      diminished without a minimum of 30 days prior written notice to Lender,
      and without disclaimer of the insurer’s liability for failure to give such
      notice.

              
	 
      	 
      	
                Latest Delivery
      Date:  By the loan closing
  date.

              

      

    

    

    INSURANCE
COMPANY.  Grantor may obtain insurance from any insurance
company Grantor may choose that is reasonably acceptable to
Lender.  Grantor understands that credit may not be denied solely
because insurance was not purchased through Lender.

    

    FLOOD
INSURANCE.  Flood Insurance for the Collateral securing this
loan is described as follows:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Real Estate at 5556 HIGHWAY 9 WEST,
ARMSTRONG, IA 50514.

    Should
the Collateral at any time be deemed to be located in an area designated by the
Director of the Federal Emergency Management Agency as a special flood hazard
area.  Grantor agrees to obtain and maintain Federal Flood Insurance,
if available, for the full unpaid principal balance of the loan and any prior
liens on the property securing the loan, up to the maximum policy limits set
under the National Flood Insurance Program, or as otherwise required by Lender,
and to maintain such insurance for the term of the loan.  Flood
insurance may be purchased under the National Flood Insurance Program or from
private insurers.

    

    INSURANCE MAILING
ADDRESS.  All documents and other materials relating to
insurance for this loan should be mailed, delivered or directed to the following
address:

    

    WEST
BANK

    P.O. BOX
65020

    WEST DES
MOINES, IA 50265

    

    FAILURE TO PROVIDE
INSURANCE.  Grantor agrees to deliver to Lender, on the latest
delivery date stated above, proof of the required insurance as provided above,
with an effective date of June 8, 2009, or earlier.  Grantor
acknowledges and agrees that if Grantor fails to provide any required insurance
or fails to continue such insurance in force, Lender may do so at Grantor’s
expense as provided in the applicable security document.  The cost of
any such insurance, at the option of Lender, shall be added to the indebtedness
as provided in the security document.  GRANTOR ACKNOWLEDGES THAT IF
LENDER SO PURCHASES ANY SUCH INSURANCE, THE INSURANCE WILL PROVIDE LIMITED
PROTECTION AGAINST PHYSICAL DAMAGE TO THE COLLATERAL, UP TO AN AMOUNT EQUAL TO
THE LESSER OF (1) THE UNPAID BALANCE OF THE DEBT, EXCLUDING ANY UNEARNED FINANCE
CHARGES, OR (2) THE VALUE OF THE COLLATERAL; HOWEVER, GRANTOR’S EQUITY IN THE
COLLATERAL MAY NOT BE INSURED.  IN ADDITION, THE INSURANCE MAY NOT
PROVIDE ANY PUBLIC LIABILITY OR PROPERTY DAMAGE INDEMNIFICATION AND MAY NOT MEET
THE REQUIREMENTS OF ANY FINANCIAL RESPONSIBILITY LAWS.

    

    AUTHORIZATION.  For
purposes of insurance coverage on the Collateral, Grantor authorizes Lender to
provide to any person (including any insurance agent or company) at information
Lender deems appropriate, whether regarding the Collateral, the loan or other
financial accommodations, or both.

    

    GRANTOR
ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS AGREEMENT TO PROVIDE INSURANCE
AND ALL OTHER DOCUMENTS RELATING TO THIS DEBT.

    

    GRANTOR
ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO PROVIDE
INSURANCE AND AGREES TO ITS TERMS.  THIS AGREEMENT IS DATED JUNE 8,
2009.

     

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

     

    
      
        	
                GRANTOR:

              
	 
      
	
                ART’S-WAY
      MANUFACTURING COMPANY, INC.

              
	 
      	 
      
	
                By:

              	
                /s/ Carrie L. Majeski

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

              
	 
      	
                MANUFACTURING
      COMPANY, INC.

              

      

    

     

    
      
        

      

      
        	
              	
                FOR
      LENDER USE ONLY

              	 
      
	
                DATE:
      __________

              	
                INSURANCE
      VERIFICATION

              	
                PHONE__________

              

      

      

      
        
          	
                  AGENT’S NAME:   

                	 
      

        

      

      
        
          
            	
                    AGENCY:   

                  	 
      

          

        

      

      
        
          
            	
                    ADDRESS:   

                  	 
      

          

        

      

      
        
          
            	
                    INSURANCE COMPANY:   

                  	 
      

          

        

      

      
        
          
            	
                    POLICY NUMBER:   

                  	 
      

          

        

      

      
        
          
            
              
                	
                        EFFECTIVE DATES:   

                      	 
      
	 	 

              

            

          

        

      

      
        
          
            	
                    COMMENTS:   

                  	 
      

          

        

      

      
        
 

      
        
           

        

        
          - 3
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      AGREEMENT
TO PROVIDE INSURANCE

      (Continued)

       

      
        
          

        

      

      
        	
              	
                FOR
      LENDER USE ONLY

              	 
      
	
                DATE:
      __________

              	
                INSURANCE
      VERIFICATION

              	
                PHONE__________

              

        

        
          
            	
                    AGENT’S NAME:   

                  	 
      

          

        

        
          
            
              	
                      AGENCY:   

                    	 
      

            

          

        

        
          
            
              	
                      ADDRESS:   

                    	 
      

            

          

        

        
          
            
              	
                      INSURANCE COMPANY:   

                    	 
      

            

          

        

        
          
            
              	
                      POLICY NUMBER:   

                    	 
      

            

          

        

        
          
            
              
                
                  	
                          EFFECTIVE DATES:   

                        	 
      
	 	 

                

              

            

          

        

        
          
            
              	
                      COMMENTS:   

                    	 
      

            

          

        

      

      

      
        
           

        

        
          - 4
-

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