EXHIBIT 10.1

$605,095 term note between Champion Industries, Inc. and First Century Bank
dated as of July 25, 2005.

--------------------------------------------------------------------------------

 
 
CHAMPION INDUSTRIES, INC.
 
FIRST CENTURY BANK, N.A.
 
PORT #
 
Loan Number
 
164191-01
 
1295152
 
PO BOX 2968
 
500 FEDERAL STREET
 
Date
 
07-25-2005
 
HUNTINGTON, WV 25703
 
BLUEFIELD, WV 24701
 
Maturity Date
 
07-24-2010
 
 
 
Loan Amount
 
$ 605,095.00
 
 
 
Renewal of
 
_____________
 
 
 
BR/ RESP 01/801
 
BORROWERS NAME AND ADDRESS
 
LENDER’S NAME AND ADDRESS
 
 
 
“I” includes each borrower above, jointly and severally.
 
“You” means the lender, its successors and assigns
 
 

For value received, I promise to pay to you, or your order, at your address
listed above the PRINCIPAL sum of SIX HUNDRED FIVE THOUSAND NINETY FIVE AND
NO/100 Dollars $605,095.00 

n Single Advance: I will receive all of this principal sum on 7-25-2005 . No
additional advances are contemplated under this note.

o Multiple Advance: The principal sum shown above is the maximum amount of
principal l can borrow under this note. On                  I will receive the
amount of 0.00 and future principal advances are contemplated.

Conditions: The conditions for future advances are UPON REQUEST.
o Open End Credit: You and I agree that I may borrow up to the maximum amount of
principal more than one time. This feature is subject to all other conditions
and expires on __________________. 

o Closed- End Credit: You and I agree that I may borrow up to the maximum only
one time (and subject to all other conditions).

INTEREST: I agree to pay interest on the outstanding principal balance from
07-25-2005 at the rate of 6.250 % per year until 07-26-2005.

n Variable Rate: This rate may then change as stated below.
n Index Rate: The future rate will be EQUAL TO  the following index rate: THE
BASE RATE ON CORPORATE LOANS POSTED BY AT LEAST 75% OF THE NATION'S 30 LARGEST
BANKS KNOWN AS THE WALL STREET JOURNAL PRIME RATE. THE RESULT OF THIS
CALCULATION WILL BE ROUNDED UP TO THE NEAREST 0.125
o No Index: The future rate will not be subject to any internal or external
index. It will be entirely in your control.
n Frequency and Timing: The rate on this note may change as often as EVERY DAY
BEGINNING 07-26-2005.
A change in the interest rate will take effect ON THE SAME DAY.

o Limitations: During the term of this loan, the applicable annual interest rate
will not be more than _________% or less than  ____________%. The rate may not
change more than ______ % each_____________.
Effect of Variable Rate: A change in the interest rate will have the following
effect on the payments:
n The amount of each scheduled payment will change.
o  The amount of the final payment will change.
o ______________________________________________________________________.

ACCRUAL METHOD: Interest will be calculated on an ACTUAL/360 basis.

POST MATURITY RATE: I agree to pay interest on the unpaid balance of this note
owing after maturity, and until paid in full, as stated below:
n on the same fixed or variable rate basis in effect before maturity (as
indicated above).
o at a rate equal to __________________________________________________.

n LATE CHARGE: if a payment is made more than 10 days after it is due, I agree
to pay a late charge of 5.000% OF THE LATE AMOUNT.

n ADDITIONAL CHARGES: In addition to interest, I agree to pay the following
charges which nare o are not included in the principal amount above: $85.00 LOAN
PROCESSING FEE; $10.00 UCC RECORDING FEE.

PAYMENTS: I agree to pay this note as follows:

ON DEMAND, BUT IF NO DEMAND IS MADE THEN 60 MONTHLY PAYMENTS OF $11,793.50
ACCRUED INTEREST CALCULATED ON THE AMOUNT OF CREDIT OUTSTANDING BEGINNING ON
08-24-2005. THIS IS A VARIABLE RATE LOAN AND THE PAYMENT AMOUNTS MAY CHANGE
AFTER THE 1ST PAYMENT AND EVERY PAYMENT THEREAFTER. 

ADDITIONAL TERMS:

THIS NOTE IS FURTHER SUBJECT TO THE CROSS-COLLATERALIZATION/CROSS-DEFAULT
AGREEMENT DATED 07/25/05
 
n SECURITY:  This note is separately secured by (describe separate document by
type and date):
 
PURPOSE: The purpose of this loan is FINANCE LAW SUIT SETTLEMENT.
 
SECURITY AGREEMENTS DATED 4/2/04, 9/9/04 & 7/25/05
 
SIGNATURES:  I AGREE TO THE TERMS OF THIS NOTE (INCLUDING THOSE ON PAGE 2).  I
have received a copy on today’s date.
 
(This section is for your internal use.  Failure to list a separate security
department does not mean the agreement will not secure this note.)
 
 
 
 
Signature for Lender
 
CHAMPION INDUSTRIES, INC.
  /s/ Jeffery Forlines
  /s/ Todd R. Fry
 
JEFFERY FORLINES
 
  TODD R. FRY, VICE PRESIDENT & CFO

 

 

 

 

 

 

 

 

DEFINITIONS: As used on page 1, “n” means the terms that apply to this loan.
"I", "me" or "my" means each Borrower who signs this note and each other person
or legal entity (including guarantors, endorsers end sureties) who agrees to pay
this note (together referred to as "us"). "You" or "your" means the Lender and
its successors and assigns.

APPLICABLE LAW: The law of the state in which you are located will govern this
note. Any term of this note which is contrary to applicable aw will not be
effective, unless the law permits you and me to agree to such a variation. If
any provision of this agreement cannot be enforced according to its terms, this
fact will not affect the enforceability of the remainder of this agreement No
modification of this agreement may be made without your express written consent.
Time is of the essence in this agreement.

COMMISSIONS OR OTHER REMUNERATION: I understand and agree that my insurance
premium paid to insurance companies as part of this note will involve money
retained by you or paid back to you as commissions or other remuneration.

In addition, I understand and agree that some other payment to third parties as
part of this note may also involve money retained by you or paid back to you as
commissions or other remuneration.

PAYMENTS: Each payment I make on this note will first reduce the amount I owe
you for charges which are neither interest nor principal. The remainder of each
payment will then reduce accrued unpaid interest, and then unpaid principal. If
you and I agree to a different application of payments, we will describe our
agreement on this note. I may prepay a part of, or the entire balance of this
loan without penalty, unless we specify to the contrary on this note. Any
partial prepayment will not excuse or reduce any later scheduled payment until
this note is paid in full (unless, when I make the prepayment, you and I agree
in writing to the contrary).

INTEREST: Interest accrues on the principal remaining unpaid from time to time,
until paid in full. If I receive the principal in more than one advance, each
advance will start to earn interest only when I receive the advance. The
interest rate in effect on this note at any given time will apply to the entire
principal advanced at that time. Notwithstanding anything to the contrary, I do
not agree to pay and you do not intend to charge any rate of interest that is
higher than the maximum rate of interest you could charge under applicable law
for the extension of credit that is agreed to hers (either before or after
maturity). If any notice of interest accrual is sent and is in error, we
mutually agree to correct it and if you actually collect more interest than
allowed by law and this agreement, you agree to refund it to me.

INDEX RATE: The index will serve only as a device for setting the rate on this
note. You do not guarantee by selecting this index, or the margin, that the rate
on this note will be the same rate you charge on any other; loan or class of
loan to me or other borrowers.

ACCRUAL METHOD: The amount of interest that I will pay on this loan will be
calculated using the interest rate and accrual method stated on page 1 of this
note. For the purpose of interest calculation, the accrual method will determine
the number of days in a "year". If no accrual method is stated, then you may use
any reasonable accrual method for calculating interest.

POST MATURITY RATE: For purposes of deciding when the "Post Maturity Rate"
(shown on page 1) applies, the term "maturity" means the date of the last
scheduled payment indicated on page 1 of this note or the date you accelerate
payment on the note, whichever is earlier.

SINGLE ADVANCE LOANS: If this is a single advance loan, you and I expect that
you will make only one advance of principal. However, you may add other amounts
to the principal if you make any payments described in this “PAYMENTS BY LENDER”
paragraph below.

MULTIPLE ADVANCE LOANS: If this is a multiple advance loan, you and I expect
that you will make more than one advance of principal. If this is closed end
credit, repaying a part of the principal will not entitle me to additional
credit.

PAYMENTS BY LENDER: If you are authorized to pay, on my behalf, charges I am
obligated to pay (such as property insurance premiums) then you may treat those
payments made by you as advances and add them to the unpaid principal under this
note, or you may demand immediate payment of the charges.

SET-OFF: I agree that you may set off any amount due and payable under this note
against any right I have to receive money from you.

“Right to receive money from you" means:

(1) any deposit account balance I have with you

(2) any money owed to me on an item presented to you or in your possession for
collection or exchange; and

(3) any repurchase agreement or other nondeposit obligation.

"Any amount due and payable under this note" means the total amount of which you
are entitled to demand payment under the terms of this note at the time you set
it off. This total includes any balance the due date for which you properly
accelerate under this note.

If my right to receive money tom you is also owned by someone who has not agreed
to pay this note, your right of set-off will apply to my interest in the
obligation end to any other amounts I could withdraw on my sole request or
endorsement, Your right of set-off does not apply to an account or other
obligation where my rights are only as a representative. It also does not apply
to any Individual Retirement Account or other tax-deferred retirement account.

You will not be liable for the dishonor of any check when the dishonor occurs
because you set off this debt against any of my accounts. I agree to hold you
harmless from any such claims arising as a result of your exercise of your right
of set off.

REAL ESTATE OR RESIDENCE SECURITY: If this note is secured by real estate or e
residence that is personal property, the existence of a default end your
remedies for such a default will be determined by applicable law, by the terms
of any separate instrument creating the security interest and, to the extent-not
prohibited by law and not contrary to the terms of the separate security
instrument, by the "Default” and “Remedies" paragraphs herein.

DEFAULT: I will be in default if any one or more of the following occur: (1) I
fail to make a payments on time or in the amount due; (2) I fail to keep the
property insured, If required; (3)I fail to pay, or keep any promise, on any
debt or agreement I have with you; (4) any other creditor of mine attempts to
collect any debt I owe him through court proceedings; (5) I die, am declared
incompetent, make an assignment for the benefit of creditors, or become
insolvent (either because my liabilities exceed my assets or I am unable to pay
my debts as they become duo); (6)I make any written statement or provide any
financial information that is untrue or inaccurate at the time it was provided;
(7)I do or fail to do something which causes you to believe that you will have
difficulty collecting the amount I owe you; (8) any collateral securing this
note is used in a manner or for a purpose which threatens confiscation by a
legal authority; (9) I change my name or assume an additional name without first
notifying you before making such a change; (10) I fail to plant, cultivate and
harvest crops in due season if I am a producer of crops; (11) any loan proceeds
are used for a purpose that will contribute to excessive erosion of highly
erodible land or to the conversion of wetlands to produce an agricultural
commodity, as further explained in 7 C.F.R. Part 1940, Subpart G, Exhibit M.

REMEDIES: If I am in default on this note you have, but are not limited to the
following remedies:

(1) You may demand immediate payment of all I owe you under this

note (principal, accrued unpaid interest and other accrued charges).

(2) You may set off this debt against any right I have to the payment of money
from you, subject to the terms of the "Set-Off" paragraph herein.

(3) You may demand security, additional security, or additional parties to be
obligated to pay this note as a condition for not using any other remedy.

(4) You may refuse to make advances to me or allow purchases on credit by me.

(5) You may use any remedy you have under state or federal law.

By selecting any one or more of these remedies you do not give up your right to
later use any other remedy. By waiving your right to declare an event to be a
default, you do not waive your right to later consider the event as a default if
it continues or happens again.

COLLECTION COSTS AND ATTORNEY'S FEES: I agree to pay all costs of collection,
replevin or any other or similar type of cost if I am In default. In addition,
if you hire an attorney to collect this note, I also agree to pay any tee you
incur with such attorney plus court costs except whore prohibited by law). To
the extent permitted by the United States bankruptcy Code, I also agree to pay
the reasonable attorney's fees and costs you incur to collect this debt as
awarded by any court exercising jurisdiction under the Bankruptcy Code.

WAIVER: I give up my rights to require you to do certain things. I will not
require you to:

(1) demand payment of amounts due (presentment);

(2) obtain official certification of nonpayment (protest); or

(3) give notice that amounts due have not been paid (notice of dishonor).

I waive any defenses I have based on surety ship or impairment of collateral.

OBLIGATIONS INDEPENDENT: I understand that I must pay this note even if someone
else has also agreed to pay it (by, for example, signing this form or a separate
guarantee or endorsement). You may sue me alone, or anyone else who is obligated
on this note, or any number of us together, to collect this note. You may do so
without any notice that it has not been paid (notice of dishonor). You may
without notice release any party to this agreement without releasing any other
party. If you give up any of your rights, with or without notice, it will not
affect my duty to pay this note. Any extension of new credit to any of us or
renewal of this note by all or less than all of us will not release me from my
duty to pay it. (Of course, you are entitled to only one payment in full.) I
agree that you may at your option extend this note or the debt represented by
this note, or any portion of the note or debt, from time to time without limit
or notice and for any term without affecting my liability for payment of the
note. I will not assign my obligation under this agreement without your prior
written approval.

FINANCIAL INFORMATION: I agree to provide you, upon request, any financial
statement or information you may deem necessary. I warrant that the financial
statements and information I provide to you are or will be accurate, correct and
complete.

NOTICE: Unless otherwise required by law, any notice to me shall be given, by
delivering it or by mailing it by first class mail addressed to me at my last
known address. My current address is on page t. I agree to inform you in writing
of any change in my address. I will give any notice to you by mailing it first
class to your address stated on page 1 of this agreement, or to any other
address that you have designated.

 
DATE OF TRANSACTION
 
PRINCIPAL ADVANCE
 
BORROWER’S INITIALS (not required)
 
PRINCIPAL PAYMENTS
 
PRINCIPAL BALANCE
 
INTEREST RATE
 
INTEREST PAYMENTS
 
INTEREST PAID THROUGH:
  
 
$
  
 
$
 
$
 
%
 
$
  
  
 
$
  
 
$
 
$
 
%
 
$
  
  
 
$
  
 
$
 
$
 
%
 
$
  
  
 
$
  
 
$
 
$
 
%
 
$
  
  
 
$
  
 
$
 
$
 
%
 
$
  
  
 
$
  
 
$
 
$
 
%
 
$
  
  
 
$
  
 
$
 
$
 
%
 
$
  
  
 
$
  
 
$
 
$
 
%
 
$
  
  
 
$
  
 
$
 
$
 
%
 
$
  
  
 
$
  
 
$
 
$
 
%
 
$
  
  
 
$
  
 
$
 
$
 
%
 
$
  

COMMERCIAL SECURITY AGREEMENT

 
 
DEBTOR NAME AND ADDRESS  
 
SECURED PARTY NAME AND ADDRESS
 
CHAMPION INDUSTRIES, INC.
 
FIRST CENTURY BANK, N.A.
 
P O BOX 2968
 
600 FEDERAL STREET
 
HUNTINGTON, WV 25703
 
BLUEFIELD, WV  24701
 
 
 
55-0717455
 
 
 
 
Type: o  individual o partnership n corporation o ______________
 
State of organization/registration (if applicable) WV___________________
 
o lf checked, refer to addendum for additional Debtors and signatures.

 

The date of this Commercial Security Agreement (Agreement) is 07-05-2005.

SECURED DEBTS. This Agreement will secure all sums advanced by Secured Party
under the terms of this Agreement and the payment and performance of the
following described SECURED DEBTS that (check one) n Debtor o
 __________________________________________________________________ (Borrower)
owes to Secured Party:

o Specific debts. The following debts and all extensions, renewals, refinancing,
modifications, and replacements (describe):

n  All Debts. All present and future debts, even if this Agreement is not
referenced, the debts are also secured by other collateral, or the future debt
is unrelated to or of a different type than the current debt. Nothing in this
Agreement is a commitment to make future loans or advances.

SECURITY INTEREST. To secure the payment and performance of the Secured Debts,
Debtor gives Secured Party a security interest in all of the Property described
in this Agreement that Debtor owns or has sufficient rights in which to transfer
an interest, now or in the future, wherever the Property is or will be located,
and all proceeds and products of the Property. “Property” includes all parts,
accessories, repairs, replacements, improvements, and accessions to the
Property; any original evidence of title or ownership; and all obligations that
support the payment or performance of the Property. “Proceeds” includes anything
acquired upon the sale, lease, license, exchange, or other disposition of the
Property; any rights and claims arising from the Property; and any collections
and distributions on account of the Property. This Agreement remains in effect
until terminated in writing, even if the Secured Debts are paid and Secured
Party is no longer obligated to advance funds to Debtor or Borrower.

PROPERTY DESCRIPTION. The Property is described as follows:

o  Accounts and Other Rights to Payment: All rights to payment, whether or not
earned by performance, including, but not limited to, payment for property or
services sold, leased, rented, licensed, or assigned. Ibis includes any rights
and interests (including all liens) which Debtor may have by law or agreement
against any account debtor or obligor of Debtor.

o  Inventory: All inventory held for ultimate sale or lease, or which has been
or will be supplied under contracts of service, or which are raw materials, work
in process, or materials used or consumed in Debtor's business.

o  Equipment: All equipment including, but not limited to, machinery, vehicles,
furniture, fixtures, manufacturing equipment, farm machinery and equipment, shop
equipment, office and record keeping equipment, parts, and tools. The Property
includes any equipment described in a list or schedule Debtor gives to Secured
Party, but such a list is not necessary to create a valid security interest in
all of Debtor's equipment.

o  Instruments and Chattel Paper: All instruments, including negotiable
instruments and promissory notes and any other writings or records that evidence
the right to payment of a monetary obligation, and tangible and electronic
chattel paper.

o  General Intangibles: All general intangibles including, but not limited to,
tax refunds, patents and applications for patents, copyrights, trademarks, trade
secrets, goodwill, trade names, customer lists, permits and franchises, payment
intangibles, computer programs and all supporting information provided in
connection with a transaction relating to computer programs, and the right to
use Debtor's name.

o  Documents: All documents of title including, but not limited to, bills of
lading, dock warrants and receipts, and warehouse receipts.

o  Farm Products and Supplies: All farm products including, but not limited to,
all poultry and livestock and their young, along with their produce, products,
and replacements; all crops, annual or perennial, and all products of the crops;
and all feed, seed, fertilizer, medicines, and other supplies used or produced
in Debtor's farming operations.

o  Government Payments and Programs: All payments, accounts, general
intangibles, and benefits including, but not limited to, payments in kind,
deficiency payments, letters of entitlement, warehouse receipts, storage
payments, emergency assistance and diversion payments, production flexibility
contracts, and conservation reserve payments under any preexisting, current, or
future federal or state government program.

o  Investment Property: All investment property including, but not 1imited to,
certificated securities, uncertified securities, securities entitlements,
securities accounts, commodity contracts, commodity accounts, and financial
assets.

o  Deposit Accounts: All deposit accounts including, but not limited to, demand,
time, savings, passbook, and similar accounts.

n  Specific Property Description: The Property includes, but is not limited by,
the following (if required, provide real estate description):

HEIDELBERG PRESS AND ACCESSORIES, HEIDELBERG 40” FIVE COLOR PRESS, (2)
HEIDELBERG DI PRO PRESS ACCESSORIES, RESBECK COLLATORS/STICHER TRIMMER SITEX
COLOR SCANNER, MT-R 1120 IMAGE SETTER EACH AS DESCRIBED ON EXHIBIT “A” ATTACHED
HERETO AND MADE A PART HEREOF.DEMO HEIDELBERG QMD 146-4 PRO OFFSET PRSS S/N
991619 WITH ALL STANDARD EQUIPMENT AND HEIDELBERG PRESS AND ACCESSORIES

USE OF PROPERTY. The Property will be used for o personal n business o
 agricultural o _____________________purposes.

 
SIGNATURES. Debtor agrees to the terms on pages 1 and 2 of this Agreement and
acknowledges receipt of a copy of this Agreement.
DEBTOR    
SECURED PARTY
CHAMPION INDUSTRIES, INC 
FIRST CENTURY BANK, N.A
________________________ 
________________________ 
TODD R. FRY, VICE PRESIDENT & CFO 
JEFFERY FORLINES

 

GENERAL PROVISIONS. Each Debtor's obligations under this Agreement are
independent of the obligations of any other Debtor. Secured Party may sue each
Debtor individually or together with any other Debtor. Secured Party may release
any part of the Property and Debtor will remain obligated under this Agreement.
The duties and benefits of this Agreement will bind the successors and assigns
of Debtor and Secured Party. No modification of this Agreement is effective
unless made in writing and signed by Debtor and Secured Party. Whenever used,
the plural includes the singular and the singular includes the plural. Time is
of the essence.

APPLICABLE LAW. This Agreement is governed by the laws of the state in which
Secured Party is located. In the event of a dispute, the exclusive forum, venue,
add place of jurisdiction will be the state in which Secured Party is located,
unless otherwise required by law. If any provision of this Agreement is
unenforceable by law, the unenforceable provision will be severed and the
remaining provisions will still be enforceable.

NAME AND LOCATION. Debtor's name indicated on page 1 is Debtor's exact legal
name. If Debtor is an individual, Debtor's address is Debtor's principal
residence. If Debtor is not an individual, Debtor's address is the location of
Debtor's chief executive offices or sole place of business. If Debtor is an
entity organized and registered under state law, Debtor has provided Debtor's
state of registration on page 1. Debtor will provide verification of
registration and location upon Secured Party's request. Debtor will provide
Secured Party with at least 30 days notice prior to any change in Debtor's name,
address, or state of organization or registration.

WARRANTS AND REPRESENTATIONS. Debtor has the right authority, and power to enter
into this Agreement. The execution and delivery of this Agreement will not
violate any agreement governing Debtor or Debtor's property, or to which
Debtor’s a party. Debtor makes the following warrants and representations which
continue as long as this Agreement is in effect:

(1) Debtor is duly organized and validly existing in all jurisdictions in which
Debtor does business;

(2) the execution and performance of the terms of this Agreement have been duly
authorized, have received all necessary governmental approval, and will not
violate any provision of law or order;

(3) other than previously disclosed to Secured Party, Debtor has not changed
Debtor’s name or principal place of business within the last 10 years and has
not used any other trade or fictitious name; and

(4) Debtor does not and will not use any other name without Secured Party's
prior written consent.

Debtor owns all of the Property, and Secured Party's claim to the Property is
ahead of the claims of any other creditor, except as otherwise agreed and
disclosed to Secured Party prior to any advance on the Secured Debts. The
Property has not been used for any purpose that would violate any laws or
subject the Property to forfeiture or seizure.

DUTIES TOWARD PROPERTY, Debtor will protect the Property and Secured Party's
interest against any competing claim. Except as otherwise agreed, Debtor will
keep the Property in Debtor's possession at the address indicated on page 1 of
this Agreement. Debtor will keep the Property in good repair and use the
Property only for purposes specified on page 1. Debtor will not use the Property
in violation of any law and will pay all taxes and assessments levied or
assessed against the Property. Secured Party has the right of reasonable access
to inspect the Property, including the right to require Debtor to assemble and
make the Property available to Secured Party. Debtor will immediately notify
Secured Party of any loss or damage to the Property. Debtor will prepare and
keep books, records, and accounts about the Property and Debtor's business, to
which Debtor will allow 5ecured Party reasonable access.

Debtor will not sell, offer to sell, license, lease, or otherwise transfer or
encumber the Property without Secured Party's prior written consent. Any
disposition of the Property will violate Secured Party’s rights, unless the
Property is inventory sold in the ordinary course of business at fair market
value. If the Property includes chattel paper or instruments, either as original
collateral or as proceeds of the Property, Debtor will record Secured Party's
interest on the face of the chattel paper or instruments.

If the Property includes accounts, Debtor will not settle any account for less
than the full value, dispose of the accounts by assignment, or make any material
change in the terms of any account without Secured Party's written consent.
Debtors will collect all accounts in the ordinary course of business, unless
otherwise required by Secured Party. Debtor will keep the proceeds of the
accounts all any goods returned to Debtor, in trust for Secured Party and will
not commingle the proceeds or returned goods with any of Debtor's other
property. Secured Party has the right to require Debtor to pay Secured Party the
fuel price on any returned items. Secured Party may require account debtors to
make payments under the accounts directly to Secured Party. Debtor will deliver
the accounts to Secured Party at Secured Party’s request. Debtor will give
Secured Party all statements, reports, certificates, list of account debtors
(showing names, addresses, and amounts owing), invoices applicable to each
account, and any other data pertaining to the accounts as Secured Party
requests.

If the Property includes farm products, Debtor will provide Secured Party with a
list of the buyers, commission merchants, and selling agents to or through whom
Debtor may sell the farm products. Debtor authorizes Secured Party to notify any
additional parties regarding Secured Party's interest in Debtor's farm products,
unless prohibited by law. Debtor agrees to plant, cultivate, and harvest crops
in due season. Debtor will be in default if any loan proceeds are used for a
purpose that will contribute to excessive erosion of highly erodible land or to
the conversion of wetland to produce or to make possible the production of an
agricultural commodity, further explained in 7 CFR Part 1940, Subpart G, and
Exhibit M. If Debtor pledges the Property to Secured Party (delivers the
Property into the possession or control of Secured Party or a designated third
party), Debtor will, upon receipt, deliver any proceeds and products of the
Property to Secured Party. Debtor will provide Secured Party with any notices,
documents, financial statements, reports, and other information relating to the
Property Debtor receives as the owner of the Properly.

PERFECTION OF SECURITY INTREST. Debtor authorizes Secured Party to file a
financing statement covering the Property. Debtor will comply with, facilitate,
and otherwise assist Secured Party in connection with obtaining possession or
control over the Property for purposes of perfecting Secured Party's interest
under the Uniform Commercial Code.

INSURANCE. Debtor agrees to keep the Property insured against the risks
reasonably associated with the Property until the Property is released from this
Agreement. Debtors will maintain this insurance in the amounts Secured Party
requires. Debtor may choose the insurance company, subject to Secured Party's
approval, which will not be unreasonably withheld. Debtor will have the
insurance provider name Secured Party as loss payee on the insurance policy.
Debtor will give Secured Party and the insurance provider immediate notice of
any loss. Secured Party may apply the insurance proceeds toward the Secured
Debts. Secured Party may require additional security as a condition of
permitting any insurance proceeds to be used to repair or replace the Property.
If Secured Party acquires the Property in damaged condition, Debtor's rights to
any insurance policies and proceeds will pass to Secured Party to the extent of
the Secured Debts. Debtor will immediately notify Secured Party of the
cancellation or termination of insurance. If Debtor fails to keep the Property
insured, or fails to provide Secured Party with proof of insurance, Secured
Party may obtain insurance to protect Secured Party's interest in the Property.
The insurance may include coverage not originally required of Debtor, may be
written by a company other than one Debtor would choose, and may be written at a
higher rate than Debtor could obtain if Debtor purchased the insurance.

AUTHORITY TO PERFORM. Debtor authorizes Secured Party to do anything Secured
Party deems reasonably necessary to protect the Property and Secured Party's
interest in the Property. If Debtor fails to perform any of Debtor's duties
under this Agreement, Secured Party is authorized, without notice to Debtor, to
perform the duties or cause them to be performed. These authorizations include,
but are not limited to, permission to pay for the repair, maintenance, and
preservation of the Property and take any action to realize the value of the
Property. Secured Party's authority to perform for Debtor des not create an
obligation to perform and Secured Party's failure to perform will not preclude
Secured Party from exercising any other rights under the law or this Agreement.

If Secured Party performs for Debtor, Secured Party will use reasonable care.
Reasonable care will not include any steps necessary to preserve rights against
prior Parties or any duty to take action in connection with the management of
the Property.

If Secured Party comes into possession of the Property, Secured Party will
preserve and protect the Property to the extent required by law. Secured Party's
duty of care with respect to the Property will be satisfied if Secured Party
exercises reasonable care in the safekeeping of the Property or in the selection
of a third party in possession of the Property.

Secured Party may enforce the obligations of an account debtor or other person
obligated on the Property. Secured Party may exercise Debtor's rights with
respect to the account debtor's or other person's obligations to make payment or
otherwise render performance to Debtor, and enforce any Security interest that
secures such obligations.

PURCHASE MONEY SECURITY INTEREST. If the Property includes items purchased with
the Secured Debts, the Property purchased with the Secured Debts will remain
subject to Secured Party's security interest until the Secured Debts are paid in
full. Payments on any non-purchase money loan also secured by this Agreement
will not be applied to the purchase money loan. Payments on the purchase money
loan will be applied first to the non-purchase money portion of the loan, if
any, and then to the purchase money portion in the order h which the purchase
money Property was acquired. If the purchase money Property was acquired at the
same time, payments will be applied in the order Secured Party selects. No
security interest will be terminated by application of this Formula.

DEFAULT. Debtor will be in default if:

(1) Debtor (or Borrower, if not the same) fails to make a payment in full when
due;

(2) Debtor fails to perform any condition or keep any covenant on this or any
debt or agreement Debtor has with Secured Party;

(3) A default occurs under the terms of any instrument or agreement evidencing
or pertaining to the Secured Debts;

(4) anything any happens that either causes Secured Party to reasonably believe
that Secured Party will have difficulty in collecting the Secured Debts or
significantly impairs the value of the Property.

REMEDIES. After Debtor defaults, and after Secured Party gives any legally
required notice and opportunity to cure the default, Secured Party ready at
Secured Party's option do any one or more of the following:

(1) Make all or any part of the Secured Debts immediately due and accrue
interest at the highest post-maturity interest rate;

(2) Require. Debtor to gather the Property and make it available to Secured
Party in a reasonable fashion;

(3) enter upon Debtor's premises and take possession of all or any part of
Debtor's property for purposes of preserving the Property or its value and use
and operate Debtor's property to protect Secured Party's interest, all without
payment or compensation to Debtor;

(4) use any remedy allowed by state or federal law, or provided in any agreement
evidencing or pertaining to the Secured Debts.

If Secured Party repossesses the Property or enforces the obligations of an
account debtor, Secured Party may keep or dispose of the Property as provided by
law. Secured Party will apply the proceeds of any collection or disposition
first to Secured Party's expenses of enforcement, which includes reasonable
attorneys' fees and legal expenses to the extent not prohibited by law, and then
to the Secured Debts. Debtor (or Borrower, if not the same) will be liable for
the deficiency, if any.

By choosing any one or more of these remedies, Secured Party does not give up
the right to use any other remedy. Secured Party does not waive a default by not
using a remedy.

WAIVER. Debtor waives all claims for damages caused by Secured Party’s acts or
omissions where Secured Party acts in good faith.

NOTICE AND ADDITIONAL DOCUMENTS. Where notice is required, Debtor agrees that 10
days prior written notice will be reasonable notice to Debtor under the Uniform
Commercial Code. Notice to one party is notice to all parties. Debtor agrees to
sign, deliver, and file any additional documents and certifications Secured
Party considers necessary to perfect, continue, or preserve Debtor's obligations
under this Agreement and to confirm Secured Party's lien status on the Property.
 

--------------------------------------------------------------------------------

CROSS-COLLATERALIZATION AND CROSS-DEFAULT AGREEMENT

           THIS CROSS-COLLATERALIZATION AND CROSS-DEFAULT AGREEMENT, made and
entered into this 25TH day of July, 2005, by and between Champion Industries,
Inc. ("Borrower"); Bourque Printing, Inc. ("Bourque"); and FIRST CENTURY BANK,
N.A., ("Lender").

W I N E S S E T H

           WHEREAS, as a part of the consideration and as additional security
for the "Lender" making a loan to "Borrower": the "Lender" has required and the
"Borrower” and "Bourque" have agreed to enter into this CROSS-COLLATERALIZATION
AND CROSSDEFAULT AGREEMENT as hereinafter set forth.

           NOW, THEREFORE, IN CONSIDERATION of the loans made by "Lender" to
"Borrower", the "Borrower" does hereby agree as follows, to-wit: 
1.        That any default under any other terms and provisions of any one of
the notes evidencing one of the obligations referred to in paragraph 2. below or
under any of the terms and provisions of any deed of trust, security agreement
or guaranty agreement securing any such obligation or in the terms and
provisions of any Loan Agreement or any other loan documentation relating to any
such obligation, shall constitute a default under all of the notes evidencing
all of said obligations, as well as under all of the deed(s) of trust, security
agreement(s), and/or guaranty agreement(s) and/or securing any or all of said
obligations and any Loan Agreement(s) which govern said obligations, and any
such default shall entitle Lender to exercise each and every right available to
it under each and every of said documents, including, but not limited to, the
right to foreclose against and sell any collateral, whether real or persona,
securing any of said obligations as if said collateral secured all of said
obligations.

2.        As of the date of execution this agreement relates to all of the
following existing obligations of Borrower:
A. A term debt accommodation dated July 25, 2005 in the original
amount of $605,095.00 bearing account number 1295152.
B. A term debt accommodation dated April 2, 2003 in the original
amount of $450,050.00 bearing account number 1393995.
C. A term debt accommodation dated September 9, 2004 in the original
Amount of $600,075.00 bearing account number 1294733.

Any such obligation includes any and all extensions, renewals, modifications,
substitutions, replacements, and changes
in form thereof, which may be effected from time to time between the
"Bank" and the "Borrower".

3.        Any and all other notes executed by the Borrower to evidence an
obligation owing to Lender after the date of this agreement are further
subject to and governed by the terms contained herein.

4. Execution of this Agreement does not in any manner modify or revise any
existing loan document. 

 

WITNESS THE FOLLOWING SIGNATURES AND SEALS:

“Borrowers”:

Champion Industries, Inc.

BY: /s/Todd Fry

Its CFO

Bourque Printing, Inc.

BY: /s/Todd Fry

It CFO

“Corporate Guarantor”:

Champion Industries, Inc.

BY: /s/Todd Fry

Its CFO

Bank:

FIRST CENTURY BANK, N.A.

BY:________________________

Its________________________