EXHIBIT 10.1
 

 Champion Industries, Inc.

First Limited Forbearance and Waiver Agreement and First Amendment to Amended
and Restated Credit Agreement 
 
This First Limited Forbearance and Waiver Agreement and First Amendment to
Amended and Restated Credit Agreement (this “Agreement”) is entered into as of
May 31, 2013 (the “Effective Date”), by and among Champion Industries, Inc., a
West Virginia corporation (the “Borrower”), Mr. Marshall Reynolds, individually
(the “Shareholder”), each of the undersigned Guarantors (“Guarantors”), the
Lenders party hereto, and Fifth Third Bank, an Ohio banking corporation, as L/C
Issuer and Administrative Agent for the Lenders (in such capacity, the
“Administrative Agent” and together with the Lenders and L/C Issuer, the “Lender
Parties”).
 
Recitals:
 
A.  
The Borrower, the Lenders from time to time party thereto, the L/C Issuer and
the Administrative Agent are party to an Amended and Restated Credit Agreement,
dated as of October 18, 2012 (as such agreement has been amended and may further
be amended, restated, supplemented and/or otherwise modified from time to time,
the “Credit Agreement”).

 
B.  
The Guarantors have entered into that certain Guaranty Agreement dated as of
September 14, 2007 (the “Guaranty”).

 
C.  
Events of Default have occurred and are continuing under Section 7.1(b) of the
Credit Agreement by reason of Borrower’s noncompliance with (i): the minimum
EBITDA covenant, set forth in Section 6.20(d) of the Credit Agreement, for the
Test Periods ended February 28, 2013, March 31, 2013 and April 30, 2013; and
(ii) Section 6.31(d) of the Credit Agreement with respect to the Designated
Transaction (together, the “Designated Defaults”).

 
D.  
The Lenders are not willing to waive the Designated Defaults.

 
E.  
Notwithstanding the Designated Defaults, the Borrower has requested that the
Administrative Agent and the Lenders, during the Forbearance Period (as defined
below), (i) temporarily forbear from exercising certain rights and remedies
under the Credit Agreement, the other Loan Documents and applicable law with
respect to the Designated Defaults, and (ii) continue to make Revolving Loans
available to the Borrower in accordance with the terms and conditions of the
Credit Agreement.

 
F.  
Subject to the terms and conditions set forth herein, and in order to
accommodate the Borrower’s request, during and only during the Forbearance
Period, the Lenders are willing to (i) temporarily forbear from exercising
certain of their default-related rights and remedies against the Borrower
available solely by reason of the Designated Defaults, and (ii) continue to
advance Revolving Loans in accordance with the terms and conditions of the
Credit Agreement.

 
Now, Therefore, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
 
1.           Incorporation of Recitals; Defined Terms.  The Borrower
acknowledges that the Recitals set forth above are true and correct in all
respects. This Agreement shall constitute a Loan Document and the Recitals set
forth above shall be construed as part of this Agreement.  The defined terms in
the Recitals set forth above are hereby incorporated into this Agreement by
reference. All other capitalized terms used herein without definition shall have
the same meanings herein as such terms have in the Credit Agreement.
 
2.          Amounts Owing.  The Borrower acknowledges, confirms and agrees that
the aggregate outstanding principal amount of Loans and L/C Obligations as of
12:00 a.m. on May 31, 2013 (immediately prior to the effectiveness of this
Agreement) is $33,815,106.22 ($18,096,000.00 in Term Loans A, $6,893,610.35 in
Term Loans B, $0 in Bullet Loans A, $8,825,495.87 in Revolving Loans, $0 in
Swing Loans, and $0 in L/C Obligations). All such Loans and Reimbursement
Obligations and any future Loans and Reimbursement Obligations, together with
interest accrued and accruing thereon, and fees, costs, expenses and other
charges now or hereafter payable by the Borrower to the Administrative Agent or
the Lenders, are unconditionally owing by the Borrower to the Administrative
Agent and the Lenders, without offset, defense or counterclaim of any kind,
nature or description whatsoever (all of which such offsets, defenses or
counterclaims, if any, are hereby waived by the Borrower).
 
3.           Acknowledgment of Defaults.  The Borrower hereby acknowledges and
agrees that (i) the Designated Defaults have occurred and are continuing, each
of which constitutes an Event of Default, and, as a result of the Designated
Defaults, as well as any other Defaults or Events of Default that may exist, the
Administrative Agent and the Lenders are entitled to exercise any and all
default-related rights and remedies under the Credit Agreement, other Loan
Documents and/or applicable law, including without limitation, making a
determination not to make further Loans or incur further Letter of Credit
Obligations, to terminate the Commitments, to accelerate the Obligations, to
exercise rights against Collateral, to enforce Liens granted under the
Collateral Documents, or to exercise any other rights or remedies that may be
available under the Loan Documents or under applicable law, and (ii) the
Borrower has no valid defense to the enforcement of such default-related rights
and remedies.
 
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4.           Forbearance.  (a) As used herein, the term “Forbearance Period”
shall mean the period commencing on the date hereof and ending on the earlier to
occur of (i) September 30, 2013 (5:00 p.m. New York time), and (ii) the
occurrence of any one or more of the following events: (A) the occurrence of any
Default or Event of Default under the Credit Agreement or any other Loan
Document, other than the Designated Defaults; (B) any failure for any reason by
the Borrower, the Shareholder or any Guarantor to comply with any term,
condition, or provision contained in this Agreement; (C) any representation made
by the Borrower, any Guarantor or the Shareholder in this Agreement or pursuant
to any other Loan Document or any other instrument or document delivered
pursuant thereto proves to be incorrect or misleading in any material respect
when made; (D) any Material Adverse Effect shall occur as determined by the
Required Lenders; and (E) any act of fraud, intentional misrepresentation,
criminal misconduct, bad faith or gross negligence by the Borrower, any
Guarantor or the Shareholder.  The occurrence of any of the events set forth in
clauses (A) through (E) above (a “Forbearance Default”) shall constitute an
immediate Event of Default under the Credit Agreement and upon the occurrence
thereof, the Forbearance Period shall automatically terminate and the
Administrative Agent and Lenders are then permitted and entitled under Section 5
of the Credit Agreement and the other Loan Documents, among other things, to
decline to provide additional credit to the Borrower, to permanently terminate
the Commitments, to accelerate the Obligations, to exercise rights against
Collateral, to require cash collateral for outstanding Letters of Credit, and to
exercise any other rights and remedies that may be available under the Loan
Documents or applicable law.
 
(b)           During the Forbearance Period, neither the Administrative Agent
nor any Lender will take action, on account of the Designated Defaults only, (i)
to accelerate the maturity of the Loans, to terminate the Commitments, or to
otherwise enforce payment of the Obligations of the Borrower under the Loan
Documents, or (ii) other than as set forth herein, to exercise any other rights
and remedies available to them under the Loan Documents or applicable
law.  Automatically and without any notice or action by the Administrative Agent
or the Lenders, upon termination or expiration of the Forbearance Period, the
Administrative Agent and the Lenders shall be entitled (but not required) to
exercise any of the rights and remedies with respect to the Designated Defaults
(or otherwise) available to them under the Loan Documents or applicable law.
 
5.           Revolving Credit.  During the Forbearance Period, the
Administrative Agent shall continue to make Revolving Loans available to the
Borrower in accordance with the terms and conditions of the Credit Agreement and
as provided for herein. Any request for credit under the Revolving Credit during
the Forbearance Period shall be subject to (a) the satisfaction or waiver of the
conditions precedent set forth in Section 3.1 of the Credit Agreement, except to
the extent non-compliance with the conditions set forth therein relates solely
to the Designated Defaults and (b) no Forbearance Default having occurred.
 
6.           Principal, Interest and Fee Payments.  During the Forbearance
Period, the Borrower shall (a) continue to pay all principal on the Loans and
Reimbursement Obligations on all Letters of Credit when due, including, without
limitation, all scheduled payments of principal on the Term Loans as and when
due under the Credit Agreement and (b) keep current all payments of interest and
fees on the Loans and Letters of Credit.
 
7.           Additional Agreements.  In order to induce the Lender Parties to
enter into this Agreement, the Borrower further agrees that:
 
(a)           Chief Restructuring Office.  Timothy D. Boates of RAS Management
Advisors, LLC (the “CRO”), as Chief Restructuring Officer of the Borrower, shall
report directly to the Borrower’s board of directors and be subject to the sole
authority, direction and control of the Borrower’s board of directors.  The
Borrower shall, and shall cause its officers, directors, employees and advisors
to (i) cooperate with the CRO with respect to the performance of the CRO’s
duties and responsibilities and (ii) direct the CRO to answer reasonable
inquiries of, and meet with, the Lender Parties, or their respective
representatives, advisors, attorneys and/or consultants (collectively, “Lender
Consultants”), regarding the Borrower and its business operations at such times
as may be reasonably requested by the Administrative Agent.  The parties agree
that (x) neither the Administrative Agent nor any of the Lender Parties or
Lender Consultant shall be in any way responsible for the Borrower’s retention
of the CRO or any advice that is given or that fails to be given by the CRO to
the Borrower and (y) the CRO’s duty of loyalty shall at all times be to the
Borrower and neither the Lender Parties nor any Lender Consultant shall be
deemed to control the CRO by virtue of their communications with the CRO or
otherwise.  For avoidance of doubt, nothing herein shall preclude or limit the
rights of the Lender Parties to directly retain financial advisors and
consultants.
 
 (b)           Access and Cooperation. The Borrower agrees that the
Administrative Agent may, at any time and from time to time after the Effective
Date (and, in any event, not less frequently than once per month following the
Effective Date), communicate directly with the Borrower’s board of directors by
telephone, email, in writing or by in-person meeting (at times and locations to
be mutually agreed between the Borrower’s board of directors and the
Administrative Agent), in each case at the election of the Administrative Agent.
 
(c)           Operation of Business.  During the Forbearance Period, the
Borrower shall (a) continue to operate its business and affairs in the ordinary
course of business except as limited or otherwise contemplated by this Agreement
and (b) not use its ordinary income or its assets (including any cash on hand)
other than in the operation of its business in the ordinary course of business
and as limited or otherwise contemplated in this Agreement.
 
(d)           Distributions to Stockholders. During the Forbearance Period, the
Borrower and/or its Subsidiaries shall not make any cash distributions
(including Stockholder Distributions) on account of any equity interests or
stock.
 
 
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(e)           Asset Sales/Strategic Transactions. During the Forbearance Period
and without having first received the prior written consent of the
Administrative Agent, the Borrower shall not (a) undertake or consummate any
asset sale outside of the ordinary course of business or otherwise not expressly
permitted by the terms of the Credit Agreement or (b) otherwise undertake to
merge its business assets and liabilities or business operations with any other
Person; provided, that, notwithstanding the foregoing, the Borrower shall pursue
the Designated Transactions in accordance with this Agreement and the Credit
Agreement.
 
8.           Amendments to Credit Agreement.
 
 
(a)              Section 1.1 of the Credit Agreement is hereby amended by adding
the following new definitions in appropriate alphabetical order:
 
 
"Designated Transaction No. 1" means the “Designated Transaction”, as defined in
the letter dated October 19, 2012 by and among the Administrative Agent, each
Lender party thereto, the Borrower, each Guarantor (as defined in the
Forbearance Agreement) and Mr. Marshall Reynolds.
 
 
"Designated Transaction No. 2" means “Designated Transaction No. 2”, as defined
in the Letter Agreement.
 
 
“Letter Agreement” means that certain letter agreement dated as of the Effective
Date (as defined in the Forbearance Agreement and Limited Waiver) by and among
the Administrative Agent, each Lender party thereto, the Borrower, each
Guarantor (as defined in the Forbearance Agreement and Limited Waiver) and Mr.
Marshall Reynolds.
 
 
“Forbearance Agreement and Limited Waiver” means that certain First Limited
Forbearance and Waiver Agreement and First Amendment to Amended and Restated
Credit Agreement dated as of the Effective Date (as defined in the Forbearance
Agreement and Limited Waiver) by and among the Administrative Agent, each
Lender, the Borrower, each Guarantor (as defined in the Limited Waiver and
Forbearance Agreement) and Mr. Marshall Reynolds.
 
 
(b)              The following definitions set forth in Section 1.1 of the
Credit Agreement are hereby amended and restated in their entirety by
substituting the following in lieu thereof:
 
 
"Designated Transaction" means any transaction which the Borrower, the
Administrative Agent and the Required Lenders agree in writing is a Designated
Transaction for purposes of this Agreement; provided that, for the avoidance of
doubt, each of Designated Transaction No. 1 and Designated Transaction No 2.
shall be deemed to be a “Designated Transaction” for purposes hereof.
 
 
"Revolving Credit Termination Date" means September 30, 2013 or such earlier
date on which the Revolving Credit Commitments are terminated in whole pursuant
to Section 2.10, 7.2 or 7.3 hereof.
 
 
(c)             Section 2.7(a) and (b) of the Credit Agreement is hereby amended
and restated in its entirety by substituting the following in lieu thereof:
 
 
“Section 2.7. Maturity of Loans. (a) Scheduled Payments of Term Loans A. The
Borrower shall make principal payments on the Term Loans A in equal installments
on the last day of each calendar month in each year, commencing with the
calendar month ending October 31, 2012, with the amount of each such principal
installment equal to $238,000; it being further agreed that a final payment
comprised of all principal and interest not sooner paid on the Term Loans A,
shall be due and payable on September 30, 2013, the final maturity thereof. Each
principal payment on the Term Loans A shall be applied to the Lenders holding
the Term Loans A pro rata based upon their Term Loan A Percentages.
 
(b)           Scheduled Payments of Term Loans B. The Borrower shall pay all
principal and Deferred Fee not sooner paid on the Term Loans B on September 30,
2013, the final maturity thereof. Each principal payment on the Term Loans B
shall be applied to the Lenders holding the Term Loans B pro rata based upon
their Term Loan B Percentages.”
 
(d)              Section 6.22 of the Credit Agreement is hereby amended and
restated in its entirety by substituting the following in lieu thereof:
 
 
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“Section 6.22. Integrated Cash Management System and Deposit Accounts. The
Borrower shall maintain an integrated cash management system with the
Administrative Agent, including a concentration account maintained with the
Administrative Agent. The Borrower will also, and will cause each of its
Subsidiaries to, maintain all its deposit and operating accounts with the
Administrative Agent; provided that, notwithstanding the foregoing, the Borrower
may maintain those deposit accounts with United Bank, Regions Bank and First
Tennessee Bank expressly listed on Schedule E to the Security Agreement, as
delivered pursuant to Section 3.8 hereof and such other deposit accounts
consented to in writing by the Administrative Agent.”
 
(e)           Section 6.31 of the Credit Agreement is hereby amended and
restated in its entirety by substituting the following in lieu thereof:
 
“Section 6.31. Designated Transactions. The Borrower (and its Subsidiaries, as
applicable) shall take each of the following actions by the date specified below
for each such action:
 
(a) Designated Transaction No. 1.
 
(i)  
no later than June 14, 2013, the Borrower shall have in hand one or more letters
of intent for Designated Transaction No. 1, dated no earlier than the Effective
Date (as defined in the Forbearance Agreement and Limited Waiver), setting forth
terms and conditions for such Designated Transaction No. 1 that are satisfactory
to the Required Lenders;

 
(ii)  
no later than three Business Days after Borrower’s receipt of notice from the
Administrative Agent, which notice shall be delivered to the Borrower by the
Administrative Agent no later than three Business Days after receipt by the
Administrative Agent of at least one letter of intent for Designated Transaction
No. 1, that a letter of intent for Designated Transaction No. 1 is satisfactory
to the Required Lenders, Borrower shall execute such letter of intent;

 
(iii)  
no later than July 15, 2013, the Borrower shall have entered into a written
asset purchase agreement with respect to Designated Transaction No. 1, which
asset purchase agreement shall (x) provide for Net Cash Proceeds to the Borrower
equal to or greater than an amount to be agreed to by the Required Lenders in
their sole discretion and (y) otherwise be on terms and conditions satisfactory
to the Required Lenders; and

 
(iv)  
 no later than August 15, 2013, the Borrower shall have (x) completed Designated
Transaction No. 1 and (y) received Net Cash Proceeds in respect thereof equal to
or greater than an amount not less than an amount agreed to by the Required
Lenders in their sole discretion.

 
(b) Designated Transaction No. 2.
 
(i)  
the Borrower (and/or its Subsidiaries, as applicable) shall use reasonable best
efforts to enter into a letter of intent, no later than June 7, 2013, for
Designated Transaction No. 2;

 
(ii)  
in the event the Borrower (and/or its Subsidiaries, as applicable) receives a
letter of intent (x) in respect of Designated Transaction No. 2 that provides
Net Cash Proceeds to Borrower of not less than the amount specified in the
Letter Agreement with respect to Designated Transaction No. 2 and (y) the terms
and conditions of which are otherwise acceptable to the Required Lenders,
Borrower (and/or its Subsidiaries, as applicable) shall execute such letter of
intent;

 
(iii)  
 the Borrower (and/or its Subsidiaries, as applicable) shall use reasonable best
efforts to enter into a written asset purchase agreement with respect to
Designated Transaction No. 2 as soon as practicable following the execution of a
letter of intent and in any event, within sixty (60) days thereafter, which
asset purchase agreement shall (x) provide for Net Cash Proceeds to Borrower
(and/or its Subsidiaries, as applicable) of not less than the amount specified
in the Letter Agreement with respect to Designated Transaction No. 2 and (y)
otherwise be on terms and conditions satisfactory to the Required Lenders; and

 
(iv)  
no later than 30 days after execution of a written asset purchase agreement with
respect to Designated Transaction No. 2, the Borrower (and/or its Subsidiaries,
as applicable) shall have (x) completed Designated Transaction No. 2 and (y)
received Net Cash Proceeds in respect thereof of not less than the amount
specified in the Letter Agreement with respect to Designated Transaction No. 2.

 
(c) Communication Regarding Designated Transactions.  The Borrower shall provide
copies of all letters of intent (and correspondence related thereto) in respect
of any Designated Transaction to the Administrative Agent within one (1)
Business Day of the Borrower’s (and/or its Subsidiaries’, as applicable) receipt
thereof, together with the Borrower’s pro forma written analysis and estimate of
the Net Cash Proceeds that would be available from the applicable Designated
Transaction for application to the Obligations, if consummated on the terms set
forth in the applicable letter of intent.”
 
 
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(f)           Section 7.1(b) of the Credit Agreement is hereby amended by
replacing the reference to “6.31(d)” set forth therein with a reference to
“6.31” in lieu thereof.
 
9.           Waivers and Other Modifications to Credit Agreement.  The Lender
Parties agree to the following waivers and modifications with respect to the
Credit Agreement:
 
(a)           General Borrowing Base Reserve. The requirement of a general
reserve in an amount equal to $1,000,000 (as set forth in clause (c) of the
definition of “Borrowing Base”) shall be waived and inapplicable, but only
during the Forbearance Period.
 
(b)           Temporary Overadvance.  During the Forbearance Period only, the
Lender Parties shall permit an overadvance on the Borrowing Base in an amount
not to exceed $1,200,000 at any one time (the “Temporary Overadvance”);
provided, however, that in no event shall the amount of such Temporary
Overadvance exceed an amount that would cause the sum of the aggregate principal
amount of Revolving Loans, Swing Loans and L/C Obligations to exceed the sum of
all Revolving Credit Commitments in effect at the time of such Temporary
Overadvance.  The Borrower shall repay in full the Temporary Overadvance
(together with unpaid interest and fees accrued thereon, if any) upon the
earliest to occur of (A) the consummation of Designated Transaction No. 1, (B)
the consummation of Designated Transaction No. 2, and (C) September 30, 2013.
 
(c)           Project Receivables.  The Borrower and any Guarantor (as
applicable) shall, upon receipt of payment of any and all Receivables generated
from the projects included in the summary delivered by the Borrower to the
Administrative Agent on May 30, 2013 (the “Projects Summary”), having an
aggregate value of cost of goods sold of $2,326,451.88, that are payable to such
Borrower or Guarantor (as applicable) by any customer related to any projects
identified in the Projects Summary (any one or more such Receivables, “Project
Receivables”), immediately remit to the Administrative Agent the full amount of
the Project Receivables payment so received for application, first, to
permanently reduce the outstanding amount of the Temporary Overadvance by the
amount of such payment, and thereafter in the order prescribed by Section 2.9 of
the Credit Agreement.  Upon request of the Administrative Agent, the Borrower
shall promptly provide a full accounting of the activity associated with the
Projects Summary.
 
(d)           Minimum EBITDA.  Borrower shall not permit EBITDA for the period
beginning April 1, 2013 and ending on (i) June 30, 2013 to be less than
$1,378,394, (ii) July 31, 2013 to be less than $2,198,509, or (iii) August 31,
2013 to be less than $2,506,722.
 
(e)           Excess Availability.  Except at any time during which a Temporary
Overadvance is outstanding, Borrower shall at all times maintain Excess
Availability of at least $500,000.
 
(f)           Certain Prohibited
Payments.                                                      Neither Borrower
nor any Guarantor shall make any payment or other transfer of value on account
of certain items specified in the Letter Agreement.
 
(g)           Cash Management
Matters.                                                      No later than June
30, 2013, mechanisms satisfactory to the Administrative Agent will be
established giving the Administrative Agent full dominion over proceeds of
Collateral, including a daily cash sweep for application to the Revolving Loan
and advances on the Revolving Loan in accordance with the Borrowing Base and
other provisions of the Credit Agreement.  Any deposit or operating accounts of
Borrower or its Subsidiaries that are not subject to the aforementioned cash
sweep (whether because they are maintained at institutions other than the
Administrative Agent or otherwise) shall not contain balances in excess of
amounts approved by Administrative Agent.
 
10.           Conditions Precedent. The effectiveness of this Agreement is
subject to the satisfaction of the following conditions precedent:
 
(a)           The Borrower, each Guarantor, the Shareholder, the Administrative
Agent, the L/C Issuer and the Required Lenders shall have duly executed and
delivered this Agreement.
 
(b)           The representations and warranties contained herein shall be true
and correct in all material respects as of the date hereof, and no Default or
Event of Default, other than the Designated Defaults, shall exist on the date
hereof.
 
(c)           The Administrative Agent shall have received (i) resolutions of
the board of directors of the Borrower and the Guarantors approving and
authorizing the execution, delivery and performance of this Agreement, the
Letter Agreement and the other documents related hereto and (ii) a good standing
certificate from the applicable Governmental Authority of the jurisdiction of
incorporation, organization or formation of the Borrower and such of its
subsidiaries as Administrative Agent may request, dated a recent date prior to
the Closing Date.
 
(d)           The Borrower shall have acknowledged in the Letter Agreement that
approval of the Borrower’s shareholders is not required for Designated
Transaction No. 1, whether considered separately or together with Designated
Transaction No. 2.
 
(e)           The Shareholder and the board of directors of each of the Borrower
and certain of its Subsidiaries, as specified in the Letter Agreement, shall
have approved, in resolutions or other writing satisfactory to the Required
Lenders, (i) this Agreement, including the terms and conditions hereof and
actions to be taken in connection herewith and (ii) any prospective Designated
Transaction No. 2 that would provide for a net cash consideration of not less
than the amount specified in the Letter Agreement with respect to Designated
Transaction No. 2.
 
 
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(f)           Borrower shall have provided to the Administrative Agent a
projection of EBITDA for the Forbearance Period, in form and substance
satisfactory to the Required Lenders.
 
(g)           The Letter Agreement shall have been executed by all parties
thereto, which Letter Agreement shall be in form and substance satisfactory to
the Administrative Agent.
 
(h)           The Administrative Agent shall have received such other
certificates, resolutions, documents and agreements as the Administrative Agent
may reasonably request.
 
11.           No Waiver of Defaults and Reservation of Rights.  (a) Neither the
Administrative Agent nor any Lender has waived, is hereby waiving, or has any
intention of waiving under this Agreement, any Designated Defaults or any other
Defaults or Events of Default which may be continuing on the date hereof or any
Defaults or Events of Default which may occur after the date hereof (whether the
same or similar to the Designated Defaults or otherwise), and neither the
Administrative Agent nor any Lender has agreed to forbear with respect to any of
its rights or remedies concerning any Defaults or Events of Default (other than,
during the Forbearance Period, the Designated Defaults to the extent expressly
set forth herein), which may have occurred or are continuing as of the date
hereof or which may occur after the date hereof.
 
(b)           Neither any “day-by-day” discretionary extensions of credit by the
Administrative Agent and the Lenders nor anything in this Agreement or in any
ongoing discussions or negotiations between the Administrative Agent and/or any
one or more of the Lenders, on the one hand, and the Borrower and Borrower’s
Affiliates, on the other hand, nor any delay on the part of the Administrative
Agent or the Lenders in exercising any of their respective rights and remedies
under the Credit Agreement, the other Loan Documents and/or applicable law,
shall directly or indirectly: (i) create any obligation to forbear from taking
any enforcement action, or to make any further extensions of credit (other than
during the Forbearance Period, with respect to the Designated Defaults to the
extent expressly set forth herein), (ii) constitute a consent to or waiver of
any past, present or future Default or Event of Default or other violation of
any provisions of the Credit Agreement or any other Loan Documents, (iii) amend,
modify or operate as a waiver of any provision of the Credit Agreement or any
other Loan Documents or any right, power, privilege or remedy of any of the
Lender Parties thereunder or under applicable law or constitute an agreement to
forbear (other than during the Forbearance Period, with respect to the
Designated Defaults to the extent expressly set forth herein) or to restructure
the Obligations in any respect or otherwise modify the capital structure of the
Borrower or any of its Affiliates, or (iv) constitute a course of dealing or
other basis for altering any rights or obligations of any of the Lender Parties
under the Loan Documents or any Obligations of the Borrower under the Credit
Agreement, other Loan Documents or any other contract or instrument.  Nothing
contained in this Agreement shall confer on Borrower or any other Person any
right to notice or cure periods with respect to any Event of Default.
 
(c)           The Lender Parties have not waived the Designated Defaults and
each of the Lender Parties expressly reserves all of its rights, powers,
privileges and remedies under the Credit Agreement, the other Loan Documents
and/or applicable law including, without limitation, subject to Section 4(b)
above solely with respect to the Designated Defaults, its right at any time, as
applicable, (i) to determine not to make further Loans or incur further Letter
of Credit Obligations under the Credit Agreement as a result of the Designated
Defaults and/or to terminate their Commitments to make Loans and incur Letter of
Credit Obligations, (ii) to accelerate the Obligations, (iii) to charge the
default rate of interest in respect of the Obligations (as of any date from and
after the date on which the first Designated Default first occurred) and to
enforce the prohibition against incurring, continuing or converting any Loan as
or into a Eurodollar Loan, (iv) to commence any legal or other action to collect
any or all of the Obligations from any or all of the Borrower, any Guarantor,
and any other person liable therefor and/or any Collateral, (v) to foreclose or
otherwise realize on any or all of the Collateral and/or as appropriate, set-off
or apply to the payment of any or all of the Obligations, any or all of the
Collateral, (vi) to take any other enforcement action or otherwise exercise any
or all rights and remedies provided for by any or all of the Credit Agreement,
the other Loan Documents or applicable law, and (vii) to reject any forbearance,
financial restructuring or other proposal made by or on behalf of Borrower,
including, without limitation any Proposed Restructuring Plan, or any creditor
or equity holder. Subject to Section 4(b) above, solely with respect to the
Designated Defaults, each of the Lender Parties may exercise its respective
rights, powers, privileges and remedies, including those set forth in (i)
through (vii) above, at any time in its sole and absolute discretion without
further notice to the extent permitted by applicable law. No oral
representations or course of dealing on the part of any of the Lender Parties or
any of its officers, employees or agents, and no failure or delay by any of the
Lender Parties with respect to the exercise of any right, power, privilege or
remedy under any of the Credit Agreement, other Loan Documents or applicable law
shall operate as a waiver thereof, and the single or partial exercise of any
such right, power, privilege or remedy shall not preclude any later exercise of
any other right, power, privilege or remedy.
 
12.           Acknowledgement of Liens. The Borrower and each Guarantor hereby
acknowledges and agrees that the Obligations owing to the Lender Parties arising
out of or in any manner relating to the Loan Documents, as well as all Hedging
Liability and Funds Transfer and Deposit Account Liability, shall continue to be
secured by Liens on all assets and property of the Borrower, including, without
limitation, all accounts, chattel paper, instruments, documents, general
intangibles, investment property, deposit accounts, inventory, equipment,
fixtures, real estate, and certain other assets and properties of the Borrower
and the Guarantors pursuant to the Loan Documents heretofore executed and
delivered by the Borrower and the Guarantors, and nothing herein contained shall
in any manner affect or impair the priority of the Liens created and provided
for thereby as to the indebtedness, obligations, and liabilities which would be
secured thereby prior to giving effect to this Agreement. The Borrower and the
Guarantors hereby acknowledge, confirm and agree that the Lender Parties have
and shall continue to have a valid, enforceable and perfected first-priority
lien upon and security interest in the Collateral granted to the Lender Parties
pursuant to the Loan Documents.
 
 
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13.           Release, Covenant not to Sue, Acknowledgment. (a) The Borrower,
each Guarantor and the Shareholder (collectively, the “Releasing Parties”) each
hereby absolutely and unconditionally releases and forever discharges the
Administrative Agent, the L/C Issuer and each Lender, and any and all
participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents, attorneys,
consultants, representatives and employees of any of the foregoing (each a
“Released Party”), from any and all claims, demands or causes of action of any
kind, nature or description relating to or arising out of or in connection with
or as a result of any of the Obligations, the Credit Agreement, this Agreement,
any other Loan Documents, whether arising in law or equity or upon contract or
tort or under any state or federal law or otherwise, which each Releasing Party
has had, now has or has made claim to have against any such person for or by
reason of any act, omission, matter, cause or thing whatsoever arising from the
beginning of time to and including the date of this Agreement, whether such
claims, demands and causes of action are matured or unmatured or known or
unknown. It is the intention of each Releasing Party in providing this release
that the same shall be effective as a bar to each and every claim, demand and
cause of action specified. Each Releasing Party acknowledges that it may
hereafter discover facts different from or in addition to those now known or
believed to be true with respect to such claims, demands, or causes of action
and agree that this instrument shall be and remain effective in all respects
notwithstanding any such differences or additional facts. Each Releasing Party
understands, acknowledges and agrees that the release set forth above may be
pleaded as a full and complete defense and may be used as a basis for an
injunction against any action, suit or other proceeding which may be instituted,
prosecuted or attempted in breach of the provisions of such release.
 
(b)           Each Releasing Party, on behalf of itself and its successors,
assigns, and other legal representatives, hereby absolutely, unconditionally and
irrevocably, covenants and agrees with and in favor of each Released Party above
that it will not sue (at law, in equity, in any regulatory proceeding or
otherwise) any Released Party on the basis of any claim released, remised and
discharged by such Releasing Party pursuant to the above release. If any
Releasing Party or any of its successors, assigns or other legal representations
violates the foregoing covenant, such Releasing Party, for itself and its
successors, assigns and legal representatives, agrees to pay, in addition to
such other damages as any Released Party may sustain as a result of such
violation, all reasonable attorneys’ fees and costs incurred by such Released
Party as a result of such violation.
 
(c)           The Borrower hereby acknowledges its status as a Borrower and
affirms its obligations under the Credit Agreement and the other Loan Documents
and each Releasing Party represents and warrants that, to its knowledge, there
are no liabilities, claims, suits, debts, liens, losses, causes of action,
demands, rights, damages or costs, or expenses of any kind, character or nature
whatsoever, known or unknown, fixed or contingent, which such Releasing Party
may have or claim to have against any Released Party arising with respect to the
Obligations, the Credit Agreement, the Contribution Agreement or any other Loan
Documents, and each Releasing Party further acknowledges that, as of the date
hereof, it does not have any counterclaim, set-off, or defense against the
Released Parties, each of which such Releasing Party hereby expressly waives.
 
14.           Representations, Warranties and Covenants.  In order to induce the
Lender Parties to enter into this Agreement, the Borrower, each Guarantor and
Shareholder, as applicable, hereby represents, warrants and covenants to the
Lender Parties, as of the date hereof and any other date on which
representations and warranties are otherwise remade or deemed remade under the
Credit Agreement that:
 
(a)           Representations, Warranties and Covenants.  (i) After giving
effect to this Agreement, no representation or warranty of the Borrower
contained in the Credit Agreement or any of the Loan Documents, including this
Agreement, shall be untrue or incorrect in any material respect as of the date
hereof, except to the extent that such representation or warranty expressly
relates to an earlier date and (ii) no Default or Event of Default (other than
the Designated Defaults) has occurred or is continuing, or would result after
giving effect hereto.
 
(b)           Authorization, Etc.  The Borrower, each Guarantor and the
Shareholder has the power and authority to execute, deliver and perform this
Agreement. The Borrower and each Guarantor has taken all necessary action
(including, without limitation, obtaining approval of its stockholders, if
necessary) to authorize its execution, delivery and performance of this
Agreement. No consent, approval or authorization of, or declaration or filing
with, any Governmental Authority, and no consent of any other Person, is
required in connection with the Borrower’s, the Guarantors’ and the
Shareholder’s execution, delivery and performance of this Agreement, except for
those already duly obtained. This Agreement has been duly executed and delivered
by the Borrower, Guarantors and Shareholder and constitutes the legal, valid and
binding obligation of the Borrower, Guarantors and Shareholder enforceable
against them, respectively, in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditor rights generally or by equitable
principles relating to enforceability. The Borrower’s and Guarantors’ execution,
delivery or performance of this Agreement does not (i) contravene the terms of
any of the Borrower’s or Guarantors’ respective organization documents; or (ii)
conflict with or constitute a violation or breach of, or constitute a default
under, or result in the creation or imposition of any Lien (other than pursuant
to the Collateral Documents) upon the property of the Borrower or Guarantors.
 
(c)           No Bankruptcy Intent.  The Borrower and each Guarantor hereby
represents that each has no present intent (a) to file any voluntary petition
under any chapter of the Bankruptcy Code, title 11 U.S.C., or in any manner seek
relief, protection, reorganization, liquidation or dissolution, or similar
relief under any other state, local, federal or other insolvency laws, either at
the present time, or at any time hereafter, or (b) directly or indirectly to
cause any involuntary petition to be filed against the Borrower or any
Guarantor, or directly or indirectly cause the Borrower or any Guarantor to
become the subject of any proceedings pursuant to any other state, federal or
other insolvency law providing for the relief of the Borrower or any Guarantor,
either at the present time, or at any time hereafter, or (c) directly or
indirectly to cause any interest of the Borrower or any Guarantor to become
property of any bankrupt estate or the subject of any state, federal or other
bankruptcy, dissolution, liquidation or insolvency proceedings.
 
 
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15.           Reference to and Effect on Loan Documents.
 
(a)           Ratification.  Except as specifically provided in this Agreement,
the Credit Agreement and the Loan Documents shall remain in full force and
effect and the Borrower hereby ratifies and reaffirms each term and condition
set forth in the Credit Agreement and in the other Loan Documents, effective as
of the date hereof.
 
(b)           No Waiver.  This Agreement is only applicable and shall only be
effective in the specific instances and for the specific purposes for which made
or given. Except as specifically provided in this Agreement, the execution,
delivery and effectiveness of this Agreement shall not operate as a waiver or
forbearance of any right, power or remedy of any of the Lender Parties under the
Credit Agreement or any of the Loan Documents, or constitute a consent, waiver
or modification with respect to any provision of the Credit Agreement or any of
the Loan Documents, which shall remain in full force and effect. Upon the
effectiveness of this Agreement each reference in (i) the Credit Agreement to
“this Agreement,” “hereunder,” “hereof,” or words of similar import and (ii) any
Loan Document to “the Agreement” shall, in each case and except as otherwise
specifically stated therein, mean and be a reference to the Credit Agreement as
modified hereby.
 
16.           Affirmation of Guarantors.  (a) Each Guarantor (as defined in the
Guaranty) hereby acknowledges that it has reviewed the terms and provisions of
this Agreement and consents to the terms and conditions of this Agreement and
any modification of the Loan Documents effected pursuant to this Agreement. Each
Guarantor hereby confirms to the Lender Parties that, after giving effect to
this Agreement, the Guaranty of such Guarantor and each other Loan Document to
which such Guarantor is a party continues in full force and effect and is the
legal, valid and binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms except as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors’ rights generally or by equitable principles relating to
enforceability. Each Guarantor further acknowledges, confirms and agrees that
Administrative Agent and the Lenders have and shall continue to have a valid,
enforceable and perfected first-priority lien (subject only to Permitted Liens)
upon and security interest in the Collateral granted to Administrative Agent and
the Lenders pursuant to the Loan Documents or otherwise granted to or held by
Administrative Agent and the Lenders.
 
(b)           Each Guarantor acknowledges and agrees that (i) notwithstanding
the conditions to effectiveness set forth in this Agreement, such Guarantor is
not required by the terms of the Credit Agreement or any other Loan Document to
consent to the waivers or modifications to the Credit Agreement effected
pursuant to this Agreement, (ii) nothing in the Credit Agreement, this Agreement
or any other Loan Document shall be deemed to require the consent of such
Guarantor to any future waivers or modifications to the Credit Agreement, and
(iii) the Lender parties hereto are relying on the assurances provided herein in
entering into this Agreement and maintaining credit outstanding to the Borrower.
 
17.           Shareholder Acknowledgement. (a) The Shareholder hereby
acknowledges that he has reviewed the terms and provisions of this Agreement and
consents to the terms and conditions of this Agreement and any modification of
the Loan Documents effected pursuant to this Agreement.
 
(b)           The Shareholder acknowledges and agrees that (i) notwithstanding
the conditions to effectiveness set forth in this Agreement, the Shareholder is
not required by the terms of the Credit Agreement or any other Loan Document to
consent to the waivers or modifications to the Credit Agreement effected
pursuant to this Agreement, (ii) nothing in the Credit Agreement, this Agreement
or any other Loan Document shall be deemed to require the consent of the
Shareholder to any future waivers or modifications to the Credit Agreement, and
(iii) the Lender parties hereto are relying on the assurances provided herein in
entering into this Agreement and maintaining credit outstanding to the Borrower.
 
18.           Miscellaneous.
 
(a)           Successors and Assigns.  This Agreement shall be binding on and
shall inure to the benefit of the Borrower, the Lender Parties and their
respective successors and assigns, except as otherwise provided herein. The
Borrower may not assign, transfer, hypothecate or otherwise convey its rights,
benefits, obligations or duties hereunder without the prior written consent of
the Lender Parties. The terms and provisions of this Agreement are for the
purpose of defining the relative rights and obligations of the Borrower, the
Guarantors, the Shareholder and the Lender Parties with respect to the
transactions contemplated hereby and there shall be no third party beneficiaries
(other than the Released Parties) of any of the terms and provisions of this
Agreement.
 
(b)           Entire Agreement. This Agreement, including all schedules and
other documents attached hereto or incorporated by reference herein or delivered
in connection herewith, constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other understandings,
oral or written, with respect to the subject matter hereof.
 
(c)           Administrative Agent Discretion.  The Borrower, the Guarantors and
the Shareholder hereby acknowledge and agree that the terms “acceptable” or
“satisfactory” to the Administrative Agent or words of similar import when used
in this Agreement without further qualification refer to the Administrative
Agent’s sole and unilateral discretion.
 
 
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(d)           Fees and Expenses.  The Borrower and each Guarantor agrees to pay
on demand all reasonable fees, costs and out-of-pocket expenses (including
attorneys’ fees and expenses) incurred by the Lender Parties pursuant to the
Loan Documents or in connection with the preparation, execution and delivery of
this Agreement and the other instruments and documents being executed and
delivered in connection herewith and the transactions contemplated hereby (the
Borrower acknowledges that it will receive summary invoice(s) reflecting only
the total amount then due and that such summary invoice(s) will not contain any
narrative description of the services provided, and that delivery of such
summary invoice(s) shall not in any way constitute a waiver of any right or
privilege of the Lender Parties associated with such invoice(s)).
 
(e)           Headings. Section and sub-section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
 
(f)           Severability.  Wherever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
 
(g)           Conflict of Terms.  Except as otherwise provided in this
Agreement, if any provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in any of the Loan Documents, the provision
contained in this Agreement shall govern and control.
 
(h)           Counterparts.  This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement. Delivery of an executed signature page to this
Agreement by facsimile transmission or by e-mail transmission of an Adobe
portable document format file (also known as a “PDF” file) shall be effective as
delivery of a manually executed counterpart hereof.
 
(i)           Incorporation of Credit Agreement.  The provisions contained in
Sections 10.13 (Costs and Expenses; Indemnification), 10.16 (Governing Law) and
10.22 (Submission to Jurisdiction; Waiver of Jury Trial) of the Credit Agreement
are incorporated herein by reference to the same extent as if reproduced herein
in their entirety, except with reference to this Agreement rather than the
Credit Agreement.
 
(j)           Reviewed by Attorneys. The Borrower, each Guarantor and the
Shareholder represent and warrant to the Lender Parties that it (i) understands
fully the terms of this Agreement and the consequences of the execution and
delivery of this Agreement, (ii) has been afforded an opportunity to have this
Agreement reviewed by, and to discuss this Agreement and the documents executed
in connection herewith, with such attorneys and other persons and advisors as
the Borrower, Guarantors and Shareholder, respectively, may wish, and (iii) has
entered into this Agreement and executed and delivered all documents in
connection herewith of its own free will and accord and without threat, duress
or other coercion of any kind by any Person. The parties hereto acknowledge and
agree that neither this Agreement nor any of the other documents executed
pursuant hereto shall be construed more favorably in favor of one party over the
other based upon which party drafted the same, it being acknowledged that all
parties hereto contributed substantially to the negotiation and preparation of
this Agreement and the other documents executed pursuant hereto or in connection
herewith.
 
(k)           Further Assurances.  The Borrower, Guarantors and Shareholder
agree to take all further actions and execute all further documents as
Administrative Agent may from time to time reasonably request to carry out the
transactions contemplated by this Agreement and all other agreements executed
and delivered in connection herewith.
 
[Signature Pages to Follow]
 
 
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In Witness Whereof, the parties hereto have caused their duly authorized
officers to execute and deliver this Agreement as of the date first set forth
above.
 

   “Borrower”        Champion Industries, Inc.           By:  /s/ Timothy D.
Boates   Name Timothy D. Boates   Title CRO

 

              
 
Signature Page to Champion
Limited Forbearance, Waiver and Amendment

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“GUARANTORS”

 
 
The Chapman Printing Company, Inc., a West Virginia corporation

 
Stationers, Inc., a West Virginia corporation

 
Bourque Printing, Inc., a Louisiana corporation

 
Dallas Printing of MS, Inc., a Mississippi corporation

 
Carolina Cut Sheets, Inc., a West Virginia corporation

 
Donihe Graphics, Inc., a Tennessee corporation

 
Smith & Butterfield Co., Inc., an Indiana corporation

 
The Merten Company, an Ohio corporation

 
Interform Corporation, a Pennsylvania corporation

 
CHMP Leasing, Inc., a West Virginia corporation

 
Blue Ridge Printing Co., Inc., North Carolina corporation

 
Capitol Business Equipment, Inc., a West Virginia corporation

 
Thompson’s of Morgantown, Inc., a West Virginia corporation

 
Independent Printing Service, Inc., an Indiana corporation

 
Diez Business Machines, Inc., a Louisiana corporation

 
Transdata Systems, Inc., a Louisiana corporation

 
Syscan Corporation, a West Virginia corporation

 
Champion Publishing, Inc., a West Virginia corporation

 
 
By:  /s/ Todd R. Fry

 
Name  Todd R. Fry

 
Title  Vice-President

 
Signature Page to Champion
Limited Forbearance, Waiver and Amendment

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  ”SHAREHOLDER”       Mr. Marshall Reynolds, individually       By:  /s/
Marshall T. Reynolds   Name  M-T-Reynolds    

 

 
Signature Page to Champion
Limited Forbearance, Waiver and Amendment

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  ”ADMINISTRATIVE AGENT"       FIFTH THIRD BANK, an Ohio banking corporation, as
Administrative Agent       By:  /s/ Donald K. Mitchell   Name  Donald K.
Mitchell   Title  Vice President    

 

 
Signature Page to Champion
Limited Forbearance, Waiver and Amendment

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  “Lenders”       Fifth Third Bank, an Ohio banking corporation, as a Lender, as
L/C Issuer           By:  /s/ Donald K. Mitchell   Name  Donald K. Mitchell  
Title  Vice President

 
Signature Page to Champion
Limited Forbearance, Waiver and Amendment

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HUNTINGTON NATIONAL BANK

 
  By:  /s/ Bruce Shearer     Name  Bruce Shearer    Title  SVP

 
 
Signature Page to Champion
Limited Forbearance, Waiver and Amendment

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  SUNTRUST BANK           By:  /s/ William S. Krueger   Name  William S. Krueger
  Title  First Vice President

 
 
Signature Page to Champion
Limited Forbearance, Waiver and Amendment

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  OLD NATIONAL BANK, NA, SUCCESSOR IN INTEREST TO THE FDIC AS RECEIVER OF
INTEGRA BANK NATIONAL ASSOCIATION           By:  /s/ Jason L. Dunn   Name 
Jason L. Dunn   Title  Assistant Vice President

 
 
Signature Page to Champion
Limited Forbearance, Waiver and Amendment

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  UNITED BANK, INC.           By /s/ Andrew Dawson   Name  Andrew Dawson   Title
 AVP

 
 
Signature Page to Champion
Limited Forbearance, Waiver and Amendment

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  SUMMIT COMMUNITY BANK           By /s/ Brad Ritchie   Name  Brad Ritchie  
Title  President

 
Signature Page to Champion
Limited Forbearance, Waiver and Amendment

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