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
      
      1295152PO
      BOX 2968
    500
      FEDERAL STREET
    Date
    07-25-2005HUNTINGTON,
      WV 25703
    BLUEFIELD,
      WV 24701
    Maturity
      Date
    07-24-2010Loan
      Amount
    $
      605,095.00Renewal
      of
    _____________BR/
      RESP 01/801BORROWERS
      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 n are 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
1 ST PAYMENT
AND EVERY PAYMENT THEREAFTER.
 
 **ADDITIONAL
TERMS:**
 
 THIS NOTE
IS FURTHER SUBJECT TO THE CROSS-COLLATERALIZATION/CROSS-DEFAULT AGREEMENT DATED
07/25/05
 nSECURITY: 
      This note is separately secured by (describe separate document by type and
      date):
    PURPOSE:
      The purpose of this loan isFINANCE
      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. FryJEFFERY
      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:$
    
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 **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 STREETHUNTINGTON,
      WV 25703
    BLUEFIELD,
      WV  2470155-0717455Type:oindividualopartnershipncorporationo______________State
      of organization/registration (if applicable)WV___________________olf
      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________________________