Document:

exhibit101.htm

    
      EXHIBIT
        10.1

       

      MASTER
        LOAN AGREEMENT

      

      Equipment
        Finance, Inc.

       

      1.0
        PARTIES, COLLATERAL AND OBLIGATIONS

       

      1,1
        This
        Agreement is dated as of May 08, 2007. For valuable consideration, the receipt
        and sufficiency of which are hereby acknowledged Champion Industries, Inc.
        (hereinafter called "Debtor") with offices at 2450 First Avenue, Huntington,
        WV
        25703, intending to be legally bound, hereby promises to pay to U.S. Bancorp
        Equipment Finance, Inc., an Oregon corporation having offices at PO Box 230789,
        Portland, OR 97281-0789 (hereinafter called "Secured Party"), any amounts
        set
        forth on any Schedule to Master Loan Agreement hereunder (the "Schedule(s)")
        and
        grants a security interest in and assigns, transfers and sets over to Secured
        Party and to the successors and assigns thereof, the property specified in
        any
        Schedule hereunder wherever located, and any and all proceeds thereof, insurance
        recoveries, and all replacements, additions, accessions, accessories and
        substitutions thereto or therefore (hereinafter called the "Collateral").
        The
        security interest granted hereby is to secure payment of any and all liabilities
        or obligations of Debtor to the Secured Party, matured or unmatured, direct
        or
        indirect, absolute or contingent, heretofore arising, now existing or hereafter
        arising, and whether under this Agreement or under any other writing between
        Debtor and Secured Party (all hereinafter called the "obligations" and/or
        the
        "liabilities").

       

      1.2
        Joint
        and Several Liability; Payment Terms. In the event there is more than one
        Debtor, all obligations shall be joint and several obligations of all Debtors
        regardless of the source of Collateral or the particular Debtor with which
        the
        obligation originated, and each Debtor waives any surety defenses that it
        might
        raise with respect to any other Debtor. Interest shall be calculated on the
        basis of a 360-day year. All payments on any Schedule hereunder shall be
        made in
        lawful money of the United States at such address as the Secured Party may
        designate to Debtor in writing from time to time. In no event shall any Schedule
        hereunder be enforced in any way which permits Secured Party to collect interest
        in excess of the maximum lawful rate. Should interest collected exceed such
        rate, Secured Party shall refund such excess interest to Debtor. In such
        event,
        Debtor agrees that Secured Party shall not be subject to any penalties for
        contracting for or collecting interest in excess of the maximum lawful
        rate.

       

      1.3
        Late
        Charge. If any of the obligations remains overdue for more than ten (10)
        days,
        Debtor hereby agrees to pay on demand, as a late charge, an amount equal
        to the
        lesser of (i) five percent (5%) of each such overdue amount; or (ii) the
        maximum
        percentage of any such overdue amount permitted by applicable law as a late
        charge. Debtor agrees that the amount of such late charge represents a
        reasonable estimate of the cost to Secured Party of processing a delinquent
        payment and that the acceptance of any late charge shall not constitute a
        waiver
        of default with respect to the overdue amount or prevent Secured Party from
        exercising any other available rights and remedies.

       

      2.0
        WARRANTIES AND COVENANTS OF DEBTOR: Debtor hereby represents, warrants and
        covenants that:

       

      2.]
        Business Organization Status and Authority. (i) Debtor is duly organized,
        validly existing and in good standing under the laws of the state of its
        organization and is qualified to do business in all states and countries
        in
        which such qualification is necessary; (ii) Debtor has the lawful power and
        authority to own its assets and to conduct the business in which it is engaged;
        and to execute and comply with the provisions of this Agreement and any related
        documents (collectively, the "Financing Documents"); (iii) the execution
        and
        delivery of the Financing Documents have been duly authorized by all necessary
        action, and the Financing Documents constitute valid, legal and binding
        agreements, enforceable in accordance with their terms; (iv) no authorization,
        consent, approval, license or exemption of, or filing or registration with,
        any
        or all of the owners of Debtor or any governmental entity was, is or will
        be
        necessary to the valid execution, delivery, performance or full enforceability
        of the Financing Documents. Except as specifically disclosed to Secured Party,
        Debtor utilizes no trade names in the conduct of its business and/or has
        not
        changed its name within the past five years. Debtor shall not change its
        state
        of organization, headquarters or residence without providing prior written
        notice to Secured Party. Debtor shall give written notice to Secured Party
        within 30 days of any termination or revocation of Debtor's existence by
        its
        state of organization.

       

      2.2
        Merger; Transfer of Assets. Debtor shall not consolidate or merge with or
        into
        any other entity, liquidate or dissolve, distribute, sell, lease, transfer
        or
        dispose of all of its ownership interests, properties or assets or any
        substantial portion thereof other than in the ordinary course of its business,
        unless the Secured Party shall give its prior written consent, and the
        surviving, or successor entity or the transferee of such assets, as the case
        may
        be, shall assume, by a written instrument which is legal, valid and enforceable
        against such surviving or successor entity or transferee, all of the obligations
        of Debtor to Secured Party or any affiliate of Secured Party.

       

      2.3
        No
        Violation of Covenants or Laws. Debtor is not party to any agreement or subject
        to any restriction which materially and adversely affects its ability to
        perform
        its obligations under the Financing Documents. The execution of and compliance
        with the terms of the Financing Documents does not and will not (i) violate
        any
        provision of law, or (ii) conflict with or result in a breach of any order,
        injunction, or decree of any court or governmental authority or the formation
        documents of Debtor, or (iii) constitute or result in a default under any
        agreement, bond or indenture by which Debtor is bound or to which any of
        its
        property is subject, or (iv) result in the imposition of any lien or encumbrance
        upon any of Debtor's assets, except for any liens created under the Financing
        Documents.

       

      2.4
        Accurate Information. All financial information submitted to the Secured
        Party
        in regard to Debtor or any shareholder, officer, director, member, or partner
        thereof, or any guarantor of any of the obligations thereof, was prepared
        in
        accordance with generally accepted accounting principles, consistently applied,
        and fairly and accurately depicts the financial position and results of
        operations of Debtor or such other person, as of the respective dates or
        for the
        respective periods, to which such information pertains. Debtor had good,
        valid
        and marketable title to all the properties and assets reflected as being
        owned
        by it on any balance sheet of Debtor submitted to Secured Party as of the
        date
        thereof.

       

      2.5
        Judgments; Pending Legal Action. There are no judgments outstanding against
        Debtor, and there are no actions or proceedings pending or, to the best
        knowledge of Debtor, threatened against or affecting Debtor or any of its
        properties in any court or before any governmental entity which, if determined
        adversely to Debtor, would result in any material adverse change in the
        business, properties or assets, or in the condition, financial or otherwise,
        of
        Debtor or would materially and adversely affect the ability of Debtor to
        satisfy
        its obligations under the Financing Documents.

       

      2.6
        No
        Breach of Other Agreements; Compliance with Applicable Laws. Debtor is not
        in
        breach of or in default under any loan agreement, indenture, bond, note or
        other
        evidence of indebtedness, or any other material agreement or any court order,
        injunction or decree or any lien, statute, rule or regulation. The operations
        of
        Debtor comply with all laws, ordinances and. governmental rules and regulations
        applicable to them. Debtor has filed all federal, state and municipal income
        tax
        returns which are required to be filed and has paid all taxes as shown on
        said
        returns and on all assessments billed to it to the extent that such taxes
        or
        assessments have become due. Debtor does not know of any other proposed tax
        assessment against it or of any basis for one.

       

      2.7
        Sale
        Prohibited. Debtor shall not sell. dispose of or offer to sell or otherwise
        transfer the Collateral or any interest therein without the prior written
        consent of Secured Party.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      2.8
        Location of Collateral. The Collateral shall be kept primarily at the
        location(s) shown on the Schedule(s) hereunder (unless the Collateral is
        mobile,
        in which case it may be moved in the ordinary course of business), and Debtor
        shall give prompt written notice to Secured Party of any change in the
        location(s) of the Collateral. Notwithstanding the foregoing, the Collateral
        shall not be moved outside the United States without Secured Party's prior
        written consent.

       

      2.9
        Collateral not a Fixture. The Collateral is not attached, and Debtor shall
        not
        permit the Collateral to become attached, to real estate in such a way that
        it
        would be considered part of the realty or designated a "fixture."
        Notwithstanding any presumption of applicable law, and irrespective of any
        manner of attachment, the Collateral shall not be deemed real property but
        shall
        retain its character as personal property. However, Debtor shall at the option
        of Secured Party furnish the latter with waiver(s) in recordable form, signed
        by
        all persons having an interest in the real estate, of any interest in the
        Collateral which is or might be deemed to be prior to Secured Party's
        interest.

       

      2.10
        Perfection of Security Interest. Except for (i) the security interest granted
        hereby and (ii) any other security interest previously disclosed by Debtor
        to
        Secured Party in writing, Debtor is the owner of the Collateral free from
        any
        adverse lien, security interest or encumbrance. Debtor shall defend the
        Collateral against all claims and demands of all persons at any time claiming
        any interest therein. At the request of Secured Party, Debtor shall execute,
        acknowledge and deliver to Secured Party any document or instrument required
        by
        Secured Party to further the purposes of the Financing Documents. Debtor
        hereby
        authorizes Secured Party to file any financing statement(s) and to be named
        as
        lienholder on any vehicle title(s) needed to perfect Secured Party's interest
        in
        the Collateral, including (without limitation) any fixture filings and any
        amendments and continuation statements thereto pursuant to the Uniform
        Commercial Code, in form satisfactory to Secured Party, and shall pay the
        cost
        of filing the same in all public offices where filing is deemed by Secured
        Party
        to be necessary or desirable.

       

      2.11
        Insurance. Unless otherwise agreed, Debtor shall have and maintain insurance
        from financially sound carriers at all times with respect to all Collateral
        against damage and other risks with such coverage and containing such terms,
        in
        such form, for such periods and written by such companies as shall be
        satisfactory to Secured Party; each insurance policy shall name Secured Party
        as
        lender's loss payee and shall be payable to Secured Party and Debtor as their
        interests may appear; all policies of insurance shall provide for a minimum
        of
        ten days' written cancellation notice to Secured Party; Debtor shall furnish
        Secured Party with certificates or other evidence satisfactory to Secured
        Party
        of compliance with the foregoing insurance provisions.

       

      2.12
        Use
        of the Collateral. Debtor shall use the Collateral for business purposes
        only
        and operate it by qualified personnel in accordance with applicable
        manufacturers' and regulatory maintenance and performance standards. Debtor
        shall adhere to reasonable practices for Debtor's industry and the type of
        Collateral, for security against terrorism and other risks. Debtor shall
        keep
        the Collateral free from any adverse lien or encumbrance (and shall promptly
        notify Secured Party of any attachment of any such lien or any seizure or
        levy)
        and in good working order, condition and repair and shall not waste or destroy
        the Collateral or any part thereof; Debtor shall keep the Collateral
        appropriately protected from the elements, and shall furnish all required
        parts
        and servicing (including any contract service necessary to maintain the benefit
        of any warranty of the manufacturer); and Debtor shall not use the Collateral
        in
        violation of any statute, ordinance, regulation or order. Secured Party may
        examine and inspect the Collateral and any and all books and records of Debtor
        during business hours at any time; such right of inspection shall include
        the
        right to copy Debtor's books and records and to converse with Debtor's officers,
        employees, agents, and independent accountants.

       

      2.13
        Taxes and Assessments. Debtor shall pay promptly when due all taxes,
        assessments, levies, imposts, duties and charges, of any kind or nature,
        imposed
        upon the Collateral or for its use or operation or upon this Agreement or
        upon
        any instruments evidencing the obligations.

       

      2.14
        Financial Statements. Debtor shall furnish Secured Party within 120 days
        after
        the close of each fiscal year of Debtor, its financial statements (including,
        without limitation, a balance sheet, a statement of income, a statement of
        cash
        flow, a statement of changes in equity, and notes to financial statements)
        for
        the immediately preceding fiscal year, setting forth the corresponding figures
        for the prior fiscal year in comparative form, all in reasonable detail without
        any qualification or exception deemed material by Secured Party. Such financial
        statements shall be prepared at least as a review by Debtor's independent
        certified accountants and, if prepared as an audit, shall be certified by
        such
        accountants. Within 45 days after the close of each other quarter of Debtor,
        Debtor shall deliver to Secured Party true and complete copies of its
        management-prepared financial statements for the immediately preceding quarter.
        Debtor shall also furnish Secured Party with any other financial information
        (including tax returns) deemed reasonably necessary by Secured Party. Each
        financial statement submitted by Debtor to Secured Party shall be prepared
        in
        accordance with generally accepted accounting principles consistently applied
        and shall fairly and accurately present the Debtor's financial condition
        and
        results of operations for the period to which it pertains.

       

      3.0
        EVENTS OF DEFAULT

       

      3.1
        Each
        of the following shall be considered an Event of Default: (i) failure on
        the
        part of Debtor to promptly perform in complete accordance with its
        representations, warranties and covenants made in this Agreement or in any
        other
        agreement with Secured Party, including, but not limited to, the payment
        of any
        liability, with interest, when due, or default by Debtor under the provisions
        of
        any other material agreement to which Debtor is party; (ii) the death of
        Debtor
        if an individual or the dissolution of Debtor if a business organization;
        (iii)
        the filing of any petition or complaint under the federal Bankruptcy Code
        or
        other federal or state acts of similar nature, by or against Debtor, or an
        assignment for the benefit of creditors by Debtor, (iv) an application for
        or
        the appointment of a receiver, trustee or conservator, voluntary or involuntary,
        by or against Debtor or for any substantial assets of Debtor; (v) insolvency
        of
        Debtor under either federal or state law or applicable principles of equity;
        (vi) entry of Judgment, issuance of any garnishment or attachment, or filing
        of
        any lien, claim or government attachment against the Collateral or which,
        in
        Secured Party's sole discretion, might impair the Collateral; (vii) the
        determination by Secured Party that a material misrepresentation of fact
        has
        been made by Debtor in this Agreement or in any writing supplementary or
        ancillary hereto; (viii) a determination by Secured Party that Debtor has
        suffered a material adverse change in its financial condition, business or
        operations from the date of this Agreement; (ix) bankruptcy, insolvency,
        termination, death, dissolution or default of any guarantor for Debtor; (x)
        any
        actual or anticipated (in Secured Party's reasonable discretion) unauthorized
        revocation, nonrenewal or termination of a letter of credit, surety bond
        or
        other instrument issued for the benefit of Secured Party as additional security
        for the obligations of Debtor hereunder; or (xi) any unauthorized filing
        by
        Debtor of a termination statement for any financing statement filed by Secured
        Party.

       

      4.0
        REMEDIES

       

      4.1
        Upon
        the happening of any Event of Default which is not cured within ten (10)
        days or
        at any time thereafter: (i) all liabilities of Debtor shall, at the option
        of
        Secured Party, become immediately due and payable; (ii) Secured Party shall
        have
        and may exercise all of the rights and remedies granted to a secured party
        under
        the Uniform Commercial Code; (iii) Secured Party shall have the right,
        immediately, and without notice or other action, to set-off against any of
        Debtor's liabilities to Secured Party any money owed by Secured Party in
        any
        capacity to Debtor, whether or not due; (iv) Secured Party may proceed with
        or
        without judicial process to take possession of all or any part of the
        Collateral; Debtor agrees that upon receipt of notice of Secured Party's
        intention to take possession of all or any part of said Collateral, Debtor
        shall
        do everything necessary to make same available to Secured Party (including,
        without limitation, assembling the Collateral and making it available to
        Secured
        Party at a place designated by Secured Party which is reasonably convenient
        to
        Debtor and Secured Party); and so long as Secured Party acts in a commercially
        reasonable manner, Debtor agrees to assign, transfer and deliver at any time
        the
        whole or any portion of the Collateral or any rights or interest therein
        in
        accordance with the Uniform Commercial Code and without limiting the scope
        of
        Secured Party's rights thereunder; (v) Secured Party may sell the Collateral
        at
        public or private sale or in any other commercially reasonable manner and,
        at
        the option of Secured Party, in bulk or in parcels and with or without having
        the Collateral at the sale or other disposition, and Debtor agrees that in
        case
        of sale or other disposition of the Collateral, or any portion thereof, Secured
        Party shall apply all proceeds first to all costs and expenses of disposition,
        including attorneys' fees, and then to Debtor's obligations to Secured Party;
        and (vi) Secured Party may elect to accept the Collateral or any part thereof
        in
        satisfaction of all sums due from Debtor. All remedies provided in this
        paragraph shall be cumulative. Secured Party may exercise anyone or more
        of such
        remedies in addition to any and all other remedies Secured Party
        may

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      have
        under any applicable law or in equity.

       

      4.2
        Disposition; Expenses. Any notification of a sale or other disposition of
        Collateral or of other action by Secured Party required to be given by Secured
        Party, will be sufficient and deemed reasonable if given personally, mailed,
        or
        delivered by facsimile transmission or overnight carrier not less than ten
        (10)
        days prior to the day on which such sale or other disposition will be made
        or
        action taken. Upon an Event of Default, any amounts due and to become due
        hereunder shall, without notice, bear interest, from the date such amounts
        are
        due until paid, at a rate (the "Default Rate") which is the lesser of: (i)
        the
        maximum rate per annum which Secured Party is permitted by law to charge,
        or
        (ii) the greater of: (y) eighteen percent (18%) per annum, or (z) five percent
        (5%) per annum over the prime rate which is announced from time to time by
        U.S.
        Bank National Association to be its prime rate. Debtor shall pay all reasonable
        expenses of realizing upon the Collateral hereunder and collecting all
        liabilities of Debtor to Secured Party, including any collection agency fee.
        In
        any interpretation or enforcement of the Financing Documents or any dispute
        related thereto or to the relationship between the parties, Debtor shall
        pay
        Secured Party's legal expenses and reasonable attorneys' fees, including
        any
        incurred before and at trial, on appeal, in any other proceeding or without
        any
        litigation being filed.

       

      5.0
        MISCELLANEOUS

       

      5.1
        No
        Implied Waivers; Entire Agreement This Agreement and any Schedule hereunder
        are
        non-cancelable and may not be prepaid. The waiver by Secured Party of any
        default hereunder or of any provisions hereof shall not discharge any party
        hereto from liability hereunder and such waiver shall be limited to the
        particular Event of Default and shall not operate as a waiver of any other
        or
        subsequent default. No modification of this Agreement or waiver of any right
        of
        Secured Party hereunder shall be valid unless in writing and signed by an
        authorized officer of Secured Party. No failure on the part of Secured Party
        to
        exercise, or delay in exercising, any right or remedy hereunder shall operate
        as
        a waiver thereof, nor shall any single or partial exercise of any right or
        remedy hereunder preclude any other or further exercise thereof or the exercise
        of any other right or remedy. The provisions of this Agreement and the rights
        and remedies granted to Secured Party herein shall be in addition to, and
        not in
        limitation of those of any other agreement with Secured Party or any other
        evidence of any liability held by Secured Party. This Agreement and any Schedule
        hereunder (a "Transaction") embody the entire agreement between the parties
        and
        supersede all prior agreements and understandings relating to the same subject
        matter, except in any case where the Secured Party takes an assignment from
        a
        vendor of its security interest in the same Collateral, in which case the
        terms
        of the Transaction shall be incorporated into the assigned agreement and
        shall
        prevail over any inconsistent terms therein but shall not be construed to
        create
        a new contract. If any of the Financing Documents are delivered to Secured
        Party
        by facsimile transmission, such documents (and signatures thereon) shall
        be
        treated as, and have the same force and effect as, originals.

       

      5.2
        Choice of Law; Waiver of Jury. The Financing Documents and the rights and
        liabilities of the parties shall be governed by applicable federal law and
        the
        laws of the state of Oregon. Any legal action or proceeding with respect
        to the
        Financing Documents shall be brought in state court sitting in Portland,
        Oregon,
        and, by execution and delivery of the Financing Documents, each of the parties
        consents to the jurisdiction of such court and waives any defense of lack
        of
        jurisdiction or inconvenient forum. Service of process by overnight courier
        will
        be sufficient to confer personal jurisdiction over the Debtor. SECURED PARTY
        AND
        DEBTOR EACH IRREVOCABLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY LITIGATION
        ARISING FROM OR RELATED TO ANY OF TIIE FINANCING DOCUMENTS.

       

      5.3
        Protection of the Collateral. At its option, Secured Party may discharge
        taxes,
        liens or other encumbrances at any time levied or placed on the Collateral,
        may
        pay for insurance on the Collateral and may pay for the maintenance and
        preservation of the Collateral. Debtor agrees to reimburse Secured Party
        on
        demand for any payment made or any expense incurred by Secured Party pursuant
        to
        the foregoing authorization and to pay a fee for additional monitoring incurred
        by Secured Party for Debtor's failure to maintain coverage or protection
        as
        provided herein. Any payments made by Secured Party shall be immediately
        due and
        payable by Debtor and shall bear interest at the Default Rate. Until default,
        Debtor may retain possession of the Collateral and use it in any lawful manner
        not inconsistent with the provisions of this Agreement and any other agreement
        between Debtor and Secured Party and not inconsistent with any policy of
        insurance thereon.

       

      5.4
        Binding Agreement; Time of the Essence. This Agreement shall be binding upon
        and
        shall inure to the benefit of the parties hereto, their respective heirs,
        executors, administrators, successors, and assigns. Time is of the essence
        with
        respect to the performance of Debtor's obligations under this Agreement and
        any
        other agreement between Debtor and Secured Party.

       

      5.5
        Enforceability. Any term, clause or provision of this Agreement or of any
        evidence of indebtedness from Debtor to Secured Party which is unenforceable
        in
        any jurisdiction shall, as to such jurisdiction, be ineffective only to the
        extent of such prohibition or unenforceability without invalidating the
        remaining terms or clauses of such provision or the remaining provisions
        hereof,
        and any such prohibition or unenforceability in any jurisdiction shall not
        invalidate or render unenforceable such term, clause or provision in any
        other
        jurisdiction.

       

      5.6
        Notices. Any notices or demands required to be given herein shall be given
        to
        the parties in writing by facsimile transmission, or by overnight courier
        or
        United States mail (first class, express, certified or otherwise) at the
        addresses set forth on page 1 of this Agreement or to such other addresses
        as
        the parties may hereafter substitute by written notice given in the manner
        prescribed in this paragraph.

       

      5.7
        Additional Security. If there shall be any other collateral for any of the
        obligations, or for the obligations of any guarantor thereof, Secured Party
        may
        proceed against and/or enforce any or all of the Collateral and such collateral
        in whatever order it may, in its sole discretion, deem appropriate. Any
        amount(s) received by Secured Party from whatever source and applied by it
        to
        any of the obligations shall be applied in such order of application as Secured
        Party shall from time to time, in its sole discretion, elect.

       

      6.0
        ASSIGNMENT

       

      6.1
        SECURED PARTY MAY SELL OR ASSIGN
        ANY AND ALL RIGHT, TITLE AND INTEREST IT HAS IN THE COLLATERAL AND/OR ARISING
        UNDER THIS AGREEMENT. DEBTOR SHALL, UPON THE DIRECTION OF SECURED PARTY,
        I)
        EXECUTE ALL DOCUMENTS NECESSARY TO EFFECTIJATE SUCH ASSIGNMENT AND, 2) PAY
        DIRECTLY AND PROMPTLY TO SECURED PARTY'S ASSIGNEE WITHOUT ABATEMENT, DEDUCTION
        OR SET-OFF, ALL AMOUNTS WHICH HAVE BECOME DUE UNDER THE ASSIGNED AGREEMENTS.
        SECURED PARTY'S ASSIGNEE SHALL HAVE ANY AND ALL RIGHTS, IMMUNITIES AND
        DISCRETION OF SECURED PARTY HEREUNDER AND SHALL BE ENTITLED TO EXERCISE ANY
        REMEDIES OF SECURED PARTY HEREUNDER. ALL REFERENCES HEREIN TO SECURED PARTY
        SHALL INCLUDE SECURED PARTY'S ASSIGNEE (EXCEPT THAT SAID ASSIGNEE SHALL NOT
        BE
        CHARGEABLE WITH ANY OBLIGATIONS OR LIABILITIES HEREUNDER OR IN RESPECT HEREOF).
        DEBTOR SHALL NOT ASSERT AGAINST SECURED PARTY'S ASSIGNEE ANY DEFENSE,
        COUNTERCLAIM OR SET-OFF WHICH DEBTOR MAY HA VB AGAINST SECURED
        PARTY.

       

      6.2
        DEBTOR SHALL NOT ASSIGN OR IN ANY
        WAY DISPOSE OF ALL OR ANY OF ITS RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT
        OR
        ENTER INTO ANY AGREEMENT REGARDING ALL OR ANY PART OF THE COLLATERAL WITHOUT THE
        PRIOR WRIITEN CONSENT OF SECURED PARTY. IN CONNECTION WITH THE GRANTING OF
        SUCH
        CONSENT AND THE PREPARATION OF NECESSARY DOCUMENTATION, A FEE SHALL BE
        ASSESSED EQUAL TO ONE PERCENT (1%) OF 1HE TOTAL REMAINING BALANCE
        THEN
        DUE HEREUNDER. In the event that Secured Party has consented to any lease
        of the
        Collateral, Debtor hereby assigns and grants to Secured Party a security
        interest in any and all rights under any lease(s), to secure all obligations
        to
        Secured Party, and Debtor shall deliver to Secured Party the original of
        such
        lease(s).

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      7.0
        POWER
        OF ATTORNEY

       

      7.1
        Debtor hereby appoints Secured Party as its attorney-in-fact to sign Debtor's
        name and to make non-material amendments (including completing and conforming
        the description of the Collateral) on any document in connection with this
        Agreement, including any document necessary for processing vehicle
        certificate(s) of title, and to obtain, adjust and settle any insurance required
        by this Agreement and to endorse any drafts in connection with such
        insurance.

       

      8.0
        NOTICE

       

      8.1
        Under Oregon law. most agreements. promises and commitments
        made by Secured Party after October 3. 1989, concerning- loans and other
        credit
        extensions which are not for personal, family or household purposes or secured
        solely by the Debtor's residence must be in writing, express
        consideration

      and
        be
        signed by Secured Party to be enforceable.

      In
        Witness Whereof, the parties, hereto
        have caused this Agreement to be duly executed the 30th    Day
        of       MAY   ,
20
  07    

      

      

       

      

       

      

       

      

       

      U.S.
        Bancorp Equipment Finance, Inc. (SECURED PARTY)

       

      By:                                             _

      An
        Authorized Officer Thereof

      

      

      9/06

       

      Champion
        Industries, Inc. (DEBTOR)

      By:
               /s/ Toney K.
        Adkins

      Authorized
        Signer

      

      Title:    President
        &
COO                                       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      

      [Missing
        Graphic Reference] CERTIFICATE OF AUTHORITY (LEASE/LOAN)

                 

      Equipment
        Finance, Inc.

       

      I/WE
        HEREBY CERTIFY to U.S. Bancorp Equipment Finance, Inc. (the "Creditor") that:
        a)
        I/we am/are the person(s) authorized to certify on behalf of Champion
        Industries, Inc., a business entity (the “Company”) organized and maintaining
        good standing under the laws of the State of West Virginia; b) the following
        is
        a true and correct copy of certain Resolutions duly adopted or voted by the
        Board of Directors, Members or Managers, as appropriate, of the Company;
        c) I/we
        have placed a copy of such Resolutions in the official records of the Company;
        d) such Resolutions have not been rescinded, amended, or otherwise altered
        or
        repealed; and e) such Resolutions are now in full force and effect and are
        in
        full compliance with the formation documents of the Company, as such may
        have
        been amended. The Company has resolved the following:

       

      I)
        That
        the Company from time to time leases personal property and/or borrows money
        or
        otherwise obtains credit from Creditor and that the entire amount of leasing,
        borrowing or credit under this resolution at anyone time, whether direct
        or
        indirect, absolute or contingent, shall be unlimited;

       

      2)
        That
        anyone of the officers, agents, members, or managers designated below is
        hereby
        authorized to borrow money and to obtain credit and other financial
        accommodations (including the leasing of personal property) for the Company;
        and
        to execute and deliver on behalf of the Company any and all documentation
        required in connection therewith in such form and containing such terms and
        conditions as the person(s) executing such documents shall approve as being
        advisable and proper and in the best interests of the Company; and that the
        execution thereof by such person(s) shall be conclusive evidence of such
        approval; and. as security for the Company's obligations to Creditor to pledge,
        assign, transfer, mortgage, grant a security interest in, hypothecate, or
        otherwise encumber any and all property of the Company, whether tangible
        or
        intangible; and to execute and deliver all instruments of assignment and
        transfer;

       

      3)
        That
        any officer, member, manager, agent or employee of the Company is hereby
        further
        authorized to take any and all such other actions as may be necessary to
        carry
        out the intent and purposes of these Resolutions. and that any and all actions
        taken by such person(s) to carry out such intent and purposes prior to the
        adoption of these Resolutions are hereby ratified and confirmed by, and adopted
        as the action of, the managers of the Company; and

       

      4)
        That
        these Resolutions shall constitute a continuing authority to the designated
        person or persons to act on behalf of the Company, and the powers and authority
        granted herein shall continue until revoked by the Company and formal written
        notice of such revocation shall have been given to Creditor. These Resolutions
        do not supersede similar prior resolutions given to Creditor.

       

      I/WE
        HEREBY FURTHER CERTIFY that pursuant to the formation documents and any other
        appropriate documents of the Company as may be necessary, the following named
        person(s) have been properly designated and appointed to the
        position(s)/office(s) indicated below, that such person(s) continue to hold
        such
        position(s)/office(s) at the time of execution of the documentation for the
        transaction( s) with Creditor, and that the signature(s) of such person(s)
        shown
        below are genuine.

       

       OFFICE                                   NAME                                                         SIGNATURE

       

       CFO                                    TODD
        FRY                                                     /S/
        TODD
        FRY                                           

       

      PRESIDENT                       TONEY
        ADKINS                                           /S/
        TONEY ADKINS

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      

      

      

      

      I/WE
        HEREBY FURTHER CERTIFY that, pursuant to the formation documents of the company,
        and any other appropriate documents of the Company as may be necessary, I/we
        have the power and authority to execute this Certificate on behalf of the
        Company, and that I/we have so executed this Certificate on
        the  30th day
        of    MAY  , 20 07 . A copy of this
        Certificate, which is duly signed and which is received by facsimile
        transmission ("fax"), shall be deemed to be of the same force and effect
        as the
        original.

      

      

      

      By:
              /S/  Walter
        Sansom

      

      Print
        Name:         Walter
        Sansom                                                     

      

      Title:
                  Secretary                                                              

      (Must
        be certified by another officer or director other than the above authorized
        signer)

       

      6/02

       

      ADDRESS
        FOR ALL NOTICES:

      PO
        Box
        230789 Portland, OR 97281 ~0789

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      

        SCHEDULE
          TO MASTER LOAN 

        AGREEMENT

      

      US
        Bancorp

      Equipment
        Finance, Inc.

       

      Champion
        Industries, Inc. 

      2450
        First Avenue 

      Huntington,
        WV 25703

      

      
        	
                 $262,013.00

              	
                 Effective
                  Date ___________________

              	
                 Schedule
                  Number  822821-AFS

              

      

                                                                 

      

      

      

      

      l.
        THIS SCHEDULE is made between
        Champion Industries, Inc. as Debtor, and U.S. Bancorp Equipment Finance,
        Inc.,
        (which, together with its successors and assigns, shall be called the "Secured
        Party") pursuant to the Master Loan Agreement dated as of May 08, 2007 between
        Debtor and Secured Party (the "Loan Agreement"), the terms of which (including
        the definitions) are incorporated herein. The terms of the Loan Agreement
        and
        this Schedule together shall constitute a separate instrument. Capitalized
        terms used but not defined herein are used with the respective meanings
        specified in the Loan Agreement. If any terms hereof are inconsistent with
        the
        terms of the Loan Agreement, the terms hereof shall prevail.

       

      2.
        For value received, Debtor hereby
        promises to pay to the order of Secured Party the principal amount of Two
        Hundred Sixty Two Thousand Thirteen and Noll
        00 Dollars
        ($262,013.00) with interest on any outstanding principal balance at the rate(s)
        specified herein from the Effective Date hereof until this Schedule shall
        have
        been paid in full in accordance with the following payment schedule: Forty
        Eight
        (48) installments in the amount of $5,458.60 each plus the entire amount
        of
        interest accrued on this Schedule at the time of payment of each installment.
        The first payment shall be due June 15, 2007 and a like payment shall be
        due on the same day of each succeeding month thereafter until the
        entire
        principal and interest have been paid. At the time of the final installment hereon,
        all unpaid
        principal and interest shall be due and owing. Each payment shall be applied
        first to accrued and unpaid interest, and the balance to the outstanding
        principal hereof. As a result, such final installment may be substantially
        more
        or substantially less than the installments specified herein.

       

      3.
        Debtor promises to pay interest on
        the principal balance outstanding at a rate of U.S. Bank National Association's
        (Bank's) prime rate, as Bank's prime rate may vary from time to time.
        Bank's prime rate is the rate of interest which Bank from time to time
        identifies as its prime rate and is not, for example, the lowest rate of
        interest which Bank collects from any borrower or class of borrowers. When
        Bank's prime rate is applicable, the interest rate hereunder shall be adjusted
        without notice upon each change in Bank's prime rate, but in no event shall
        the
        rate of interest be higher than allowed by law. Bank's prime rate is currently
        8.25 percent.

       

      4.
        Secured Party may, from time to
        time, in its sole discretion, increase or decrease the amount of unpaid
        installments to an amount Secured Party deems necessary to amortize the
        outstanding principal balance of this Schedule by the due date of the final
        installment. Secured Party shall notify Debtor of each such change in writing.
        Whether or not the installment amount is increased or decreased, Debtor
        understands that, as a result of increases or decreases in the rate of interest
        in accordance herewith, the final installment may be substantially more
        or substantially less than the installments specified herein, but in no event
        shall the rate of interest be higher than that allowed by law.

       

      5.
        Each Debtor, if more than one, and
        all other parties who at any time may be liable hereon in any capacity, hereby
        jointly and severally waive diligence, demand, presentment, presentment
        for payment, protest, notice of protest and notice of dishonor of this Schedule,
        and authorize the Secured Party, without notice, to grant extensions in the
        time
        of payment of and reductions in the rate of interest on any moneys owing
        on this
        Schedule.

       

      6.
        The
        following property is hereby made Collateral for all purposes under the Loan
        Agreement:

       

      One
        (1)
        Muller Martini 1550 Presto Saddle Stitcher, sin NN28139
        with HK75
        Stitching Heads and Three Knife Trimmer; Compact Twin Feeders, sin NN28131
        and sin
        NN28132; Folder Feeder, s/n NN28135;
        Hand
        Feed Station-l Station, s/n
NN28225;
        Trim Removal System, sin NN28227; KTA80 Compressor, sin
        28229; and Belt Delivery, sin
NN28150;

       

      One
        (I) MBO B30 Gate Fold Plate
sin 16361;

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      TOGETHER
        WITH ALL REPLACEMENTS, PARTS, REPAIRS, ADDITIONS, ACCESSIONS AND ACCESSORIES
        INCORPORATED THEREIN OR AFFIXED OR ATTACHED THERETO AND ANY AND ALL PROCEEDS
        OF
        THE FOREGOING, INCLUDING, WITHOUT LIMITATION, INSURANCE RECOVERIES.

       

      7.
        The
        Collateral hereunder shall be based at the following location(s):

       

      1515
        Central Parkway, Cincinnati, OH 4524 County: Hamilton

      

      IN
        WITNESS WHEREOF, Debtor has executed this Schedule this 30th day of
        MAY  , 2007
        .

      

      

      

       

      

       

      U.S.
Bancorp
        Equipment
        Finance, Inc.

       

      By:
                                                      _

      An
        Authorized Officer Thereof

       

      3/06

      

      

      

      Champion
        Industries, Inc.

       

      

      

       

      Champion
        Industries, Inc. (DEBTOR)

       

      By:
        _______/s/ Toney K. Adkins_____

       

      Authorized
        Signer

       

      

       

      Title:    President
        & COO

       

      ADDRESS
        FOR ALL NOTICES:

      PO
        Box 230789 Portland,
        OR 97281-0789exhibit102.htm

    EXHIBIT
      10.2

    
 

    PROMISSORY
      NOTE

    
      	
              Principal

              $1,750,000.00

            	
              Loan
                Date

              06-12-2007

            	
              Maturity

              06-12-2012

            	
              Loan
                No.

              6010048530100003

            	
              Call
                / Coll

              25

            	
              Account

            	
              Officer

              906

            	
              Initials

            

    

    References
      in the shaded area are for Lender's use only and do not limit the applicability
      of this document to any particular loan or item. Any item above containing
      "'***" has been omitted due to text length limitations.

    

    

    Borrower:     CHAMPION
      INDUSTRIES, INC. (TIN:
      55-0717455)                                                                                                                     Lender:                      COMMUNITY
      TRUST BANK, INC.

    P.O.
      BOX
      2968                                                                                           COMMERCIAL
      LENDING (PIKEVILLE MAIN)

    HUNTINGTON.
      WV
      25728-2968                                                                                           346
      NORTH MAYO TRAIL

    P.O.
      BOX
      2947

    PIKEVILLE,
      KY 41502-2947

    

    Principal
      Amount:
      $1,750,000.00                                                                Initial
      Rate:
      8.250%                                           Date
      of Note: June 12, 2007

    

    PROMISE
      TO PAY. CHAMPION INDUSTRIES INC ("Borrower") promises to pay to COMMUNITY TRUST
      BANK, INC. ("Lender"), or order, In lawful money of the United States of
      America, the principal amount of One Million Seven Hundred Fifty Thousand &
00/100 Dollars ($1,750,000.00), together with interest on the unpaid principal
      balance from  June 12, 2007 until paid in full.

    

    PAYMENT.  Subject
      to any payment changes resulting form changes in the index, Borrower will pay
      this loan in 60 payments of $35,799.51 each payment. Borrower’s first payment is
      due July 12, 2007, and all subsequent payments are due on the same day of each
      month after that.  Borrower’s final payment will be due on June 12,
      2012, and will be for all principal and all accrued interest not yet
      paid.  Payments include principal and interest. Unless otherwise
      agreed or required by applicable law, payments will be applied first to any
      accrued unpaid interest; then to principal; then to any unpaid collection costs;
      then to any late charges. The annual interest rate for the Note is computed
      on a
      365/360 basis; that is, by applying the ratio of annual interest rate over
      a
      year of 360 days, multiplied by the outstanding principal balance, multiplied
      by
      the actual number of days the principal balance is outstanding. Borrower will
      pay Lender at Lender's address shown above or at such other place as Lender
      may
      designate in writing.

    

    VARIABLE
      INTEREST RATE. The interest rate on this Note is subject to change from time
      to
      time based on changes in an independent index which is the Highest Prime Rate
      most recently published in “The Wall Street Journal’s money rates column” as the
      base rate on corporate loans at large U.S. money center commercial banks. (the
      “Index”). The index is not necessarily the lowest rate charged by Lender on its
      loans. If the index becomes unavailable during the term of this loan, Lender
      may
      designate a substitute index after notifying Borrower. Lender will tell Borrower
      the current index rate upon Borrower’s request.  The interest rate
      change will not occur more often than each day, [Any change in the Prime Rate
      shall be effective as of the day on which the change is announced to become
      effective].  Borrower understands that Lender may make loans based on
      other rates as well.  The Index currently is 8.250% per annum. The
      interest rate to be applied to the unpaid principal balance of this Note will
      be
      at a rate equal to the index, resulting in an initial rate of 8.250% per
      annum.  NOTICE: Under no circumstances will interest rate on this Note
      be more than the maximum rate allowed by applicable law. Whenever increases
      occur in the interest rate, Lender, at its option, may do one or more of the
      following: (A) increase Borrower’s payment to ensure Borrower’s loan will pay
      off by its original final maturity date, (B) increase Borrower’s payments to
      cover accruing interest, (C) increase the number of Borrower’s payments, and (D)
      continue Borrower’s payments at the same amount and increase Borrower’s final
      payment.

    

    PREPAYMENT.
      Borrower may pay without penalty all or portion of the amount owed earlier
      than
      it is due.  Early payments will not, unless agreed to by Lender in
      writing, relieve Borrower of Borrower’s obligation to continue to make payments
      of accrued unpaid interest.  Rather, early payments will reduce the
      principal balance due and may result in Borrower’s making fewer
      payments.  Borrower agrees not to send Lender payments marked “paid in
      full”, “without recourse”, or similar language.  If Borrower sends
      such a payment, Lender may accept it without losing any of Lender’s rights under
      this Note, and Borrower will remain obligated to pay any further amount owed
      to
      Lender.  All written communications concerning disputed amounts,
      including any check or other payment instrument that indicates that the payment
      constitutes “payment if full” of the amount owed or that is tendered with other
      conditions or limitations or as full satisfaction of a disputed amount must
      be
      mailed or delivered to: Community Trust Bank, Inc., P.O. Box 2947 Pikeville,
      KY
      41502-2947.

    

    LATE
      CHARGE. If a payment is 10 days or more lately, Borrower will be charged 5.000%
      of the regularly scheduled payment.

    

    INTEREST
      AFTER DEFAULT.  Upon default, including failure to pay upon final
      maturity, the interest rate on this Note shall be increased by adding a 2.000
      percentage point margin “Default Rate Margin”). The Default Rate Margin shall
      also apply to each succeeding interest rate change that would have applied
      had
      there been no default. However, in no event will the interest rate exceed the
      maximum interest rate limitations permitted under applicable law.

    

    DEFAULT.
      Each of the following shall constitute an event of default (“Event of Default”)
      under this Note.

    

    Payment
      Default- Borrower fails to make any payment when due under this
      Note.

    

    Other
      Defaults- Borrower fails to comply with or to perform any other term,
      obligation, covenant or condition contained in this Note or in any of the
      related documents or to comply with or perform any term, obligation, covenant,
      or condition contained in any other agreement between Lender and
      Borrower.

    

    Default
      in favor of third parties- Borrower or any Grantor defaults under any loan,
      extension of credit, security agreement, purchase or sales agreement, or any
      other agreement, in favor of any other creditor or person that may materially
      effect any of Borrower’s property or Borrower’s ability to repay this Note or
      perform Borrower’s obligations under this Note or any of the related
      documents.

    

    False
      Statements-  Any warranty, representation or statement made or
      furnished to Lender by Borrower or on Borrower’s behalf under this Note or the
      related documents is false or misleading in any material respect, either now
      or
      at the time made or furnished or becomes false or misleading at any time
      thereafter.

    

    Insolvency-
      The dissolution or termination of Borrower’s existence as a going business, the
      insolvency or Borrower, the appointment of a receiver for any part of Borrower’s
      property, any assignment for the benefit of creditors, any type of creditor
      workout, or the commencement of any proceeding under any bankruptcy or
      Insolvency laws by or against Borrower.

    

    Creditor
      or Forfeiture Proceedings. Commencement of foreclosure of forfeiture
      proceedings, whether by judicial proceeding, self-help, repossession or any
      other method, by any creditor of Borrower or by any governmental agency against
      any collateral securing the loan. This includes a garnishment of any of
      Borrower’s accounts, including deposit accounts, with
      Lender.  However, the Event of Default shall not apply if there is a
      good faith dispute by Borrower as to the validity or reasonableness of the
      claim
      which is the basis of the creditor or forfeiture proceeding and if Borrower
      gives Lender written notice of the creditor or forfeiture proceeding and
      deposits with Lender monies or a surety bond for the creditor or forfeiture
      proceeding, in an amount determined by Lender, in its sole discretion, as being
      an adequate reserve or bond for the dispute.

    

    Events
      Affecting Guarantor- Any of the preceding events occurs with respect to any
      guarantor, endorser, surely, or accommodation party of any of the indebtedness
      or any guarantor, endorser, surety, or accommodation part dies or becomes
      incompetent, or revokes or disputes the validity of, or liability under, any
      guaranty of the indebtedness evidenced by this Note.  In the event of
      a death, Lender, at this option, may, but shall not be required to , permit
      the
      guarantor’s estate to assume unconditionally the obligations arising under the
      guaranty in a manner satisfactory to Lender, and, in doing so, cure any Event
      of
      Default.

    

    

    Change
      in
      Ownership- Any change in ownership of twenty-five percent (25%) or more of
      the
      common stock of Borrower.

    

    Adverse
      Change- A material adverse change occurs in Borrower’s financial condition, or
      Lender believes the prospect of payment or performance of this Note is
      impaired.

    

    Insecurity-
      Lender in good faith believes itself insecure.

    

    Cure
      Provisions – If any default, other than a default in payment is curable and if
      Borrower has not been given a notice of a breach of the same provision of this
      Note within the preceding twelve (12) months, it may be cured if Borrower,
      after
      receiving written notice from Lender demanding cure of such default: (1) cures
      the default within ten (10) days; or (2) if the cure requires more than ten
      (10)
      days, immediately initiates steps which Lender deems in Lender’s sole discretion
      to be sufficient to cure the default and thereafter continues and completes
      all
      reasonable and necessary steps sufficient to produce compliance as soon as
      reasonable
      practical.        

    

    LENDER’S
      RIGHTS. Upon default, Lender may declare the entire unpaid principal balance
      on
      this Note and all accrued unpaid interest immediately due, and then Borrower
      will pay that amount.

    

    ATTORNEYS’
      FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note
      if
      Borrower does not pay.  Borrower will pay Lender that amount. This
      includes, subject to any limits under applicable law, Lender’s attorneys’ fees
      and Lender’s legal expenses, whether or not there is a lawsuit, including
      attorneys’ fees, expense for bankruptcy proceedings (including efforts to modify
      or vacate any automatic stay or injunction), and appeals. If not prohibited
      by
      law, Borrower also will pay any court costs, in addition to all other sums
      provided by law.

    

    JURY
      WAIVER. Lender and Borrower hereby waive the right to any jury trial in any
      action, proceeding, or counterclaim brought by either Lender or Borrower against
      the other.

    

    GOVERNING
      LAW. This Note will be governed by Federal law applicable to the Lender and,
      to
      the extent not preempted by federal law, the laws of the Commonwealth of
      Kentucky without regard to its conflicts of law provisions. This Note has been
      accepted by the Lender in the Commonwealth of Kentucky.

    

    CHOICE
      OF
      VENUE.  If there is a lawsuit, Borrower agrees upon Lender’s request
      to submit to the jurisdiction of the courts of Pike County, Commonwealth of
      Kentucky.

    

    DISHONORED
      ITEM FEE. Borrower will pay a fee to Lender of $20.00 if Borrower makes a
      payment on Borrower’s loan and the check or preauthorized charge with which
      Borrower pays is later dishonored.

    

    RIGHT
      OF
      SETOFF. To the extent permitted by applicable law, Lender reserves the right
      of
      setoff in all Borrower’s accounts with Lender (whether checking, savings, or
      some other account). This includes all accounts Borrower holds jointly with
      someone else and all accounts Borrower may open in the
      future.  However, this does not include any IRA or Keogh accounts, or
      any trust accounts for which setoff would be prohibited by
      law.  Borrower authorizes Lender, to the extent permitted by
      applicable law, to charge or setoff all sums owing on the indebtedness against
      any and all such accounts.

    

    COLLATERAL.
      Borrower acknowledges this Note is secured by (1) HEIDELBERG CD 102-6+L, Serial
      No: (548127); S/W CP20000 Instant Gate, Serial No: (1253018562); BetaC270RC
      SM/CD 102 5/6/7 Option 1; PE Conductor Can-Gerate, 15m; Connecting cable CAN
      ext. Nr. 12 14500mm; BetaC – Shipping; BetaC – Packing; Installation of RC SM CD
      102; Combi Unit Start Up CD/SM 102; Int Tank BC 270 102 5-7 RC/SC/GC; S/W
      License Pre.Interf. full version V.3, Serial No: (1253018562A); Prinect Prepress
      Interface mit Laufwerk.

    

    INTEREST
      INCREASE. THIS NOTE’S INTEREST RATE WILL BE INCREASED BY 2% PER ANNUM IF ANY
      PAYMENT IS NOT RECEIVED WITHIN 30 DAYS OF ITS DUE DATE.

    

    SUCCESSOR
      INTERESTS. The terms of this Note shall be binding upon Borrower, and upon
      Borrower’s heirs, personal representatives, successors and assigns, and shall
      inure to the benefit of Lender and its successors and assigns.

    

    GENERAL
      PROVISIONS. If any part of this Note cannot be enforced, this fact will not
      affect the rest of the Note. Lender may delay or forgo enforcing any of its
      rights or remedies under this Note without losing them.  Borrower and
      any other person who signs, guarantees or endorses this Note, to the extent
      allowed by law, waive presentiment, demand for payment, and notice of
      dishonor.  Upon any change in terms of this Note, and unless otherwise
      expressly stated in writing, no party who signs this Note, whether as maker,
      guarantor, accommodation maker or endorser, shall be released form liability.
      All such parties agree that Lender may renew or extend (repeatedly and for
      any
      length of time) this loan or release any party or guarantor or collateral;
      or
      impair, fail to realize upon or perfect Lender’s security interest in the
      collateral; and take any other action deemed necessary by Lender without the
      consent of or notice to anyone. All such parties also agree that Lender may
      modify this loan without the consent of or notice to anyone other than the
      party
      with whom the modification is made. The obligations under this Note are joint
      and several.

    

    PRIOR
      TO
      SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
      NOTE,
      INCLUDING THE VARIABLE INTEREST RATE PROVISIONS, BORROWER AGREES TO TERMS OF
      THIS NOTE.

    

    BORROWER
      ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

    

    BORROWER:

    

    CHAMPION
      INDUSTRIES, INC.

    

    

    By:
      _________________________________________

        TONEY
      K. ADKINS, PRESIDENT OF CHAMPION

        INDUSTRIES,
      INC.

    

    LENDER:

    

    COMMUNITY
      TRUST BANK, INC.

    

    

    X__________________________________________

        AUTHORIZED
      SIGNER

    

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    COMMERCIAL
      SECURITY AGREEMENT

    
      	
              Principal

              $1,750,000.00

            	
              Loan
                Date

              06-12-2007

            	
              Maturity

              06-12-2012

            	
              Loan
                No.

              6010048530100003

            	
              Call
                / Coll

              25

            	
              Account

            	
              Officer

              906

            	
              Initials

            

    

    References
      in the shaded area are for Lender's use only and do not limit the applicability
      of this document to any particular loan or item. Any item above containing
      "'***" has been omitted due to text length limitations.

    

    

    Borrower:     CHAMPION
      INDUSTRIES, INC. (TIN:
      55-0717455)                                                                                                                     Lender:                      COMMUNITY
      TRUST BANK, INC.

    P.O.
      BOX
      2968                                                                                           COMMERCIAL
      LENDING (PIKEVILLE MAIN)

    HUNTINGTON.
      WV
      25728-2968                                                                                           346
      NORTH MAYO TRAIL

    P.O.
      BOX
      2947

    PIKEVILLE,
      KY 41502-2947

    
 

    THIS
      COMMERCIAL SECURITY AGREEMENT dated June 12, 2007, is made and executed between
      CHAMPION INDUSTRIES INC ("Grantor") and COMMUNITY TRUST BANK, INC.
      ("Lender").

    

    GRANT
      OF
      SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a
      security interest in the Collateral to secure the Indebtedness and agrees that
      Lender shall have the rights stated in this Agreement with respect to the
      Collateral, in addition to all other rights which Lender may have by
      law.

    

    COLLATERAL
      DESCRIPTION. The word "Collateral" as used in this Agreement means the following
      described property, whether now owned or hereafter acquired, whether now
      existing or hereafter arising, and wherever located, in which Grantor is giving
      to Lender a security interest for the payment of the Indebtedness and
      performance of all other obligations under the Note and this
      Agreement:

    

    Purchase
      Money Security Interest in (1) HEIDELBERG CD 102-6+L, Serial No: (548127);
      S/W
      CP20000 Instant Gate, Serial No: (1253018562); BetaC270RC SM/CD 102 5/6/7 Option
      1; PE Conductor Can-Gerate, 15m; Connecting cable CAN ext. Nr. 12 14500mm;
      BetaC
– Shipping; BetaC – Packing; Installation of RC SM CD 102; Combi Unit Start Up
      CD/SM 102; Int Tank BC 270 102 5-7 RC/SC/GC; S/W License Pre.Interf. full
      version V.3, Serial No: (1253018562A); Prinect Prepress Interface mit
      Laufwerk.

    

    In
      addition, the word "Collateral" also includes all the following, whether now
      owned or hereafter acquired, whether now existing or hereafter arising, and
      wherever located:

    

    (A)
      All
      accessions, attachments, accessories, tools, parts, supplies, replacements
      of
      and additions to any of the collateral described herein, whether added now
      or
      later.

    (B)
      All
      products and produce of any of the property described in this Collateral
      section.

    (C)
      All
      accounts, general intangibles, instruments, rents, monies, payments, and all
      other rights, arising out of a sale, lease, consignment or other disposition
      of
      any of the property described in this Collateral section.

    (D)
      All
      proceeds (including insurance proceeds) from the sale, destruction, loss, or
      other disposition of any of the property described in this Collateral section,
      and sums due from a third party who has damaged or destroyed the Collateral
      or
      from that party's insurer, whether due to judgment, settlement or other
      process.

    (E)
      All
      records and data relating to any of the property described in this Collateral
      section, whether in the form of a writing, photograph, microfilm, microfiche,
      or
      electronic media, together with all of Grantor's right, title, and interest
      in
      and to all computer software required to utilize, create, maintain, and process
      any such records or data on electronic media.

    

    RIGHT
      OF
      SETOFF. To the extent permitted by applicable law. Lender reserves a right
      of
      setoff in all Grantor's accounts with Lender (whether checking. savings. or
      some
      other account). This includes all accounts Grantor holds jointly with someone
      else and all accounts Grantor may open in the future. However, this does not
      include any IRA or Keogh accounts, or any trust accounts for which setoff would
      be prohibited by law. Grantor authorizes Lender, to the extent permitted by
      applicable law, to charge or setoff all sums owing on the Indebtedness against
      any and all such accounts.

    

    GRANTOR'S
      REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect
      to
      the Collateral, Grantor represents and promises to Lender that:

    

    Perfection
      of Security Interest. Grantor agrees to take whatever actions are requested
      by
      Lender to perfect and continue Lender's security interest in the Collateral.
      Upon request of Lender, Grantor will deliver to Lender any and all of the
      documents evidencing or constituting the Collateral, and Grantor will note
      Lender's interest upon any and all chattel paper and instruments if not
      delivered to Lender for possession by Lender.

    

    Notices
      to Lender. Grantor will promptly notify Lender in writing at Lender's address
      shown above (or such other addresses as Lender may designate from time to time)
      prior to any (1) change in Grantor's name; (2) change in Grantor's assumed
      business name(s); (3) change in the management of the Corporation Grantor;
      (4)
      change in the authorized signer(s); (5) change in Grantor's principal office
      address; (6) change in Grantor's state of organization; (7) conversion of
      Grantor to a new or different type of business entity; or (8) change in any
      other aspect of Grantor that directly or indirectly relates to any agreements
      between Grantor and Lender. No change in Grantor's name or state of organization
      will take effect until after Lender has received notice.

    No
      Violation. The execution and delivery of this Agreement will not violate any
      law
      or agreement governing Grantor or to which Grantor is a party, and its
      certificate or articles of incorporation and bylaws do not prohibit any term
      or
      condition of this Agreement.

    

    Enforceability
      of Collateral. To the extent the Collateral consists of accounts, chattel paper,
      or general intangibles, as defined by the Uniform Commercial Code, the
      Collateral is enforceable in accordance with its terms, is genuine, and fully
      complies with all applicable laws and regulations concerning form, content
      and
      manner of preparation and execution, and all persons appearing to be obligated
      on the Collateral have authority and capacity to contract and are in fact
      obligated as they appear to be on the Collateral. There shall be no setoffs
      or
      counterclaims against any of the Collateral, and no agreement shall have been
      made under which any deductions or discounts may be claimed concerning the
      Collateral except those disclosed to Lender in writing.

    

    Location
      of the Collateral. Except in the ordinary course of Grantor's business, Grantor
      agrees to keep the Collateral at Grantor's address shown above or at such other
      locations as are acceptable to Lender. Upon Lender's request, Grantor will
      deliver to Lender in form satisfactory to Lender a schedule of real properties
      and Collateral locations relating to Grantor's operations, including without
      limitation the following: (1) all real property Grantor owns or is purchasing;
      (2) all real property Grantor is renting or leasing; (3) all storage facilities
      Grantor owns, rents, leases, or uses; and (4) all other properties where
      Collateral is or may be located.

    

    Removal
      of the Collateral. Except in the ordinary course of Grantor's business, Grantor
      shall not remove the Collateral from its existing location without Lender's
      prior written consent. To the extent that the Collateral consists of vehicles,
      or other titled property, Grantor shall not pledge any action which would
      require application for the certificates of title for the vehicles outside
      the
      State of West Virginia, without Lender’s prior written consent. Grantor shall,
      whenever requested, advise Lender of the exact location of the
      Collateral.

    

    Transactions
      Involving Collateral. Except for inventory sold or accounts collected in the
      ordinary course of Grantor's business, or as otherwise provided for in this
      Agreement, Grantor shall not sell, offer to sell, or otherwise transfer or
      dispose of the Collateral. Grantor shall not pledge, mortgage, encumber or
      otherwise permit the Collateral to be subject to any lien, security interest,
      encumbrance, or charge, other than the security interest provided for in this
      Agreement, without the prior written consent of Lender. This includes security
      interests even if junior in right to the security interests granted under this
      Agreement. Unless waived by Lender, all proceeds from any disposition of the
      Collateral (for whatever reason) shall be held in trust for Lender and shall
      not
      be commingled with any other funds; provided however, this requirement shall
      not
      constitute consent by Lender to any sale or other disposition. Upon receipt,
      Grantor shall immediately deliver any such proceeds to Lender.

    

    Title.
      Grantor represents and warrants to Lender that Grantor holds good and marketable
      title to the Collateral, free and clear of all liens and encumbrances except
      for
      the lien of this Agreement. No financing statement covering any of the
      Collateral is on file in any public office other than those which reflect the
      security interest created by this Agreement or to which Lender has specifically
      consented. Grantor shall defend Lender's rights in the Collateral against the
      claims and demands of all other persons.

    

    Repairs
      and Maintenance. Grantor agrees to keep and maintain, and to cause others to
      keep and maintain, the Collateral in good order, repair and condition at all
      times while this Agreement remains in effect. Grantor further agrees to pay
      when
      due all claims for work done on, or services rendered or material furnished
      in
      connection with the Collateral so that no lien or encumbrance may ever attach
      to
      or be filed against the Collateral.

    

    Inspection
      of Collateral. Lender and Lender's designated representatives and agents shall
      have the right at all reasonable times to examine and inspect the Collateral
      wherever located.

    

    Taxes,
      Assessments and Liens. Grantor will pay when due all taxes, assessments and
      liens upon the Collateral, its use or operation, upon this Agreement, upon
      any
      promissory note or notes evidencing the Indebtedness, or upon any of the other
      Related Documents. Grantor may withhold any such payment or may elect to contest
      any lien if Grantor is in good faith conducting an appropriate proceeding to
      contest the obligation to pay and so long as Lender's interest in the Collateral
      is not jeopardized in Lender's sole opinion. If the Collateral is subjected
      to a
      lien which is not discharged within fifteen (15) days, Grantor shall deposit
      with Lender cash, a sufficient corporate surety bond or other security
      satisfactory to Lender in an amount adequate to provide for the discharge of
      the
      lien plus any interest, costs, attorneys' fees or other charges that could
      accrue as a result of foreclosure or sale of the Collateral. In any contest
      Grantor shall defend itself and Lender and shall satisfy any final adverse
      judgment before enforcement against the Collateral. Grantor shall name Lender
      as
      an additional obligee under any surety bond furnished in the contest
      proceedings. Grantor further agrees to furnish Lender with evidence that such
      taxes, assessments, and governmental and other charges have been paid in full
      and in a timely manner. Grantor may withhold any such payment or may elect
      to
      contest any lien if Grantor is in good faith conducting an appropriate
      proceeding to contest the obligation to pay and so long as Lender's interest
      in
      the Collateral is not jeopardized.

    

    Compliance
      with Governmental Requirements. Grantor shall comply promptly with all laws,
      ordinances, rules and regulations of all governmental authorities, now or
      hereafter in effect, applicable to the ownership, production, disposition,
      or
      use of the Collateral, including all laws or regulations relating to the undue
      erosion of highly-erodible land or relating to the conversion of wetlands for
      the production of an agricultural product or commodity. Grantor may contest
      in
      good faith any such law, ordinance or regulation and withhold compliance during
      any proceeding, including appropriate appeals, so long as Lender's interest
      in
      the Collateral, in Lender's opinion, is not jeopardized.

    

    Hazardous
      Substances. Grantor represents and warrants that the Collateral never has been,
      and never will be so long as this Agreement remains a lien on the Collateral,
      used in violation of any Environmental Laws or for the generation, manufacture,
      storage, transportation, treatment, disposal, release or threatened release
      of
      any Hazardous Substance. The representations and warranties contained herein
      are
      based on Grantor's due diligence in investigating the Collateral for Hazardous
      Substances. Grantor hereby (1) releases and waives any future claims against
      Lender for indemnity or contribution in the event Grantor becomes liable for
      cleanup or other costs under any Environmental Laws, and (2) agrees to indemnify
      and hold harmless Lender against any and all claims and losses resulting from
      a
      breach of this provision of this Agreement. This obligation to indemnify shall
      survive the payment of the Indebtedness and the satisfaction of this
      Agreement.

    

    Maintenance
      of Casualty Insurance. Grantor shall procure and maintain all risks insurance,
      including without limitation fire, theft and liability coverage together with
      such other insurance as Lender may require with respect to the Collateral,
      in
      form, amounts, coverages and basis reasonably acceptable to Lender and issued
      by
      a company or companies reasonably acceptable to Lender. Grantor, upon request
      of
      Lender, will deliver to Lender from time to time the policies or certificates
      of
      insurance in form satisfactory to Lender, including stipulations that coverages
      will not be cancelled or diminished without at least thirty (30) days' prior
      written notice to Lender and not including any disclaimer of the insurer's
      liability for failure to give such a notice. Each insurance policy also shall
      include an endorsement providing that coverage in favor of Lender will not
      be
      impaired in any way by any act, omission or default of Grantor or any other
      person. In connection with all policies covering assets in which Lender holds
      or
      is offered a security interest, Grantor will provide Lender with such loss
      payable or other endorsements as Lender may require. If Grantor at any time
      fails to obtain or maintain any insurance as required under this Agreement,
      Lender may (but shall not be obligated to) obtain such insurance as Lender
      deems
      appropriate, including if Lender so chooses "single interest insurance," which
      will cover only Lender's interest in the Collateral.

    

    Application
      of Insurance Proceeds. Grantor shall promptly notify Lender of any loss or
      damage to the Collateral, whether or not such casualty or loss is covered by
      insurance. Lender may make proof of loss if Grantor fails to do so within
      fifteen (15) days of the casualty. All proceeds of any insurance on the
      Collateral, including accrued proceeds thereon, shall be held by Lender as
      part
      of the Collateral. If Lender consents to repair or replacement of the damaged
      or
      destroyed Collateral, Lender shall, upon satisfactory proof of expenditure,
      payor reimburse Grantor from the proceeds for the reasonable cost of repair
      or
      restoration. If Lender does not consent to repair or replacement of the
      Collateral, Lender shall retain a sufficient amount of the proceeds to pay
      all
      of the Indebtedness, and shall pay the balance to Grantor. Any proceeds which
      have not been disbursed within six (6) months after their receipt and which
      Grantor has not committed to the repair or restoration of the Collateral shall
      be used to prepay the Indebtedness.

    

    Insurance
      Reserves. Lender may require Grantor to maintain with Lender reserves for
      payment of insurance premiums, which reserves shall be created by monthly
      payments from Grantor of a sum estimated by Lender to be sufficient to produce,
      at least fifteen (15) days before the premium due date, amounts at least equal
      to the insurance premiums to be paid. If fifteen (15) days before payment is
      due, the reserve funds are insufficient, Grantor shall upon demand pay any
      deficiency to Lender. The reserve funds shall be held by Lender as a general
      deposit and shall constitute a non-interest-bearing account which Lender may
      satisfy by payment of the insurance premiums required to be paid by Grantor
      as
      they become due. Lender does not hold the reserve funds in trust for Grantor,
      and Lender is not the agent of Grantor for payment of the insurance premiums
      required to be paid by Grantor. The responsibility for the payment of premiums
      shall remain Grantor's sole responsibility.

    

    Insurance
      Reports. Grantor, upon request of Lender, shall furnish to Lender reports on
      each existing policy of insurance showing such information as Lender may
      reasonably request including the following: (1) the name of the insurer; (2)
      the
      risks insured; (3) the amount of the policy; (4) the property insured; (5)
      the
      then current value on the basis of which insurance has been obtained and the
      manner of determining that value; and (6) the expiration date of the policy.
      In
      addition, Grantor shall upon request by Lender (however not more often than
      annually) have an independent appraiser satisfactory to Lender determine, as
      applicable, the cash value or replacement cost of the Collateral.

    

    Financing
      Statements. Grantor authorizes Lender to file a UCC financing statement, or
      alternatively, a copy of this Agreement to perfect Lender's security interest.
      At Lender's request, Grantor additionally agrees to sign all other documents
      that are necessary to perfect, protect, and continue Lender's security interest
      in the Property. Grantor will pay all filing fees, title transfer fees, and
      other fees and costs involved unless prohibited by law or unless Lender is
      required by law to pay such fees and costs. Grantor irrevocably appoints Lender
      to execute documents necessary to transfer title if there is a default. Lender
      may file a copy of this Agreement as a financing statement. If Grantor changes
      Grantor's name or address, or the name or address of any person granting a
      security interest under this Agreement changes, Grantor will promptly notify
      the
      Lender of such change.

    

    GRANTOR'S
      RIGHT TO POSSESSION. Until default, Grantor may have possession of the tangible
      personal property and beneficial use of all the Collateral and may use it in
      any
      lawful manner not inconsistent with this Agreement or the Related Documents,
      provided that Grantor's right to possession and beneficial use shall not apply
      to any Collateral where possession of the Collateral by Lender is required
      by
      law to perfect Lender's security interest in such Collateral. If Lender at
      any
      time has possession of any Collateral, whether before or after an Event of
      Default, Lender shall be deemed to have exercised reasonable care in the custody
      and preservation of the Collateral if Lender takes such action for that purpose
      as Grantor shall request or as Lender, in Lender's sole discretion, shall deem
      appropriate under the circumstances, but failure to honor any request by Grantor
      shall not of itself be deemed to be a failure to exercise reasonable care.
      Lender shall not be required to take any steps necessary to preserve any rights
      in the Collateral against prior parties, nor to protect, preserve or maintain
      any security interest given to secure the Indebtedness.

    

    LENDER'S
      EXPENDITURES. If any action or proceeding is commenced that would materially
      affect Lender's interest in the Collateral or if Grantor fails to comply with
      any provision of this Agreement or any Related Documents, including but not
      limited to Grantor's failure to discharge or pay when due any amounts Grantor
      is
      required to discharge or pay under this Agreement or any Related Documents,
      Lender on Grantor's behalf may (but shall not be obligated to) take any action
      that Lender deems appropriate, including but not limited to discharging or
      paying all taxes, liens, security interests, encumbrances and other claims,
      at
      any time levied or placed on the Collateral and paying all costs for insuring,
      maintaining and preserving the Collateral. All such expenditures incurred or
      paid by Lender for such purposes will then bear interest at the rate charged
      under the Note from the date incurred or paid by Lender to the date of repayment
      by Grantor. All such expenses will become a part of the Indebtedness and, at
      Lender's option, will (A) be payable on demand; (B) be added to the balance
      of
      the Note and be apportioned among and be payable with any installment payments
      to become due during either (1) the term of any applicable insurance policy;
      or
      (2) the remaining term of the Note; or (C) be treated as a balloon payment
      which
      will be due and payable at the Note's maturity. The Agreement also will secure
      payment of these amounts. Such right shall be in addition to all other rights
      and remedies to which Lender may be entitled upon Default.

    

    DEFAULT.
      Each of the following shall constitute an Event of Default under this
      Agreement:

    

    Payment
      Default. Grantor fails to make any payment when due under the
      Indebtedness.

    

    Other
      Defaults. Grantor fails to comply with or to perform any other term, obligation,
      covenant or condition contained in this Agreement or in any of the Related
      Documents or to comply with or to perform any term, obligation, covenant or
      condition contained in any other agreement between Lender and
      Grantor.

    

    Default
      in Favor of Third Parties. Should Borrower or any Grantor default under any
      loan, extension of credit, security agreement, purchase or sales agreement,
      or
      any other agreement, in favor of any other creditor or person that may
      materially affect any of Grantor's property or Grantor's or any Grantor's
      ability to repay the Indebtedness or perform their respective obligations under
      this Agreement or any of the Related Documents.

    

    False
      Statements. Any warranty, representation or statement made or furnished to
      Lender by Grantor or on Grantor's behalf under this Agreement or the Related
      Documents is false or misleading in any material respect, either now or at
      the
      time made or furnished or becomes false or misleading at any time
      thereafter.

    

    Defective
      Collateralization. This Agreement or any of the Related Documents ceases to
      be
      in full force and effect (including failure of any collateral document to create
      a valid and perfected security interest or lien) at any time and for any
      reason.

    

    Insolvency.
      The dissolution or termination of Grantor's existence as a going business,
      the
      insolvency of Grantor, the appointment of a receiver for any part of Grantor's
      property, any assignment for the benefit of creditors, any type of creditor
      workout, or the commencement of any proceeding under any bankruptcy or
      insolvency laws by or against Grantor.

    

    Creditor
      or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
      proceedings, whether by judicial proceeding, self-help, repossession or any
      other method, by any creditor of Grantor or by any governmental agency against
      any collateral securings the basis of the creditor or forfeiture proceeding
      and
      if Grantor gives Lender written notice of the creditor or forfeiture proceeding
      and the Indebtedness. This includes a garnishment of any of Grantor's accounts,
      including deposit accounts, with Lender. However, this Event of Default shall
      not apply if there is a good faith dispute by Grantor as to the validity or
      reasonableness of the claim which is the basis of the creditor or forfeiture
      proceeding and if Grantor gives Lender written notice of the creditor or
      forfeiture proceeding and deposits with Lender monies or a surety bond for
      the
      creditor or forfeiture proceeding, in an amount determined by Lender, in its
      sole discretion, as being an adequate reserve or bond for the
      dispute.

    

    Events
      Affecting Guarantor. Any of the preceding events occurs with respect to any
      guarantor, endorser, surety, or accommodation party of any of the Indebtedness
      or guarantor, endorser, surety, or accommodation party dies or becomes
      incompetent or revokes or disputes the validity of, or liability under, any
      Guaranty of the Indebtedness.

    

    Adverse
      Change. A material adverse change occurs in Grantor's financial condition,
      or
      Lender believes the prospect of payment or performance of the Indebtedness
      is
      impaired.

    

    Insecurity.
      Lender in good faith believes itself insecure.

    

    Cure
      Provisions. If any default, other than a default in payment is curable and
      if
      Grantor has not been given a notice of a breach of the same provision of this
      Agreement within the preceding twelve (12) months, it may be cured if Grantor,
      after receiving written notice from Lender demanding cure of such default:
      (1)
      cures the default within ten (10) days; or (2) if the cure requires more than
      ten (10) days, immediately initiates steps which Lender deems in Lender's sole
      discretion to be sufficient to cure the default and thereafter continues and
      completes all reasonable and necessary steps sufficient to produce compliance
      as
      soon as reasonably practical.

    

    RIGHTS
      AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Agreement,
      at
      any time thereafter, Lender shall have all the rights of a secured party under
      the West Virginia Uniform Commercial Code. In addition and without limitation,
      Lender may exercise anyone or more of the following rights and
      remedies:

    

    Accelerate
      Indebtedness. Lender may declare the entire Indebtedness, including any
      prepayment penalty which Grantor would be required to pay, immediately due
      and
      payable, without notice of any kind to Grantor.

    

    Assemble
      Collateral. Lender may require Grantor to deliver to Lender all or any portion
      of the Collateral and any and all certificates of title and other documents
      relating to the Collateral. Lender may require Grantor to assemble the
      Collateral and make it available to Lender at a place to be designated by
      Lender. Lender also shall have full power to enter upon the property of Grantor
      to take possession of and remove the Collateral. If the Collateral contains
      other goods not covered by this Agreement at the time of repossession, Grantor
      agrees Lender may take such other goods, provided that Lender makes reasonable
      efforts to return them to Grantor after repossession.

    

    Sell
      the
      Collateral. Lender shall have full power to sell, lease, transfer, or otherwise
      deal with the Collateral or proceeds thereof in Lender's own name or that of
      Grantor. Lender may sell the Collateral at public auction or private sale.
      Unless the Collateral threatens to decline speedily in value or is of a type
      customarily sold on a recognized market, Lender will give Grantor, and other
      persons as required by law, reasonable notice of the time and place of any
      public sale, or the time after which any private sale or any other disposition
      of the Collateral is to be made. However, no notice need be provided to any
      person who, after Event of Default occurs, enters into and authenticates an
      agreement waiving that person's right to notification of sale. The requirements
      of reasonable notice shall be met if such notice is given at least ten (10)
      days
      before the time of the sale or disposition. All expenses relating to the
      disposition of the Collateral, including without limitation the expenses of
      retaking, holding, insuring, preparing for sale and selling the Collateral,
      shall become a part of the Indebtedness secured by this Agreement and shall
      be
      payable on demand, with interest at the Note rate from date of expenditure
      until
      repaid.

    

    Appoint
      Receiver. Lender shall have the right to have a receiver appointed to take
      possession of all or any part of the Collateral, with the power to protect
      and
      preserve the Collateral, to operate the Collateral preceding foreclosure or
      sale, and to collect the Rents from the Collateral and apply the proceeds,
      over
      and above the cost of the receivership, against the Indebtedness. The receiver
      may serve without bond if permitted by law. Lender's right to the appointment
      of
      a receiver shall exist whether or not the apparent value of the Collateral
      exceeds the Indebtedness by a substantial amount. Employment by Lender shall
      not
      disqualify a person from serving as a receiver.

    

    Collect
      Revenues, Apply Accounts. Lender, either itself or through a receiver, may
      collect the payments, rents, income, and revenues from the Collateral. Lender
      may at any time in Lender's discretion transfer any Collateral into Lender's
      own
      name or that of Lender's nominee and receive the payments, rents, income, and
      revenues therefrom and hold the same as security for the Indebtedness or apply
      it to payment of the Indebtedness in such order of preference as Lender may
      determine. Insofar as the Collateral consists of accounts, general intangibles,
      insurance policies, instruments, chattel paper, choses in action, or similar
      property, Lender may demand, collect, receipt for, settle, compromise, adjust,
      sue for, foreclose, or realize on the Collateral as Lender may determine,
      whether or not Indebtedness or Collateral is then due. For these purposes,
      Lender may, on behalf of and in the name of Grantor, receive, open and dispose
      of mail addressed to Grantor; change any address to which mail and payments
      are
      to be sent; and endorse notes, checks, drafts, money orders, documents of title,
      instruments and items pertaining to payment, shipment, or storage of any
      Collateral. To facilitate collection, Lender may notify account debtors and
      obligors on any Collateral to make payments directly to Lender.

    

    Obtain
      Deficiency. If Lender chooses to sell any or all of the Collateral, Lender
      may
      obtain a judgment against Grantor for any deficiency remaining on the
      Indebtedness due to Lender after application of all amounts received from the
      exercise of the rights provided in this Agreement. Grantor shall be liable
      for a
      deficiency even if the transaction described in this subsection is a sale of
      accounts or chattel paper.

    

    Other
      Rights and Remedies. Lender shall have all the rights and remedies of a secured
      creditor under the provisions of the Uniform Commercial Code, as may be amended
      from time to time. In addition, Lender shall have and may exercise any or all
      other rights and remedies it may have available at law, in equity, or
      otherwise.

    

    Election
      of Remedies. Except as may be prohibited by applicable law, all of Lender's
      rights and remedies, whether evidenced by this Agreement, the Related Documents,
      or by any other writing, shall be cumulative and may be exercised singularly
      or
      concurrently. Election by Lender to pursue any remedy shall not exclude pursuit
      of any other remedy, and an election to make expenditures or to take action
      to
      perform an obligation of Grantor under this Agreement, after Grantor's failure
      to perform, shall not affect Lender's right to declare a default and exercise
      its remedies.

    

    MISCELLANEOUS
      PROVISIONS. The following miscellaneous provisions are a part of this
      Agreement:

    

    Amendments.
      This Agreement, together with any Related Documents, constitutes the entire
      understanding and agreement of the parties as to the matters set forth in this
      Agreement. No alteration of or amendment to this Agreement shall be effective
      unless given in writing and signed by the party or parties sought to be charged
      or bound by the alteration or amendment.

    

    Attorneys'
      Fees; Expenses. Grantor agrees to pay upon demand all of Lender's costs and
      expenses, including Lender's attorneys' fees and Lender's legal expenses,
      incurred in connection with the enforcement of this Agreement. Lender may hire
      or pay someone else to help enforce this Agreement, and Grantor shall pay the
      costs and expenses of such enforcement. Costs and expenses include Lender's
      attorneys' fees and legal expenses whether or not there is a lawsuit, including
      attorneys' fees and legal expenses for bankruptcy proceedings (including efforts
      to modify or vacate any automatic stay or injunction), appeals, and any
      anticipated post-judgment collection services. Grantor also shall pay all court
      costs and such additional fees as may be directed by the court.

    

    Caption
      Headings. Caption headings in this Agreement are for convenience purposes only
      and are not to be used to interpret or define the provisions of this
      Agreement.

    

    Governing
      Law. With respect to procedural matters related to the perfection and
      enforcement of Lender’s rights against the Collateral, this Agreement will be
      governed by federal law applicable to Lender and to the extent not preempted
      by
      federal law, the laws of the State of West Virginia. In all other respects,
      this
      Agreement will be governed by the federal law applicable to Lender and, to
      the
      extent not preempted by federal law, the laws of the Commonwealth of Kentucky
      without regard to its conflicts of law provisions. However, if there ever is
      a
      question about whether any provision of this Agreement is valid or enforceable,
      the provision that is questioned will be governed by whichever state or federal
      law would find the provision to be valid and enforceable. The loan transaction
      that is evidenced by the Note and this Agreement has been applied for,
      considered, approved and made, and all necessary loan documents have been
      accepted by Lender in the Commonwealth of Kentucky.

    

    Choice
      of
      Venue. If there is a lawsuit, Grantor agrees upon Lender’s request to submit to
      the jurisdiction of the courts of Pike County, Commonwealth of
      Kentucky.

    

    No
      Waiver
      by Lender. Lender shall not be deemed to have waived any rights under this
      Agreement unless such waiver is given in writing and signed by Lender. No delay
      or omission on the part of Lender in exercising any right shall operate as
      a
      waiver of such right or any other right. A waiver by Lender of a provision
      of
      this Agreement shall not prejudice or constitute a waiver of Lender's right
      otherwise to demand strict compliance with that provision or any other provision
      of this Agreement. No prior waiver by Lender, nor any course of dealing between
      Lender and Borrower, or between Lender and any Grantor, shall constitute a
      waiver of any of Lender's rights or of any of Borrower's or any Grantor's
      obligations as to any future transactions. Whenever the consent of Lender is
      required under this Agreement, the granting of such consent by Lender in any
      instance shall not constitute continuing consent to subsequent instances where
      such consent is required and in all cases such consent may be granted or
      withheld in the sole discretion of Lender.

    

    Notices.
      Any notice required to be given under this Agreement shall be given in writing,
      and shall be effective when actually delivered, when actually received by
      telefacsimile (unless otherwise required by law), when deposited with a
      nationally recognized overnight courier, or, if mailed when deposited in the
      United States mail, as first class, certified or registered mail postage
      prepaid, directed to the addresses shown near the beginning of this Agreement.
      Any party may change its address for notices under this Agreement by giving
      formal written notice to the other parties, specifying that the purpose of
      the
      notice is to change the party's address. For notice purposes, Grantor agrees
      to
      keep Lender informed at all times of Grantor's current address. Unless otherwise
      provided or required by law, if there is more than one Grantor, any notice
      given
      by Lender to any Grantor is deemed to be notice given to all
      Grantors.

    

    Power
      of
      Attorney. Grantor hereby appoints Lender as Grantor's irrevocable
      attorney-in-fact for the purpose of executing any documents necessary to
      perfect, amend, or to continue the security interest granted in this Agreement
      or to demand termination of filings of other secured parties. Lender may at
      any
      time, and without further authorization from Grantor, file a carbon,
      photographic or other reproduction of any financing statement or of this
      Agreement for use as a financing statement. Grantor will reimburse Lender for
      all expenses for the perfection and the continuation of the perfection of
      Lender's security interest in the Collateral.

    

    Severability.
      If a court of competent jurisdiction finds any provision of this Agreement
      to be
      illegal, invalid, or unenforceable as to any circumstance, that finding shall
      not make the offending provision illegal, invalid, or unenforceable as to any
      other circumstance. If feasible, the offending provision shall be considered
      modified so that it becomes legal, valid and enforceable. If the offending
      provision cannot be so modified, it shall be considered deleted from this
      Agreement. Unless otherwise required by law, the illegality, invalidity, or
      unenforceability of any provision of this Agreement shall not affect the
      legality, validity or enforceability of any other provision of this
      Agreement.

    

    Successors
      and Assigns. Subject to any limitations stated in this Agreement on transfer
      of
      Grantor's interest, this Agreement shall be binding upon and inure to the
      benefit of the parties, their successors and assigns. If ownership of the
      Collateral becomes vested in a person other than Grantor, Lender, without notice
      to Grantor, may deal with Grantor's successors with reference to this Agreement
      and the Indebtedness by way of forbearance or extension without releasing
      Grantor from the obligations of this Agreement or liability under the
      Indebtedness.

    

    Survival
      of Representations and Warranties. All representations, warranties, and
      agreements made by Grantor in this Agreement shall survive the execution and
      delivery of this Agreement, shall be continuing in nature, and shall remain
      in
      full force and effect until such time as Grantor's Indebtedness shall be paid
      in
      full.

    

    Time
      is
      of the Essence. Time is of the essence in the performance of this
      Agreement.

    

    DEFINITIONS.
      The following capitalized words and terms shall have the following meanings
      when
      used in this Agreement. Unless specifically stated to the contrary, all
      references to dollar amounts shall mean amounts in lawful money of the United
      States of America. Words and terms used in the singular shall include the
      plural, and the plural shall include the singular, as the context may require.
      Words and terms not otherwise defined in this Agreement shall have the meanings
      attributed to such terms in the Uniform Commercial Code:

    

    Agreement.
      The word "Agreement" means this Commercial Security Agreement, as this
      Commercial Security Agreement may be amended or modified from time to time,
      together with all exhibits and schedules attached to this Commercial Security
      Agreement from time to time.

    

    Borrower.
      The word "Borrower" means CHAMPION INDUSTRIES, INC. and includes all co-signers
      and co-makers signing the Note and all their successors and
      assigns.

    

    Collateral.
      The word "Collateral" means all of Grantor's right, title and interest in and
      to
      all the Collateral as described in the Collateral Description section of this
      Agreement.

    

    Default.
      The word "Default" means the Default set forth in this Agreement in the section
      titled "Default".

    

    Environmental
      Laws. The words "Environmental Laws" mean any and all state, federal and local
      statutes, regulations and ordinances relating to the protection of human health
      or the environment, including without limitation the Comprehensive Environmental
      Response. Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section
      9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act
      of
      1986, Pub. L. No. 99-499 ("SARA"). the Hazardous Materials Transportation Act,
      49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act,
      42
      U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules
      or regulations adopted pursuant thereto.

    

    Event
      of
      Default. The words "Event of Default" mean any of the events of default set
      forth in this Agreement in the default section of this Agreement.

    

    Grantor.
      The word "Grantor" means CHAMPION INDUSTRIES. INC.

    

    Guaranty.
      The word "Guaranty" means the guaranty from guarantor, endorser, surety, or
      accommodation party to lender, including without limitation a guaranty of all
      or
      part of the Note.

    

    Hazardous
      Substances. The words "Hazardous Substances" mean materials that, because of
      their quantity, concentration or physical, chemical or infectious
      characteristics, may cause or pose a present or potential hazard to human health
      or the environment when improperly used, treated, stored, disposed of generated,
      manufactured, transported or otherwise handled. The words "Hazardous Substances"
      are used in their very broadest sense and include without limitation any and
      all
      hazardous or toxic substances, materials or waste as defined by or listed under
      the Environmental laws. The term "Hazardous Substances" also includes, without
      limitation, petroleum and petroleum by-products or any fraction thereof and
      asbestos.

    

    Indebtedness.
      The word "Indebtedness" means the indebtedness evidenced by the Note or Related
      Documents, including all principal and interest together with all other
      indebtedness and costs and expenses for which Grantor is responsible under
      this
      Agreement or under any of the Related Documents.

    

    Lender.
      The word "Lender" means COMMUNITY TRUST BANK, INC., its successors and
      assigns.

    

    Note.
      The
      word "Note" means the Note executed by CHAMPION INDUSTRIES INC in the principal
      amount of $1,750,000.00 dated June 12, 2007, together with all renewals of
      extensions of, modifications of, refinancings of, consolidations of, and
      substitutions for the note or credit agreement.

    

    Property.
      The word "Property" means all of Grantor's right, title and interest in and
      to
      all the Property as described in the "Collateral Description" section of this
      Agreement.

    

    Related
      Documents. The words "Related Documents" mean all promissory notes, credit
      agreements, loan agreements, environmental agreements, guaranties, security
      agreements, mortgages, deeds of trust, security deeds, collateral mortgages,
      and
      all other instruments, agreements and documents, whether now or hereafter
      existing, executed in connection with the Indebtedness.

    

    GRANTOR
      HAS READ AND UNDERSTOOD All THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT
      AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED JUNE 12, 2007.

    GRANTOR:

    

    CHAMPION
      INDUSTRIES, INC.

    

    

    By:
      _________________________________________

        TONEY
      K. ADKINS, PRESIDENT OF CHAMPION

        INDUSTRIES,
      INC.

    

    

    LENDER:

    

    COMMUNITY
      TRUST BANK, INC.

    

    

    X__________________________________________

        AUTHORIZED
      SIGNER

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    BUSINESS
      LOAN AGREEMENT

    
      	
              Principal

              $1,750,000.00

            	
              Loan
                Date

              06-12-2007

            	
              Maturity

              06-12-2012

            	
              Loan
                No.

              6010048530100003

            	
              Call
                / Coll

              25

            	
              Account

            	
              Officer

              906

            	
              Initials

            

    

    References
      in the shaded area are for Lender's use only and do not limit the applicability
      of this document to any particular loan or item. Any item above containing
      "'***" has been omitted due to text length limitations.

    

    

    Borrower:     CHAMPION
      INDUSTRIES, INC. (TIN:
      55-0717455)                                                                                                                     Lender:                      COMMUNITY
      TRUST BANK, INC.

    P.O.
      BOX
      2968                                                                                           COMMERCIAL
      LENDING (PIKEVILLE MAIN)

    HUNTINGTON.
      WV
      25728-2968                                                                                           346
      NORTH MAYO TRAIL

    P.O.
      BOX
      2947

    PIKEVILLE,
      KY 41502-2947

    

    

    THIS
      BUSINESS LOAN AGREEMENT dated June 12, 2007, is made and executed between
      CHAMPION INDUSTRIES, INC. ("Borrower") and COMMUNITY TRUST BANK, INC. ("Lender")
      on the following terms and conditions. Borrower has received prior commercial
      Loans from Lender or has applied to Lender for a commercial Loan or Loans or
      other financial accommodations, including those which may be described on any
      exhibit or schedule attached to this Agreement ("Loan"). Borrower understands
      and agrees that: (A) in granting, renewing. or extending any Loan, Lender is
      relying upon Borrower's representations, warranties, and agreements as set
      forth
      in this Agreement; (B) the granting, renewing, or extending of any Loan by
      Lender at all times shall be subject to Lender's sole judgment and discretion;
      and (C) all such Loans shall be and remain subject to the terms and conditions
      of this Agreement.

    

    TERM.
      This Agreement shall be effective as of June 12, 2007, and shall continue in
      full force and effect until such time as all of Borrower's Loans in favor of
      Lender have been paid in full, including principal, interest, costs, expenses,
      attorneys' fees, and other fees and charges, or until June 12,
      2012.

    

    CONDITIONS
      PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial Advance
      and
      each subsequent Advance under this Agreement shall be subject to the fulfillment
      to Lender's satisfaction of all of the conditions set forth in this Agreement
      and in the Related Documents.

    

    Loan
      Documents. Borrower shall provide to Lender the following documents for the
      Loan: (1) the Note; (2) Security Agreements granting to Lender security
      interests in the Collateral; (3) financing statements and all other documents
      perfecting Lender's Security Interests; (4) evidence of insurance as required
      below; (5) together with all such Related Documents as Lender may require for
      the Loan; all in form and substance satisfactory to Lender and Lender's
      counsel.

    

    Borrower's
      Authorization. Borrower shall have provided in form and substance satisfactory
      to Lender properly certified resolutions, duly authorizing the execution and
      delivery of this Agreement, the Note and the Related Documents. In addition,
      Borrower shall have provided such other resolutions, authorizations, documents
      and instruments as Lender or its counsel, may require.

    

    Payment
      of Fees and Expenses. Borrower shall have paid to Lender all fees, charges,
      and
      other expenses which are then due and payable as specified in this Agreement
      or
      any Related Document.

    

    Representations
      and Warranties. The representations and warranties set forth in this Agreement,
      in the Related Documents, and in any document or certificate delivered to Lender
      under this Agreement are true and correct.

    

    No
      Event
      of Default. There shall not exist at the time of any Advance a condition which
      would constitute an Event of Default under this Agreement or under any Related
      Document.

    

    REPRESENTATIONS
      AND WARRANTIES. Borrower represents and warrants to Lender, as of the date
      of
      this Agreement, as of the date of each disbursement of Loan proceeds, as of
      the
      date of any renewal, extension or modification of any Loan and at all times
      any
      Indebtedness exists:

    

    Organization.
      Borrower is a corporation for profit which is, and at all times shall be, duly
      organized, validly existing, and in good standing under and by virtue of the
      laws of the State of West Virginia. Borrower is duly authorized to transact
      business in all other states in which Borrower is doing business, having
      obtained all necessary filings, governmental licenses and approvals for each
      state in which Borrower is doing business. Specifically, Borrower is, and at
      all
      times shall be, duly qualified as a foreign corporation in all states in which
      the failure to so qualify would have a material adverse effect on its business
      or financial condition. Borrower has the full power and authority to own its
      properties and to transact the business in which it is presently engaged or
      presently proposes to engage. Borrower maintains its principal office at 2450-90
      FIRST AVENUE, HUNTINGTON, WV 25703. Unless Borrower has designated otherwise
      in
      writing, this is the principal office at which Borrower keeps its books and
      records including its records concerning the Collateral. Borrower will notify
      Lender prior to any change in the location of Borrower's state of organization
      or any change in Borrower's name. Borrower shall do all things necessary to
      preserve and to keep in full force and effect its existence, rights and
      privileges, and shall comply with all regulations, rules, ordinances, statutes,
      orders and decrees of any governmental or quasi-governmental authority or court
      applicable to Borrower and Borrower's business activities.

    

    Assumed
      Business Names. Borrower has filed or recorded all documents or filings required
      by law relating to all assumed business names used by Borrower. Excluding the
      name of Borrower, the following is a complete list of all assumed business
      names
      under which Borrower does business: None.

    

    Authorization.
      Borrower's execution, delivery, and performance of this Agreement and all the
      Related Documents have been duly authorized by all necessary action by Borrower
      and do not conflict with, result in a violation of, or constitute a default
      under (1) any provision of (a) Borrower's articles of incorporation or
      organization, or bylaws, or (b) any agreement or other instrument binding upon
      Borrower or (2) any law, governmental regulation, court decree, or order
      applicable to Borrower or to Borrower's properties.

    

    Financial
      Information. Each of Borrower's financial statements supplied to Lender truly
      and completely disclosed Borrower's financial condition as of the date of the
      statement, and there has been no material adverse change in Borrower's financial
      condition subsequent to the date of the most recent financial statement supplied
      to Lender. Borrower has no material contingent obligations except as disclosed
      in such financial statements.

    

    Legal
      Effect. This Agreement constitutes, and any instrument or agreement Borrower
      is
      required to give under this Agreement when delivered will constitute legal,
      valid, and binding obligations of Borrower enforceable against Borrower in
      accordance with their respective terms.

    

    Properties.
      Except as contemplated by this Agreement or as previously disclosed in
      Borrower's financial statements or in writing to Lender and as accepted by
      Lender, and except for property tax liens for taxes not presently due and
      payable, Borrower owns and has good title to all of Borrower's properties free
      and clear of all Security Interests, and has not executed any security documents
      or financing statements relating to such properties. All of Borrower's
      properties are titled in Borrower's legal name, and Borrower has not used or
      filed a financing statement under any other name for at least the last five
      (5)
      years.

    

    Hazardous
      Substances. Except as disclosed to and acknowledged by Lender in writing,
      Borrower represents and warrants that: (1) During the period of Borrower's
      ownership of the Collateral, there has been no use, generation, manufacture,
      storage, treatment, disposal, release or threatened release of any Hazardous
      Substance by any person on, under, about or from any of the Collateral. (2)
      Borrower has no knowledge of, or reason to believe that there has been (a)
      any
      breach or violation of any Environmental laws; (b) any use, generation,
      manufacture, storage, treatment, disposal, release or threatened release of
      any
      Hazardous Substance on, under, about or from the Collateral by any prior owners
      or occupants of any of the Collateral; or (c) any actual or threatened
      litigation or claims of any kind by any person relating to such matters. (3)
      Neither Borrower nor any tenant, contractor, agent or other authorized user
      of
      any of the Collateral shall use, generate, manufacture, store, treat, dispose
      of
      or release any Hazardous Substance on, under, about or from any of the
      Collateral; and any such activity shall be conducted in compliance with all
      applicable federal, state, and local laws, regulations, and ordinances,
      including without limitation all Environmental laws. Borrower authorizes Lender
      and its agents to enter upon the Collateral to make such inspections and tests
      as Lender may deem appropriate to determine compliance of the Collateral with
      this section of the Agreement. Any inspections or tests made by Lender shall
      be
      at Borrower's expense and for Lender's purposes only and shall not be construed
      to create any responsibility or liability on the part of Lender to Borrower
      or
      to any other person. The representations and warranties contained herein are
      based on Borrower's due diligence in investigating the Collateral for hazardous
      waste and Hazardous Substances. Borrower hereby (1) releases and waives any
      future claims against Lender for indemnity or contribution in the event Borrower
      becomes liable for cleanup or other costs under any such laws, and (2) agrees
      to
      indemnify and hold harmless Lender against any and all claims, losses,
      liabilities, damages, penalties, and expenses which Lender may directly or
      indirectly sustain or suffer resulting from a breach of this section of the
      Agreement or as a consequence of any use, generation, manufacture, storage,
      disposal, release or threatened release of a hazardous waste or substance on
      the
      Collateral. The provisions of this section of the Agreement, including the
      obligation to indemnify, shall survive the payment of the Indebtedness and
      the
      termination, expiration or satisfaction of this Agreement and shall not be
      affected by Lender's acquisition of any interest in any of the Collateral,
      whether by foreclosure or otherwise.

    

    Litigation
      and Claims. No litigation, claim, investigation, administrative proceeding
      or
      similar action (including those for unpaid taxes) against Borrower is pending
      or
      threatened, and no other event has occurred which may materially adversely
      affect Borrower's financial condition or properties, other than litigation,
      claims, or other events, if any, that have been disclosed to and acknowledged
      by
      Lender in writing.

    

    Taxes.
      To
      the best of the Borrower’s knowledge, all of Borrower’s tax returns and reports
      that are or were required to be filed, have been filed, and all taxes,
      assessments and other governmental charges have been paid in full, except those
      presently being or to be contested by Borrower in good faith in the ordinary
      course of business and for which adequate reserves have been
      provided.

    

    Lien
      Priority. Unless otherwise previously disclosed to Lender in writing, Borrower
      has not entered into or granted any Security Agreements, or permitted the filing
      or attachment of any Security Interests on or affecting any of the Collateral
      directly or indirectly securing repayment of Borrower’s Loan and Note, that
      would be prior or that may in any way be superior to Lender’s Security Interests
      and rights in and to such Collateral.

    

    Binding
      Effect. This Agreement, the Note, all Security Agreements (if any), and all
      Related Documents are binding upon the signers thereof, as well as upon their
      successors, representatives and assigns, and are legally enforceable in
      accordance with their respective terms.

    

    AFFIRMATIVE
      COVENANTS. Borrower covenants and agrees with Lender that, so long as this
      Agreement remains in effect, Borrower will:

    

    Notices
      of Claims and Litigation. Promptly inform Lender in writing of (1) all material
      adverse changes in Borrower's financial condition, and (2) all existing and
      all
      threatened litigation, claims, investigations, administrative proceedings or
      similar actions affecting Borrower or any Guarantor which could materially
      affect the financial condition of Borrower or the financial condition of any
      Guarantor.

    

    Financial
      Records. Maintain its books and records in accordance with GAAP, applied on
      a
      consistent basis, and permit Lender to examine and audit Borrower's books and
      records at all reasonable times.

    

    Financial
      Statements. Furnish Lender with the following:

    

    Annual
      Statements. As soon as available, but in no event later than one-hundred-twenty
      (120) days after the end of each fiscal year, Borrower's balance sheet and
      income statement for the year ended, compiled by a certified public accountant
      satisfactory to Lender.

    

    Tax
      Returns. As soon as available, but in no event later than one-hundred-twenty
      (120) days after the applicable filing date for the tax reporting period ended,
      Federal and other governmental tax returns, prepared by a certified public
      accountant satisfactory to Lender.

    

    All
      financial reports required to be provided under this Agreement shall be prepared
      in accordance with GAAP, applied on a consistent basis, and certified by
      Borrower as being true and correct.

    

    Additional
      Information. Furnish such additional information and statements, as Lender
      may
      request from time to time.

    

    Insurance.
      Maintain fire and other risk insurance, public liability insurance, and such
      other insurance as Lender may require with respect to Borrower's properties
      and
      operations, in form, amounts, coverages and with insurance companies acceptable
      to Lender. Borrower, upon request of Lender, will deliver to Lender from time
      to
      time the policies or certificates of insurance in form satisfactory to Lender,
      including stipulations that coverages will not be cancelled or diminished
      without at least thirty (30) days prior written notice to Lender. Each insurance
      policy also shall include an endorsement providing that coverage in favor of
      Lender will not be impaired in any way by any act, omission or default of
      Borrower or any other person. In connection with all policies covering assets
      in
      which Lender holds or is offered a security interest for the Loans, Borrower
      will provide Lender with such Lender's loss payable or other endorsements as
      Lender may require.

    

    Insurance
      Reports. Furnish to Lender, upon request of Lender, reports on each existing
      insurance policy showing such information as Lender may reasonably request,
      including without limitation the following: (1) the name of the insurer; (2)
      the
      risks insured; (3) the amount of the policy; (4) the properties insured; (5)
      the
      then current property values on the basis of which insurance has been obtained,
      and the manner of determining those values; and (6) the expiration date of
      the
      policy. In addition, upon request of Lender (however not more often than
      annually). Borrower will have an independent appraiser satisfactory to Lender
      determine, as applicable, the actual cash value or replacement cost of any
      Collateral. The cost of such appraisal shall be paid by Borrower.

    

    Other
      Agreements. Comply with all terms and conditions of all other agreements,
      whether now or hereafter existing, between Borrower and any other party and
      notify Lender immediately in writing of any default in connection with any
      other
      such agreements.

    

    Loan
      Proceeds. Use all Loan proceeds solely for Borrower's business operations,
      unless specifically consented to the contrary by Lender in writing.

    

    Taxes,
      Charges and Liens. Pay and discharge when due all of its indebtedness and
      obligations, including without limitation all assessments, taxes, governmental
      charges, levies and liens, of every kind and nature, imposed upon Borrower
      or
      its properties, income, or profits, prior to the date on which penalties would
      attach, and all lawful claims that, if unpaid, might become a lien or charge
      upon any of Borrower's properties, income, or profits.

    

    Performance.
      Perform and comply, in a timely manner, with all terms, conditions, and
      provisions set forth in this Agreement, in the Related Documents, and in all
      other instruments and agreements between Borrower and Lender. Borrower shall
      notify Lender immediately in writing of any default in connection with any
      agreement.

    

    Operations.
      Maintain executive and management personnel with substantially the same
      qualifications and experience as the present executive and management personnel;
      provide written notice to Lender of any change in executive and management
      personnel; conduct its business affairs in a reasonable and prudent
      manner.

    

    Environmental
      Studies. Promptly conduct and complete, at Borrower's expense, all such
      investigations, studies, samplings and testings as may be requested by Lender
      or
      any governmental authority relative to any substance, or any waste or by-product
      of any substance defined as toxic or a hazardous substance under applicable
      federal, state, or local law, rule, regulation, order or directive, at or
      affecting any property or any facility owned, leased or used by
      Borrower.

    

    Compliance
      with Governmental Requirements. Comply with all laws, ordinances, and
      regulations, now or hereafter in effect, of all governmental authorities
      applicable to the conduct of Borrower's properties, businesses and operations,
      and to the use or occupancy of the Collateral, including without limitation,
      the
      Americans With Disabilities Act. Borrower may contest in good faith any such
      law, ordinance, or regulation and withhold compliance during any proceeding,
      including appropriate appeals, so long as Borrower has notified Lender in
      writing prior to doing so and so long as, in Lender's sole opinion, Lender's
      interests in the Collateral are not jeopardized. Lender may require Borrower
      to
      post adequate security or a surety bond, reasonably satisfactory to Lender,
      to
      protect Lender's interest.

    

    Inspection.
      Permit employees or agents of Lender at any reasonable time to inspect any
      and
      all Collateral for the Loan or Loans and Borrower's other properties and to
      examine or audit Borrower's books, accounts, and records and to make copies
      and
      memoranda of Borrower's books, accounts, and records. If Borrower now or at
      any
      time hereafter maintains any records (including without limitation computer
      generated records and computer software programs for the generation of such
      records) in the possession of a third party, Borrower, upon request of Lender,
      shall notify such party to permit Lender free access to such records at all
      reasonable times and to provide Lender with copies of any records it may
      request, all at Borrower's expense.

    

    Compliance
      Certificates. Unless waived in writing by Lender, provide Lender at least
      annually, with a certificate executed by Borrower’s chide financial officer, or
      other officer or person acceptable to Lender, certifying that the
      representations and warranties set forth in this Agreement are true and correct
      as of the date of the certificate and further certifying that, as of the date
      of
      the certificate, no Event of Default exists under this Agreement.

    

    Environmental
      Compliance and Reports. Borrower shall comply in all respects with any and
      all
      Environmental laws; not cause or permit to exist, as a result of an intentional
      or unintentional action or omission on Borrower's part or on the part of any
      third party, on property owned and/or occupied by Borrower, any environmental
      activity where damage may result to the environment, unless such environmental
      activity is pursuant to and in compliance with the conditions of a permit issued
      by the appropriate federal, state or local governmental authorities; shall
      furnish to Lender promptly and in any event within thirty (30) days after
      receipt thereof a copy of any notice, summons, lien, citation, directive, letter
      or other communication from any governmental agency or instrumentality
      concerning any intentional or unintentional action or omission on Borrower's
      part in connection with any environmental activity whether or not there is
      damage to the environment and/or other natural resources.

    

    Additional
      Assurances. Make, execute and deliver to Lender such promissory notes,
      mortgages, deeds of trust, security agreements, assignments, financing
      statements, instruments, documents and other agreements as Lender or its
      attorneys may reasonably request to evidence and secure the Loans and to perfect
      all Security Interests.

    

    LENDER'S
      EXPENDITURES. If any action or proceeding is commenced that would materially
      affect Lender's interest in the Collateral or if Borrower fails to comply with
      any provision of this Agreement or any Related Documents, including but not
      limited to Borrower's failure to discharge or pay when due any amounts Borrower
      is required to discharge or pay under this Agreement or any Related Documents,
      Lender on Borrower's behalf may (but shall not be obligated to) take any action
      that Lender deems appropriate, including but not limited to discharging or
      paying all taxes, liens, security interests, encumbrances and other claims,
      at
      any time levied or placed on any Collateral and paying all costs for insuring,
      maintaining and preserving any Collateral. All such expenditures incurred or
      paid by Lender for such purposes will then bear interest at the rate charged
      under the Note from the date incurred or paid by Lender to the date of repayment
      by Borrower. All such expenses will become a part of the indebtedness and,
      at
      Lender's option, will (A) be payable on demand; (B) be added to the balance
      of
      the Note and be apportioned among and be payable with any installment payments
      to become due during either (1) the term of any applicable insurance policy;
      or
      (2) the remaining term of the Note; or (C) be treated as a balloon payment
      which
      will be due and payable at the Note's maturity.

    
 

    NEGATIVE
      COVENANTS. Borrow covenants and agrees with Lender that while this Agreement
      is
      in effect, Borrower shall not, without prior written consent of
      Lender:

    

    Indebtedness
      and Liens.  (1) Except for trade debt incurred in the normal course of
      business and indebtedness to Lender contemplated by this Agreement, create,
      incur, or assume indebtedness for borrowed money, including capital leases,
      (2)
      sell, transfer, mortgage, assign, pledge, lease, grant a security interest
      in,
      or encumber any of the Borrower’s assets (except as allowed as Permitted Liens),
      or (3) sell with recourse any of Borrower’s accounts, except to
      Lender.

    

    Continuity
      of Operations. (1) Engage in any business activities substantially different
      than those in which Borrower is presently engaged, (2) cease operations,
      liquidate, merge, transfer, acquire or consolidate with any other entity, change
      its name, dissolve or transferor sell the Collateral out of the ordinary course
      of business, or (3) pay any dividends on Borrower’s stock (other than dividends
      payable in its stock) provided, however, that notwithstanding the foregoing,
      but
      only so long as no Event of Default has occurred and is continuing or would
      result from the payment of dividends, if Borrower is a “Subchapter S
      Corporation” (as defined in the Internal Revenue Code of 1986, as amended),
      Borrower may pay cash dividends on its stock to its shareholders from time
      to
      time in amounts necessary to enable the shareholder to pay income taxes and
      make
      estimated income tax payments to satisfy their liabilities under federal and
      state law which arise solely from their status as Shareholders of a Subchapter
      S
      Corporation because of their ownership of share of Borrower’s stock, or purchase
      or retire any of Borrower’s outstanding share or alter or amend Borrower’s
      capital structure.

    

    Loans,
      Acquisitions and Guaranties.  (1) Loan, invest in or advance money or
      assets to any other person, enterprise or entity, (2) purchase, create or
      acquire any interest in any other enterprise or entity, or (3) incur any
      obligation as surety to guarantor other than in the ordinary course of
      business.

    

    Agreements.
      Borrower will not enter into any agreement containing any provisions which
      would
      be violated or breached by the performance of Borrower’s obligations under this
      Agreement or in connection herewith.

    

    CESSATION
      OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower,
      whether under this Agreement or under any other agreement, Lender shall have
      no
      obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower
      or any Guarantor is in default under the terms of this Agreement or any of
      the
      Related Documents or any other agreement that Borrower or any Guarantor has
      with
      Lender; (B) Borrower or any Guarantor dies, becomes incompetent or becomes
      insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged
      a bankrupt; (C) there occurs a material adverse change in Borrower's financial
      condition, in the financial condition of any Guarantor, or in the value of
      any
      Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise
      attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or
      any
      other Loan with Lender; or (E) Lender in good faith deems itself insecure,
      even
      though no Event of Default shall have occurred.

    

    RIGHT
      OF
      SETOFF. To the extent permitted by applicable law, Lender reserves a right
      of
      setoff in all Borrower's accounts with Lender (whether checking, savings, or
      some other account). This includes all accounts Borrower holds jointly with
      someone else and all accounts Borrower may open in the future. However, this
      does not include any IRA or Keogh accounts, or any trust accounts for which
      setoff would be prohibited by law. Borrower authorizes Lender, to the extent
      permitted by applicable law, to charge or setoff all sums owing on the
      Indebtedness against any and all such accounts.

    

    DEFAULT.
      Each of the following shall constitute an Event of Default under this
      Agreement:

    

    Payment
      Default. Borrower fails to make any payment when due under the
      Loan.

    

    Other
      Defaults. Borrower fails to comply with or to perform any other term,
      obligation, covenant or condition contained in this Agreement or in any of
      the
      Related Documents or to comply with or to perform any term, obligation, covenant
      or condition contained in any other agreement between Lender and
      Borrower.

    

    Default
      in Favor of Third Parties. Borrower or any Grantor defaults under any Loan,
      extension of credit, security agreement, purchase or sales agreement, or any
      other agreement, in favor of any other creditor or person that may materially
      affect any of Borrower's or any Grantor's property or Borrower's or any
      Grantor's ability to repay the Loans or perform their respective obligations
      under this Agreement or any of the Related Documents.

    

    False
      Statements. Any warranty, representation or statement made or furnished to
      Lender by Borrower or on Borrower's behalf under this Agreement or the Related
      Documents is false or misleading in any material respect, either now or at
      the
      time made or furnished or becomes false or misleading at any time
      thereafter.

    

    Insolvency.
      The dissolution or termination of Borrower's existence as a going business,
      the
      insolvency of Borrower, the appointment of a receiver for any part of Borrower's
      property, any assignment for the benefit of creditors, any type of creditor
      workout, or the commencement of any proceeding under any bankruptcy or
      insolvency laws by or against Borrower.

    

    Defective
      Collateralization. This Agreement or any of the Related Documents ceases to
      be
      in full force and effect (including failure of any collateral document to create
      a valid and perfected security interest or lien) at any time and for any
      reason.

    

    Creditor
      or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
      proceedings, whether by judicial proceeding, self-help, repossession or any
      other method, by any creditor of Borrower or by any governmental agency against
      any collateral securing the Loan. This includes a garnishment of any of
      Borrower's accounts, including deposit accounts, with Lender. However, this
      Event of Default shall not apply if there is a good faith dispute by Borrower
      as
      to the validity or reasonableness of the claim which is the basis of the
      creditor or forfeiture proceeding and if Borrower gives Lender written notice
      of
      the creditor or forfeiture proceeding and deposits with Lender monies or a
      surety bond for the creditor or forfeiture proceeding, in an amount determined
      by Lender, in its sole discretion, as being an adequate reserve or bond for
      the
      dispute.

    

    Events
      Affecting Guarantor. Any of the preceding events occurs with respect to any
      Guarantor of any of the Indebtedness or any Guarantor dies or becomes
      incompetent, or revokes or disputes the validity of, or liability under, any
      Guaranty of the Indebtedness. In the event of a death, Lender, at its option,
      may, but shall not be required to, permit the Guarantor's estate to assume
      unconditionally the obligations arising under the guaranty in a manner
      satisfactory to Lender, and, in doing so, cure any Event of
      Default.

    

    Change
      in
      Ownership. Any change in ownership of twenty-five percent (25%) or more of
      the
      common stock of Borrower.

    

    Adverse
      Change. A material adverse change occurs in Borrower's financial condition,
      or
      Lender believes the prospect of payment or performance of the Loan is
      impaired.

    

    Insecurity.
      Lender in good faith believes itself insecure.

    

    Right
      to
      Cure. If any default, other than a default on Indebtedness, is curable and
      if
      Borrower or Grantor, as the case may be, has not been given a notice of a
      similar default within the preceding twelve (12) months, it may be cured if
      Borrower or Grantor, as the case may be, after receiving written notice from
      Lender demanding cure of such default: (1) cure the default within ten (10)
      days; or (2) if the cure requires more than ten (10) days, immediately initiate
      steps which Lender deems in Lender's sole discretion to be sufficient to cure
      the default and thereafter continue and complete all reasonable and necessary
      steps sufficient to produce compliance as soon as reasonably
      practical.

    

    EFFECT
      OF
      AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise
      provided in this Agreement or the Related Documents, all commitments and
      obligations of Lender under this Agreement or the Related Documents or any
      other
      agreement immediately will terminate (including any obligation to make further
      Loan Advances or disbursements), and, at Lender's option, all Indebtedness
      immediately will become due and payable, all without notice of any kind to
      Borrower, except that in the case of an Event of Default of the type described
      in the "Insolvency" subsection above, such acceleration shall be automatic
      and
      not optional. In addition, Lender shall have all the rights and remedies
      provided in the Related Documents or available at law, in equity, or otherwise.
      Except as may be prohibited by applicable law, all of Lender's rights and
      remedies shall be cumulative and may be exercised singularly or concurrently.
      Election by Lender to pursue any remedy shall not exclude pursuit of any other
      remedy, and an election to make expenditures or to take action to perform an
      obligation of Borrower or of any Grantor shall not affect Lender's right to
      declare a default and to exercise its rights and remedies.

    

    MISCELLANEOUS
      PROVISIONS. The following miscellaneous provisions are a part of this
      Agreement:

    
 

    Amendments.
      This Agreement, together with any Related Documents, constitutes the entire
      understanding and agreement of the parties as to the matters set forth in this
      Agreement. No alteration of or amendment to this Agreement shall be effective
      unless given in writing and signed by the party or parties sought to be charged
      or bound by the alteration or amendment.

    

    Attorneys'
      Fees; Expenses. Borrower agrees to pay upon demand all of Lender's costs and
      expenses, including Lender's attorneys' fees and Lender's legal expenses,
      incurred in connection with the enforcement of this Agreement. Lender may hire
      or pay someone else to help enforce this Agreement, and Borrower shall pay
      the
      costs and expenses of such enforcement. Costs and expenses include Lender's
      attorneys' fees and legal expenses whether or not there is a lawsuit, including
      attorneys' fees and legal expenses for bankruptcy proceedings (including efforts
      to modify or vacate any automatic stay or injunction), appeals, and any
      anticipated post-judgment collection services. Borrower also shall pay all
      court
      costs and such additional fees as may be directed by the court.

    

    Caption
      Headings. Caption headings in this Agreement are for convenience purposes only
      and are not to be used to interpret or define the provisions of this
      Agreement.

    

    Consent
      to Loan Participation. Borrower agrees and consents to Lender's sale or
      transfer, whether now or later, of one or more participation interests in the
      Loan to one or more purchasers, whether related or unrelated to Lender. Lender
      may provide, without any imitation whatsoever, to anyone or more purchasers,
      or
      potential purchasers, any information or knowledge Lender may have about
      Borrower or about any other matter relating to the Loan, and Borrower hereby
      waives any rights to privacy Borrower may have with respect to such matters.
      Borrower additionally waives any and all notices of sale of participation
      interests, as well as all notices of any repurchase of such participation
      interests. Borrower also agrees that the purchasers of any such participation
      interests will be considered as the absolute owners of such interests in the
      Loan and will have all the rights granted under the participation agreement
      or
      agreements governing the sale of such participation interests. Borrower further
      waives all rights of offset or counterclaim that it may have now or later
      against Lender or against any purchaser of such a participation interest and
      unconditionally agrees that either Lender or such purchaser may enforce
      Borrower's obligation under the Loan irrespective of the failure or insolvency
      of any holder of any interest in the Loan. Borrower further agrees that the
      purchaser of any such participation interests may enforce its interests
      irrespective of any personal claims or defenses that Borrower may have against
      Lender.

    

    Governing
      Law. This Agreement will be governed by federal law applicable to Lender and,
      to
      the extent not preempted by federal law, the laws of the Commonwealth of
      Kentucky without regard to its conflicts of law provisions. This Agreement
      has
      been accepted by Lender in the Commonwealth of Kentucky.

    

    Choice
      of
      Venue. If there is a lawsuit, Borrower agrees upon Lender’s request to submit
      tot he jurisdiction of the courts of Pike County, Commonwealth of
      Kentucky.

    

    No
      Waiver
      by Lender. Lender shall not be deemed to have waived any rights under this
      Agreement unless such waiver is given in writing and signed by Lender. No delay
      or omission on the part of Lender in exercising any right shall operate as
      a
      waiver of such right or any other right. A waiver by Lender of a provision
      of
      this Agreement shall not prejudice or constitute a waiver of Lender's right
      otherwise to demand strict compliance with that provision or any other provision
      of this Agreement. No prior waiver by Lender, nor any course of dealing between
      Lender and Borrower, or between Lender and any Grantor, shall constitute a
      waiver of any of Lender's rights or of any of Borrower's or any Grantor's
      obligations as to any future transactions. Whenever the consent of Lender is
      required under this Agreement, the granting of such consent by Lender in any
      instance shall not constitute continuing consent to subsequent instances where
      such consent is required and in all cases such consent may be granted or
      withheld in the sole discretion of Lender.

    

    Notices.
      Any notice required to be given under this Agreement shall be given in writing,
      and shall be effective when actually delivered, when actually received by
      telefacsimile (unless otherwise required by law), when deposited with a
      nationally recognized overnight courier, or, if mailed, when deposited in the
      United States mail, as first class, certified or registered mail postage
      prepaid, directed to the addresses shown near the beginning of this Agreement.
      Any party may change its address for notices under this Agreement by giving
      formal written notice to the other parties, specifying that the purpose of
      the
      notice is to change the party's address. For notice purposes, Borrower agrees
      to
      keep Lender informed at all times of Borrower's current address. Unless
      otherwise provided or required by law, if there is more than one Borrower,
      any
      notice given by Lender to any Borrower is deemed to be notice given to all
      Borrowers.

    

    Severability.
      If a court of competent jurisdiction finds any provision of this Agreement
      to be
      illegal, invalid, or unenforceable as to any circumstance, that finding shall
      not make the offending provision illegal, invalid, or unenforceable as to any
      other circumstance. If feasible, the offending provision shall be considered
      modified so that it becomes legal, valid and enforceable. If the offending
      provision cannot be so modified, it shall be considered deleted from this
      Agreement. Unless otherwise required by law, the illegality, invalidity, or
      unenforceability of any provision of this Agreement shall not affect the
      legality, validity or enforceability of any other provision of this
      Agreement.

    

    Subsidiaries
      and Affiliates of Borrower. To the extent the context of any provisions of
      this
      Agreement makes it appropriate, including without limitation any representation,
      warranty or covenant, the word "Borrower" as used in this Agreement shall
      include all of Borrower's subsidiaries and affiliates. Notwithstanding the
      foregoing however, under no circumstances shall this Agreement be construed
      to
      require Lender to make any Loan or other financial accommodation to any of
      Borrower's subsidiaries or affiliates.

    

    Successors
      and Assigns. All covenants and agreements by or on behalf of Borrower contained
      in this Agreement or any Related Documents shall bind Borrower's successors
      and
      assigns and shall inure to the benefit of Lender and its successors and assigns.
      Borrower shall not, however, have the right to assign Borrower's rights under
      this Agreement or any interest therein, without the prior written consent of
      Lender.

    

    Survival
      of Representations and Warranties. Borrower understands and agrees that in
      making the Loan, Lender is relying on all representations, warranties, and
      covenants made by Borrower in this Agreement or in any certificate or other
      instrument delivered by Borrower to Lender under this Agreement or the Related
      Documents. Borrower further agrees that regardless of any investigation made
      by
      Lender, all such representations, warranties and covenants will survive the
      making of the Loan and delivery to Lender of the Related Documents, shall be
      continuing in nature, and shall remain in full force and effect until such
      time
      as Borrower's Indebtedness shall be paid in full, or until this Agreement shall
      be terminated in the manner provided above, whichever is the last to
      occur.

    

    Time
      is
      of the Essence. Time is of the essence in the performance of this
      Agreement.

    

    Waive
      Jury. All parties to this Agreement hereby waive the right to any jury trial
      in
      any action, proceeding, or counterclaim brought by any party against any other
      party.

    

    Advance.
      The word "Advance" means a disbursement of Loan funds made, or to be made,
      to
      Borrower or on Borrower's behalf on a line of credit or multiple advance basis
      under the terms and conditions of this Agreement.

    

    Agreement.
      The word" Agreement" means this Business Loan Agreement, as this Business Loan
      Agreement may be amended or modified from time to time, together with all
      exhibits and schedules attached to this Business Loan Agreement from time to
      time.

    

    Borrower.
      The word "Borrower" means CHAMPION INDUSTRIES, INC. and includes all co-signers
      and co-makers signing the Note and all their successors and
      assigns.

    

    Collateral.
      The word "Collateral" means all property and assets granted as collateral
      security for a Loan, whether real or personal property, whether granted directly
      or indirectly, whether granted now or in the future, and whether granted in
      the
      form of a security interest, mortgage, collateral mortgage, deed of trust,
      assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage,
      chattel trust, factor's lien, equipment trust, conditional sale, trust receipt,
      lien, charge, lien or title retention contract, lease or consignment intended
      as
      a security device, or any other security or lien interest whatsoever, whether
      created by law, contract, or otherwise.

    

    Environmental
      Laws. The words "Environmental Laws" mean any and all state, federal and local
      statutes, regulations and ordinances relating to the protection of human health
      or the environment, including without limitation the Comprehensive Environmental
      Response, Compensation, and Liability Act of 1980, as amended. 42 U.S.C. Section
      9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act
      of
      1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act.
      49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act,
      42
      U.S.C. Section 6901, et seq., or other applicable state or federal law, rules,
      or regulations adopted pursuant thereto.

    

    Event
      of
      Default. The words "Event of Default" mean any of the events of default set
      forth in this Agreement in the default section of this Agreement.

    
 

    GAAP.
      The
      word "GAAP" means generally accepted accounting principles.

    

    Grantor.
      The word "Grantor" means each and all of the persons or entities granting a
      Security Interest in any Collateral for the Loan, including without limitation
      all Borrowers granting such a Security Interest.

    

    Guarantor.
      The word "Guarantor" means any guarantor, surety, or accommodation party of
      any
      or all of the Loan.

    

    Guaranty.
      The word "Guaranty" means the guaranty from Guarantor to Lender, including
      without limitation a guaranty of all or part of the Note.

    

    Hazardous
      Substances. The words "Hazardous Substances" mean materials that, because of
      their quantity, concentration or physical, chemical or infectious
      characteristics, may cause or pose a present or potential hazard to human health
      or the environment when improperly used, treated, stored, disposed of,
      generated, manufactured, transported or otherwise handled. The words "Hazardous
      Substances" are used in their very broadest sense and include without limitation
      any and all hazardous or toxic substances, materials or waste as defined by
      or
      listed under the Environmental Laws. The term "Hazardous Substances" also
      includes, without limitation, petroleum and petroleum by-products or any
      fraction thereof and asbestos.

    

    Indebtedness.
      The word "Indebtedness" means the indebtedness evidenced by the Note or Related
      Documents, including all principal and interest together with all other
      indebtedness and costs and expenses for which Borrower is responsible under
      this
      Agreement or under any of the Related Documents.

    

    Lender.
      The word "Lender" means COMMUNITY TRUST BANK, INC., its successor and
      assigns.

    

    Loan.
      The
      word "Loan" means any and all Loans and financial accommodations from Lender
      to
      Borrower whether now or hereafter existing, and however evidenced, including
      without limitation those Loans and financial accommodations described herein
      or
      described on any exhibit or schedule attached to this Agreement from time to
      time.

    

    Note.
      The
      word "Note" means the Note executed by CHAMPION INDUSTRIES,INC. in the principal
      amount of $1,750,000.00 dated June 12, 2007, together with all renewals of,
      extensions of, modifications of, refinancings of, consolidations of, and
      substitutions for the note or credit agreement.

    

    Permitted
      Liens. The words “Permitted Liens” mean (1) liens and security interests
      securing Indebtedness owed by Borrower to Lender; (2) liens for taxes,
      assessments, or similar charges either not yet due or being contested in good
      faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other
      like liens arising in the ordinary course of business and securing obligations
      which are not yet delinquent; (4) purchase money liens or purchase money
      security interests upon or in any property acquired or held by Borrower in
      the
      ordinary course of business to secure indebtedness outstanding on the date
      of
      this Agreement or permitted  to be incurred under the paragraph of
      this Agreement titled “Indebtedness and Liens”; (5) liens and security interests
      which as of the date of this Agreement, have been disclosed to and approved
      by
      the Lender in writing; and (6) those liens and security interests which in
      the
      aggregate constitute an immaterial and insignificant monetary amount with
      respect to the net value of Borrower’s assets.

    

    Related
      Documents. The words "Related Documents" mean all promissory notes, credit
      agreements, Loan agreements, environmental agreements, guaranties, security
      agreements, mortgages, deeds of trust, security deeds, collateral mortgages,
      and
      all other instruments, agreements and documents, whether now or hereafter
      existing, executed in connection with the Loan.

    

    Security
      Agreement. The words "Security Agreement" mean and include without limitation
      any agreements, promises, covenants, arrangements, understandings or other
      agreements, whether created by law, contract, or otherwise, evidencing,
      governing, representing, or creating a. Security Interest.

    

    Security
      Interest. The words "Security Interest" mean, without limitation, any and all
      types of collateral security, present and future, whether in the form of a
      lien,
      charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge,
      crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust,
      factor's lien, equipment trust, conditional sale, trust receipt, lien or title
      retention contract, lease or consignment intended as a security device, or
      any
      other security or lien interest whatsoever whether created by law, contract,
      or
      otherwise.

    

    BORROWER
      ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT
      AND
      BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED JUNE 12,
      2007.

    

    BORROWER:

    

    CHAMPION
      INDUSTRIES, INC.

    

    

    By:
      _________________________________________

        TONEY
      K. ADKINS, PRESIDENT OF CHAMPION

        INDUSTRIES,
      INC.

    

    LENDER:

    

    COMMUNITY
      TRUST BANK, INC.

    

    

    X__________________________________________

        AUTHORIZED
      SIGNER

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