10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the Fiscal Year Ended October 31, 2003

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission File No. 0-21084

CHAMPION INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

West Virginia	55-0717455
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2450 First Avenue
P.O. Box 2968

Huntington, West Virginia	25728
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (304) 528-2700

Securities registered pursuant to Section 12(b) of Act: None

Securities registered pursuant to Section 12(g) of Act: Common Stock, $1.00 par value

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or

for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes x       No o

Indicate by check mark if the disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Yes o       No x

The aggregate market value of the voting stock of the registrant held by non-affiliates as of January 9, 2004, was $20,867,804 of Common Stock, $1.00 par value. The outstanding common stock of the Registrant at the close of business on January 9, 2004 consisted of 9,717,913 shares of Common Stock, $1.00 par value.

Total number of pages including cover page 227

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registration statement on Form S-2/A No. 333-47585, filed on March 16, 1998, are incorporated by reference into Part IV, Item 15. Portions of the Registrant’s definitive proxy statement dated February 12, 2004 with respect to its Annual Meeting of Shareholders to be held on March 15, 2004 are incorporated by reference into Part III, Items 10-13. Exhibit Index located in Part IV Item 15.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     Certain statements contained in this Annual Report or in documents incorporated herein by reference, including without limitation statements including the word “believes,” “anticipates,” “intends,” “expects” or words of similar import, constitute “forward-looking statements” within the meaning of section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements of the Company expressed or implied by such forward-looking statements. Such factors include, among others, general economic and business conditions, changes in business strategy or development plans, and other factors referenced in this Annual Report, including without limitations under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business.” Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

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PART I

ITEM 1 - BUSINESS

HISTORY

     Champion Industries, Inc. (“Champion” or the “Company”) is a major commercial printer, business forms manufacturer and office products and office furniture supplier in regional markets east of the Mississippi River. The Company’s sales offices and production facilities are located in Huntington, Charleston, Parkersburg, Clarksburg, and Morgantown, West Virginia; Lexington and Owensboro, Kentucky; Baton Rouge, New Orleans and Gonzales, Louisiana; Cincinnati, Ohio; Jackson, Mississippi; Kingsport and Knoxville, Tennessee; Evansville, Indiana; Bridgeville and Altoona, Pennsylvania; and Asheville, North Carolina. The Company’s sales force of approximately 140 salespeople sells printing services, business forms management services, office products and office furniture.

     The Company was chartered as a West Virginia corporation on July 1, 1992. Prior to the public offering of the Company’s Common Stock on January 28, 1993 (the “Offering”), the Company’s business was operated by The Harrah and Reynolds Corporation (“Harrah and Reynolds”), doing business as Chapman Printing Company, together with its wholly-owned subsidiaries, The Chapman Printing Company, Inc. and Stationers, Inc. Incident to the Offering, Harrah and Reynolds and the Company entered into an Exchange Agreement, pursuant to which, upon the closing date of the Offering: (i) Harrah and Reynolds contributed to the Company substantially all of the operating assets of its printing division, including all inventory and equipment (but excluding any real estate and vehicles) and all issued and outstanding capital stock of its subsidiaries, The Chapman Printing Company, Inc. and Stationers, Inc.; (ii) the Company assumed certain of the liabilities relating to the operations of the printing divisions of Harrah and Reynolds and its subsidiaries, The Chapman Printing Company, Inc. and Stationers, Inc., excluding debts associated with real estate, certain accounts payable to affiliates and certain other liabilities; and (iii) Harrah and Reynolds was issued 2,000,000 shares of Common Stock of the Company.

     The Company and its predecessors have been headquartered in Huntington since 1922. Full scale printing facilities, including web presses for manufacturing business forms, and sales and customer service operations are located in Huntington. The Company’s Charleston division was established in 1974 through the acquisition of the printing operations of Rose City Press. Sales and customer service operations, as well as the pre-press departments, are located in Charleston. The Parkersburg division opened in 1977 and was expanded by the acquisitions of Park Press and McGlothlin Printing Company. In addition to sales and customer service operations, this division houses a large full-color printing facility and a state-of-the-art studio, with scanners, electronic color retouching equipment and 4-, 5- and 6-color presses.

     The Lexington division commenced operations in 1983 upon the acquisition of the Transylvania Company. This location includes a pre-press department, computerized composition facilities, as well as sales and customer service operations.

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     The Company acquired Stationers, Inc. (“Stationers”), an office product, office furniture and retail bookstore operation located in Huntington, in 1987 and consolidated its own office products and office furniture operations with Stationers. On August 30, 1991, Stationers, Inc. sold the assets, primarily inventory and fixtures, of its retail bookstore operation. In July 1993, Stationers expanded through acquisition and began operations in Marietta, Ohio, under the name “Garrison Brewer.” The Company’s Garrison Brewer operation was relocated across the Ohio river to the nearby Chapman Printing Parkersburg location in 2002.

     The Bourque Printing division (“Bourque”) commenced operations in June, 1993, upon the acquisition of Bourque Printing, Inc. in Baton Rouge, Louisiana. This location includes a pre-press department, computerized composition facilities, a pressroom with up to 4-color presses and a bindery department, as well as sales and customer service operations. Bourque was expanded through the acquisition of Strother Forms/Printing in Baton Rouge in 1993, through the acquisition of the assets of E. S. Upton Printing Company, Inc. in New Orleans in 1996 and through the acquisition of Transdata Systems, Inc. in Baton Rouge and New Orleans in 2001.

     The Dallas Printing division (“Dallas” or “Champion Jackson”) commenced operations in September, 1993, upon the acquisition of Dallas Printing Company, Inc. in Jackson, Mississippi. This location includes a pre-press department, computerized composition facilities, as well as sales and customer service operations.

     On November 2, 1993, a wholly-owned subsidiary of the Company chartered to effect such acquisition purchased selected assets of Tri-Star Printing, Inc., a Delaware corporation doing business as “Carolina Cut Sheets” in the manufacture and sale of business forms in Timmonsville, South Carolina. The Company’s subsidiary has changed its name to “Carolina Cut Sheets, Inc.” Carolina Cut Sheets manufactures single-part business forms for sale to dealers and through the Company’s other divisions.

     On February 25, 1994, Bourque acquired certain assets of Spectrum Press Inc. (“Spectrum”), a commercial printer located in Baton Rouge, Louisiana.

     On June 1, 1994, the Company acquired certain assets of Premier Data Graphics, a distributor of business forms and data supplies located in Clarksburg, West Virginia.

     On August 30, 1994, Dallas acquired certain assets of Premier Printing Company, Inc. (“Premier Printing”) of Jackson, Mississippi.

     On June 1, 1995, in exchange for issuance of 52,383 shares of its common stock, the Company acquired U.S. Tag & Ticket Company, Inc. (“U.S. Tag”), a Baltimore, Maryland based manufacturer of tags used in the manufacturing, shipping, postal, airline and cruise industries. The operations of U.S. Tag were moved to Huntington, West Virginia in August 2003 and they were consolidated into an existing facility.

     On November 13, 1995, in exchange for $950,000 cash and the issuance of 66,768 shares of its common stock, the Company acquired Donihe Graphics, Inc. (“Donihe”), a high-volume color printer based in Kingsport, Tennessee.

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     On February 2, 1996, Bourque purchased various assets and assumed certain liabilities of E.S. Upton Printing Company, Inc. (“Upton”) for approximately $750,000 in cash.

     On July 1, 1996, the Company acquired Smith & Butterfield Co., Inc. (“Smith & Butterfield”), an office products company located in Evansville, Indiana and Owensboro, Kentucky. Smith & Butterfield is operated as a division of Stationers, Inc. The Company issued 66,666 shares of common stock valued at $1,200,000 in exchange for all of the issued and outstanding shares of common stock of Smith & Butterfield.

     On August 21, 1996, the Company purchased the assets of The Merten Company (“Merten”), a commercial printer headquartered in Cincinnati, Ohio, for cash and assumption of liabilities aggregating $2,535,295.

     On December 31, 1996, the Company acquired all outstanding capital stock of Interform Corporation (“Interform”), a business form manufacturer in Bridgeville, Pennsylvania, for $2,500,000 in cash which was financed by a bank.

     On May 21, 1997, the Company acquired all outstanding common shares of Blue Ridge Printing Co., Inc. of Asheville, North Carolina and Knoxville, Tennessee (“Blue Ridge”) in exchange for 277,775 shares of the Company’s common stock.

     On February 2, 1998, the Company acquired all outstanding common shares of Rose City Press (“Rose City”) of Charleston, West Virginia, in exchange for 75,722 shares of the Company’s common stock valued at $1,250,000.

     On May 18, 1998, the Company acquired all outstanding common shares of Capitol Business Equipment, Inc. (“Capitol”), doing business as Capitol Business Interiors, of Charleston, West Virginia, in exchange for 72,202 shares of the Company’s common stock valued at $1,000,000.

     On May 29, 1998, the Company acquired all outstanding common shares of Thompson’s of Morgantown, Inc. and Thompson’s of Barbour County, Inc. (collectively, “Thompson’s” or “Champion Morgantown”) of Morgantown, West Virginia, in exchange for 45,473 shares of the Company’s common stock valued at $600,000.

     Rose City, Capitol and Thompson’s are operated as divisions of Stationers.

     On June 1, 1999, the Company acquired all of the issued and outstanding common stock of Independent Printing Service, Inc. (“IPS”) of Evansville, Indiana. IPS is operated as a division of Smith & Butterfield.

     On July 16, 1999, the Company’s Blue Ridge subsidiary acquired certain assets and assumed certain liabilities of AIM Printing (“AIM”) of Knoxville, Tennessee.

     On November 30, 1999, the Company acquired all of the issued and outstanding common stock of Diez Business Machines (“Diez”) of Gonzales, Louisiana. Diez is operated as a subsidiary of Stationers.

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     On November 6, 2000, the Company acquired certain assets of the Huntington, West Virginia paper distribution division of the Cincinnati Cordage Paper Company (“Cordage”). On April 30, 2001, the Company entered into a strategic alliance with Xpedx resulting in the assumption by Xpedx of the Cordage customer list and the sale of certain inventory items.

     On October 10, 2001, the Company acquired Transdata Systems, Inc. (“Transdata”) of Baton Rouge and New Orleans, Louisiana.

     On June 18, 2003, the Company acquired certain assets of Contract Business Interiors (CBI) of Wheeling, West Virginia pursuant to acceptance by the U.S. Bankruptcy Court for the Northern District of West Virginia. As a result of this transaction the Company also assumed certain customer deposit liabilities in the ordinary course of business.

     On July 1, 2003, the Company acquired certain assets of Pittsburgh based Integrated Marketing Solutions, the direct sales division and distributorship of Datatel Resources Corporation.

     All acquisitions have been accounted for using the purchase method of accounting except for U.S. Tag, Blue Ridge, Capitol and Thompson’s, which utilized the “pooling-of-interest” method of accounting

BUSINESS

     Champion is engaged in the commercial printing and office products and furniture supply business in regional markets east of the Mississippi River. The Company’s sales force sells a full range of printing services, business forms, office products and office furniture. Management views these sales activities as complementary since frequent customer sales calls required for one of its products or services provide opportunities to cross-sell other products and services. The Company believes it benefits from significant customer loyalty and customer referrals because it provides personal service, quality products, convenience and selection with one-stop shopping.

     The Company’s printing services range from the simplest to the most complex jobs, including business cards, books, tags, brochures, posters, 4- to 6-color process printing and multi-part, continuous and snap-out business forms. The Company’s state-of-the-art equipment enables it to provide computerized composition, art design, paste-up, stripping, film assembly and color scanner separations. Included within our print segment are fulfillment services to our customers which encompasses warehousing, distribution, and reporting services. The Company also offers complete bindery and letterpress services. The printing operations contributed $96.5 million, $95.2 million and $98.1 million or 79.0%, 77.5% and 78.4% of the Company’s total revenues for the fiscal years ended October 31, 2003, 2002 and 2001.

     The Company provides a full range of office products and office furniture primarily in the budget and middle price ranges, and also offers office design services. The Company

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publishes a catalog of high volume, frequently ordered items purchased directly from manufacturers. These catalog sales account for the bulk of sales volume and afford sales personnel flexibility in product selection and pricing. Medium to large volume customers are offered levels of pricing discounts. In addition, the Company offers a broad line of general office products through major wholesalers’ national catalogs. The Company has implemented an Internet e-commerce site, which allows customers to order office products, furniture and forms online. The e-commerce site includes the office products and office furniture catalog, which is customized specifically for each customer requesting Internet e-commerce access. In addition the Company offers customized on-line forms management solutions through www.cgc1.com. The Company believes that its e-commerce sites will allow customers to access data concerning their company’s purchase habits so as to better control expenditures for office products and business forms and eliminate large in-house inventories. The Company is a member of a major office products purchasing organization. Members benefit from volume discounts, which permit them to offer competitive prices and improve margins. The Company’s office furniture business focuses on the budget to middle price range lines, although upscale lines are offered as well. Office products, office furniture and office design operations contributed $25.6 million, $27.7 million and $27.0 million, or 21.0%, 22.5% and 21.6% of the Company’s total revenues for the fiscal years ended October 31, 2003, 2002 and 2001.

ORGANIZATION

     Champion’s two lines of business are comprised of twenty-three operating divisions. The Huntington headquarters provides centralized financial management and administrative services to each of its two business segments.

Commercial Printing

     Eleven commercial printing divisions are located in Huntington, Charleston and Parkersburg, West Virginia; Lexington, Kentucky; Baton Rouge and New Orleans, Louisiana; Jackson, Mississippi; Cincinnati, Ohio; Kingsport and Knoxville, Tennessee; and Asheville, North Carolina. Each has a sales force, a customer service operation and a pre-press department that serve the customers in their respective geographic areas. Although each customer’s interface is solely with its local division’s personnel, its printing job may be produced in another division using the equipment most suited to the quality and volume requirements of the job. In this way, for example, Champion can effectively compete for high quality process color jobs in Lexington by selling in Lexington, printing in Cincinnati and binding in Huntington. The full range of printing resources is available to customers in the entire market area without Champion having to duplicate equipment in each area.

     Interform Corporation, doing business as Interform Solutions and located in Bridgeville, Pennsylvania, manufactures business forms and related products, which it sells through a network of independent distributors concentrated in Eastern Pennsylvania, New Jersey and metropolitan New York.

     Consolidated Graphic Communications division in Pittsburgh, Pennsylvania operates as a full line printing and printing services distributor. The division offers complete print management, fulfillment services and B2B e-commerce solutions.

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     Carolina Cut Sheets, Inc., located in Huntington, West Virginia, manufactures single sheet business forms which are sold to other commercial printers and dealers and through the Company’s other divisions.

     The Huntington, West Virginia division of Chapman Printing Company manufactures single sheet and multi-part, snap-out and continuous business forms for sale through many of the Company’s commercial printing divisions.

     U.S. Tag, located in Huntington, West Virginia, manufactures and sells tags used in the manufacturing, shipping, postal, airline and cruise industries throughout the United States through dealers and the Company’s other divisions.

     Transdata, located in Baton Rouge and New Orleans, Louisiana, operates as a subsidiary of Bourque Printing performing sales and customer service functions including fulfillment services.

Office Products, Office Furniture and Office Design

     Stationers, located in Huntington, Clarksburg (doing business as “Champion Clarksburg”), Morgantown (through its Champion Morgantown division) and Parkersburg, West Virginia (doing business as “Garrison Brewer”), provides office products and office furniture primarily to customers in the Company’s West Virginia, Ohio and Kentucky market areas. Products are sold by printing division salespeople and delivered in bulk daily to each division, or shipped directly to customers.

     Smith & Butterfield, located in Evansville, Indiana and Owensboro, Kentucky, provides office products and office furniture primarily to customers in the Company’s Indiana and Kentucky market areas. Products are sold by Smith & Butterfield sales personnel and delivered to customers daily.

     Diez, located in Gonzales, Louisiana, provides office products and office furniture primarily to customers in the Company’s Louisiana market area.

     Stationers, through its Capitol division, offers office design services throughout West Virginia and eastern Kentucky.

     Champion Jackson located in Jackson, Mississippi functions as both a printing sales headquarters with full digital prepress and an office products sales center.

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PRODUCTS AND SERVICES
Printing Services

     Champion’s primary business is commercial printing and business forms manufacturing. The Company, unlike most of its regional competitors, offers the full range of printing production processes, enabling the Company to provide customers a one-stop, one-vendor source without the time and service constraints of subcontracting one or more aspects of production. Major production areas include: (i) printing of business cards, letterhead, envelopes, and one, two, or three color brochures; (ii) process color manufacturing of brochures, posters, advertising sheets and catalogues; (iii) die cutting and foil stamping; (iv) bindery services, including trimming, collating, folding and stitching the final product; (v) forms printing, encompassing roll-to-roll computer forms, checks, invoices, purchase orders and similar forms in single-part, multi-part, continuous and snap-out formats; (vi) tag manufacturing; and (vii) high volume process color webprinting of brochures and catalogs. The capabilities of the Company’s various printing divisions are stated below.

									High
	Sales &								Volume
	Customer				Sheet		Full		Full
Division	Service		Pre-Press		Printing		Color		Color
Huntington		*		*		*
Charleston		*		*
Parkersburg		*		*		*		*
Lexington		*		*
Bourque Printing, Inc.		*		*		*		*
Dallas Printing Company, Inc. (Champion Jackson)		*		*
Carolina Cut Sheets, Inc.		*
U.S. Tag & Ticket Company, Inc.		*		*		*
Donihe Graphics, Inc.		*		*		*		*		*
Upton Printing		*		*		*		*
The Merten Company		*		*		*		*
Interform Corporation		*		*				*
Consolidated Graphic Communications		*
Blue Ridge Printing Co., Inc.		*		*		*		*
Transdata		*

* - Services Provided

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Office Products, Office Furniture and Office Design

     Champion provides its customers with a wide range of product offerings in two major categories: supplies, such as file folders, paper products, pens and pencils, computer paper and laser cartridges; and furniture, including budget and middle price range desks, chairs, file cabinets and computer furniture. Office supplies are sold primarily by Company salespeople through the Company’s own catalogs. Office furniture is primarily sold from catalogs and supplied from in-house stock. Special orders constitute a small portion of sales. The Capitol division of Stationers provides interior design services to commercial customers. The design services include space planning, purchasing and installation of office furniture, and management of design projects.

MANUFACTURING AND DISTRIBUTION

     The Company’s pre-press facilities have desktop publishing, typesetting, laser imagesetting and scanning/retouching equipment, and complete layout, design, stripping and plate processing operations. Sheet printing equipment (for printing onto pre-cut, individual sheets) includes single color duplicators, single to six color presses and envelope presses. Rotary equipment (for printing onto continuous rolls of paper) includes multi-color business form web presses, carbon and multi-part collators, and a high-speed 5-color half-web press.

     Binding equipment consists of hot-foil, embossing and die cutting equipment, perforators, folders, folder-gluers, scoring machines, collator/stitcher/ trimmers for saddle stitching, automatic and manual perfect binders, numbering machines and mailing equipment.

     Each of the Company’s offices is linked with overnight distribution of products and on-line electronic telecommunications permitting timely transfer of various production work from facility to facility as required. While the Company maintains a fleet of delivery vehicles for intracompany and customer deliveries, it utilizes the most cost effective and expeditious means of delivery, including common carriers.

     Requirements for the Company’s press runs are determined shortly before the runs are made and, therefore, backlog is not a meaningful measure in connection with the Company’s printing business.

     The Company’s inventory goal is to have approximately 85% of the office product items the Company sells in stock. Another 12% are ordered on a daily basis and received overnight. The remaining 3% are items that come direct from manufacturers and may take one week or more from placement of order to delivery to customer. Office furniture sales are made primarily from the Company’s in-house stock. However, special orders from manufacturers may require up to 90 days for delivery.

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CUSTOMERS

     The Company believes that its reputation for quality, service, convenience and selection allows it to enjoy significant loyalty from its customers. Champion’s marketing strategy is to focus on manufacturers, institutions, financial services companies and professional firms. Consistent with customary practice in the commercial printing and office products industries, the Company ordinarily does not have long-term contracts with its customers, although a number of high volume customers issue yearly purchase orders. These purchase orders, which are typically for office products but may include printing services, are for firm prices adjustable for paper price changes. Depending upon customer satisfaction with price and service, these purchase orders may be renewed for another year or up to three years without repeating the full bidding process.

     During the fiscal years ended October 31, 2003, 2002 and 2001, no single customer accounted for more than 2% of the Company’s total revenues. Due to the project-oriented nature of customers’ printing requirements, sales to particular customers may vary significantly from year to year depending upon the number and size of their projects.

SUPPLIERS

     The Company has not experienced difficulties in obtaining materials in the past and does not consider itself dependent on any particular supplier for supplies. The Company has negotiated Company-wide paper purchasing agreements directly with paper manufacturers and is a member of a major office products buying group, which management believes provides the Company with a competitive advantage.

COMPETITION

     The markets for the Company’s printing services and office products are highly competitive, with success based primarily on price, quality, production capability, capacity for prompt delivery and personal service.

     Champion’s printing competitors are numerous and range in size from very large national companies with substantially greater resources than the Company to many smaller local companies. In recent years, despite consolidation within the printing industry, there has been a substantial increase in technological advances in new equipment, resulting in excess capacity and highly competitive pricing. The Company has remained competitive by maintaining its printing equipment at state-of-the-art levels and emphasizing personal attention to customers.

     Large national and regional mail order discount operations provide significant competition in the office products and office furniture business. The economies afforded by membership in a national purchasing association and by purchasing directly from manufacturers,

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and the high level of personal services to customers, contribute substantially to the Company’s ability to compete in the office supply and office furniture market segments.

ENVIRONMENTAL REGULATION

     The Company is subject to the environmental laws and regulations of the United States and the states in which it operates concerning emissions into the air, discharges into waterways and the generation, handling and disposal of waste materials. The Company’s past expenditures relating to environmental compliance have not had a material effect on the Company and are included in normal operating expenses. These laws and regulations are constantly evolving, and it is impossible to predict accurately the effect they may have upon the capital expenditures, earnings and competitive position of the Company in the future. Based upon information currently available, management believes that expenditures relating to environmental compliance will not have a material impact on the financial position of the Company.

GEOGRAPHIC CONCENTRATION AND ECONOMIC CONDITIONS

     The Company’s operations and the majority of its customers are located in the United States of America, east of the Mississippi River. The Company and its profitability may be more susceptible to the effects of unfavorable or adverse local or regional economic factors and conditions than a company with a more geographically diverse customer base.

SEASONALITY

     Historically, the Company has experienced a greater portion of its profitability in the second and fourth quarters than in the first and third quarters. The second quarter generally reflects increased orders for printing of corporate annual reports and proxy statements. A post-Labor Day increase in demand for printing services and office products coincides with the Company’s fourth quarter.

EMPLOYEES

     On October 31, 2003, the Company had approximately 775 employees.

     The Company’s subsidiary, Interform Corporation, is party to a collective bargaining agreement with the United Steelworkers of America, AFL-CIO-CLC on behalf of its Local Union 8263 covering all production and maintenance employees (totaling 72 employees at October 31, 2003) at its Bridgeville, Pennsylvania facility. This contract expires May 31, 2006. The Company believes relations with the union and covered employees are good.

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EXECUTIVE OFFICERS OF CHAMPION

			Position and offices with Champion;
Name	Age		Principal occupation or employment last five years
Marshall T. Reynolds		67	Chief Executive Officer and Chairman of the Board of Directors of the Company from December 1992 to present; President of the Company December 1992 to September 2000; President and General Manager of Harrah and Reynolds, predecessor of the Company from 1964 (and sole shareholder from 1972 to present) to 1993; Chairman of the Board of Directors of River City Associates Inc. (owner of the Radisson Hotel Huntington) since 1989; Chairman of the Board of Directors of Broughton Foods Company from November 1996 to June 1999; Director (from 1983 to November 1993) and Chairman of the Board of Directors (from 1983 to November 1993) of Banc One West Virginia Corporation (formerly Key Centurion Bancshares, Inc.).
Kirby J. Taylor		58	President and Chief Operating Officer of the Company since September 2000; President and Chief Executive Officer of Action Business Consulting from November 1997 to September 2000 (management consulting firm); President and Chief Executive Officer of Nexquest, Inc. from January 1996 to November 1997; President and Chief Operating Officer of Addington Resources, Inc. from July 1994 to January 1996 (mining and waste management company); Vice President and Chief Financial Officer of Outboard Marine Corp. from April 1993 to July 1994 (manufacturer and distributor of boats and motors); Vice President and Chief Financial Officer of Tenneco Automotive from August 1990 to April 1993 (manufacturer of auto parts); Senior Vice President and Chief Financial Officer of Tenneco Minerals from August 1988 to August 1990; Vice President and Chief Financial Officer of Tenneco Minerals from

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			Position and offices with Champion;
Name	Age		Principal occupation or employment last five years
			February 1984 to August 1988; President of Tenneco International Finance from November 1980 to February 1984.
J. Mac Aldridge		62	Vice President and Division Manager - Stationers since December 1992; Vice President of Company and Division Manager – Huntington from September 1995 to October 1997; President and General Manager of Stationers since November 1989; Sales Representative of Huntington Division of Harrah and Reynolds from July 1983 to October 1989.
Gary A. Blackshire		51	Vice President of the Company since December 1992; Division Manager - Merten September 1998 to April 2001; Division Manager - Charleston December 1992 to April 2001; Division Manager - Charleston of Harrah and Reynolds from April 1992 to December 1992; Sales Representative of Charleston Division of Harrah and Reynolds from 1975 until April 1992.
R. Douglas McElwain		56	Vice President and Division Manager - Bourque Printing division of the Company since December 1993; General Manager of Bourque Printing from June 1993 to December 1993; Sales Representative of Charleston Division of Harrah and Reynolds and Company from 1986 until June 1993.
Toney K. Adkins		54	Vice President-Administration of the Company since November 1995; President, KYOWVA Corrugated Container Company, Inc. from 1991 to 1996.
Todd R. Fry		38	Chief Financial Officer of the Company since November 1999; Treasurer and Chief Financial Officer of Broughton Foods Company from September 1997 to June 1999; Coopers & Lybrand L.L.P. from 1991 to September 1997.
Walter R. Sansom		74	Secretary of the Company since December 1992; Production Coordinator of the Company since December 1992 and of Harrah and Reynolds from August 1968 to December 1992.

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			Position and offices with Champion;
Name	Age		Principal occupation or employment last five years
Theodore J. Nowlen		49	Vice President of the Company since March 1999; President of Interform since May 1998; Vice President of Marketing and Technology of Interform from January 1996 to May 1998; Vice President of Technology of Interform from September 1991 to January 1996; Manager of Information Systems of Interform from April 1983 to September 1991.
James A. Rhodes		47	Vice President of the Company since March 1999; President of Consolidated Graphic Communications Division of Interform since February 1999; Vice President of Sales of Consolidated Graphic Communications from 1996 to 1999; General Sales Manager – East of Consolidated Graphic Communications from 1995 to 1996.

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ITEM 2 - PROPERTIES

     The Company conducts its operations from twenty-six (26) different physical locations, eighteen (18) of which are leased, and eight (8) of which are owned in fee simple by Company subsidiaries. The Company does not anticipate any issues in regards to the renewal of certain leases when the terms expire. The properties leased, and certain of the lease terms are set forth below:

	Division Occupying	Square		Annual		Expiration
Property	Property	Feet		Rental		Of Term
2450 1st Avenue Huntington, West Virginia (1)	Chapman Printing- Huntington		85,000	$	116,400		2008
1945 5th Avenue Huntington, West Virginia (1)	Stationers		37,025		60,000		2007
615-619 4th Avenue Huntington, West Virginia (1)	Stationers		59,641		21,600		2008
405 Ann Street Parkersburg, West Virginia (1)	Chapman Printing – Parkersburg		36,614		57,600		2008
1563 Hansford Street Charleston, West Virginia (2)	Chapman Printing – Charleston		21,360		33,280		2008
890 Russell Cave Road Lexington, Kentucky (1)	Chapman Printing - Lexington		20,135		57,600		2007
214 Stone Road Belpre, Ohio (1)	Stationers - Garrison Brewer		15,146		42,000		2004
2800 Lynch Road Evansville, Indiana (1)	Smith & Butterfield		42,375		116,640		2004
113-117 East Third St. Owensboro, Kentucky (1)	Smith & Butterfield		8,500		14,400		2007
1901 Mayview Road Bridgeville, Pennsylvania (1)	Interform Corporation		120,000		293,503		2008
736 Carondelet Street New Orleans, Louisiana	Upton Printing		15,000		71,400		2008
5600 Jefferson Highway Harahan, Louisiana	Upton Printing		11,250		65,248		2004
1515 Central Parkway Cincinnati, Ohio (1)	The Merten Company		40,000		102,060		2006
2217 Robb Street Baltimore, Maryland (3)	U.S. Tag		26,000		39,996		2005
7868 Anselmo Lane Baton Rouge, Louisiana	Transdata		13,300		42,000		Monthly

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	Division Occupying	Square		Annual		Expiration
Property	Property	Feet		Rental		Of Term
2569 University Avenue Morgantown, West Virginia	Stationers-Thompson’s		9,000		8,400		2006
Route 2, Kyle Industrial Park Huntington, West Virginia	Champion Headquarters		9,000		78,000		2003
1733 North Airline Highway Gonzales, Louisiana	Stationers-Diez		5,800		12,000		Monthly
1214 Main Street Wheeling, West Virginia	CBI - Wheeling		22,000		36,000		2009

(1)  Lease is “triple net”, whereby the Company pays for all utilities, insurance, taxes, repairs and maintenance and all other costs associated with properties.

(2)  The Company purchased one-third interest in this property in January of 2002. The lease is “triple net”, whereby the Company pays for all utilities, insurance, taxes, repairs and maintenance and all other costs associated with properties.

(3)  The U.S. Tag operation was relocated to Huntington, West Virginia in August 2003.

     The Dallas Printing subsidiary owns, and operates from, a single-story masonry structure of approximately 19,600 square feet at 321-323 East Hamilton Street, Jackson, Mississippi.

     The Bourque Printing subsidiary owns, and operates from, a single-story building of approximately 18,501 square feet at 13112 South Choctaw Drive, Baton Rouge, Louisiana. The Company also owns a warehouse of approximately 5,000 square feet at 13214 South Choctaw Drive, Baton Rouge, Louisiana. In 2003, the Bourque Printing subsidiary purchased a 42,693 square foot building at 10848 Airline Highway, Baton Rouge, Louisiana.

     Stationers’ Clarksburg operation is conducted from a single-story masonry building of approximately 20,800 square feet owned by the Company at 700 N. Fourth Street, Clarksburg, West Virginia.

     Donihe owns, and operates from, a single-story steel building of approximately 38,500 square feet situated on roughly 14.5 acres at 766 Brookside Drive, Kingsport, Tennessee.

     Blue Ridge owns, and operates from, (i) a two-story masonry building of approximately 9,066 square feet and a contiguous 1,692 square foot former residential structure at 544 and 560 Haywood Road, Asheville, North Carolina, and (ii) a two-story steel building of approximately 12,500 square feet on approximately three acres at 1485 Amherst Road, Knoxville, Tennessee.

     The Capitol subsidiary of Stationers owns and operates from a 22,000 square foot building at 711 Indiana Avenue, Charleston, West Virginia. This building, formerly leased, was purchased by the Company in December 2001.

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     The Company continually reviews its production facilities and has and continues to consolidate facilities as deemed economically feasible. The company believes its production facilities are suitable and adequate to meet current production needs.

ITEM 3 - LEGAL PROCEEDINGS

     The Company is subject to various claims and legal actions, other than the claim discussed below, that arise in the ordinary course of business. In the opinion of management, after consulting with legal counsel, the Company believes that the ultimate resolution of these claims and legal actions will not have a material effect on the consolidated financial statements of the Company.

     On February 16, 2002, a jury verdict was rendered against the Company in a civil action brought against the Company in state court in Jackson, Mississippi. The civil action is styled National Forms & Systems Group, Inc. v. Timothy V. Ross; Todd Ross and Champion Industries, Inc.; and Timothy V. Ross v. National Forms & Systems Group, Inc. and Mickey McCardle; Circuit Court of the First Judicial District of Hinds County, Mississippi; Case No. 251-11-942-CIV.

     The plaintiffs in this civil action asserted that the Company and its Dallas Printing Company, Inc. subsidiary had engaged in unfair competition and other wrongful acts in hiring certain of its employees. The jury awarded the plaintiffs $1,745,000 in actual damages and $750,000 in punitive damages.

     On March 1, 2002, the plaintiffs in the civil action filed a motion for attorney’s fees and costs in the amount of $889,401. On July 16, 2002, the court entered an order granting plaintiff $645,119 in attorney fees and expenses, and ordered that interest on the amount of the jury award accrue from February 22, 2002.

     On July 17, 2002, the Company filed a notice of appeal from the jury verdict. The appeal involves both the jury award and the attorney’s fee and expense award. If the Company is not successful on appeal, Mississippi law provides that it is liable for an additional 15% of the total award. The case was referenced to the Mississippi Court of Appeals which has not yet announced a decision in this case.

     The Company has been advised that it has no insurance coverage for this award. The Company under Mississippi law has a guaranteed right to appeal. The Company has been advised by counsel that it has multiple grounds for an appeal and a reasonable basis for believing that an appeal would be successful in eliminating the jury award. However, there can be no assurance that the jury award will be overturned upon appeal. If the verdict is not overturned, the impact on the operating results of the Company could be material.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

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PART II

ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED

STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

     Champion common stock has traded on the National Association of Securities Dealers, Inc. Automated Quotation System (“NASDAQ”) National Market System since the Offering under the symbol “CHMP.”

     The following table sets forth the high and low closing prices for Champion common stock for the period indicated. The range of high and low closing prices are based on data from NASDAQ and does not include retail mark-up, mark-down or commission.

	Fiscal Year 2003				Fiscal Year 2002
	High		Low		High		Low
First quarter	$	3.35	$	2.45	$	3.15	$	2.28
Second quarter		3.31		2.77		3.25		2.82
Third quarter		3.88		2.70		3.04		2.30
Fourth quarter		5.05		3.68		2.84		2.25

     At the close of business on January 9, 2004, there were 519 shareholders of record of Champion common stock.

     The following table sets forth the quarterly dividends per share declared on Champion common stock.

	Fiscal Year		Fiscal Year		Fiscal Year
	2004		2003		2002
First quarter	$	0.05	$	0.05	$	0.05
Second quarter		—		0.05		0.05
Third quarter		—		0.05		0.05
Fourth quarter		—		0.05		0.05

ITEM 6 – SELECTED FINANCIAL DATA

SELECTED CONSOLIDATED FINANCIAL DATA

     The following selected consolidated financial data for each of the five years in the period ended October 31, 2003 have been derived from the Audited Consolidated Financial Statements of the Company. The information set forth below should be read in conjunction with the Audited Consolidated Financial Statements, related notes, and the information contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing elsewhere herein.

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	Year Ended October 31,
	2003			2002			2001 (1)			2000			1999
	(In thousands, except share and per share data)
OPERATING STATEMENT DATA:
Revenues:
Printing	$	96,537		$	95,194		$	98,146		$	96,657		$	92,405
Office products and office furniture		25,646			27,690			26,998			29,672			31,954
Total revenues		122,183			122,884			125,144			126,329			124,359
Cost of sales:
Printing		70,352			68,771			71,816			69,376			65,021
Office products and office furniture		17,453			19,480			18,661			19,927			21,764
Total cost of sales		87,805			88,251			90,477			89,303			86,785
Gross profit		34,378			34,633			34,667			37,026			37,574
Selling, general and administrative expense		31,222			30,560			31,800			32,621			31,387
Restructuring costs		—			—			2,052			—			—
Asset impairment costs		—			—			3,061			—			—
Income (loss) from operations		3,156			4,073			(2,246	)		4,405			6,187
Interest income		4			14			64			71			157
Interest expense		(167	)		(386	)		(891	)		(1,018	)		(1,228	)
Other income		10			73			528			114			211
Income (loss) before income taxes		3,003			3,774			(2,545	)		3,572			5,327
Income tax (expense) benefit		(1,235	)		(1,566	)		363			(1,463	)		(2,134	)
Net income (loss)	$	1,768		$	2,208		$	(2,182	)	$	2,109		$	3,193
Earnings (loss) per share:
Basic	$	0.18		$	0.23		$	(0.22	)	$	0.22		$	0.33
Diluted		0.18			0.23			(0.22	)		0.22			0.33
Dividends per share	$	0.20		$	0.20		$	0.20		$	0.20		$	0.20
Weighted average common shares outstanding:
Basic		9,714,000			9,714,000			9,714,000			9,714,000			9,714,000
Diluted		9,761,000			9,726,000			9,714,000			9,714,000			9,714,000

(1) The Company initiated a corporate-wide restructuring and profitability enhancement plan in the third quarter 2001. As a result of this plan, the Company recorded a pre-tax charge of $6.1 million or $4.3 million net of tax or $0.44 per share on a basic and diluted basis.

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	At October 31,
	2003		2002		2001		2000		1999
	(In Thousands)
BALANCE SHEET DATA:
Cash and cash equivalents	$	2,172	$	4,507	$	5,765	$	3,174	$	2,464
Working capital		26,977		26,072		26,041		29,070		30,333
Total assets		58,469		59,508		63,950		71,559		73,642
Long-term debt (net of current portion)		3,966		1,805		4,549		8,070		9,933
Shareholders’ equity		42,691		42,866		42,601		46,726		46,560

ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

     The Company is a commercial printer, business forms manufacturer and office products and office furniture supplier in regional markets of the United States of America, east of the Mississippi River. The Company has grown through strategic acquisitions and internal growth. Through such growth, the Company has realized regional economies of scale, operational efficiencies, and exposure of its core products to new markets. The Company has acquired fifteen printing companies, eight office products and office furniture companies and a paper distribution division (which was subsequently sold in 2001) since its initial public offering on January 28, 1993.

     The Company’s net revenues consist primarily of sales of commercial printing, business forms, tags, other printed products, office supplies, office furniture, data products and office design services. The Company recognizes revenues when products are shipped or ownership is transferred and when services are rendered to the customer. The Company’s revenues are subject to seasonal fluctuations caused by variations in demand for its products.

     The Company’s cost of sales primarily consists of raw materials, including paper, ink, pre-press supplies and purchased office supplies, furniture and data products, and manufacturing costs including direct labor, indirect labor and overhead. Significant factors affecting the Company’s cost of sales include the costs of paper in both printing and office supplies, the costs of labor and other raw materials.

     The Company’s operating costs consist of selling, general and administrative expenses. These costs include salaries, commissions and wages for sales, customer service, accounting, administrative and executive personnel, rent, utilities, legal, audit, information systems equipment costs, software maintenance and depreciation.

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CRITICAL ACCOUNTING POLICIES INVOLVING SIGNIFICANT ESTIMATES

     The Company’s significant accounting policies are described in Note 1 to the consolidated financial statements included in Item 15 of this Form 10-K. The discussion and analysis of the financial statements and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The following critical accounting policies affect the Company’s more significant judgments and estimates used in the preparation of the consolidated financial statements. There can be no assurance that actual results will not differ from those estimates.

     Asset Impairment: The Company is required to test for asset impairment relating to property and equipment whenever events or changes in circumstances indicate that the carrying value of an asset might not be recoverable. The Company applies Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (Statement No. 144) in order to determine whether or not an asset is impaired. This standard requires an impairment analysis when indicators of impairment are present. If such indicators are present, the standard indicates that if the sum of the future expected cash flows from the Company’s asset, undiscounted and without interest charges, is less than the carrying value, an asset impairment must be recognized in the financial statements. The amount of the impairment is the difference between the fair value of the asset and the carrying value of the asset.

     The Company believes that the accounting estimate related to an asset impairment is a “critical accounting estimate” because it is highly susceptible to change from period to period because it requires management to make assumptions about future cash flows over future years and that the impact of recognizing an impairment could have a significant effect on operations. Management’s assumptions about future cash flows requires significant judgment because actual operating levels have fluctuated in the past and are expected to continue to do so in the future. Management has discussed the development and selection of this critical accounting estimate with the audit committee of our board of directors and the audit committee has reviewed the Company’s disclosure relating to it in the MD&A.

     Beginning in fiscal year 2002, goodwill is required to be evaluated annually for impairment, according to Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.” (Statement No. 142). The standard requires a two-step process be performed to analyze whether or not goodwill has been impaired. Step one is to test for potential impairment, and requires that the fair value of the reporting unit be compared to its book value including goodwill. If the fair value is higher than the book value, no impairment is recognized. If the fair value is lower than the book value, a second step must be performed. The second step is to measure the amount of impairment loss, if any, and requires that a hypothetical purchase price allocation be done to determine the implied fair value of goodwill. This fair value

22

is then compared to the carrying value of goodwill. If the implied fair value is lower than the carrying value, an impairment must be recorded.

     As discussed in the notes to the financial statements, goodwill is recorded at the adjusted book value and was analyzed for impairment with the implementation of Statement No. 142. The fair value of the Company’s goodwill was estimated using discounted cash flow methodologies. Based on the analysis, the Company determined that fair value relating to goodwill resulted in an implied fair value greater than the book value recorded for the corresponding goodwill, and therefore no impairment was recognized in either year since the adoption of this statement.

     The Company believes that the accounting estimate related to the goodwill impairment is a “critical accounting estimate” because the underlying assumptions used for the discounted cash flow can change from period to period and could potentially cause a material impact to the income statement. Management’s assumptions about discount rates, inflation rates and other internal and external economic conditions, such as earnings growth rate, require significant judgment based on fluctuating rates and expected revenues. Additionally, Statement No. 142 requires that the goodwill be analyzed for impairment on an annual basis using the assumptions that apply at the time the analysis is updated. Management has discussed the development of these estimates with the audit committee of the board of directors. Additionally, the board of directors has reviewed this disclosure and its relation to MD&A.

     Allowance for Doubtful Accounts: The Company encounters risks associated with sales and the collection of the associated accounts receivable. As such, the Company records a monthly provision for accounts receivable that are considered to be uncollectible. In order to calculate the appropriate monthly provision, the Company primarily utilizes a historical rate of accounts receivables written off as a percentage of total revenue. This historical rate is applied to the current revenues on a monthly basis. The historical rate is updated periodically based on events that may change the rate such as a significant increase or decrease in collection performance and timing of payments as well as the calculated total exposure in relation to the allowance. Periodically, the Company compares the identified credit risks with the allowance that has been established using historical experience and adjusts the allowance accordingly.

     The Company believes that the accounting estimate related to the allowance for doubtful accounts is a “critical accounting estimate” because the underlying assumptions used for the allowance can change from period to period and could potentially cause a material impact to the income statement and working capital. Management has discussed the development and selection of this estimate with the audit committee of the board of directors, and the board has, in turn, reviewed the disclosure and its relation to MD&A.

     During 2003, 2002, and 2001 $336,000, $363,000 and $1,215,000 of bad debt expense was incurred and the allowance for doubtful accounts was $1,191,000, $1,397,000 and $1,432,000 as of October 31, 2003, 2002 and 2001. The actual write-offs for the periods were $543,000, $398,000 and $1,356,000 during 2003, 2002 and 2001. General economic conditions and

23

specific geographic concerns are major factors that may affect the adequacy of the allowance and may result in a change in the annual bad debt expense.

     The following discussion and analysis presents the significant changes in the financial position and results of operations of the Company and should be read in conjunction with the Audited Consolidated Financial Statements and notes thereto included elsewhere herein.

RESULTS OF OPERATIONS

     The following table sets forth for the periods indicated information derived from the Company’s Consolidated Statements of Operations, including certain information presented as a percentage of total revenues.

			Year Ended October 31,
			($ In thousands)
			2003					2002					2001
Revenues:
	Printing		$	96,537		79.0	%	$	95,194		77.5	%	$	98,146		78.4	%
	Office products and office furniture			25,646		21.0			27,690		22.5			26,998		21.6
		Total revenues		122,183		100.0			122,884		100.0			125,144		100.0
Cost of sales:
	Printing			70,352		57.6			68,771		56.0			71,816		57.4
	Office products and office furniture			17,453		14.3			19,480		15.8			18,661		14.9
		Total cost of sales		87,805		71.9			88,251		71.8			90,477		72.3
Gross Profit				34,378		28.1			34,633		28.2			34,667		27.7
Selling, general and administrative expenses				31,222		25.6			30,560		24.9			31,800		25.4
Restructuring charges				—		—			—		—			2,052		1.6
Asset impairment charges				—		—			—		—			3,061		2.5
Income (loss) from operations				3,156		2.5			4,073		3.3			(2,246	)	(1.8	)
Other income (expense):
		Interest income		4		0.0			14		0.0			64		0.1
		Interest expense		(167	)	(0.1	)		(386	)	(0.3	)		(891	)	(0.7	)
		Other income		10		0.0			73		0.1			528		0.4
Income (loss) before income taxes				3,003		2.4			3,774		3.1			(2,545	)	(2.0	)
	Income tax (expense) benefit			(1,235	)	(1.0	)		(1,566	)	(1.3	)		363		0.3
Net income (loss)			$	1,768		1.4	%	$	2,208		1.8	%	$	(2,182	)	(1.7	%)

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Year Ended October 31, 2003 Compared to Year Ended October 31, 2002

Revenues

     Consolidated net revenues were $122.2 million for the year ended October 31, 2003 compared to $122.9 million in the prior fiscal year. This change represents a decrease in revenues of approximately $700,000 or 0.6%. Printing revenues increased by $1.3 million or 1.4% from $95.2 million in 2002 to $96.5 million in 2003. The increase in printing sales was primarily due to the addition of a new large customer and additional sales derived primarily from the operations of certain assets purchased from Integrated Marketing Solutions in July 2003. Office products and office furniture revenue decreased $2.0 million or 7.4% from $27.7 million in 2002 to $25.6 million in 2003. The decrease in revenues for the office products and office furniture segment was primarily attributable to an industry-wide slowdown in office furniture sales.

Cost of Sales

     Total cost of sales for the year ended October 31, 2003 totaled $87.8 million compared to $88.3 million in the previous year. This change represented a decrease of $446,000 or 0.5% in cost of sales. Printing cost of sales increased $1.6 million or 2.3% to $70.4 million in 2003 compared to $68.8 million in 2002. Printing cost of sales were higher due to an overall increase in printing sales this coupled with competitive pressures led to gross margin compression in 2003. Office products and office furniture cost of sales decreased $2.0 million to $17.5 million in 2003 from $19.5 million in 2002. This resulted in enhanced gross margins due to lower cost of goods sold resulting from purchasing reductions from imports and stronger margins on remaining furniture sales.

Operating Expenses and Income

     Selling, general and administrative (S,G&A) expenses increased $700,000 to $31.2 million in 2003 from $30.6 million in 2002. S,G&A as a percentage of net sales represented 25.6% of net sales in 2003 compared with 24.9% of net sales in 2002. This increase is related, in part, to increases in insurance related expenses including health, general commercial and workers compensation .

Other Income (Expense)

     Interest expense decreased $219,000 to $167,000 in 2003 from $387,000 in 2002 primarily as a result of a decrease in interest rates and lower outstanding borrowings.

Income Taxes

     Income taxes as a percentage of income before taxes were 41.5% in 2002 compared with 41.1% in 2003.

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     The effective income tax rate in 2003 and 2002 approximates the combined federal and state, net of federal benefit, statutory income tax rate.

Net Income

     For reasons set forth above, net income for 2003 decreased $440,000 to $1.8 million, or $0.18 per share on a basic and diluted basis, from a net income of $2.2 million for 2002, or $0.23 per share on a basic and diluted basis.

Year Ended October 31, 2002 Compared to Year Ended October 31, 2001

Revenues

     Consolidated net revenues were $122.9 million for the year ended October 31, 2002 compared to $125.1 million in the prior fiscal year. This change represents a decrease in revenues of $2.3 million or 1.8%. Printing revenues decreased by $3.0 million or 3.0% from $98.1 million in 2001 to $95.2 million in 2002. The decrease in printing sales was primarily the result of an overall sluggish market in most of the geographic regions served by the Company partially offset by additional printing sales from the Company’s acquisition of Transdata for a full year in 2002. Office products and office furniture revenue increased $691,000 or 2.6% from $27.0 million in 2001 to $27.7 million in 2002. The increase in revenues for the office products and office furniture segment was primarily attributable to higher furniture sales, primarily in one of the Company’s geographic regions. Gross margin dollars declined in office products and office furniture divisions while the printing divisions posted an increase in gross margin dollars. This increase relates to the prior year gross margin dollars being reduced by charges taken as part of the restructuring and profitability enhancement plan that were not present in the current year.

Cost of Sales

     Total cost of sales for the year ended October 31, 2002 totaled $88.3 million compared to $90.5 million in the previous year. This change represented a decrease of $2.2 million or 2.5% in cost of sales. Printing cost of sales decreased $3.0 million or 4.2% to $68.8 million in 2002 compared to $71.8 million in 2001. Printing cost of sales were lower due to an overall decrease in printing sales and inventory related charges in the prior year due to the restructuring and profitability enhancement plan (See Note 10 of the Consolidated Financial Statements). Office products and office furniture cost of sales increased $800,000 or 4.4% to $19.5 million from $18.7 million in 2001, primarily due to higher furniture sales.

Operating Expenses and Income

     Selling, general and administrative (S,G&A) expenses decreased $1.2 million to $30.6 million in 2002 from $31.8 million in 2001. S,G&A as a percentage of net sales represented 24.9% of net sales in 2002 compared with 25.4% of net sales in 2001. This decrease is related, in part, to decreases in corporate overhead expenses including rent and utilities as well as a decrease in bad debt expense and other benefits resulting from the Company’s adoption of a restructuring and profitability enhancement plan in the third quarter of 2001 partially offset by increased legal related expenses in 2002 including legal fees associated with a civil action brought against the Company in state court in Jackson, Mississippi (See Note 7 of the

26

Consolidated Financial Statements). In addition, the Company adopted SFAS No. 142, which resulted in the elimination of goodwill amortization of approximately $50,000 net of tax annually.

     The Company initiated a corporate-wide restructuring and profitability enhancement plan in the third quarter of 2001. The plan was implemented to effectuate certain key initiatives including plant and office consolidations, headcount reductions, asset impairment issues and a general response to a deteriorating economic environment. The Company followed the applicable provisions of Financial Accounting Standards Board No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,” to compute the tangible and intangible impairment portions of the restructuring charges. As a result of the restructuring plan, the Company recorded a pre-tax charge of $6.1 million or $4.3 million net of tax or $0.44 per share. The charges were composed of the following components: write-down of goodwill, facilities and equipment of $3,060,000; employee severance and termination benefits of $55,000 and restructuring and other charges of $2,976,000. The restructuring and other charges included charges related to increases and related write-offs in the allowance for doubtful accounts, inventory obsolescence reserves and inventory valuation modifications related to excess quantities, costs related to duplicative facility leases, computer systems related charges, termination fees of a pension plan of an acquired company, and other general charges to implement the above mentioned plan.

     The charges are classified on the statement of operations as components of income from operations. Inventory obsolescence and valuation reserves are classified as a component of cost of sales in the amount of $978,000.

Other Income (Expense)

     Interest expense decreased $504,000 to $387,000 in 2002 from $891,000 in 2001 primarily as a result of a decrease in interest rates and lower outstanding borrowings.

     Other income decreased approximately $450,000 primarily due to a gain resulting from the strategic alliance with Xpedx recorded in 2001.

Income Taxes

     Income taxes as a percentage of income before taxes resulted in a benefit of 14.3% in 2001 compared with income tax expense of 41.5% in 2002.

     The effective income tax rate in 2002 approximates the combined federal and state, net of federal benefit, statutory income tax rate.

     The Company recorded a tax benefit in the third quarter of 2001 as a result of restructuring and asset impairment charges. The effective income tax rate in 2001 is reflective of certain tax attributes of non-deductible goodwill resulting from asset impairment charges.

Net Income (Loss)

     For reasons set forth above, net income for 2002 increased $4.4 million to $2.2 million, or $0.23 per share on a basic and diluted basis, from a net loss of $(2.2) million for 2001, or $(0.22) per share on a basic and diluted basis.

LIQUIDITY AND CAPITAL RESOURCES

     As of October 31, 2003, the Company had $2.2 million of cash and cash equivalents, a decrease of $2.3 million from the prior year. Working capital as of October 31, 2003 was $27.0 million, a 3.5% increase from $26.1 million at October 31, 2002. The decrease in cash and cash equivalents is primarily attributable to a decrease in cash provided from operations due primarily to an increase of $1.6 million in accounts receivable, on a net basis.

     The Company has historically used cash generated from operating activities and debt to finance capital expenditures and the cash portion of the purchase price of acquisitions. Management plans to continue making significant investments in equipment and to seek appropriate acquisition candidates. However, to fund the Company’s continued expansion of

27

operations, additional financing may be necessary. The Company has two available lines of credit totaling $11.0 million (See Note 3 of the Consolidated Financial Statements). For the foreseeable future including through Fiscal 2004, management believes it can fund operations, meet debt service requirements, and make the planned capital expenditures based on the available cash and cash equivalents, cash flow from operations, and lines of credit.

     Even though the Company believes that the legal contingency (See Note 7 of the Consolidated Financial Statements) that it faces will be resolved favorably, the possibility for an adverse decision on appeal is also inherent in the legal process. The Company believes that adequate liquidity is available to fund this contingency, if required.

     Additionally, the Company has minimal amounts of future contracted obligations (See Note 3 and Note 6 of the Consolidated Financial Statements). The Company is not a guarantor of indebtedness of others. The Company has no significant off balance sheet arrangements at October 31, 2003.

Cash Flows from Operating Activities

     Cash flows from operating activities for the years ended October 31, 2003, 2002 and 2001 were $4.6 million, $5.8 million and $11.5 million. Cash flows from operating activities for the fiscal year 2003 compared to 2002 decreased primarily due to a change in cash flow from accounts receivable.

Cash Flows from Investing Activities

     Cash used in investing activities was ($3.7) million, ($1.1) million and ($2.7) million for the years ended October 31, 2003, 2002 and 2001. Cash flows used in investing activities increased in 2003 compared to 2002 due to the purchase of a building in Baton Rouge, Louisiana and the purchase of additional equipment including several new presses, coupled with a decrease in proceeds from asset sales in 2003. In 2002 the Company sold two buildings which were reflected as proceeds from the sale of fixed assets.

Cash Flows from Financing Activities

     Net cash flows used in financing activities for the years ended October 31, 2003, 2002, and 2001 were ($3.2) million, ($6.0) million and ($6.1) million. Net cash flows used in financing activities decreased in 2003 compared to 2002 due to an increase in borrowings. Dividends paid in 2003, 2002 and 2001 were $1.9 million per year.

INFLATION AND ECONOMIC CONDITIONS

     Management believes that the effect of inflation on the Company’s operations has not been material and will continue to be immaterial for the foreseeable future. The Company does not have long-term contracts; therefore, to the extent permitted by competition, it has the ability to pass through to its customers most cost increases resulting from inflation, if any. In addition, the Company is not particularly energy dependent; therefore, an increase in energy costs should not have a significant impact on the Company.

28

SEASONALITY

     Historically, the Company has experienced a greater portion of its profitability in the second and fourth quarters than in the first and third quarters. The second quarter generally reflects increased orders for printing of corporate annual reports and proxy statements. A post-Labor Day increase in demand for printing services and office products coincides with the Company’s fourth quarter.

NEWLY ISSUED ACCOUNTING STANDARDS

     See Note 1 of the Consolidated Financial Statements

ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company does not have any significant exposure relating to market risk.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial statements and other information required by this Item are contained in the financial statements and footnotes thereto included in Item 15 and listed in the index on page F-1 of this report.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None.

ITEM 9A – CONTROLS AND PROCEDURES

     Company management, including the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures pursuant to Exchange Act Rule 13a-15c as of the end of the period covered by this annual report. Based on that evaluation, the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective in ensuring that all material information required to be filed in this annual report has been made known to them in a timely fashion. There were no changes in internal controls over financial reporting during the fourth fiscal quarter that have materially affected or are reasonably likely to materially affect the Company’s internal controls over financial reporting.

29

PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information relating to the directors of the Company is contained under the captions “Elections of Directors”, “Director Meetings, Committees and Attendance”, “Section 16a Beneficial Ownership Reporting Compliance” and “Code of Ethics” in the Company’s definitive Proxy Statement, expected to be dated February 12, 2004, with respect to the Annual Meeting of Shareholders to be held on March 15, 2004, which will be filed pursuant to regulation 14(a) of the Securities Exchange Act of 1934 and which is incorporated herein by reference. Certain information concerning executive officers of the Company appear in “EXECUTIVE OFFICERS OF CHAMPION” at Part I of this report.

ITEM 11 - EXECUTIVE COMPENSATION

     The information called for by this Item is contained under the captions “Compensation of Directors and Officers”, “Compensation Committee Report on Executive Compensation” and “Stock Performance Graph” in the Company’s definitive Proxy Statement, expected to be dated February 12, 2004, with respect to the Annual Meeting of Shareholders to be held on March 15, 2004, which will be filed pursuant to regulation 14(a) of the Securities Exchange Act of 1934 and which is incorporated herein by reference.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

     The information called for by this Item is contained under the captions “Equity Compensation Plan Information” and “Ownership of Shares” in the Company’s definitive Proxy Statement, expected to be dated February 12, 2004, with respect to the Annual Meeting of Shareholders to be held on March 15, 2004, which will be filed pursuant to regulation 14(a) of the Securities Exchange Act of 1934 and which is incorporated herein by reference.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information called for by this Item is contained under the caption “Transactions with Directors, Officers and Principle Shareholders” in the Company’s definitive Proxy Statement, expected to be dated February 12, 2004, with respect to the Annual Meeting of Shareholders to be held on March 15, 2004, which will be filed pursuant to regulation 14(a) of the Securities Exchange Act of 1934 and which is incorporated herein by reference.

ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The information called for by this Item is contained under the caption “Independent Auditors” in the Company’s definitive Proxy Statement, expected to be dated February 12, 2004, with respect to the Annual Meeting of Shareholders to be held on March 15, 2004, which will be filed pursuant to regulation 14(a) of the Securities Exchange Act of 1934 and which is incorporated herein by reference.

30

PART IV

ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) (1) and (2)

The Consolidated Financial Statements and Schedule, required by Item 8, are listed on the index on page F-1 and included as part of Item 15.

All other Schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

3. EXHIBITS

Number	Description	Reference
(3) 3.1	Articles of Incorporation	Filed as Exhibit 3.1 to Form 10-Q dated June 16, 1997, filed on June 16, 1997, incorporated herein by reference.
3.2	Bylaws	Filed as Exhibit 3.2 to Registration Statement on Form S-1, File No. 33-54454, filed on November 10, 1992, incorporated herein by reference.
(4)	Instruments defining the rights of security holders, including debentures.	See Exhibit 3.1 above.
(10)	Material Contracts	Realty Lease dated January 28, 1993 between ADJ Corp. and Company regarding 2450 1st Avenue, Huntington, West Virginia, filed as Exhibit 10.1 to Form 10-K dated January 27, 1994, filed January 31, 1994, is incorporated herein by reference.
		Realty Lease dated January 28, 1993 between The Harrah and Reynolds Corporation and Company regarding 615 4th Avenue, Huntington, West Virginia, filed as Exhibit 10.2 to Form 10-K dated January 27, 1994, filed January 31, 1994, is incorporated herein by reference.
		Realty Lease dated January 28, 1993 between ADJ Corp. and Company regarding 617-619 4th Avenue, Huntington, West Virginia, filed as

31

Number	Description	Reference
		Exhibit 10.3 to Form 10-K dated January 27, 1994, filed January 31, 1994, is incorporated herein by reference.
		Realty Lease dated January 28, 1993 between The Harrah and Reynolds Corporation and Company regarding 1945 5th Avenue, Huntington, West Virginia, filed as Exhibit 10.4 to Form 10-K dated January 27, 1994, filed January 31, 1994, is incorporated herein by reference.
		Realty Lease dated January 28, 1993 between Printing Property Corp. and Company regarding 405 Ann Street, Parkersburg, West Virginia, filed as Exhibit 10.5 to Form 10-K dated January 27, 1994, filed January 31, 1994, is incorporated herein by reference.
		Realty Lease dated January 28, 1993 between Printing Property Corp. and Company regarding 890 Russell Cave Road, Lexington, Kentucky, filed as Exhibit 10.6 to Form 10-K dated January 27, 1994, filed January 31, 1994, is incorporated herein by reference.
		Realty Lease dated January 28, 1993 between BCM Company, Ltd. and Company regarding 1563 Hansford Street, Charleston, West Virginia, filed as Exhibit 10.7 to Form 10-K dated January 27, 1994, filed January 31, 1994, is incorporated herein by reference.
		Lease dated April 11, 1994 between Terry and Anis Wyatt and Stationers Inc. regarding 214 Stone Road, Belpre, Ohio, filed as Exhibit 10.1 to Form 10-K dated January 26, 1995, filed January 27, 1995, is incorporated herein by reference.
		Form of Indemnification Agreement between Company and all directors and executive officers, filed as Exhibit 10.4 to Registration Statement on Form S-1, File No. 33-54454, filed on November 10, 1992, is incorporated herein by reference.
		Lease Agreement dated June 1, 1995 between Owl Investors Joint Venture and U.S. Tag & Ticket Company, Inc. regarding 2217 Robb Street,

32

Number	Description	Reference
		Baltimore, Maryland filed as Exhibit 10.1 to Form 10-K dated January 26, 1996, filed January 26, 1996, is incorporated herein by reference.
		Lease Agreement dated June 1, 1972 between Earl H. and Elaine D. Seibert and Smith & Butterfield Co., Inc. regarding 113-117 East Third Street, Owensboro, Kentucky, filed as Exhibit 10.3 to Form 10-K dated January 28, 1997, filed January 28, 1997, is incorporated herein by reference.
		$12,500,000 Term Loan Credit Agreement by and among Champion Industries, Inc. and the Banks Party thereto and PNC Bank, National Association, as Agent, dated as of March 31, 1997, as amended by Amendment No. 1 to Credit Agreement dated August 1, 1997, filed as Exhibit 10.1 to Form 10-K dated January 29, 1998, filed January 29, 1998, is incorporated herein by reference.
		$5,600,000 Term Loan Credit Agreement by and among the Company and its subsidiaries and PNC Bank, National Association, dated as of March 13, 1998, together with promissory note and representative security agreement attendant thereto, filed as Exhibit 10.1 to Form 10-K dated January 25, 1999 is incorporated herein by reference.
		Agreement of Lease between Mildred Thompson and Thompson’s of Morgantown, Inc. dated May 28, 1998, regarding Kirk and Chestnut Streets, Morgantown, West Virginia, filed as Exhibit 10.3 to Form 10-K dated January 25, 1999, is incorporated herein by reference.
	Executive Compensation Plans and Arrangements	Company’s 1993 Stock Option Plan, effective March 22, 1994, filed as Exhibit 10.14 to Form 10-K dated January 27, 1994, filed January 31, 1994, is incorporated herein by reference.
		Deferred Compensation Agreement dated July 1, 1993 between Blue Ridge Printing Co., Inc. and Glenn W. Wilcox, Sr., filed as Exhibit 10.4 to Form 10-K dated January 29, 1998, filed January 29, 1998, is incorporated herein by reference.
		Split Dollar Life Insurance Agreement dated July

33

Number	Description	Reference
		1, 1993 between Blue Ridge Printing Co., Inc. and Glenn W. Wilcox, Sr., filed as Exhibit 10.5 to Form 10-K dated January 29, 1998, filed January 29, 1998, is incorporated herein by reference. Agreement of Lease between ADJ Corp and Champion Industries, Inc. dated January 1, 1999, regarding Industrial Lane in Kyle Industrial filed Exhibit 10.1 to Form 10-K dated January 25, 2000, filed January 28, 2000, is incorporated herein by reference.
		$10,000,000 revolving credit agreement by and among the Company and its subsidiaries and National City Bank dated as of April 1, 1999, filed as Exhibit 10.2 to Form 10-K dated January 25, 2000, filed January 28, 2000, is incorporated herein by reference.
		Lease Agreement dated November 1, 1999 between Randall M. Schulz, successor trustee of The Butterfield Family Trust No. 2 and Smith & Butterfield Co., Inc. regarding 2800 Lynch Road, Evansville, Indiana, filed as Exhibit 10.3 to Form 10-K dated January 25, 2000, filed January 28, 2000, is incorporated herein by reference.
		Agreement of Lease dated September 25, 1998 between Ronald H. Scott and Frank J. Scott dba St. Clair Leasing Co. and Interform Corporation, regarding 1901 Mayview Road, Bridgeville, Pennsylvania, filed as Exhibit 10.4 to Form 10-K dated January 25, 2000, filed January 28, 2000, is incorporated herein by reference.
		$1,000,000 revolving line of credit between Stationers, Inc. and First Sentry Bank dated as of October 17, 2000, filed as Exhibit 10.1 to form 10-K dated January 22, 2001, filed January 26, 2001, is incorporated herein by reference.

34

Number	Description	Reference
		$2,690,938 Business Loan agreement by and among the Company and One Valley Bank National Association (BB&T), dated as of May 6, 1999, together with Promissory Note and Commercial Security Agreement, filed as Exhibit 10.4 to form 10-K dated January 22, 2001, filed January 26, 2001 is incorporated herein by reference.
		$618,720 Promissory Note by and among the Company and Bank One, West Virginia, N.A. dated as of June 6, 2000 together with commercial security agreement, filed as Exhibit 10.5 to form 10-K dated January 22, 2001, filed January 26, 2001, is incorporated herein by reference.
		$550,000 Promissory Note by and among the Company and Bank One, West Virginia, N.A. dated as of August 4, 2000 together with Commercial Security Agreement and Letter of Understanding, filed as Exhibit 10.6 to form 10-K dated January 22, 2001, filed January 26, 2001, is incorporated herein by reference.
		Agreement of Lease dated September 1, 2002 between Marion B. and Harold A. Merten, Jr. and The Merten Company regarding 1515 Central Parkway, Cincinnati, Ohio, Filed as Exhibit (10.1) to form 10-K dated January 21, 2002, Filed January 25, 2002 is incorporated herein by reference.
		$415,000 Commercial Lease Agreement by and among the company and Firstar Equipment Finance dated as of January 12, 2001, Filed as Exhibit (10.2) to form 10-K dated January 21, 2002, Filed January 25, 2002 is incorporated herein by reference.
		$450,000 Commercial Lease Agreement by and among the Company and Leasing One Corporation dated as of April 19, 2001, Filed as Exhibit (10.3) to form 10-K dated January 21, 2002, Filed January 25, 2002 is incorporated herein by reference.
		$315,665 Promissory Note by and among the

35

Number	Description	Reference
		Company and Community Trust Bank, N.A. as of April 27, 2001, Filed as Exhibit (10.4) to form 10-K dated January 21, 2002, Filed January 25, 2002 is incorporated herein by reference.
		Lease Agreement dated February 27, 1991 between the Alfred J. Moran Trust and Docutec of Louisiana, Inc. regarding 7868 Anselmo Lane, Baton Rouge, Louisiana, Filed as Exhibit (10.6) to form 10-K dated January 21, 2002, Filed January 25, 2002 is incorporated herein by reference.

(10.1)	Business Loan Agreement, $1,440,000 commercial loan between Bourque Printing Company and Hibernia National Bank together with promissory note dated as of March 19, 2003. Page Exhibit (10.1)-p1
(10.2)	Commercial Security Agreement, $450,050 commercial loan between Champion Industries, Inc. and First Century Bank dated as of March 2, 2003. Page Exhibit (10.2)-p1
(10.3)	Business Loan Agreement, $351,000 commercial loan between Champion Industries, Inc. and City National Bank together with promissory note dated as of August 14, 2003. Page Exhibit (10.3)-p1
(10.4)	Revolving Credit Agreement, $10,000,000 revolving line of credit between Champion Industries, Inc. and United Bank, Inc. dated as of August 1, 2003. Page Exhibit (10.4)-p1
(10.5)	Agreement Amending and Extending term of lease dated May 9, 2003 between Champion Industries, Inc. DBA, Upton Printing and AMB Property, L.P. Page Exhibit (10.5)-p1
(10.6)	Agreement Amending and Extending term of lease dated October 1, 2003 between Bourque Printing DBA, Upton Printing and M. Field Gomila Et. Al.. Page Exhibit (10.6)-p1
(10.7)	Promissory Note, $122,500 between Champion Industries, Inc. and Community Trust Bank dated as of January 9, 2003. Page Exhibit (10.7)-p1
(14.1)	Code of Ethics for the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Chief Accounting Officer.
(14.2)	Code of Business Conduct and Ethics.

36

(21)	Subsidiaries of the Registrant	Exhibit 21	Page Exhibit 21-p1
(23)	Consent of Ernst & Young LLP	Exhibit 23	Page Exhibit 23-p1
(31.1)	Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley act of 2002 - Marshall T. Reynolds	Exhibit 31.1	Page Exhibit 33.1-p1
(31.2)	Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley act of 2002 – Todd R. Fry	Exhibit 31.2	Page Exhibit 31.2-p1
(31.3)	Principal Operating Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley act of 2002 – Kirby J. Taylor	Exhibit 31.3	Page Exhibit 31.3-p1
(32)	Marshall T. Reynolds, Todd R. Fry and Kirby J. Taylor Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley act of 2002	Exhibit 32	Page Exhibit 32-p1

(b)	Champion filed the following reports on Form 8-K during the last quarter of the period covered by this report:
	Form 8-K dated August 23, 2003, filed August 23, 2003 regarding Champion’s press release titled “CHAMPION ANNOUNCES EARNINGS AND DIVIDEND FOR THIRD QUARTER 2003.”
(c)	Exhibits – Exhibits are filed as a separate section of this report.
(d)	Financial Statement Schedules – Filed as separate section on page F-28.

37

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Champion Industries, Inc.

By /s/ Marshall T. Reynolds

Marshall T. Reynolds
Chief Executive Officer

By /s/ Kirby J. Taylor

Kirby J. Taylor
President and Chief Operating Officer

By /s/ Todd R. Fry

Todd R. Fry
Vice President and Chief Financial Officer

Date: January 19, 2004

38

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated and on the dates indicated.

SIGNATURE AND TITLE	DATE
/s/ Robert H. Beymer Robert H. Beymer, Director	January 19, 2004
/s/ Philip E. Cline Philip E. Cline, Director	January 19, 2004
/s/ Harley F. Mooney, Jr. Harley F. Mooney, Jr., Director	January 19, 2004
/s/ Todd L. Parchman Todd L. Parchman, Director	January 19, 2004
/s/ A. Michael Perry A. Michael Perry, Director	January 19, 2004
/s/ Marshall T. Reynolds Marshall T. Reynolds, Director	January 19, 2004
/s/ Neal W. Scaggs Neal W. Scaggs, Director	January 19, 2004
/s/ Glenn W. Wilcox, Sr. Glenn W. Wilcox, Sr., Director	January 19, 2004

39

Champion Industries, Inc.

Audited Consolidated Financial Statements and Schedule

October 31, 2003

Contents
Report of Independent Auditors		F-2
Audited Consolidated Financial Statements:
	Consolidated Balance Sheets as of October 31, 2003 and 2002	F-3
	Consolidated Statements of Operations for the years ended October 31, 2003, 2002 and 2001	F-5
	Consolidated Statements of Shareholders’ Equity for the years ended October 31, 2003, 2002 and 2001	F-6
	Consolidated Statements of Cash Flows for the years ended October 31, 2003, 2002 and 2001	F-7
	Notes to Consolidated Financial Statements as of October 31, 2003	F-8
Schedule II – Valuation and Qualifying Accounts		F-28

Report of Independent Auditors

The Board of Directors and Shareholders
Champion Industries, Inc.

We have audited the accompanying consolidated balance sheets of Champion Industries, Inc. and Subsidiaries as of October 31, 2003 and 2002, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended October 31, 2003. Our audits also included the financial statement schedule listed in the index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based upon our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Champion Industries, Inc. and Subsidiaries at October 31, 2003 and 2002, and the consolidated results of their operations and their cash flows for each of the three years in the period ended October 31, 2003, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP                        

Charleston, West Virginia
December 31, 2003

F-2

Champion Industries, Inc. and Subsidiaries

Consolidated Balance Sheets

			October 31,
			2003			2002
Assets
	Current assets:
		Cash and cash equivalents	$	2,171,713		$	4,507,139
		Accounts receivable, net of allowance of $1,191,000 and $1,397,000		20,142,812			18,546,989
		Inventories		11,349,929			11,427,581
		Other current assets		739,560			1,745,563
		Deferred income tax assets		1,059,520			1,027,059
	Total current assets			35,463,534			37,254,331
	Property and equipment, at cost:
		Land		2,063,373			1,028,372
		Buildings and improvements		7,445,219			6,120,122
		Machinery and equipment		37,682,530			36,362,178
		Equipment under capital leases		983,407			983,407
		Furniture and fixtures		2,965,389			2,872,212
		Vehicles		3,262,861			3,082,258
				54,402,779			50,448,549
	Less accumulated depreciation			(34,964,006	)		(31,442,360	)
				19,438,773			19,006,189
	Cash surrender value of officers’ life insurance			1,020,795			947,955
	Goodwill and other intangibles, net of accumulated amortization			2,114,390			1,725,941
	Other assets			431,343			573,087
				3,566,528			3,246,983
	Total assets		$	58,468,835		$	59,507,503

See notes to consolidated financial statements.

F-3

Champion Industries, Inc. and Subsidiaries

Consolidated Balance Sheets (continued)

				October 31,
				2003		2002
Liabilities and shareholders’ equity
	Current liabilities:
		Accounts payable		$	3,283,222	$	3,258,095
		Accrued payroll and commissions			1,500,165		2,004,046
		Taxes accrued and withheld			1,259,853		1,416,900
		Accrued income taxes			707,119		873,136
		Accrued expenses			789,676		819,234
		Current portion of long-term debt:
			Notes payable		744,662		2,615,422
			Capital lease obligations		202,309		195,035
	Total current liabilities				8,487,006		11,181,868
	Long-term debt, net of current portion:
		Line of credit			1,705,668		—
		Notes payable			2,103,569		1,445,837
		Capital lease obligations			156,718		359,027
	Deferred income tax liabilities				2,900,807		3,225,119
	Other liabilities				424,233		429,842
	Total liabilities				15,778,001		16,641,693
	Commitments and contingencies
	Shareholders’ equity:
		Common stock, $1 par value, 20,000,000 shares authorized; 9,713,913 shares issued and outstanding			9,713,913		9,713,913
		Additional paid-in capital			22,242,047		22,242,047
		Retained earnings			10,734,874		10,909,850
	Total shareholders’ equity				42,690,834		42,865,810
	Total liabilities and shareholders’ equity			$	58,468,835	$	59,507,503

See notes to consolidated financial statements.

F-4

Champion Industries, Inc. and Subsidiaries

Consolidated Statements of Operations

		Year Ended October 31,
		2003			2002			2001
Revenues:
	Printing	$	96,536,601		$	95,194,288		$	98,146,114
	Office products and office furniture		25,646,031			27,689,621			26,998,196
	Total revenues		122,182,632			122,883,909			125,144,310
Cost of sales:
	Printing		70,351,496			68,770,628			71,815,872
	Office products and office furniture		17,453,228			19,480,400			18,661,472
	Total cost of sales		87,804,724			88,251,028			90,477,344
Gross profit			34,377,908			34,632,881			34,666,966
Selling, general and administrative expenses			31,221,692			30,560,289			31,799,557
Restructuring costs			—			—			2,052,692
Asset impairment costs			—			—			3,060,706
Income (loss) from operations			3,156,216			4,072,592			(2,245,989	)
Other income (expense):
	Interest income		3,899			14,376			63,700
	Interest expense		(167,442	)		(386,699	)		(890,787	)
	Other		10,216			73,326			528,013
			(153,327	)		(298,997	)		(299,074	)
Income (loss) before income taxes			3,002,889			3,773,595			(2,545,063	)
Income tax (expense) benefit			(1,235,086	)		(1,565,891	)		362,974
Net income (loss)		$	1,767,803		$	2,207,704		$	(2,182,089	)
Earnings (loss) per share:
	Basic	$	0.18		$	0.23		$	(0.22	)
	Diluted		0.18			0.23			(0.22	)
Dividends paid per share			0.20			0.20			0.20
Weighted average shares outstanding:
	Basic		9,714,000			9,714,000			9,714,000
	Diluted		9,761,000			9,726,000			9,714,000

See notes to consolidated financial statements.

F-5

Champion Industries, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity

		Common Stock				Additional
						Paid-In		Retained
		Shares		Amount		Capital		Earnings			Total
Balance, October 31, 2000			9,713,913	$	9,713,913	$	22,242,047	$	14,769,798		$	46,725,758
	Net loss for 2001		—		—		—		(2,182,089	)		(2,182,089	)
	Dividends ($0.20 per share)		—		—		—		(1,942,783	)		(1,942,783	)
Balance, October 31, 2001			9,713,913		9,713,913		22,242,047		10,644,926			42,600,886
	Net income for 2002		—		—		—		2,207,704			2,207,704
	Dividends ($0.20 per share)		—		—		—		(1,942,780	)		(1,942,780	)
Balance, October 31, 2002			9,713,913		9,713,913		22,242,047		10,909,850			42,865,810
	Net income for 2003		—		—		—		1,767,803			1,767,803
	Dividends ($0.20 per share)		—		—		—		(1,942,779	)		(1,942,779	)
Balance, October 31, 2003			9,713,913	$	9,713,913	$	22,242,047	$	10,734,874		$	42,690,834

See notes to consolidated financial statements.

F-6

Champion Industries, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

					Year Ended October 31,
					2003			2002			2001
Cash flows from operating activities:
	Net income (loss)				$	1,767,803		$	2,207,704		$	(2,182,089	)
	Adjustments to reconcile net income (loss) to cash provided by operating activities:
		Depreciation and amortization				4,288,407			4,182,253			4,507,165
		Loss (gain) on sale of assets				16,014			47,426			(12,584	)
		Gain on sale of division				—			—			(407,515	)
		Deferred income taxes				(356,773	)		(245,091	)		(814,020	)
		Deferred compensation				14,297			17,872			21,446
		Bad debt expense				336,291			363,328			705,742
		Restructuring, asset impairment and other charges				—			—			6,091,298
			Changes in assets and liabilities:
				Accounts receivable		(1,932,114	)		255,456			2,992,168
				Inventories		315,535			336,614			1,049,516
				Other current assets		1,006,003			(991,445	)		255,797
				Accounts payable		25,129			(1,085,196	)		(219,276	)
				Accrued payroll and commissions		(503,881	)		(103,331	)		(190,106	)
				Taxes accrued and withheld		(157,047	)		127,340			65,525
				Accrued income taxes		(166,017	)		1,152,407			(503,790	)
				Accrued expenses		(73,277	)		(399,341	)		115,478
				Other liabilities		(19,906	)		(21,074	)		(22,176	)
				Net cash provided by operating activities		4,560,464			5,844,922			11,452,579
Cash flows from investing activities:
		Purchase of property and equipment				(3,162,658	)		(1,885,111	)		(1,806,122	)
		Proceeds from sale of fixed assets				185,534			1,198,720			247,829
		Proceeds from sale of division				—			—			264,700
		Businesses acquired, net of cash received				(630,460	)		(376,842	)		(1,588,040	)
		Change in other assets				(33,825	)		(21,067	)		141,919
		Cash surrender value				(72,840	)		—			—
		Net cash used in investing activities				(3,714,249	)		(1,084,300	)		(2,739,714	)
Cash flows from financing activities:
		Borrowings on line of credit				3,192,271			1,000,000			1,500,000
		Payments on line of credit				(1,500,000	)		(1,000,000	)		(1,500,000	)
		Proceeds from long-term debt				923,451			—			1,192,397
		Principal payments on long-term debt				(3,854,584	)		(4,075,419	)		(5,371,350	)
		Dividends paid				(1,942,779	)		(1,942,780	)		(1,942,783	)
		Net cash used in financing activities				(3,181,641	)		(6,018,199	)		(6,121,736	)
		Net (decrease) increase  in cash and cash equivalents				(2,335,426	)		(1,257,577	)		2,591,129
		Cash and cash equivalents at beginning of year				4,507,139			5,764,716			3,173,587
		Cash and cash equivalents at end of year			$	2,171,713		$	4,507,139		$	5,764,716

See notes to consolidated financial statements.

F-7

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

     Champion is a commercial printer, business forms manufacturer and office products and office furniture supplier in regional markets in the United States of America, east of the Mississippi.

     The accounting and reporting policies of Champion conform to accounting principles generally accepted in the United States. The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. The following is a summary of the more significant accounting and reporting policies.

Principles of Consolidation

     The accompanying consolidated financial statements of Champion Industries, Inc. and Subsidiaries (the “Company”) include the accounts of The Chapman Printing Company, Inc., Bourque Printing, Inc., Dallas Printing Company, Inc., Stationers, Inc., Carolina Cut Sheets, Inc., U.S. Tag & Ticket Company, Inc., Donihe Graphics, Inc., Smith and Butterfield Co., Inc., The Merten Company, Interform Corporation, Blue Ridge Printing Co., Inc., CHMP Leasing, Inc., Rose City Press, Capitol Business Equipment, Inc., Thompson’s of Morgantown, Inc., Independent Printing Service, Inc., Diez Business Machines and Transdata Systems, Inc.

     Significant intercompany transactions have been eliminated in consolidation.

Cash Equivalents

     Cash and cash equivalents consist principally of cash on deposit with banks, repurchase agreements for government securities, and a money market account, all highly liquid investments with an original maturity of three months or less. At October 31, 2003 and 2002, the Company held overnight repurchase agreements for $1,415,000 and $845,000 of government securities with stated interest rates of 0.30% and 0.65%.

Inventories

     Inventories are principally stated at the lower of first-in, first-out, cost or market. Manufactured finished goods and work-in-process inventories include material, direct labor and overhead based on standard costs, which approximate actual costs.

Property and Equipment

     Depreciation of property and equipment and amortization of leasehold improvements and equipment under capital leases are recognized primarily on the straight-line and declining-balance methods in amounts adequate to amortize costs over the estimated useful lives of the assets as follows:

F-8

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

Buildings and improvements	5 - 40 years
Machinery and equipment	3 - 10 years
Furniture and fixtures	5 - 10 years
Vehicles	3 - 5 years

     The Company leases certain equipment under financing agreements that are classified as capital leases. These leases are for a term of five years and contain purchase options at the end of the original lease term. Amortization of assets recorded under capital lease agreements is included in depreciation expense.

     Major renewals, betterments, and replacements are capitalized while maintenance and repair costs are charged to operations as incurred. Upon the sale or disposition of assets, the cost and related accumulated depreciation are removed from the accounts with the resulting gains or losses reflected in income. Depreciation expense approximated $4,090,000, $4,139,000, and $4,267,000 for the years ended October 31, 2003, 2002 and 2001.

     Long-lived property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. This evaluation includes the review of operating performance and estimated future undiscounted cash flows of the underlying assets or businesses.

Goodwill and other intangibles

     The excess cost over fair value of net assets of acquired businesses, goodwill, was in years prior to 2002 being amortized by the straight-line method over periods ranging from 15 to 25 years. Amortization expense approximated $181,000 for the year ended October 31, 2001. The other intangible assets are being amortized over 5 years representing the future benefit of the intangible.

     In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets (FAS 142). The Company adopted these standards with its fiscal year beginning November 1, 2001. Under the new rules, goodwill (and intangible assets deemed to have indefinite lives) is no longer amortized but is subject to annual impairment tests in accordance with FAS 142 except in the year of adoption where companies were required to evaluate impairment at the beginning of the year and again at a recurring annual date. The first step in the impairment analysis is a screen for potential impairment and was required to be completed within six months of adopting FAS 142. The second step if required, measures the amount of impairment. The Company completed step one of the initial impairment analysis and the subsequent annual analysis during the second and fourth quarters of 2002. Additionally, this analysis was performed in the fourth quarter of 2003. The application of the requirements of this standard did not result in an impairment charge. Other intangible assets will continue to be amortized over their useful lives. Application of the nonamortization provisions of the Statement resulted in an increase in net income of $50,000 in 2002 or approximately $0.01 per share.

F-9

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

The goodwill and other intangibles consisted of the following at October 31:

						Net Book
		Cost		Accumulated		Value
2003
	Goodwill	$	2,437,250	$	507,278	$	1,929,972
	Other Intangibles		196,274		11,856		184,418
		$	2,633,524	$	519,134	$	2,114,390
2002
	Goodwill	$	2,233,219	$	507,278	$	1,725,941
	Other Intangibles		—		—		—
		$	2,233,219	$	507,278	$	1,725,941

     The estimated aggregate amortization expense as of October 31, 2003 for each of the five succeeding fiscal years is $39,300 for 2004-2007 and $27,400 for 2008. The amortization expense for other intangible assets approximated $12,000, $0 and $0 for the years ended October 31, 2003, 2002 and 2001.

In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (FAS 144), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of, and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations for a disposal of a segment of a business. FAS 144 is effective for fiscal years beginning after December 15, 2001, with earlier application encouraged. The Company adopted FAS 144 as of November 1, 2001 and the adoption did not have a significant impact on the Company’s financial position and results of operations.

Advertising Costs

     Advertising costs are expensed as incurred. Advertising expense for the years ended October 31, 2003, 2002 and 2001 approximated $433,000, $549,000 and $645,000.

Income Taxes

     Provisions for income taxes currently payable and deferred income taxes are based on the liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

F-10

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

Earnings Per Share

     Basic earnings per share is computed by dividing net income by the weighted average shares of common stock outstanding for the period and excludes any dilutive effects of stock options. Diluted earnings per share is computed by dividing net income by the weighted average shares of common stock outstanding for the period plus the shares that would be outstanding assuming the exercise of dilutive stock options using the treasury stock method. The effect of dilutive stock options increased weighted average shares outstanding by 48,000 and 12,000 for the years ended October 31, 2003 and 2002.

Segment Information

     The Company designates the internal organization that is used by management for making operating decisions and assessing performance as the source of the Company’s reportable segments.

Accounting for Web Site Development Costs

     Certain external costs and internal payroll and payroll-related costs have been capitalized during the application, development, and implementation stages of the Company’s web site. The costs regarding the ongoing operation and maintenance are expensed in the period incurred. The Company’s internet sales are based on a cooperative effort with the Company’s direct sales force as an optional ordering alternative.

Revenue Recognition

     Revenues are recognized when products are shipped or ownership is transferred and when services are rendered to customers. The Company acts as a principal party in sales transactions, assumes title to products and assumes the risks and rewards of ownership including risk of loss for collection, delivery, or returns. The Company typically recognizes revenue for the majority of its products upon shipment to the customer and transfer of title. Under agreements with certain customers, custom forms may be stored by the Company for future delivery. In these situations, the Company may receive a logistics and warehouse management fee for the services provided. In these cases, delivery and bill schedules are outlined with the customer and product revenue is recognized when manufacturing is complete and the product is received into the warehouse, title transfers to the customer, the order is invoiced and there is reasonable assurance of collectibility. Since the majority of products are customized, product returns are not significant. Therefore, the Company records sales on a gross basis. Shipping and handling costs are recorded as a component of cost of sales.

Accounting for Costs Associated with Exit or Disposal Activities

     In July 2002, the FASB issued SFAS No. 146 “Accounting for Costs Associated with Exit or Disposal Activities” (Statement No. 146), which supercedes EITF No. 94-3, “Liability Recognition for Certain Employment Termination Benefits and Other Costs to Exit an Activity.” Statement 146 requires companies to record liabilities for costs associated with exit or disposal activities to be recognized only when the liability is incurred instead of

F-11

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

at the date of commitment to an exit or disposal activity. Adoption of this standard is effective for exit or disposal activities that are initiated after December 31, 2002. The Company recognized costs for severance, lease termination and travel of approximately $123,000 during the Fourth Quarter of 2003, under the requirements of this standard, relating to the consolidation of the Company’s U.S. Tag facility into the Company’s existing Huntington, West Virginia location.

Accounting for Stock-Based Compensation

     In December 2002, the FASB issued SFAS No. 148 “Accounting for Stock-Based Compensation—Transition and Disclosure”. Statement 148 amends FASB Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition to Statement 123’s fair value method of accounting for stock-based employee compensation.

     The Company has elected to follow the intrinsic value method in accounting for its employee stock options. Accordingly, because the exercise price of the Company’s employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized.

     The fair value of these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions for 2003 and 2002, respectively: risk-free interest rates of 4.30% and 3.91%; dividend yields of 4.80% and 8.03%; volatility factors of the expected market price of the Company’s common stock of 48.6% and 45.4%; and a weighted-average expected life of the option of 4 years.

     The following pro forma information has been determined as if the Company had accounted for its employee stock options under the fair value method. For purposes of pro forma disclosures, the estimated fair value of the options is expensed in the year granted since the options vest immediately. The Company’s pro forma information for the years ended October 31 are as follows:

	Year Ended October 31
	2003		2002		2001
Net Income (loss), as reported	$	1,767,803	$	2,207,704	$	(2,182,089	)
Deduct: Total stock-based employee compensation expense determined under fair value method for all awards, net of related tax effects		62,250		38,704		—
Pro Forma net income (loss)	$	1,705,553	$	2,169,000	$	(2,182,089	)
Earnings (loss) per share:
Basic, as reported	$	0.18	$	0.23	$	(0.22	)
Basic, pro forma	$	0.18	$	0.22	$	(0.22	)
Diluted, as reported	$	0.18	$	0.23	$	(0.22	)
Diluted, pro forma	$	0.17	$	0.22	$	(0.22	)

F-12

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

FIN 46

In December 2003, the Financial Accounting Standards Board issued the revised FASB Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51 (FIN 46). FIN 46 requires the consolidation of entities in which an enterprise absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. Currently entities are generally consolidated by an enterprise when it has a controlling financial interest through ownership of a majority voting interest in the entity. The provisions of FIN 46 are generally effective for existing (prior to January 31, 2003) variable interest relationships of a public entity no later than the end of the first reporting period that ends after March 15, 2004. However, prior to the required application of this interpretation a public entity that is not a small business issuer shall apply FIN 46 to those entities that are considered to be special-purpose entities no later than the end of the first reporting period that ends after December 15, 2003. Management does not believe that FIN 46 will have a material impact on the Company’s financial statements; however, management continues to review the requirements and the related accounting implications.

EITF 00-21 Revenue Arrangements With Multiple Deliverables

In May 2003 the Financial Accounting Standards Board Emerging Issues Task Force issued EITF 00-21 “Revenue Arrangements With Multiple Deliverables.” This issue addresses certain aspects of the accounting by a vendor for arrangements under which it will perform multiple revenue generating activities. The guidance in this issue is effective for revenue arrangements entered into during fiscal periods beginning after June 15, 2003. The application of this EITF did not have a material effect during the fourth quarter of 2003. Management does not believe that EITF 00-21 will have a material prospective impact on the Company’s financial statements. However, management continues to review this requirement and the related accounting implications.

Reclassifications

     Certain prior-year amounts have been reclassified to conform to the current-year Financial Statement presentation.

F-13

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

2. Inventories

     Inventories consisted of the following:

		October 31,
		2003		2002
Printing:
	Raw materials	$	2,203,228	$	2,421,973
	Work in process		2,022,420		1,795,796
	Finished goods		3,680,184		3,942,518
Office products and office furniture			3,444,097		3,267,294
		$	11,349,929	$	11,427,581

3. Long-term Debt

Long-term debt consisted of the following:

	October 31,
	2003		2002
Unsecured term note payable to a bank, due in monthly principal installments of $148,810 plus interest approximating the prime rate with the last note maturing April 2004. This note was paid off in September of 2003.	$	—	$	2,678,733
Installment notes payable to banks, due in monthly installments plus interest at rates approximating the bank’s prime rate maturing in various periods ranging from July 2004 - February 2010, collateralized by equipment, vehicles, inventory and accounts receivable.		2,848,231		1,382,526
Capital lease obligations, due in monthly installments totaling $19,116 through February 2005, with $8,322 due in monthly installments in periods February 2005 through October 2005 at fixed rates of interest ranging from 7.0% to 7.75%.		359,027		554,062
		3,207,258		4,615,321
Less current portion		946,971		2,810,457
Long-term debt, net of current portion	$	2,260,287	$	1,804,864

The unsecured term note agreements contain restrictive financial covenants requiring the Company to maintain certain financial ratios. The Company was in compliance with these covenants at October 31, 2003.

Maturities of long-term debt for each of the next five years follow:

F-14

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

	Notes		Capital
	Payable		Leases		Total
2004	$	744,662	$	202,309	$	946,971
2005		366,646		156,718		523,364
2006		283,464		—		283,464
2007		251,565		—		251,565
2008		198,340		—		198,340
Thereafter		1,003,554		—		1,003,554
	$	2,848,231	$	359,027	$	3,207,258

     On August 1, 2003 the Company obtained an unsecured revolving line of credit with a bank for borrowings to a maximum of $10,000,000 with interest payable monthly at the prime rate of interest. The line of credit expires in July 2006 and contains certain restrictive financial covenants. The line of credit essentially replaced a previous $10,000,000 facility with another bank. The Company had outstanding borrowings of approximately $1.7 million under this facility at October 31, 2003 of which approximately $1.2 million was used to pay off an existing term loan prior to maturity. There were no borrowings outstanding under these facilities at October 31, 2002.

     The Company has an unsecured revolving line of credit with a bank for borrowings to a maximum of $1,000,000 with interest payable monthly at the Wall Street Journal prime rate. The line of credit expires in April 2004 and contains certain financial covenants. There were no borrowings outstanding under this facility at October 31, 2003 or 2002.

     The prime rate, the base interest rate on the above loans, approximated 4.00% and 4.75% at October 31, 2003 and 2002. Interest paid during the years ended October 31, 2003, 2002 and 2001 approximated $230,000, $385,000 and $872,000. The Company capitalized interest of $33,000 during 2003 related to the purchase of a building in Baton Rouge, Louisiana.

     The Company’s non-cash activities for 2003, 2002, and 2001 included equipment purchases of approximately $96,000, $288,000 and $792,000, which were financed by a bank and the purchase in 2003 of a building in Baton Rouge, Louisiana of which $1,440,000 of the purchase price was financed by a bank.

4. Employee Benefit Plans

     The Company had a Profit Sharing Plan that covered all eligible employees and qualified as a Savings Plan under Section 401(k) of the Internal Revenue Code. Effective

F-15

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

January 1, 1998, the Profit Sharing Plan was merged into The Champion Industries, Inc. 401(k) Plan (the “Plan”). The Plan covers all eligible employees who satisfy the age and service requirements. Each participant may elect to contribute up to 15% of annual compensation, and the Company is obligated to contribute 100% of the participant’s contribution not to exceed 2% of the participant’s annual compensation. The Company may make discretionary contributions to the Plan. The Company’s expense under these Plans was approximately $365,000, $346,000 and $369,000 for the years ended October 31, 2003, 2002 and 2001.

     The Company’s 1993 Stock Option Plan provides for the granting of both incentive and non-qualified stock options to management personnel for up to 762,939 shares of the Company’s common stock. The option price per share for incentive stock options shall not be lower than the fair market value of the common stock at the date of grant. The option price per share for non-qualified stock options shall be at such price as the Compensation Committee of the Board of Directors may determine at its sole discretion. All options to date are incentive stock options. Exercise prices for options outstanding as of October 31, 2003 ranged from $2.49 to $6.88. Options vest immediately and may be exercised within five years from the date of grant. The weighted average remaining contractual life of those options is 3.0 years.

     A summary of the Company’s stock option activity and related information for the years ended October 31 follows:

				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	2003			Price		2002			Price		2001			Price
Outstanding-beginning of year		230,000		$	5.41		130,000		$	10.63		176,317		$	11.44
Granted		125,000			2.77		126,000			2.49		—			—
Exercised		—			—		—			—		—			—
Forfeited or expired		(43,000	)		13.42		(26,000	)		17.38		(46,317	)		13.72
Outstanding-end of year		312,000			3.25		230,000			5.41		130,000			10.63
Weighted average fair value of options granted during the year	$	0.83				$	0.52				$	—

F-16

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

A summary of stock options outstanding and exercisable at October 31, 2003, follows:

Exercise	Number		Remaining
Price	Outstanding		Life
6.88		30,000		0.63
4.25		40,000		1.14
2.49		120,000		3.05
2.77		122,000		4.13

     The Company has deferred compensation agreements with two employees of Blue Ridge Printing Co., Inc. providing for payments totaling approximately $1,000,000 over a ten year period after retirement. During fiscal 2001, one of these employees was paid out. The Company had accrued approximately $354,000 and $340,000 at October 31, 2003 and 2002 relating to these agreements. The amount expensed for these agreements for the years ended October 31, 2003, 2002 and 2001 approximated $14,000, $18,000 and $21,000. To assist in funding the deferred compensation agreements, the Company has invested in life insurance policies, which had a cash surrender value of approximately $386,000 and $364,000 for years 2003 and 2002.

5. Income Taxes

Income tax expense (benefit) consisted of the following:

		Year Ended October 31,
		2003			2002			2001
Current expense:
	Federal	$	1,270,574		$	1,460,913		$	325,728
	State		321,285			350,069			125,318
Deferred benefit			(356,773	)		(245,091	)		(814,020	)
		$	1,235,086		$	1,565,891		$	(362,974	)

F-17

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

Deferred tax assets and liabilities are as follows:

		October 31,
		2003			2002
Assets:
	Allowance for doubtful accounts	$	476,358		$	560,957
	Deferred compensation		142,973			135,824
	Net operating loss carryforward of acquired companies		604,582			642,427
	Accrued vacation		278,848			219,701
	Other accrued liabilities		189,492			146,649
	Other assets		89,240			84,229
Gross deferred tax assets			1,781,493			1,789,787
Liabilities:
	Property and equipment		3,337,530			3,443,400
	Gross deferred tax liability		3,337,530			3,443,400
	Valuation allowance		(285,250	)		(544,447	)
Net deferred tax liabilities		$	1,841,287		$	2,198,060

     A reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate is as follows:

	Year Ended October 31,
	2003			2002			2001
Statutory federal income tax rate		34.0	%		34.0	%		(34.0	%)
State taxes, net of federal benefit		7.0			6.1			(1.1	)
Restructuring permanent differences		—			—			22.1
Change in valuation allowance		(7.8	)		—			—
Deferred tax adjustments		6.1			(0.6	)		(3.2	)
Selling expenses		2.5			2.1			2.3
Other		(0.7	)		(0.1	)		(0.4	)
Effective tax rate		41.1	%		41.5	%		(14.3	%)

     Income taxes paid during the years ended October 31, 2003, 2002 and 2001 approximated $1,758,000, $659,000 and $959,000.

     The Company has available for income tax purposes net operating loss carryforwards from acquired companies of approximately $1,154,000, of which $222,000 expires in 2011, $899,000 in 2012 and $33,000 in 2013. The Company has available for state income tax purposes net operating loss carryforwards from acquired companies of approximately $2,619,000 of which $144,000 expires in 2012, $108,000 expires in 2013, $435,000 expires in 2014, $1,012,000 expires in 2015, $872,000 expires in 2016 and $48,000 expires in 2018. The Company established valuation allowances against certain net operating loss

F-18

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

carryforwards during 2003 the valuation allowance decreased by $259,197 resulting from changes in the estimated realizability of an acquired subsidiary’s deferred tax assets.

6. Related Party Transactions and Operating Lease Commitments

     The Company leases operating facilities from entities controlled by its Chief Executive Officer, his family and affiliates. The terms of these leases, which are accounted for as operating leases, range from five to fifteen years.

A summary of significant related party transactions follows:

	Year Ended October 31,
		2003		2002		2001
Rent expense paid to affiliated entities for operating facilities		$	424,000	$	424,000	$	441,000
Sales of office products, office furniture and printing services to affiliated entities			590,000		803,000		673,000

     In addition, the Company leases property and equipment from unrelated entities under operating leases. Rent expense amounted to $960,000, $881,000 and $898,000 for the years ended October 31, 2003, 2002 and 2001.

     Under the terms and conditions of the above-mentioned leases, the Company pays all taxes, assessments, maintenance, repairs or replacements, utilities and insurance.

     Future minimum rental commitments for all noncancelable operating leases including related party commitments with initial terms of one year or more consisted of the following at October 31, 2003:

2004	$	1,091,651
2005		838,513
2006		751,053
2007		690,103
2008		399,594
Thereafter		6,000
	$	3,776,914

     The Company participates in a self-insurance program for employee health care benefits with affiliates controlled by its Chief Executive Officer and as such is responsible for paying claims of company participants as required by the plan document. The Company is allocated costs primarily related to the reinsurance premiums based on its proportionate share to provide such benefits to its employees. The Company’s expense related to this

F-19

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

program for the years ended October 31, 2003, 2002 and 2001 was approximately $2,999,000, $2,267,000 and $2,842,000.

     In the first quarter of 2002, the Company made a deposit to purchase a fractional ownership in an aircraft from an entity controlled by its Chief Executive Officer for approximately $1.2 million of which $875,000 had been paid as of October 31, 2002. The Company had previously anticipated the transaction to be completed during the fourth quarter of 2002. The Company’s Board of Directors further evaluated the transaction, and prior to its completion determined that it would be in the Company’s best interests to rescind the transaction. Therefore, the transaction has been terminated and a full refund of the deposit has been made.

     During 2003, 2002 and 2001 the Company utilized this aircraft and reimbursed the controlled entity for the use of the aircraft, fuel, air crew, ramp fees and other expenses attendant to the Company’s use, in amounts aggregating $79,000, $118,000 and $106,000. The Company believes that such amounts are at or below the market rate charged by third-party commercial charter companies for similar aircraft.

     The Company believes that the terms of its related party transactions are no less favorable to the Company than could be obtained with an independent third party.

7. Commitments and Contingencies

     On February 16, 2002, a jury verdict was rendered against the Company in a civil action brought against the Company in state court in Jackson, Mississippi.

     The plaintiffs in this civil action asserted that the Company and its Dallas Printing Company, Inc. subsidiary had engaged in unfair competition and other wrongful acts in hiring certain of its employees. The jury awarded the plaintiffs $1,745,000 in actual damages and $750,000 in punitive damages.

     On March 1, 2002, the plaintiffs in the civil action filed a motion for attorney’s fees and costs in the amount of $889,401. On July 16, 2002, the court entered an order granting plaintiff $645,119 in attorney fees and expenses, and ordered that interest on the amount of the jury award accrue from February 22, 2002.

     On July 17, 2002, the Company filed a notice of appeal from the jury verdict. The appeal involves both the jury award and the attorney’s fee and expense award. If the Company is not successful on appeal, Mississippi law provides that it is liable for an additional 15% of the total award.

     The Company has been advised that it has no insurance coverage for this award. The Company under Mississippi law has a guaranteed right to appeal. The Company has been advised by counsel that it has multiple grounds for an appeal and a reasonable basis for believing that an appeal would be successful in eliminating the jury award. However, there

F-20

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

can be no assurance that the jury award will be overturned upon appeal. If the verdict is not overturned, the impact on the operating results of the Company could be material. The case was referenced to the Mississippi Court of Appeals which has not yet announced a decision in this case.

     The Company is subject to the environmental laws and regulations of the United States and the states in which it operates concerning emissions into the air, discharges into the waterways and the generation, handling and disposal of waste materials. The Company’s past expenditures relating to environmental compliance have not had a material effect on the Company and are included in normal operating expenses. These laws and regulations are constantly evolving, and it is impossible to predict accurately the effect they may have upon the capital expenditures, earnings, and competitive position of the Company in the future. Based upon information currently available, management believes that expenditures relating to environmental compliance will not have a material impact on the financial position of the Company.

     The Company is subject to various claims and legal actions, other than the claim discussed above, that arise in the ordinary course of business. In the opinion of management, after consulting with legal counsel, the Company believes that the ultimate resolution of these claims and legal actions will not have a material effect on the consolidated financial statements of the Company.

8. Acquisitions

     On July 1, 2003 the Company acquired certain assets of Pittsburgh based Integrated Marketing Solutions, the direct sales division and distributorship of Datatel Resources Corporation.

     On June 18, 2003 the Company acquired certain assets of Contract Business Interiors (CBI) of Wheeling, WV pursuant to acceptance by U.S. Bankruptcy Court for the Northern District of West Virginia. As a result of this transaction the Company also assumed certain customer deposit liabilities in the ordinary course of business.

     On October 10, 2001, the Company acquired Transdata Systems, Inc. (“Transdata”) of Baton Rouge and New Orleans, Louisiana.

     On November 6, 2000, the Company acquired certain assets of the Huntington, West Virginia paper distribution division of The Cincinnati Cordage Paper Company (“Cordage”) for $1.2 million, pursuant to an auction held by the U.S. Bankruptcy Court for the Southern District of Ohio. On April 30, 2001, the Company entered into a strategic alliance with Xpedx resulting in the assumption by Xpedx of the Cordage customer list and certain inventory items. This strategic alliance has been accounted for as a sale of a division with a gain recognized of approximately $400,000.

     Pro forma financial information and all disclosures required by FAS 141 and FAS 142 related to these acquisitions has not been presented because such information would not be materially different from amounts reported herein or is not significant.

F-21

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

     All of the above transactions have been accounted for using the purchase method of accounting.

9. Industry Segment Information

     The Company operates principally in two industry segments organized on the basis of product lines: the production, printing and sale, principally to commercial customers, of printed materials (including brochures, pamphlets, reports, tags, continuous and other forms); and the sale of office products and office furniture including interior design services. The Company employs approximately 775 people, of whom 72 or approximately 9% are covered by a collective bargaining agreement, which expires on May 31, 2006.

F-22

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

The table below presents information about reported segments for the years ended October 31:

				Office Products
2003	Printing			& Furniture			Total
Revenues	$	106,540,961		$	30,771,361		$	137,312,322
Elimination of intersegment revenue		(10,004,360	)		(5,125,330	)		(15,129,690	)
Consolidated revenues	$	96,536,601		$	25,646,031		$	122,182,632
Operating income		3,262,418			(106,202	)		3,156,216
Depreciation & amortization		4,145,286			143,121			4,288,407
Capital expenditures		4,572,890			126,233			4,699,123
Identifiable assets		48,387,601			10,081,234			58,468,835
Goodwill		1,643,530			286,442			1,929,972

				Office Products
2002	Printing			& Furniture			Total
Revenues	$	104,767,231		$	31,529,434		$	136,296,665
Elimination of intersegment revenue		(9,572,943	)		(3,839,813	)		(13,412,756	)
Consolidated revenues	$	95,194,288		$	27,689,621		$	122,883,909
Operating income		3,955,083			117,509			4,072,592
Depreciation & amortization		4,057,772			124,481			4,182,253
Capital expenditures		1,994,255			178,582			2,172,837
Identifiable assets		49,100,223			10,407,280			59,507,503
Goodwill		1,439,499			286,442			1,725,941

				Office Products
2001	Printing			& Furniture			Total
Revenues	$	107,599,525		$	29,932,697		$	137,532,222
Elimination of intersegment revenue		(9,453,411	)		(2,934,501	)		(12,387,912	)
Consolidated revenues	$	98,146,114		$	26,998,196		$	125,144,310
Operating income (loss)		712,701			(2,958,690	)		(2,245,989	)
Depreciation & amortization		4,260,419			246,746			4,507,165
Capital expenditures		2,305,369			293,122			2,598,491
Identifiable assets		55,210,611			8,739,303			63,949,914
Goodwill		1,047,741			286,442			1,334,183

F-23

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

     A reconciliation of total segment revenue, assets and operating income to consolidated income before income taxes for the years ended October 31, 2003, 2002 and 2001 is as follows:

		2003			2002			2001
Revenues:
	Total segment revenues	$	137,312,322		$	136,296,665		$	137,532,222
	Elimination of intersegment revenue		(15,129,690	)		(13,412,756	)		(12,387,912	)
	Consolidated revenue	$	122,182,632		$	122,883,909		$	125,144,310
Operating income (loss):
	Total segment operating income (loss)	$	3,156,216		$	4,072,592		$	(2,245,989	)
	Interest income		3,899			14,376			63,700
	Interest expense		(167,442	)		(386,699	)		(890,787	)
	Other income		10,216			73,326			528,013
Consolidated income (loss) before income taxes		$	3,002,889		$	3,773,595		$	(2,545,063	)
Identifiable assets:
	Total segment identifiable assets	$	58,468,835		$	59,507,503		$	63,949,914
	Elimination of intersegment assets		—			—			—
	Total consolidated assets	$	58,468,835		$	59,507,503		$	63,949,914

10.     Restructuring Charge, Asset Impairment Charge and Other Charges

In the third quarter of 2001, the Company recorded charges related to a restructuring and profitability enhancement plan. This plan was implemented to effectuate certain key initiatives including plant and office consolidations, headcount reductions, asset impairment issues and a general response to a deteriorating economic environment. The pre-tax charge resulting from these actions was $6.1 million ($4.3 million after-tax or $0.44 per share on a basic and diluted basis.) The charge related to approximately $3.1 million from asset impairments including goodwill, facility and equipment write-downs. The Company recorded charges for restructuring and other special charges of $3.0 million comprised primarily of severance payments, charge-offs related to duplicative facility leases, increases in allowance for doubtful accounts and inventory obsolescence and valuation reserves, costs related to the impairment of the Company’s information systems hardware and software, charges related to termination and related fees of a pension plan of an acquired Company, and other charges and expenses related to plant consolidations and restructuring.

As a result of the Company’s restructuring plan, approximately 35 employees were terminated from the Company primarily as a result of plant and office consolidations at the Company’s Carolina Cut Sheets operation, Chapman Printing Lexington location and the Garrison Brewer division of Stationers. In addition, the Company anticipated the elimination of additional positions resulting from retirements and normal attrition within the

F-24

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

twelve to eighteen months following the implementation of the plan. As of October 31, 2001, 35 employees were notified of their termination and one retired position was eliminated.

The cash and non-cash elements of the Company’s restructuring charge, asset impairment charge, and other unusual charges approximated $1.5 million in cash and $4.6 million non-cash. The charges are classified on the statement of operations as components of operating income. Inventory obsolescence and related increases to valuation reserves are classified as a component of cost of sales. The printing segment charges approximated $3.5 million consisting of goodwill write-downs of $779,000, facilities and equipment write-downs of $235,000, severance costs of $51,000, inventory obsolescence and valuation reserves of $978,000 and restructuring and other charges of $1,457,000. The office products and furniture segment charges approximated $2.6 million consisting of goodwill write-downs of $1,611,000, facilities write-downs of $436,000, severance costs of $4,000 and restructuring and other charges of $541,000. Details of the approximated charges are as follows as of October 31, 2003:

			Utilized
	Original						Balance at
	Accrual		Cash		Noncash		October 31, 2003
Write-down of goodwill, facilities and equipment	$	3,060,000	$	168,000	$	2,892,000	$	—
Employee severance and termination benefits		55,000		55,000		—		—
Inventory obsolescence and valuation reserves		978,000		—		978,000		—
Restructuring and other charges		1,998,000		1,155,000		768,000		75,000
Total	$	6,091,000	$	1,378,000	$	4,638,000	$	75,000

     In August 2003, the Company relocated its U.S. Tag division from Baltimore, Maryland to Huntington, West Virginia. As a result of the Company’s decision to relocate this division the Company incurred lease termination costs of $63,000 which will be paid out on a monthly basis over the term of the lease (at a rate of approximately $3,333 per month for 19 months as of October 31, 2003), $45,000 in severance and termination benefits which were paid during the fourth quarter of 2003 and travel related costs of approximately $15,000 which were incurred during the fourth quarter of 2003. As a result of the U.S. Tag relocation 19 positions were eliminated. The Company anticipates only nominal costs related to the plant relocation to occur in the future. These costs will occur over the remaining lease term and include utility and security costs.

F-25

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

     The costs associated with the aforementioned relocation of U.S. Tag were reflected in the consolidated statements of operations statement in the category where the expenses historically have been classified and are part of the printing segment.

11.     Fair Value of Financial Instruments

     The carrying amount reported in the balance sheet for cash and cash equivalents approximates its fair value. The fair value of long-term debt was estimated using discounted cash flows and it approximates their carrying value.

F-26

Champion Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

12. Quarterly Results of Operations (unaudited)

     The following is a summary of the quarterly results of operations for the years ended October 31, 2003 and 2002.

		First		Second		Third		Fourth
		Quarter		Quarter		Quarter		Quarter
Revenues
	2003	$	28,619,000	$	29,329,000	$	30,599,000	$	33,636,000
	2002	$	29,791,000	$	30,669,000	$	30,848,000	$	31,576,000
Gross Profit
	2003	$	7,918,000	$	8,492,000	$	8,217,000	$	9,751,000
	2002	$	8,303,000	$	9,034,000	$	8,441,000	$	8,855,000
Net income
	2003	$	254,000	$	517,000	$	253,000	$	744,000
	2002	$	258,000	$	751,000	$	253,000	$	946,000
Earnings per share
Basic
	2003	$	0.03	$	0.05	$	0.03	$	0.08
	2002	$	0.03	$	0.08	$	0.03	$	0.10
Diluted
	2003	$	0.03	$	0.05	$	0.03	$	0.08
	2002	$	0.03	$	0.08	$	0.03	$	0.10
Weighted Average Shares Outstanding
Basic
	2003		9,714,000		9,714,000		9,714,000		9,714,000
	2002		9,714,000		9,714,000		9,714,000		9,714,000
Diluted
	2003		9,730,000		9,750,000		9,756,000		9,810,000
	2002		9,725,000		9,737,000		9,728,000		9,716,000

F-27

Champion Industries, Inc. and Subsidiaries

Schedule II

Valuation and Qualifying Accounts

Years Ended October 31, 2003, 2002 and 2001

					Additions
	Balance at		Balances of		charged to					Balance
	Beginning		acquired		costs and					at end
Description	of period		Companies		Expenses (2)		Deductions (1)			of period
2003
Allowance for doubtful accounts	$	1,397,491	$	—	$	336,291	$	(542,786	)	$	1,190,996
2002
Allowance for doubtful accounts	$	1,432,304	$	—	$	363,328	$	(398,141	)	$	1,397,491
2001
Allowance for doubtful accounts	$	1,508,536	$	65,000	$	1,214,784	$	(1,356,016	)	$	1,432,304

(1)	Uncollectable accounts written off, net of recoveries
(2)	In 2001, $509,042 was charged to expense relating to the Company’s restructuring and profitability enhancement plan.

F-28 EX-10.1 3 w93425exv10w1.htm EXHIBIT 10.1

10.1

Business Loan Agreement, $1,440,000 commercial loan between Bourque Printing Company and Hibernia National Bank together with promissory note dated as of March 19, 2003.

BUSINESS LOAN AGREEMENT

Borrower:	Bourque Printing, Inc. (TIN: 72-0714729)
	13112 S. Choctaw Drive Baton Rouge, LA 70815
Lender:	Hibernia National Bank Attn: Loan Administration Dept. 313 Carondelet Street x New Orleans, LA 70130

THIS BUSINESS LOAN AGREEMENT dated March 19, 2003, is made and executed between Bourque Printing, Inc. (“Borrower”), Champion Industries, Inc. (“Guarantor”) and Hibernia National Bank (“Lender”) on the following terms and conditions. Borrower has applied to Lender for a 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. This Agreement shall apply to any and all present and future loans, loan advances, extension of credit, financial accommodations and other agreements and undertakings of every nature and kind that may be entered into by and between Borrower and Lender now and in the future.

APPLICATION FOR AND PURPOSE OF THE LOAN. Borrower has applied to Lender for a Loan in the aggregate principal amount of $1,440,000 for the following purpose: To finance the purchase of the land and building located at 10848 Airline Hwy., Baton Rouge, LA.

BORROWER’S NOTE. Lender has agreed to extend a Loan to Borrower in the amount of $1,440,000.00 subject to the terms and conditions of this Agreement and Borrower’s attached Note. Borrower agrees to be bound and obligated under the terms and conditions of this Agreement and Borrower’s Note.

TERM. This Agreement shall be effective as of March 19, 2003, 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 such time as the parties may agree in writing to terminate this Agreement.

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) the Guaranty; and 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.

Real Estate Documents. Lender shall have received a current appraisal of the Collateral supporting a loan-to-value ratio equal to or less than 75%. Borrower shall have provided Lender with the following, in form and substance acceptable to Lender in its sole discretion: (1) a Phase I Environmental Audit of the Collateral; (3) a mortgagee’s title insurance policy for that portion of the Collateral comprising real property, insuring Lender’s first mortgage lien on such Collateral’ in an amount equal to $1,440,000, and containing only those exceptions acceptable to Lender, in its sole discretion; and (4) evidence that Borrower has complied with its insurance obligations hereunder with respect to the Collateral.

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, including without limitation the properly certified resolution of the Guarantor authorizing execution and delivery of the Guaranty.

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 Louisiana. 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 an office at 13112 S. Choctaw Drive, Baton Rouge, Louisiana 70815. Unless Borrower has designated otherwise in writing, the principal office is the 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, do not require the consent or approval of any other person, regulatory authority, or governmental body, and do not conflict with, result in a violation of, or constitute a default under (1) any provision of Borrower’s articles of incorporation or organization, or bylaws, or 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. Borrower has the power and authority to enter into the Note and the Related Documents and to grant collateral as security for the Loan. Borrower has the further power and authority to own and to hold all of Borrower’s assets and properties, and to carry on Borrower’s business as presently conducted.

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 Borrower’s 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 t2) 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. There are no suits or proceedings pending, or to the knowledge of Borrower, threatened against or affecting Borrower or Borrower’s assets, before any court or by any governmental agency, other than those previously disclosed to Lender in writing, which, if adversely determined, may have a material adverse effect on Borrower’s financial condition or business.

Taxes. To the best of 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.

Information. All information heretofore or contemporaneously herewith furnished by Borrower to Lender for the purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all information hereafter furnished by or on behalf of Borrower to Lender will be, true and accurate in every material respect on the date as of which such information is dated or certified; and none of such information is or will be incomplete by omitting to state any material fact necessary to make such information not misleading.

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.

Commercial Purposes. Borrower intends to use the Loan proceeds solely for business or commercially related purposes.

Employee Benefit Plans. Each employee benefit plan as to which Borrower may have any liability complies in all material respects with all applicable requirements of law and regulations, and (1) no Reportable Event nor Prohibited Transaction (as defined in ERISA) has occurred with respect to any such plan, (2) Borrower has not withdrawn from any such plan or initiated steps to do so, (3) no steps have been taken to terminate any such plan or to appoint a trustee to administer such a plan, and (4) there are no unfunded liabilities other than those previously disclosed to Lender in writing.

Investment Company Act Borrower is not an “investment company” or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.

Public Utility Holding Company Act. Borrower is not a “holding company”, or a “subsidiary company” of a “holding company”, or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company”, within the meaning of the Public Utility Holding Company Act of 1935, as amended.

Regulations T and U. Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T and U of the Board of Governors of the Federal Reserve System).

Claims and Defenses. There are no defenses or counterclaims, offsets or other adverse claims, demands or actions of any kind, personal or otherwise, that Borrower, any Grantor, or any Guarantor could assert with respect to the Note, Loan, this Agreement, or the Related Documents.

AFFIRMATIVE COVENANTS. Borrower and Guarantor covenant and agree with Lender that, so long as this Agreement remains in effect, Borrower and Guarantor will:

Repayment. Repay the Loan in accordance with its terms and the terms of this Agreement and the Guaranty, as applicable.

Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower’s and Guarantor’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. In addition, Borrower shall provide Lender with written notice of the occurrence of any Event of Default, the occurrence of any Reportable Event under, or the institution of steps by Borrower or Guarantor to withdraw from, or the institution of any steps to terminate, any employee benefit plan as to which Borrower or Guarantor may have any liability.

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 ninety (90) days after the end of each fiscal year, Guarantor’s balance sheet and income statement for the year ended, audited by a certified public accountant reasonably satisfactory to Lender.

Interim Statements. As soon as available, but in no event later than 45 days after the end of each fiscal quarter, Borrower’s balance sheet and profit and loss statement for the period ended, prepared by Borrower.

Additional Requirements. Compliance Certificate. Borrower and Guarantor covenant and agree to furnish to Lender concurrently with the delivery of quarterly financial statements, a certificate of a financial officer setting forth reasonably detailed calculations demonstrating compliance with financial covenants required hereunder in form and substance acceptable 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 or Guarantor, as applicable, as being true and correct.

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

Financial Covenants and Ratios. Guarantor shall comply with the following covenants and ratios:

Other Requirements. Total Liabilities to Tangible Net Worth. Guarantor covenants and agrees with Lender to maintain a ratio of Total Liabilities to Tangible Net Worth of no more than 2.50, where “Total Liabilities” means all of the liabilities of Guarantor, including capital lease obligations. “Tangible Net Worth” means the total assets of Guarantor (less reserves) excluding all intangible assets (i.e., goodwill, trademarks, patents, copyrights, organizational expenses, and similar intangible expenses, but including leaseholds and leasehold improvements) less Total Liabilities.

Debt Service Coverage. Guarantor covenants and agrees with Lender to maintain a “Debt Service Coverage” ratio of no less than 1.25, calculated using the following formula:

       EBITDA divided by Interest Expense + Current maturities of long term debt

The term “EBITDA” means, for a period, the sum of the net income of Guarantor before Interest Expense, income taxes, depredation, and amortization for the period, determined in accordance with generally accepted accounting principles, applied on a consistent basis. The term “Interest Expense” means the sum of the total interest expense paid by Guarantor during a period, including the interest portion of lease payments under Capitalized Leases, determined in accordance with generally accepted accounting principles, applied on a consistent basis. The term “Capitalized Leases” means a lease that has been or should be capitalized on the books of Guarantor in accordance with generally accepted accounting principles, applied on a consistent basis.

Testing Frequency. Guarantor shall be tested as of the end of each calendar quarter for compliance with these Financial Covenants after receipt of the financial statements of Guarantor for each calendar quarter-end. Except as provided above, all computations made to determine compliance with the requirements contained in this paragraph shall be made in accordance with generally accepted accounting principles, applied on a consistent basis, and certified by Guarantor as being true and correct.

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.

Guaranty. Prior to disbursement of any Loan proceeds, Borrower shall furnish an executed guaranty of the Loan in favor of Lender, executed by the Guarantor, on Lender’s forms, and in the amounts and under the conditions spelled out in the guaranty agreement.

Guarantor	Amount
Champion Industries, Inc.	Unlimited

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, and in all other loan agreements now or in the future existing between Borrower and any other party. 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; 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.

Change of Location. Immediately notify Lender in writing of any additions to or changes in the location of Borrower’s businesses.

Title to Assets and Property. Maintain good and marketable title to all of Borrower’s assets and properties.

Notice of Default, Litigation and ERISA Matters. Forthwith upon learning of the occurrence of any of the following, Borrower shall provide Lender with written notice thereof, describing the same and the steps being taken by Borrower with respect thereto: (1) the occurrence of any Event of Default, or (2) the institution of, or any adverse determination in, any litigation, arbitration proceeding or governmental proceeding, or (3) the occurrence of a Reportable Event under, or the institution of steps by Borrower to withdraw from, or the institution of any steps to terminate, any employee benefit plan as to which Borrower may have any liability.

Other Information. From time to time Borrower will provide Lender with such other information as Lender may reasonably request.

Employee Benefit Plans. So long as this Agreement remains in effect, Borrower will maintain each employee benefit plan as to which Borrower may have any liability, in compliance with all applicable requirements of law and regulations.

Compliance Certificates. Unless waived in writing by Lender, provide Lender at least annually, with a certificate executed by Borrower’s chief 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. Borrower recognizes and agrees that Lender may incur certain expenses in connection with Lender’s exercise of rights under this Agreement. 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, Encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral, including without limitation, the purchase of insurance protecting only Lender’s interest in any Collateral. Lender may further take such other action or actions and incur such additional expenditures as Lender may deem to be necessary and proper to cure or rectify any actions or inactions on Borrower’s part as may be required under this Agreement. Nothing under this Agreement or otherwise shall obligate Lender to take any such actions or to incur any such additional expenditures on Borrower’s behalf, or as making Lender in any way responsible or liable for any loss, damage, or injury to any Collateral, to Borrower, or to any other person or persons, resulting from Lender’s election not to take such actions or to incur such additional expenses. In addition, Lender’s election to take any such actions or to incur such additional expenditures shall not constitute a waiver or forbearance by Lender of any Event of Default under this Agreement. 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. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender:

Indebtedness and Liens. (1) Except for indebtedness incurred in the ordinary 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 Borrower’s assets (except as allowed as Permitted Liens and except in the ordinary course of business), or (3) sell with recourse any of Borrower’s accounts outside the ordinary course of business.

Continuity of Operations. (1) Engage in any business activities substantially different than those in which Borrower is presently engaged or (2) cease operations, liquidate, merge, transfer, acquire or consolidate with any other entity, change its name, dissolve or transfer or sell Collateral out of the ordinary course of business.

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

Agreements. Borrower will not enter into any agreement containing any provisions which would violate or breach the performance of Borrower’s obligations and financial covenants set forth herein.

DEPOSIT ACCOUNTS. As collateral security for repayment of Borrower’s Note and all renewals and extensions, as well as to secure any and all other loans, notes, indebtedness and obligations that Borrower may now and in the future owe to Lender or incur in Lender’s favor, whether direct or indirect, absolute or contingent, due or to become due, of any nature and kind whatsoever (with the exception of any indebtedness under a consumer credit card account), and to the extent permitted by law, Borrower is granting Lender a continuing security interest in any and all funds that Borrower may now and in the future have on deposit with Lender or in certificates of deposit or other deposit accounts as to which Borrower is an account holder (with the exception of IRA, pension, and other tax-deferred deposits). Borrower further agrees that, to the extent permitted by law, Lender may at any time apply any funds that Borrower may have on deposit with Lender or in certificates of deposit or other deposit accounts as to which Borrower is an account holder against the unpaid balance of Borrower’s Note and any and all other present and future indebtedness and obligations that Borrower may then owe to Lender, in principal, interest, fees, costs, expenses, and reasonable attorneys’ fees.

EVENTS OF DEFAULT. The following actions or inactions or both shall constitute Events of Default under this Agreement:

Default Under the Note. Should Borrower default in the payment of principal or interest under the Note or any of the Indebtedness.

Default Under this Agreement. Should Borrower violate, or fail to comply fully with any of the terms and conditions of, or default under this Agreement.

Default Under other Agreements. Should any default occur or exist under any Related Document which directly or indirectly secures repayment of the Loan and any of the Indebtedness.

Other Defaults In Favor of Lender. Borrower or any guarantor defaults under any other loan, extension of credit, security right, instrument, document, or agreement, or obligation in favor of Lender.

Default in Favor of Third Parties. Should Borrower or any Guarantor 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 Borrower’s property, or any Guarantor’s ability to perform their respective obligations under this Agreement, or any Related Document, or pertaining to the Indebtedness.

Insolvency. Should the suspension, failure or insolvency, however evidenced, of Borrower or any Guarantor occur or exist.

Readjustment of Indebtedness. Should proceedings for readjustment of indebtedness, reorganization, composition or extension under any insolvency law be brought by or against Borrower or any Guarantor.

Assignment for Benefit of Creditors. Should Borrower or any Guarantor file proceedings for a respite or make a general assignment for the benefit of creditors.

Receivership. Should a receiver of all or any part of Borrower’s property, or the property of any Guarantor, be applied for or appointed.

Dissolution Proceedings. Proceedings for the dissolution or appointment of a liquidator of Borrower or any guarantor are commenced.

False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf, or made by Guarantor, the Note, in connection with the obtaining of the Loan evidenced by the Note or any security document directly or indirectly securing repayment of the Note 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.

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.

Lender shall have the right at its sole option, to accelerate payment of Borrower’s Note in full, in principal, interest, costs, expenses, attorneys’ fees, and other fees and charges, as well as to accelerate the maturity of any and all other loans and/or obligations that Borrower may then owe to Lender whether direct or indirect, or by way of assignment or purchase of a participation interest, and whether absolute or contingent, liquidated or unliquidated, voluntary or involuntary, determined or undetermined, due or to become due, and whether now existing or hereafter arising, and whether Borrower is obligated alone or with others on a “solitary” or “joint and several” basis, as a principal obligor or as a surety, of every nature and kind whatsoever, whether any such indebtedness may be barred under any statute of limitations or otherwise may be unenforceable or voidable for any reason whatsoever.

Lender shall have the additional right, again at its sole option, to file an appropriate collection action against Borrower and/or against any guarantor or guarantors of Borrower’s Loan and Note, and/or to proceed or exercise any rights against any Collateral then securing repayment of Borrower’s Loan and Note. Borrower and each guarantor further agree that Lender’s remedies shall be cumulative in nature and nothing under this Agreement or otherwise, shall be construed as to limit or restrict the options and remedies available to Lender following any event of default under this Agreement 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.

Notwithstanding the foregoing, in the event of a breach by Borrower under the paragraphs entitled “Financial Records”, “Financial Statements”, “Financial Covenants and Ratios”, “Operations”, “Change in Location” and “Compliance Certificates”, Lender agrees to give Borrower written notice of such breach and Borrower shall have ten (10) days after the giving of such notice by Lender to cure the breach before being in default under this Agreement.

Additional Documents. Borrower shall provide Lender with the following additional documents:

Corporate Resolution. Borrower has provided or will provide Lender with a certified copy of resolutions property adopted by Borrower’s Board of Directors, and certified by Borrower’s corporate secretary, assistant secretary, or other authorized officer, under which Borrower’s Board of Directors authorized one or more designated officers or employees to execute this Agreement, the Note and any and all Security Agreements directly or indirectly securing repayment of the same, and to consummate the borrowings and other transactions as contemplated under this Agreement, and to consent to the remedies following any default by Borrower as provided in this Agreement and in any Security Agreements.

Opinion of Counsel. When required by Lender, Borrower has provided or will provide Lender with an opinion of Borrower’s counsel certifying to and that: (a) Borrower’s Note, any Security Agreements and this Agreement constitute valid and binding obligations on Borrower’s part that are enforceable in accordance with their respective terms; (b) Borrower is validly existing and in good standing; (c) Borrower has authority to enter into this Agreement and to consummate the transactions contemplated under this Agreement, and (d) such other matters as may have been requested by Lender or by Lender’s counsel.

DEFINITION OF INDEBTEDNESS EXPANDED. The word “Indebtedness” shall also mean and include individually, collectively, interchangeably and without limitation, any and all present and future loans, extensions of credit, liabilities and/or obligations of every nature and kind whatsoever that Borrower, and/or Grantor if Borrower and Grantor are not the same party, may now and in the future owe to or incur in favor of Lender and its successors or assigns, including without limitation, indebtedness under any Note described herein, whether such loans, extensions of credit liabilities and/or obligation are direct or indirect, or by way of assignment, and whether related or unrelated, or whether committed or purely discretionary, and whether absolute or contingent, voluntary or involuntary, determined or undetermined, liquidated or unliquidated, due or to become due. together with interest, costs, expenses, attorneys’ fees and other fees and charges, whether or not any such indebtedness may be barred under any statute of limitations or may be otherwise unenforceable or voidable for any reason.

Loan to Value. The Borrower shall at all times maintain a ratio of the outstanding principal balance of the Loan to the appraised value of the Property of not more than 75% as of the last day of each calendar year.

Miscellaneous Provisions. The following miscellaneous provisions are a part of this Agreement:

Amendments. No amendment, modification, consent or waiver of any provision of this Agreement, and no consent to any departure by Borrower there from, shall be effective unless the same shall be in writing signed by a duly authorized officer of Lender, and then shall be effective only as to the specific instance and for the specific purpose for which given.

Attorneys’ Fees; Expenses. Borrower agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s reasonable 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 reasonable attorneys’ fees and legal expenses whether or not there is a lawsuit, including reasonable 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.

Borrower Information. Borrower consents to the release of information on or about Borrower by Lender in accordance with any court order, law or regulation and in response to credit inquiries concerning Borrower.

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 limitation whatsoever, to any one 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, construed and enforced in accordance with federal law and the laws of the State of Louisiana. This Agreement has been accepted by Lender in the State of Louisiana.

Non-Liability of Lender. The relationship between Borrower and Lender created by this Agreement is strictly a debtor and creditor relationship and not fiduciary in nature, nor is the relationship to be construed as creating any partnership or joint venture between Lender and Borrower. Borrower is exercising Borrower’s own judgment with respect to Borrower’s business. A11 information supplied to Lender is for Lender’s protection only and no other party is entitled to rely on such information. There is no duty for Lender to review, inspect, supervise or inform Borrower of any matter with respect to Borrower’s business. Lender and Borrower intend that Lender may reasonably rely on all information supplied by Borrower to Lender, together with all representations and warranties given by Borrower to Lender, without investigation or confirmation by Lender and that any investigation or failure to investigate will not diminish Lender’s right to so rely.

Indemnification of Lender. Borrower agrees to indemnify, to defend and to save and hold Lender harmless from any and all claims, suits, obligations, damages, losses, costs and expenses (including, without limitation, Lender’s reasonable attorneys’ fees in an amount not exceeding 25.000% of the principal balance due on the Loan), demands, liabilities, penalties, fines and forfeitures of any nature whatsoever that may be asserted against or incurred by Lender, its officers, directors, employees, and agents arising out of, relating to, or in any manner occasioned by this Agreement and the exercise of the rights and remedies granted Lender under this, as well as by: (a) the ownership, use, operation, construction, renovation, demolition, preservation, management, repair, condition, or maintenance of any part of the Collateral; (b) the exercise of any of Borrower’s rights collaterally assigned and pledged to Lender hereunder; (c) any failure of Borrower to perform any of its obligations hereunder; and/or (d) any failure of Borrower to comply with the environmental and ERISA obligations, representations and warranties set forth herein. The foregoing indemnity provisions shall survive the cancellation of this Agreement as to all matters arising or accruing prior to such cancellation and the foregoing indemnity shall survive in the event that Lender elects to exercise any of the remedies as provided under this Agreement following default hereunder. Borrower’s indemnity obligations under this section shall not in any way be affected by the presence or absence of covering insurance, or by the amount of such insurance or by the failure or refusal of any insurance carrier to perform any obligation on its part under any insurance policy or policies affecting the Collateral and/or Borrower’s business activities. Should any claim, action or proceeding be made or brought against Lender by reason of any event as to which Borrower’s indemnification obligations apply, then, upon Lender’s demand, Borrower, at its sole cost and expense, shall defend such claim, action or proceeding in Borrower’s name, if necessary, by the attorneys for Borrower’s insurance carrier (if such claim, action or proceeding is covered by insurance), or otherwise by such attorneys as Lender shall approve. Lender may also engage its own attorneys at its reasonable discretion to defend Borrower and to assist in its defense and Borrower agrees to pay the fees and disbursements of such attorneys.

Counterparts. This Agreement may be executed in multiple counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts, taken together, shall constitute one and the same Agreement.

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. To give Borrower any notice required under this Agreement, Lender may hand deliver or mail the notice to Borrower at Borrower’s last address in Lender’s records. If there is more than one Borrower under this Agreement, notice to a single Borrower shall be considered as notice to all Borrowers. To give Lender any notice under this Agreement, Borrower (or any Borrower) shall mail the notice to Lender by registered or certified mail at the address specified in this Agreement, or at any other address that Lender may have given to Borrower (or any Borrower) by written notice as provided in this section. All notices required or permitted under this Agreement must be in writing and will be considered as given on the day it is delivered by hand or deposited in the U.S. Mail as provided herein.

Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable. This Agreement shall be construed and enforceable as if the illegal, invalid or unenforceable provision had never comprised a part of it, and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as a part of this Agreement, a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and legal, valid and enforceable.

Sole Discretion of Lender. Whenever Lender’s consent or approval is required under this Agreement, the decision as to whether or not to consent or approve shall be in the sole and exclusive discretion of Lender and Lender’s decision shall be final and conclusive.

Subsidiarles 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 contained by or on behalf of Borrower 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.

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.

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 Louisiana Commercial Laws (La. R.S. 10: 9-101, et seq.). Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement:

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 or to be attached to this Business Loan Agreement from time to time.

Borrower. The word “Borrower” means Bourque Printing, Inc., and all other persons and entities signing the Note in whatever capacity.

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 laws, rules, or regulations adopted pursuant thereto.

ERISA. The word “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and including all regulations and published interpretations of the act.

Event of Default. The words “Event of Default” mean individually, collectively, and interchangeably 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 Champion Industries, Inc., and any guarantor, surety, or accommodation party of any or all of the Loan, and, in each case, Borrower’s successors, assigns, heirs, personal representatives, executors and administrators of any guarantor, surety, or accommodation party.

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, in principal, interest, costs, expenses and attorneys’ fees and all other fees and charges together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents, as such definition is expanded as previously set forth in this Agreement.

Lender. The word “Lender” means Hibernia National Bank, its successors and assigns, and any subsequent holder or holders of Borrower’s Loan and Note, or any interest therein.

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, and further including any and all subsequent amendments, additions, substitutions, renewals and refinancings of any of Borrower’s Loans.

Note. The word “Note” means the Note executed by Bourque Printing, Inc. in the principal amount of $1,440,000.00 dated March 19, 2003, together with all renewals, extensions, modifications, refinancings, consolidations and substitutions of and for the note or credit agreement.

Permitted Liens. The words “Permitted Liens” mean (a) liens and security interests securing Indebtedness owed by Borrower to Lender; (b) liens for taxes, assessments, or similar charges either not yet due or being contested in good faith; (c) 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; (d) 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”; (e) liens and security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (f) 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 individually, collectively, interchangeably and 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, individually, collectively, and interchangeably, 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 MARCH 19, 2003.

BORROWER:
BOURQUE PRINTING, INC.
By:
Its:
GUARANTOR:
CHAMPION INDUSTRIES, INC.
By:
Its:
LENDER:
HIBERNIA NATIONAL BANK
By:
	Authorized Signer

PROMISSORY NOTE

Borrower:	Bourque Printing, Inc. (TIN: 72-0714729) 13112 S. Choctaw Drive Baton Rouge, LA 70815
Lender:	Hibernia National Bank Attn: Loan Administration Dept. 313 Carondelet Street New Orleans, LA 70130

Principal Amount $1,440,000.00 Initial Rate: 4.250% Date of Note: March 19, 2003

PROMISE TO PAY. Bourque Printing, Inc. (“Borrower”) promises to pay to the order oF Hibernia National Bank (“Lender”), in lawful money of the United States of America the sum of One Million Four Hundred Forty Thousand & 00/100 Dollars(U.S. S1,440,000.00), together with simple interest assessed on a variable rate basis at the rate per annum equal to the Index provided herein, as the Index under this Note may he adjusted from time to time, one or more times, with Interest being assessed on the unpaid principal balance of this Note as outstanding from time to time, commencing on March 19, 2003 and continuing until this Note is paid in full.

PAYMENT. Subject to any payment changes resulting from changes in the Index, Borrower will pay this loan on demand. Payment in full is due immediately upon Lender’s demand. If no demand is made, Borrower will pay this loan in 83 regular payments of S10,876.57 each and one irregular last payment estimated at $892,791.97. Borrower’s first payment is due April 19, 2003, and all subsequent payments are due on the same day of each month after that. Borrower’s final payment due on February 2010, may be greater if Borrower does not make payments as scheduled. Unless otherwise agreed or required by applicable law, payments will be applied first to accrued unpaid Interest, then to principal, and any remaining amount to any unpaid collection costs and late charges. The annual interest rate for this Note is computed on a 365/360 basis; that is, by applying the ratio of the 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 WALL STREET JOURNAL PRIME RATE (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 notice to 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. Borrower understands that Lender may make loans based on other rates as weil. The Index currently is 4.250% 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 4.250% per annum. Under no circumstances will the 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 payments 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 prepay this Note in full at any time by paying the then unpaid principal balance of this Note, plus accrued simple interest and any unpaid late charges through date of prepayment. If Borrower prepays this Note in full, or if Lender accelerates payment, Borrower understands that, unless otherwise required by law, any prepaid fees or charges will not be subject to rebate and will be earned by Lender at the time this Note is signed. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments under the payment schedule. 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 computed amounts, including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Hibernia National Bank, P.O. Box 61540 New Orleans, LA 70161.

LATE CHARGE. If Borrower fails to pay any payment under this Note in full within 10 days of when due, Borrower agrees to pav Lender a late payment fee in an amount equal to 10.000% of the delinquent interest due or $29.00, whichever is greater. Late charges will not be assessed following declaration of default and acceleration of the maturity of this Note.

INTEREST AFTER DEFAULT. If Lender declares this Note to be in default, Lender has the right prospectively to adjust and fix the simple interest rate under this Note until this Note is paid in full, as follows: (A) If the original principal amount of this Note is $250,000 or less, the fixed default interest rate shall be equal to eighteen (18%) percent per annum, or three (3%) per cent per annum in excess of the interest rate under this Note, whichever is greater. (B) If the original principal amount of this Note is more than $250,000, the fixed default-interest rate shall be equal to twenty-one (21%) percent per annum, or three (3%) per cent per annum in excess of the interest rate under this Note at the time of default, whichever is greater.

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

Default Under Loan Agreement. If an event of default occurs or exists under the terms of Borrower’s Loan Agreement in favor of Lender.

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

Default Under Security Agreements. Should Borrower or any guarantor violate, w fail to comply fully with any of the terms and conditions of, or default under any security right, instrument, document, or agreement directly or indirectly securing repayment of this Note.

Other Defaults in Favor of Lender. Should Borrower or any guarantor of this Note default under any other loan, extension of credit, security right, instrument, document, or agreement, or obligation in favor of Lender.

Default in Favor of Third Parties. Should Borrower or any guarantor 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 affect any property or other collateral directly or indirectly securing repayment of this Note.

Insolvency. Should the suspension, failure or insolvency, however evidenced, of Borrower or any Guarantor of this Note occur or exist.

Death or Interdiction. Should any guarantor of this Note die or be interdicted.

Readjustment of Indebtedness. Should proceedings for readjustment of indebtedness, reorganization, bankruptcy, composition or extension under any insolvency law be brought by or against Borrower or any guarantor.

Assignment for Benefit of Creditors. Should Borrower or any guarantor file proceedings for a respite or make a general assignment for the benefit of creditors.

Receivership. Should a receiver of all or any part of Borrower’s property, or the property of any guarantor, be applied for or appointed.

Dissolution Proceedings. Proceedings for the dissolution or appointment of a liquidator of Borrower or any guarantor are commenced.

False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf 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.

Material Adverse Change. Should any material adverse change occur in the financial condition of Borrower or any guarantor of this Note or should any material discrepancy exist between the financial statements submitted by Borrower or any guarantor and the actual financial condition of Borrower or such guarantor.

Insecurity. Lender in good faith believes itself insecure with regard to repayment of this Note.

LENDER’S RIGHTS UPON DEFAULT. Should any one or more default events occur or exist under this Note as provided above, Lender shall have the right, at Lenders sole option, to declare formally this Note to be in default and to accelerate the maturity and insist upon immediate payment in full of the unpaid principal balance then outstanding under this Note, plus accrued interest, together with reasonable attorneys’ fees, costs, expenses and other fees and charges as provided herein. Lender shall have the further right, again at Lenders sole

option, to declare formal default and to accelerate the maturity and to insist upon immediate payment in full of each and every other loan, extension of credit, debt, liability and/or obligation of every nature and kind that Borrower may then owe to Lender, whether direct or indirect or by way of assignment, and whether absolute or contingent, liquidated or unliquidated, voluntary or involuntary, determined or undetermined, secured or unsecured, whether Borrower is obligated alone or with others on a “solidary” or “joint and several” basis, as a principal obligor or otherwise, all without further notice or demand, unless Lender shall otherwise elect.

ATTORNEYS’ FEES; EXPENSES. If Lender refers this Note to an attorney for collection, or files suit against Borrower to collect this Note, or if Borrower files for bankruptcy or other relief from creditors, Borrower agrees to pay Lender’s reasonable attorneys’ fees.

WAIVE JURY. BORROWER AND LENDER HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGT BY EITHER BORROWER OR LENDER AGAINST THE OTHER.

GOVERNING LAW. This Note will be governed by, construed and enforced in accordance with federal law and the laws of the State of Louisiana. This Note has been accepted by Lender in the State of Louisiana.

NSF CHECK CHARGE. In the event that Borrower makes any payment under this Note by check and Borrower’s check is returned to Lender unpaid due to nonsufficient funds in Borrower’s deposit account, Borrower agrees to pay Lender an additional NSF check charge in an amount of $29.00.

DEPOSIT ACCOUNTS. As collateral security for repayment of this Note and all renewals and extensions, as well as to secure any and all other loans, notes, indebtedness and obligations that Borrower may now and in the future owe to Lender or incur in Lender’s favor, whether direct or indirect, absolute or contingent, due or to become due, of any nature and kind whatsoever (with the exception of any indebtedness under a consumer credit card account), and to the extent permitted by law, Borrower is granting Lender a continuing security interest in any and all funds that Borrower may now and in the future have on deposit with Lender or in certificates of deposit or other deposit accounts as to which Borrower is an account holder (with the exception of IRA, pension, and other tax-deferred deposits). Borrower further agrees that, to the extent permitted by law, Lender may at any time apply any funds that Borrower may have on deposit with Lender or in certificates of deposit or other deposit accounts as to which Borrower is an account holder against the unpaid balance of this Note and any and all other present and future indebtedness and obligations that Borrower may then owe to Lender, in principal, interest, fees, costs, expenses, and reasonable attorneys’ fees.

FINANCIAL STATEMENTS. Borrower agrees to provide Lender with such financial statements and other related information at such frequencies and in such detail as Lender may reasonably request.

WAIVERS. Borrower and each guarantor of this Note hereby waive demand, presentment for payment, protest, notice of protest and notice of nonpayment, and all pleas of division and discussion, and severally agree that their obligations and liabilities to Lender hereunder shall be on a “solidary” or “joint and several” basis. Borrower and each guarantor further severally agree that discharge or release of any party who is or may be liable to Lender for the indebtedness represented hereby, or the release of any collateral directly or

indirectly securing repayment hereof, shall not have the effect of releasing any other party or parties, who shall remain liable to Lender, or of releasing any other collateral that is not expressly released by Lender. Borrower and each guarantor additionally agree that Lender’s acceptance of payment other than in accordance with the terms of this Note, or Lender’s subsequent agreement to extend or modify such repayment terms, or Lender’s failure or delay in exercising any rights or remedies granted to Lender, shall likewise not have the effect of releasing Borrower or any other party or parties from their respective obligations to Lender, or of releasing any collateral that directly or indirectly secures repayment hereof. In addition, any failure or delay on the part of Lender to exercise any of the rights and remedies granted to Lender shall not have the effect of waiving any of Lender’s rights and remedies. Any partial exercise of any rights and/or remedies granted to Lender shall furthermore not be construed as a waiver of any other rights and remedies; it being Borrower’s intent and agreement that Lender’s rights and remedies shall be cumulative in nature. Borrower and each guarantor further agree that, should any default event occur or exist under this Note, any waiver or forbearance on the part of Lender to pursue the rights and remedies available to Lender, shall be binding upon Lender only to the extent that Lender’s specifically agrees to any such waiver or forbearance in writing. A waiver or forbearance on the part of Lender as to one default event shall not be construed as a waiver or forbearance as to any other default. Borrower and each guarantor of this Note further agree that any late charges provided for under this Note will not be charges for deferral of time for payment and will not and are not intended to compensate Lender’s for a grace or cure period, and no such deferral, grace or cure period has or will be granted to Borrower in return for the imposition of any late charge. Borrower recognizes that Borrower’s failure to make timely payment of amounts due under this Note will result in damages to Lender, including but not limited to Lender’s loss of the use of amounts due, and Borrower agrees that any late charges imposed by Lender hereunder will represent reasonable compensation to Lender for such damages. Failure to pay in full any installment or payment timely when due under this Note, whether or not a late charge is assessed, will remain and shall constitute an Event of Default hereunder.

SUCCESSORS AND ASSIGNS LIABLE. Borrower’s and each guarantor’s obligations and agreements under this Note shall be binding upon Borrowers and each guarantor’s respective successors, heirs, legatees, devisees, administrators, executors and assigns. The rights and remedies granted to Lender under this Note shall inure to the benefit of Lender’s successors and assigns, as well as to any subsequent holder or holders of this Note.

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

SEVERABILITY. If any provision of this Note is held to be invalid, illegal or unenforceable by any court, that provision shall be deleted from this Note and the balance of this Note shall be interpreted as if the deleted provision never existed.

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

NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES. Please notify us if we report any inaccurate information about your account(s)

to a consumer reporting agency. Your written notice describing the specific inaccuracy(ies) should be sent to us at the following address: Hibernia National Bank, Loan Services, P.O. Box 61007 New Orleans, LA 70161

APPUCABLE LENDING LAW. This business or commercial Note is subject to La. R.S. 9:3509, etseq.

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

BORROWER:

BOURQUE PRINTING,INC.

Its:

EX-10.2 4 w93425exv10w2.htm EXHIBIT 10.2

10.2

Commercial Security Agreement, $450,050 commercial loan between Champion Industries, Inc. and First Century Bank dated as of March 2, 2003.

DEBTOR NAME AND ADDRESS	SECURED PARTY NAME AND ADDRESS
CHAMPION INDUSTRIES, INC	FIRST CENTURY BANK, N.A.
P. O. BOX 2968	500 FEDERAL STREET
HUNTINGTON, WV 25703	BLUEFIELD, WV 24701

55-0717455

Type: o individual o partnership n corporation o          
State of organization/registration (if applicable) WV          
o If checked, refer to addendum for additional Debtors and signatures.

COMMERCIAL SECURITY AGREEMENT

The date of this Commercial Security Agreement (Agreement) is 04-02-2003         .

SECURED DEBTS. This Agreement will secure all sums advanced by Secured Party under the terms of this Agreement and the payment and performance of the following described Secured Debts that (check one) o Debtor o                  _______________________________________________________________________(Borrower) owes to Secured party:
	n Specific Debts. The following debts and all extensions, renewals, refinancings, modifications, and replacements (describe): LOAN # 1393995 IN THE AMOUNT OF $450,050.00 DATED 4/2/03
	o All Debts. All present and future debts. even if this Agreement is not referenced, the debts are also secured by other collateral, or the future debt is unrelated to or of a different type than the current debt. Nothing in this Agreement is a commitment to make future loans or advances.

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

PROPERTY DESCRIPTION. The Property is described as follows:

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

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

o Equipment: All equipment including, but not limited to, machinery, vehicles, furniture, fixtures, manufacturing equipment, farm machinery and equipment, shop equipment, office and record keeping equipment, parts, and tools. The Property

includes any equipment described in a list or schedule Debtor gives to Secured Party, but such a list is not necessary to create a valid security interest in all of Debtor’s equipment.

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

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

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

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

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

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

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

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

DEMO HEIDELBERG QMD146-4 PRO OFFSET PRESS S/N 991619 WITH ALL STANDARD EQUIPMENT

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

SIGNATURES. Debtor agrees to the terms on pages 1 and 2 of this Agreement and acknowledges receipt of a copy of this Agreement.

DEBTOR	SECURED PARTY
CHAMPION INDUSTRIES, INC	FIRST CENTURY BANK, N.A.
TODD R. FRY	JEFFERY L. FORLINES
VICE PRESIDENT & CFO	SENIOR VICE PRESIDENT

___________________

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

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

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

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

(1)	Debtor is duly organized and validly existing in all jurisdictions in which Debtor does business;
(2)	The execution and performance of the terms of this Agreement have been duly authorized, have received all necessary governmental approval, and will not violate any provision of law or order;
(3)	Other than previously disclosed to Secured Party, Debtor has not changed Debtor’s name or principal place of business within the last 10 years and has not used any other trade or fictitious name; and
(4)	Debtor does not and will not use any other name without Secured Party’s prior written consent.

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

DUTIES TOWARD PROPERTY. Debtor will protect the Property and Secured Party’s interest against any competing claim. Except as otherwise agreed, Debtor will keep the Property in Debtor’s possession at the address indicated on page 1 of this Agreement. Debtor will keep the Property in good repair and use the Property only for purposed specified on page 1. Debtor will not use the Property in violation of any law and will pay all taxes and assessments levied or assessed against the Property. Secured Party has the right of

reasonable access to inspect the Property, including the right to require Debtor to assemble and make the Property available to Secured Party. Debtor will immediately notify Secured Party of any loss or damage to the Property. Debtor will prepare and keep books, records, and accounts about the Property and Debtor’s business, to which Debtor will not sell, offer to sell, license, lease or otherwise transfer or encumber the Property without Secured Party’s prior written consent. Any disposition of the Property will violate Secured Party’s rights, unless the Property is inventory sold in the ordinary course of business at fair market value. If the Property includes chattel paper or instruments, either as original collateral or as proceeds of the Property, Debtor will record Secured Party’s interest on the face of the chattel paper or instruments. If the Property includes accounts, Debtor will collect all accounts in the ordinary course of business, unless otherwise required by Secured Party. Debtor will keep the proceeds of the accounts, and any goods returned to Debtor, in trust for Secured Party and will not commingle the proceeds or returned goods with any of Debtor’s other property. Secured Party has the right to require Debtor to pay Secured Party the full price on any returned items. Secured Party may require account debtors to make payments under the accounts directly to Secured Party. Debtor will deliver the accounts to Secured Party at Secured Party’s request. Debtor will give Secured Party all statements, reports, certificates, lists of account debtors (showing names, addresses, and amounts owing), invoices applicable to each account, and any other data pertaining to the accounts as Secured Party requests.

If the Property includes farm products, Debtor will provide Secured Party with a list of the buyers, commission merchants, and selling agents to or though whom Debtor may sell the farm products. Debtor authorizes Secured Party to notify any additional parties regarding Secured Party’s interest in Debtor’s farm products, unless prohibited by law. Debtor agrees to plant, cultivate, and harvest crops in due season. Debtor will be in default if any loan proceeds are used for a purpose that will contribute to excessive erosion of highly erodible land or to the conversion of wetland to produce or to make possible the production of an agricultural commodity, further explained in 7 CFR Part 940, Subpart G, Exhibit M. If Debtor pledges the Property to Secured Party (delivers the Property into the possession or control of Secured Party or a designated third party), Debtor will, upon receipt, deliver any proceeds and products of the Property to Secured Party. Debtor will provide Secured party with any noted documents, financial statements, reports, and other information relating to the Property Debtor receives as the owner of the Property.

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

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

AUTHORITY TO PERFORM. Debtor authorizes Secured Party to do anything Secured Party deems reasonably necessary to protect the Property and Secured Party’s interest in the

Property. If Debtor fails to perform any of Debtor’s duties under this Agreement, Secured Party is authorized, without notice to Debtor, to perform the duties or cause them to be performed. These authorizations include, but are not limited to, permission to pay for the repair, maintenance, and preservation of the Property and take any action to realize the value of the Property. Secured Party’s authority to perform for Debtor does not create an obligation to perform, and Secured Party’s failure to perform will not preclude Secured Party from exercising any other rights under the law or this Agreement. If Secured Party performs for Debtor, Secured Party will use reasonable care. Reasonable care will not include any steps necessary to preserve rights against prior parties or any duty to take action in connection with the management of the Property.

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

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

PURCHASE MONEY SECURITY INTEREST. If the Property includes items purchased with the Secured Debts, the Property purchased with the Secured Debts will remain subject to Secured Party’s security interest until the Secured Debts are paid in full. Payments on any non-purchase money loan also secured by this Agreement will not be applied to the purchase money loan. Payments on the purchase money loan will be applied first to the non-purchase money portion of the loan, if any, and then to the purchase money portion in the order in which the purchase money Property was acquired. If the purchase money Property was acquired at the same time, payments will be terminated by application of this formula.

DEFAULT. Debtor will be in default if:

(1)	Debtor (or Borrower, if not the same) fails to make a payment in full when due;
(2)	Debtor fails to perform any condition or keep any covenant on this or any debt or agreement Debtor has with Secured Party;
(3)	a default occurs under the terms of any instrument or agreement evidencing or pertaining to the Secured Debts;
(4)	anything else happens that either causes Secured Party to reasonably believe that Secured Party will have difficulty in collecting the Secured Debts or significantly impairs the value of the Property.

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

(1)	make all or any part of the Secured Debts immediately due and accrue interest at the highest post-maturity interest rate;
(2)	require Debtor to gather the Property and make it available to Secured Party in a reasonable fashion;
(3)	enter upon Debtor’s premises and take possession of all or any part of Debtor’s property for purposes of preserving the Property or its value and use and operate Debtor’s property to protect Secured Party’s interest, all without payment or compensation to Debtor;
(4)	use any remedy allowed by state or federal law, or provided in any agreement evidencing or pertaining to the Secured Debts.

If Secured Party repossesses the Property or enforces the obligations of an account debtor, Secured Party may keep or dispose of the Property as provided by law. Secured Party will apply the proceeds of any collection or disposition first to Secured Party’s expenses of enforcement, which includes reasonable attorneys’ fees and legal expenses to the extent not prohibited by law, and then to the Secured Debts. Debtor (or Borrower, if no the same) will be liable for the deficiency, if any.

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

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

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

CHAMPION INDUSTRIES, INC	FIRST CENTURY BANK, N.A.
P.O. BOX 2968	500 FEDERAL STREET
HUNTINGTON, WV 25703	BLUEFIELD, WV 24701	Loan Number: 1393995
		Date: 04-02-2003
		Maturity Date: 04-02-2008_
BORROWER’S NAME AND	LENDER’S NAME AND ADDRESS	Loan Amount: $450,000.00
ADDRESS	“You” means the lender,	Renewal of
“I” includes each	its successors and	BR/RESP 01/801
borrower above, jointly	assigns.
and severally

For value received, I promise to pay to you, or your order, at your address listed above the PRINCIPAL sum of FOUR HUNDRED FIFTY THOUSAND FIFTY AND NO/100 Dollars $450,050.00

n Single Advance: I will receive all of this principal sum on 04-02-2003     . No additional advances are contemplated under this note.
o Multiple Advance: The principal sum shown above is the maximum amount of principal I can borrow under this note. On                        I will receive the amount of $              and future principal advances are contemplated. Conditions: The conditions for future advances are                                                                                                                                                                                                                                                                                                                                                                                            o Open End Credit: You and I agree that I may borrow up to the maximum amount of principal more than one time. This feature is subject to all other conditions and expires on                                                     . o Closad End Credit: You and I agree that I may borrow up to the maximum only one time (and subject to all other conditions).
INTEREST: I agree to pay interest on the outstanding principal balance from 04-02-2003      at the rate of 4.250 % per year until 04-03-2003 .
	n Variable Rate: This rate may then change as stated below.
	n Index Rate: The future rate will be EQUAL TO the following index rate: THE HIGHEST RATE ON CORPORATE LOANS POSTED BY AT LEAST 75% OF THE USA’S THIRTY LARGEST BANKS KNOWN AS THE WALL STREET JOURNAL PRIME RATE. THE RESULT OF THIS CALCULATION WILL BE ROUNDED UP TO THE NEAREST 0.125 .
	o No Index: The future rate will not be subject to any internal or external index. It will be entirely in your control.
	n Frequency and Timing: The rate on this note may change as often as EVERY DAY BEGINNING 04-03-2003 . A change in the interest rate will take effect ON THE SAME DAY .
	o Limitations: During the term of this loan, the applicable annual interest rate will not be more than                       % or less than                       %. The rate may not change more than                       % each                       .
	Effect of Variable Rate: A change in the interest rate will have the following effect on the payments:

n The amount of each scheduled payment will change. o The amount of the final payment will change.

o_______________________________________________________________________.

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

POST MATURITY RATE: I agree to pay interest on the unpaid balance of this note owing after maturity, and until paid in full, as stated below:

n on the same fixed or variable rate basis in effect before maturity (as indicated above).

o at a rate equal to _________________________________________________________.

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

n ADDITIONAL CHARGES: In addition to interest, I agree to pay the following charges which n are o are not included in the principal amount above:

______________________________________________________________________________.

PAYMENTS: I agree to pay this note as follows:

ON DEMAND, BUT IF NO DEMAND IS MADE THEN 60 MONTHLY PAYMENTS OF $8,352.55 BEGINNING 05-02-2003. THIS IS A VARIABLE RATE LOAN AND THE PAYMENT AMOUNTS MAY CHANGE AFTER THE 1ST PAYMENT AND EVERY PAYMENT THEREAFTER.

ADDITIONAL TERMS:

n SECURITY: This note is separately secured by (describe separate document by type and date):

SEPARATE SECURITY AGREEMENT DATED APRIL 2, 2003

(This section is for your internal use. Failure to list a separate security document does not mean the agreement will not secure this note.)

PURPOSE: The purpose of this loan is PURCHASE EQUIPMENT.

SIGNATURES: I AGREE TO THE TERMS OF THIS NOTE (INCLUDING THOSE ON PAGE 2).

I have received a copy on today’s date.

Signature for Lender	CHAMPION INDUSTRIES, INC.
JEFFERY L. FORLINES, SENIOR VICE PRESIDENT	TODD R. FRY, VICE PRESIDENT & CFO
UNIVERSAL NOTE

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

APPLICABLE LAW: The law of the state in which you are located will govern this note. Any term of this note which is contrary to applicable law will not be effective, unless the

law permits you and me to agree to such variation. If any provision of this agreement cannot be enforced according to its terms, this fact will not affect the enforceability of the remainder of this agreement. No modification of this agreement may be made without your express written consent. Time is of the essence in this element.

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

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

PAYMENTS: Each payment I make on this note will first reduce the amount I owe you for charges which are neither interest nor principal. The remainder of each payment will then reduce accrued unpaid interest, and then unpaid principal. If you and I agree to a different application of payments, we will describe our agreement on this note. I may prepay a part of, or the entire balance of this loan without penalty, unless we specify to the contrary on this note. Any partial prepayment will note excuse or reduce any later scheduled payment until this note is paid in full (unless, when I make the prepayment, you and I agree in writing to the contrary).

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

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

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

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

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

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

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

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

	“Right to receive money from you” means:
(1)	any deposit account balance I have with you;
(2)	any money owed to me on an item presented to you or in your possession for collection or exchange; and
(3)	any repurchase agreement or other nondeposit obligation.

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

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

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

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

DEFAULT: I will be in default if any one or more of the following occur: (1) I fail to make a payment on time or in the amount due; (2) I fail to keep the property insured, if required; (3) I fail to pay, or keep any promise, on any debt or agreement I have with you; (4) any other creditor of mine attempts to collect any debt I owe him through court proceedings; (5) I die, am declared incompetent, make an assignment for the benefit of creditors, or become insolvent (either because my liabilities exceed my assets or I am unable to pay my debts as they become due); (6) I make any written statement or provide any financial information that is untrue or inaccurate at the time it was provided; (7) I do or fail to do something which causes you to believe that you will have difficulty collecting the amount I owe you; (8) any collateral securing this note is used in a manner or for a purpose which threatens confiscation by a legal authority; (9) I change my name or assume an additional name without first notifying you before making such a change; (10) I fail to plant, cultivate and harvest crops in due season if I am a producer of crops; (11) any loan proceeds are used for a purpose that will contribute to excessive erosion of highly erodible land or to the conversion of wetlands to produce an agricultural commodity, as further explained in 7 C.F.R. Part 940, Subpart G, Exhibit M.

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

(1)	You may demand immediate payment o all I owe you under this note (principal, accrued unpaid interest and other accrued charges).
(2)	You may set off this debt against any right I have to the payment of money from you, subject to the terms of the “Set-Off” paragraph herein.
(3)	You may demand security, additional security, or additional parties to be obligated to pay this note as a condition for not using any other remedy.
(4)	You may refuse to make advances to me or allow purchases on credit by me.
(5)	You may use any remedy you have under state and federal law.

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

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

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

(1)	demand payment of amounts due (presentment);
(2)	obtain official certification of nonpayment (protest); or
(3)	give notice that amounts due have not been paid (notice of dishonor).
I waive any defenses I have based on suretyship or impairment of collateral.

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

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

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

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

EX-10.3 5 w93425exv10w3.htm EXHIBIT 10.3

10.3

Business Loan Agreement, $351,000 commercial loan between Champion Industries, Inc. and City National Bank together with promissory note dated as of August 14, 2003.

BUSINESS LOAN AGREEMENT

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.	Lender:	City National Bank
	(TIN: 55-0717455)		of West Virginia
	2450-901ST AVENUE		Huntington Branch
	HUNTINGTON, WV 25703		1900 Third Avenue Huntington, WV 25703
			(304) 526-6200

THIS BUSINESS LOAN AGREEMENT dated August 14 2003, Is made and executed between CHAMPION INDUSTRIES, INC. (“Borrower”) and City National Bank of West Virginia (“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 August 14, 2003, 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 such time as the parties may agree in writing to terminate this Agreement.

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 an office at 2450-90 1ST AVENUE, HUNTINGTON, WV 25703. Unless Borrower has designated otherwise in writing, the principal office is the 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 Borrower’s articles of incorporation or organization, or bylaws, or 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 Borrower’s 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

Loan No: 99908226 BUSINESS LOAN AGREEMENT
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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 Borrower’s knowledge, all of Borrower’s tax returns and reports that are or were required to be filed, have been filed, end 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 ninety (90) days after the end of each fiscal year, Borrower’s balance sheet end 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 ten (10) 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; 14) 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 ail 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, Lenders 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 chief 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 trusts, 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.

RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law, rule, regulation or guideline, or the interpretation or application of any thereof by any court or administrative or governmental authority (including any request or policy not having the force of law} shall impose, modify or make applicable any taxes (except federal, state or local income or franchise taxes imposed on Lender), reserve requirements, capital adequacy requirements or other obligations which would (A) increase the cost to Lender for extending or maintaining the credit facilities to which this Agreement relates, (B) reduce the amounts payable to Lender under this Agreement or the Related Documents, or (C) reduce the rate of return on Lender’s capital as a consequence of Lender’s obligations with respect to the credit facilities to which this Agreement relates, then Borrower agrees to pay Lender such additional amounts as will compensate Lender therefor, within five (5) days after Lender’s written demand for such payment, which demand shall be accompanied by an explanation of such imposition or charge and a calculation in reasonable detail of the additional amounts payable by Borrower, which explanation and calculations shall be conclusive in the absence of manifest error.

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 ail 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. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the 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 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. (l) 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 transfer or sell 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 shareholders 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 shares of Borrower’s stock, or purchase or retire any of Borrower’s outstanding shares or alter or amend Borrower’s capital structure.

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

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, and, at Lender’s option, to administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph.

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 (and no Event of Default will have occurred) 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 maybe 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 Lenders 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 limitation whatsoever, to any one 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, construed and enforced in accordance with federal law and the laws of the State of West Virginia. This Agreement has been accepted by Lender in the State of West Virginia.

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 contained by or on behalf of Borrower 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.

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. Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement:

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 all other persons and entities signing the Note in whatever capacity.

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 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.

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 City National Bank of West Virginia, its successors 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 $351,000.00 dated August 14, 2003, 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 AUGUST 14, 2003.

BORROWER:

CHAMPION INDUSTRIES, INC.

By:
        TODD R FRY, VICE PRESIDENT & CFO of CHAMPION INDUSTRIES, INC.

LENDER:

CITY NATIONAL BANK OF WEST VIRGINIA

By:
        Authorized Signer

PROMISSORY NOTE

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:	City National Bank
	2450-90 1ST AVENUE		of West Virginia
	HUNTINGTON, WV 25703		Huntington Branch
			1900 Third Avenue
			Huntington, WV
			25703
			(304) 526-6200

Principal Amount: $351,000.00 Initial Rate: 4.000% Date of Note: August 14, 2003

PROMISE TO PAY. CHAMPION INDUSTRIES, INC. (“Borrower”) promises to pay to City National Bank of West Virginia (“Lender”), or order, in lawful money of the United States of America, the principal amount of Three Hundred Fifty-one Thousand & 00/100 Dollars ($351,000.00), together with interest on the unpaid principal balance from August 14, 2003, until paid in full. The interest rate will not increase above 18.000%.

PAYMENT. Subject to any payment changes resulting from changes in the Index, Borrower will pay this loan in 59 payments of $6,473.80 each payment and an irregular last payment estimated at $6,473.71 Borrower’s first payment is due September 14, 2003, and all subsequent payments are due on the same day of each month after that. Borrower’s final payment will be due on August 14, 2008, 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 unpaid collection costs and any late charges, then to any unpaid interest, and any remaining amount to principal. The annual interest rate for this Note is computed on a 365/360 basis; that is, by applying the ratio of the 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 The Wall Street Journal Prime Rate as published in the Money Rates Section of the Wall Street Journal. (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 notice to 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. Borrower understands that Lender may make loans based on other rates as well. The Index currently is 4.000% 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, adjusted if necessary for any minimum and maximum rate limitations described below, resulting in an initial rate of 4.000% per annum. Notwithstanding the foregoing, the variable interest rate or rates provided for in this Note will be subject to the following minimum and maximum rates. NOTICE: Under no circumstances will the interest rate on this Note be less than 1.000% per annum or more than (except for any higher default rate shown below) the lesser of 18.000% per annum or 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 payments 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; MINIMUM INTEREST CHARGE. In any event, even upon full prepayment of this Note, Borrower understands that Lender is entitled to a minimum interest charge of $7.50. Other than Borrower’s obligation to pay any minimum interest charge, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments under the payment schedule. 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 in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: City National Bank of West Virginia, Huntington Branch, 1900 Third Avenue, Huntington, WV 25703.

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged 5.000% of the regularly scheduled payment or $25.00, whichever is greater.

INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, Lender, at its option, may, if permitted under applicable law, increase the variable interest rate on this Note to 4.000 percentage points over the Index. The interest rate will not exceed the maximum rate permitted by applicable law.

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

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

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

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

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

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

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

Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note. 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 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 (and no event of default will have occurred) 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 reasonably 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, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.

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, construed and enforced in accordance with federal law and the laws of the State of West Virginia. This Note has been accepted by Lender in the State of West Virginia.

DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $15.00 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 a right of setoff in all Borrower’s accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts, and, at Lender’s option, to administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph.

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.

NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES. Please notify us if we report any inaccurate information about your account(s) to a consumer reporting agency. Your written notice describing the specific inaccuracy(ies) should be sent to us at the following address: City National Bank of West Virginia, 25 Gatewater Road, PO Box 7220, Cross Lanes, WV 25313-7220

GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the

terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender’s security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are Joint and several.

WEST VIRGINIA INSURANCE NOTICE. Unless Borrower provides Lender with evidence of the Insurance coverage required by Borrower’s agreement with Lender, Lender may purchase insurance at Borrowers expense to protect Lender’s interests in the collateral. This insurance may, but need not, protect Borrower’s Interests. The coverage that Lender purchases may not pay any claim that Borrower makes or any claim that is made against Borrower in connection with the collateral. Borrower may later cancel any Insurance purchased by Lender, but only after providing Lender with evidence that Borrower has obtained Insurance as required by their agreement. If Lender purchases insurance for the collateral’ Borrower will be responsible for the costs of that Insurance, including interest and any other charges Lender may impose in connection with the placement of the Insurance, until the affective date of the cancellation or expiration of the insurance. The costs of the insurance may be added to Borrower’s total outstanding balance or obligation. The costs of the insurance may be more than the cost of insurance Borrower may be able to obtain on Borrower’s own.

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

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

BORROWER:

CHAMPION INDUSTRIES, INC.

By:

TODD R FRY, VICE PRESIDENT & CFO of

CHAMPION INDUSTRIES, INC.

EX-10.4 6 w93425exv10w4.htm EXHIBIT 10.4

10.4

Revolving Credit Agreement, $10,000,000 revolving line of credit between Champion Industries, Inc. and United Bank, Inc. dated as of August 1, 2003.

REVOLVING CREDIT AGREEMENT

BY AND BETWEEN

CHAMPION INDUSTRIES, INC.

AND

UNITED BANK, INC.

DATED AS OF AUGUST 1, 2003

          REVOLVING CREDIT AGREEMENT

          THIS REVOLVING CREDIT AGREEMENT is dated as of August 1, 2003, and is made by and between CHAMPION INDUSTRIES, INC., a West Virginia corporation, with offices at 2450 First Avenue, Huntington, West Virginia 25703 (“Borrower”) and UNITED BANK, INC., a West Virginia state banking corporation, with offices at 2889 Third Avenue, Huntington, West Virginia 25702 (“UBI”).

          WITNESSETH:

          WHEREAS, pursuant to a Credit Agreement dated as of March 31, 1997 (the “Term Loan Agreement”), PNC Bank, National Association (“PNC” or “Agent”), in its capacity as agent for the banks signatory to the Term Loan Agreement (the “Banks”), provided a term loan to the Borrower in the aggregate principle amount of up to $12,500,000.00; and

          WHEREAS, in addition to the foregoing, the Borrower has requested UBI to provide a revolving loan facility to the Borrower in an aggregate principal amount of up to $10,000,000.00 for the purpose of financing acquisitions, capital expenditures and general working capital requirements; and

          WHEREAS, UBI is willing to provide such a revolving credit facility to the Borrower upon the terms and conditions hereinafter set forth; and

          NOW, THEREFORE, the parties hereto, in consideration of their mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, covenant and. agree as follows:

1. CERTAIN DEFINITIONS

1.1 Certain Definitions.

          In addition to words and terms defined elsewhere in this Agreement, the following words and terms shall have the following meanings, respectively, unless the context hereof clearly requires otherwise:

          Affiliate as to any Person shall mean any other Person (i) which directly or indirectly controls, is controlled by, or is under common control with such Person, (ii) which beneficially owns or holds 5% or more of any class of the voting or other equity interests of such Person, or (iii) 5% or more of any class of voting interests or other equity interests of which is beneficially owned or held, directly or indirectly, by such Person. Control, as used in this definition, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, including the power to elect a majority of the directors or trustees of a corporation or trust, as the case may be.

          UBI’s Facility Fee shall have the meaning assigned to that term in Section 2.7.

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          Agreement shall mean this Revolving Credit Agreement, as the same may be supplemented or amended from time to time, including all schedules and exhibits.

          Annual Statements shall have the meaning assigned to that term in Section 5.1.9(i).

          Authorized Officer shall mean those individuals, designated by written notice to UBI from the Borrower, authorized to execute notices, reports and other documents on behalf of the Borrower required hereunder. The Borrower may amend such list of individuals from time to time by giving written notice of such amendment to UBI.

          Banks shall mean the financial institutions from time to time signatory to the Term Loan Agreement and their respective successors and assigns as permitted thereunder, each of which is referred to herein as a Bank.

          Benefit Arrangement shall mean at any time an “employee benefit plan,” within the meaning of Section 3(3) of ERISA, which is neither a plan nor a Multiemployer Plan and which is maintained, sponsored or otherwise contributed to by any member of the ERISA Group.

          Borrower shall have the meaning given in the preamble to this Agreement.

          Business Day shall mean any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed for business in Huntington, West Virginia.

          Closing Date shall mean the effective date hereof.

          Consideration shall mean with respect to any Permitted Acquisition, the aggregate of (i) the net present value paid by any of the Borrower, directly or indirectly, to the seller in connection therewith, (ii) the Indebtedness incurred or assumed by any of the Borrower, whether in favor of the seller or otherwise and whether fixed or contingent, (iii) any Guaranty given or incurred by the Borrower in connection therewith, (iv) 50% of the value of stock transferred, and (v) the net present value of any other consideration given or obligation incurred by the Borrower in connection therewith.

          Consolidated Cash Flow From Operations for any period of determination shall mean the sum of net income, depreciation, amortization, other non-cash charges to net income, interest expense and cash income tax expense minus non-cash credits to net income, all measured on a rolling four quarters basis in each case of the borrower and its Subsidiaries for such period determined and consolidated in accordance with GAAP.

          Consolidated Tangible Net Worth shall mean as of any date of determination total stockholders’ equity less intangible assets of the Borrower and its Subsidiaries as of such date determined and consolidated in accordance with GAAP.

          Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful money of the United States of America.

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          Environmental Complaint shall mean any written complaint setting forth a cause of action for personal or property damage or natural resource damage or equitable relief, order, notice of violation, citation, request for information issued pursuant to any Environmental Laws by an Official Body, subpoena or other written notice of any type relating to, arising out of, or issued. pursuant to, any of the Environmental Laws or any Environmental Conditions, as the case may be.

          Environmental Conditions shall mean any conditions of the environment, including the workplace, the ocean, natural resources (including flora or fauna), soil, surface water, groundwater, any actual or potential drinking water supply sources, substrata or the ambient air, relating to or arising out of, or caused by, the use, handling, storage, treatment, recycling, generation, transportation, release, spilling, leaking, pumping, emptying, discharging, injecting, escaping, leaching, disposal, dumping, threatened release or other management or mismanagement of Regulated Substances resulting from the use of, or operations on, any Property.

          Environmental Laws shall mean all federal, state, local and foreign Laws and regulations, including permits, licenses, authorizations, bonds, orders, judgments, and consent decrees issued, or entered into, pursuant thereto, relating to pollution or protection of human health or the environment or employee safety in the workplace.

          ERISA shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.

          ERISA Group shall mean, at any time, the Borrower and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with the Borrower, are treated as a single employer under Section 414 of the Internal Revenue Code.

          Event of Default shall mean any of the events described in Section 8.1 and referred to therein as an “Event of Default.”

          Federal Funds Effective Rate for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of Pittsburgh (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the ‘Federal Funds Active Rate” for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced.

          Financial Projections shall have the meaning assigned to that term in Section 5.1.9(i).

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          Fixed Charge Coverage Ratio shall mean the ratio of Consolidated Cash Flow from Operations to Fixed Charges.

          Funding Date means the date of the funding of a Loan.

          GAAP shall mean generally accepted accounting principles as are in effect from time to time, subject to the provisions of Section 1.3, and applied on a consistent basis both as to classification of items and amounts.

          Guaranty of any Person shall mean any obligation of such Person guaranteeing or in effect guaranteeing any liability or obligation of any other Person in any manner, whether directly or indirectly, including any performance bond or other suretyship arrangement and any other form of assurance against loss, except endorsement of negotiable or other instruments for deposit or collection in the ordinary course of business and indemnities.

          Indebtedness shall mean, as to any Person at any time, any and all indebtedness, obligations or liabilities (whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, or joint or several) of such Person for or in respect of (i) borrowed money, (ii) amounts raised under or liabilities in respect of any note purchase or acceptance credit facility, (iii) reimbursement obligations (contingent or otherwise) under any letter of credit, currency swap agreement, interest rate swap, cap, collar or floor agreement or other interest rate management device, (iv) any other transaction (including forward sale or purchase agreements, capitalized leases and conditional sales agreements) having the commercial effect of a borrowing of money entered into by such Person to finance its operations or capital requirements (but not including trade payables and accrued expenses incurred in the ordinary course of business which are not represented by a promissory note or other evidence of indebtedness and which are not more than thirty (30) days past due), or (v) any Guaranty of Indebtedness for borrowed money.

          Ineligible Security shall mean any security which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.

          Insolvency proceeding shall mean, with respect to any Person, (a) case, action or proceeding with respect to such Person (i) before any court or any other Official Body under any bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, or (ii) for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of the Borrower or otherwise relating to liquidation, dissolution, winding-up or relief of such Person, or (b) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of such Person’s creditors generally or any substantial portion of its creditors, undertaken under any Law.

          Interest Payment Date means, with respect to any Prime Rate Loan, the last day of each Interest Period applicable to such Loan; provided that, in all cases, “Interest Payment Date” shall also include each Interest Period Anniversary Date for such Interest Period.

          Interest Period shall have the meaning assigned to such term in Section 3.1.2.

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          Internal Revenue Code shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and. any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.

          Labor Contracts shall mean all employment agreements, employment contracts, collective bargaining agreements and other agreements among the Borrower or any Subsidiary of the Borrower and its employees.

          Law shall mean any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order, injunction, writ, decree or award of any Official Body.

          Lien shall mean any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security and any filed financing statement or other notice of any of the foregoing (whether or not a lien or other encumbrance is created or exists at the time of the filing).

          LLC Interests shall have the meaning given to such term in Section 5.1.3.

          Loan or Loans means any one or more of the Revolving Loans.

          Loan Documents shall mean this Agreement, the Revolving Note, and any other instruments, certificates or documents delivered or contemplated to be delivered hereunder or thereunder or in connection herewith or therewith, as the same may be supplemented or amended from time to time in accordance herewith or therewith, and Loan Document shall mean any of the Loan Documents,

          Material Adverse Change shall mean any set of circumstances or events which (a) has or could reasonably be expected to have any material adverse effect whatsoever upon the validity or enforceability of this Agreement or any other Loan Document, (b) is or could reasonably be expected to be material and adverse to the business, properties, assets, financial condition, results of operations of the Borrower and its Subsidiaries taken as a whole, (c) impairs materially or could reasonably be expected to impair materially the ability of the Borrower and its Subsidiaries taken as a whole to duly and punctually pay or perform their Indebtedness, or (d) impairs materially or could reasonably be expected to impair materially the ability of UBI or any of the Banks, to the extent permitted, to enforce their legal remedies pursuant to this Agreement or any other Loan Document.

          Maturity or Maturity Date shall mean July 31, 2006.

          Month with respect to an Interest Period, shall mean the interval between the days in consecutive calendar months numerically corresponding to the first day of such Interest Period. If any Interest Period begins on a day of a calendar month for which there is no numerically corresponding day in the month in which such Interest Period is to end, the final month of such Interest Period shall be deemed to end on the last Business Day of such final month.

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          Multiemployer Plan shall mean any employee benefit plan which is a “multiemployer plan” within the meaning of Section 4001 (a) (3) of ERISA and to which any Borrower or any member of the ERISA Group is then making or accruing an obligation to make contributions or, within the preceding five Plan years, has made or had an obligation to make such contributions.

          Multiple Employer Plans shall mean a Plan which has two or more contributing sponsors (including any Borrower or any member of the ERISA Group) at least two of whom are not under common control, as such a plan is described in Sections 4063 and 4064 of ERISA.

          Notices shall have the meaning assigned to that term in Section 10.5.

          Obligation shall mean any obligation or liability of the Borrower to UBI, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent now or hereafter existing, or due or to become due, under or in connection with this Agreement, the Revolving Note, or any other Loan Document.

          Official Body shall mean any national, federal, state, local or other government or political subdivision or any agency, authority, bureau, central bank, commission, department or instrumentality of either, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

          Partnership Interests shall have the meaning given to such term in Section 5.1.3.

          PBGC shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.

          Permitted Acquisition shall have the meaning assigned to such term in Section 7.2.5.

          Permitted Investments shall mean:

               (i) Direct obligations of the United States of America or any agency or instrumentality thereof or obligations backed by the full faith and credit of the United States of America maturing in twelve (12) months or less from the date of acquisition;

               (ii) Commercial paper maturing in 180 days or less rated not lower than A-1, by Standard & Poor’s or P-1 by Moody’s Investors Service, Inc. on the date of acquisition;

               (iii) Demand deposits, time deposits or certificates of deposit maturing within one year in commercial banks whose obligations are rated A-1, A or the equivalent or better by Standard & Poor’s on the date of acquisition;

               (iv) Investments shown on Schedule 1.1(P) pursuant to this Agreement and in favor of the Agent; and

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               (v) Any other investment deemed appropriate and prudent by the Company to the extent such investments in the aggregate do not exceed $500,000.

          Permitted Liens shall mean:

               (i) Liens, security interests and mortgages (A) in favor of UBI pursuant to this Agreement, and (B) in favor of the Agent for the benefit of the Banks party to the Term Loan Agreement.

               (ii) Liens for taxes, assessments, or similar charges, incurred in the ordinary course of business and. which are not yet due and payable;

               (iii) Pledges or deposits made in the ordinary course of business to secure payment of workmen’s compensation, or to participate in any fund in connection with workmen’s compensation, unemployment insurance, old-age pensions or other social security programs;

               (iv) Liens of mechanics, materialmen, warehousemen, carriers, or other like Liens securing obligations incurred in the ordinary course of business that are not yet due and payable and Liens of landlords securing obligations to pay lease payments that are not yet due and payable or in default;

               (v) Good-faith pledges or deposits made in the ordinary course of business to secure performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess of the aggregate amount due thereunder, or to secure statutory obligations, or surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business;

               (vi) Encumbrances consisting of zoning restrictions, easements or other restrictions on the use of real property, none of which materially impairs the use of such property or the value thereof, and none of which is violated in any material respect by existing or proposed structures or land use;

               (vii) Liens on property leased by the Borrower or any Subsidiary of the Borrower under capital and operating leases permitted in Section 7.2.13 securing obligations of the Borrower or any Subsidiary of the Borrower to the lessor under such leases;

               (viii) Any Lien existing on the date of this Agreement and described on Schedule 1.1(P), as the debt underlying such Lien may be refinanced or replaced (but the principal amount secured thereby is not hereafter increased, and no additional assets become subject to such Lien) and a replacement Lien placed thereon;

               (ix) Purchase Money Security Interests, provided that the aggregate amount of loans and deferred payments secured by such Purchase Money Security Interests shall not exceed $10,000,000 and any replacement or renewal thereof as long as the principal amount secured thereby is not increased and no existing additional assets at the effective date of this agreement become subject to such lien in an amount greater than $1.0 million in the aggregate.

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Asset purchases subsequent to the effective date of this agreement are permitted to be financed to the extent the aggregate financings do not exceed $10,000,000.

                    (x) The following, (A) if the validity or amount thereof is being contested in good faith by appropriate and lawful proceedings diligently conducted so long as levy and execution thereon have been stayed and continue to be stayed or (B) if a final judgment is entered and such judgment is discharged within thirty (30) days of entry, and in either case they do not, in aggregate, materially impair the ability of the Borrower to perform its obligations hereunder or under the other Loan Documents:

                         (1) Claims or Liens for taxes, assessments or charges due and payable and subject to interest or penalty, provided that the Borrower maintains such reserves or other appropriate provisions as shall be required by GAAP and pays all such taxes, assessments or charges forthwith upon the commencement of proceedings to foreclose any such Lien; or

                         (2) Claims, Liens or encumbrances upon, and defects of title to, real or personal property, including any attachment of personal or real property or other legal process prior to adjudication of a dispute on the merits; or

                         (3) Claims or Liens of mechanics, carriers, or other statutory nonconsensual Liens; or

                         (4) Liens resulting from final judgments or orders described in Section 8.1.6.

          Person shall mean any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, joint venture, government or political subdivision or agency thereof, or any other entity.

          Plan shall mean at any time an employee pension benefit plan (including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained by any entity which was at such time a member of the ERISA Group for employees of any entity which was at such time a member of the ERISA Group.

          Potential Default shall mean any event or condition which with notice, passage of time or a determination by UBI would constitute an Event of Default.

          Prime Rate shall mean a variable annual interest rate equal to JP Morgan Chase Bank prime rate adjusted daily with each change in such rate.

          Prime Rate Loans means Loans made by Bank bearing interest at rates determined in accordance with Section 3.1.1.

          Principal Office shall mean the principal banking office of UBI in Parkersburg, West Virginia.

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          Prohibited Transaction shall mean any prohibited transaction as defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA for which neither an individual nor a class exemption has been issued by the United States Department of Labor.

          Property shall mean all real property, both owned and leased, of the Borrower or any Subsidiary of the Borrower.

          Purchase Money Security Interest shall mean Liens upon tangible property securing loans to the Borrower or any Subsidiary of the Borrower or deferred payments by the Borrower or any Subsidiary of the Borrower for the purchase of such tangible property.

          Leverage Ratio shall mean the ratio of the Borrower’s Total Senior Indebtedness to Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”). For purposes of the Leverage Ratio, Total Senior Indebtedness shall be measured as of the end of each fiscal quarter and EBITDA shall be measured as of the end of each fiscal quarter for the previous four fiscal quarters.

          Regulated Substances shall mean any substance, including: any solid, liquid, semisolid, gaseous, thermal, thoriated or radioactive material, refuse, garbage, wastes, chemicals, petroleum products, by-products, coproducts, impurities, dust, scrap, heavy metals, defined as a “hazardous substance,” “pollutant,” “pollution,” “contaminant,” “hazardous or toxic substance,” “extremely hazardous substance,” “toxic chemical,” “toxic waste,” “hazardous waste,” “industrial waste,” “residual waste,” “solid waste,” “municipal waste,” “mixed waste,” “infectious waste,” “chemotherapeutic waste,” “medical waste,” or “regulated substance” or any related materials, substances or wastes as now or hereafter defined pursuant to any Environmental Laws, ordinances, rules, regulations or other directives of any Official Body, the generation, manufacture, extraction, processing, distribution, treatment, storage, disposal, transport, recycling, reclamation, use, reuse, spilling, leaking, dumping, injection, pumping, leaching, emptying, discharge, escape, release or other management or mismanagement of which is regulated by the Environmental Laws.

          Regulation U shall mean Regulation U, T, G or X as promulgated by the Board of Governors of the Federal Reserve System, as amended from time to time.

          Reportable Event shall mean a reportable event described in Section 4043 of ERISA and regulations thereunder with respect to a Plan or Multiemployer Plan.

          Revolving Loan or Revolving Loans shall have the meaning assigned to that term in Section 2. 2.

          Revolving Note or Revolving Credit Note shall mean the Revolving Credit Note of the Borrower in the form of Exhibit 1.1(T) evidencing the Revolving Loan or Revolving Loans, together with all amendments, extensions, renewals, replacements refinancings or refunds thereof in whole or in part.

          Section 20 Subsidiary shall mean the Subsidiary of the bank holding company controlling UBI, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities

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          Shares shall have the meaning assigned to that term in Section 5.1.2.

          Standard & Poor’s shall mean Standard & Poor’s Ratings Services.

          Subsidiary of any person at any time shall mean (i) any corporation or trust of which more than 50% (by number of shares or number of votes) of the outstanding capital stock or shares of beneficial interest normally entitled to vote for the election of one or more directors or trustees (regardless of any contingency which does or may suspend or dilute the voting rights) is at such time owned directly or indirectly by such Person or one or more of such Person’s Subsidiaries, (ii) any partnership of which such Person is a general partner or of which more than 50% or more of the partnership interests is at the time directly or indirectly owned by such Person or one or more of such Person’s Subsidiaries, (ii) any limited liability company of which such Person is a member or of which more than 50% of the limited liability company interests is at the time directly or indirectly owned by such Person or one or more of such Person’s Subsidiaries or (iv) any corporation, trust, partnership, limited liability company or other entity which is controlled or capable of being controlled by such Person or one or more of such Person’s Subsidiaries.

          Subsidiary Shares shall have the meaning assigned to that term in Section 5.1.3.

          Total Senior Indebtedness shall mean as to the Borrower and all of its Subsidiaries, the sum of all borrowed money and all reimbursement obligations under any letters of credit.

1.2 Construction.

          Unless the context of this Agreement otherwise clearly requires, the following rules of construction shall apply to this Agreement and each of the other Loan Documents:

1.2.1 NUMBER, INCLUSION

          References to the plural include the singular, the plural, the part and the whole; “or” has the inclusive meaning represented by the phrase “and/or,” and “including” has the meaning represented by the phrase “including without limitation”.

1.2.2 DETERMINATION.

          References to “determination” of or by UBI shall be deemed to include, a good faith estimate by UBI (in the case of quantitative determinations) and a good-faith belief by UBI (in the case of qualitative determinations) and such determination shall be conclusive absent manifest error.

1.2.3 UBI’S DISCRETION AND CONSENT.

          Whenever UBI is granted the right herein to act in its or their sole discretion or to grant or withhold, consent such right shall be exercised reasonably and in good faith.

1.2.4 DOCUMENTS TAKEN AS A WHOLE.

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          The words “hereof,” “herein,” “hereunder,” “hereto” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document as a whole and not to any particular provision of this agreement or such other Loan Document.

1.2.5 HEADINGS.

          The section and other headings contained in this Agreement or such other Loan Document and the Table of Contents (if any), preceding this Agreement or such other Loan Document are for reference purposes only and shall not control or affect the construction of this Agreement or such other Loan Document or the interpretation thereof in any respect;

1.2.6 IMPLIED REFERENCES TO THIS AGREEMENT.

          Article, section, subsection, clause, schedule and exhibit references are to this Agreement or other Loan Document, as the case may be, unless otherwise specified;

1.2.7 PERSONS.

          Reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement or such other Loan Document, as the case may be, and reference to a Person in a particular capacity excludes such Person in any other capacity; and

1.2.8 MODIFICATIONS TO DOCUMENTS.

          Reference to any agreement, (including this Agreement and any other Loan Document together with the schedules and exhibits hereto or thereto), document or instrument means such agreement, document or instrument as amended, modified, replaced, substituted for, superseded or restated.

1.3 Accounting Principles.

          Except as otherwise provided in this Agreement, all computations and determinations as to accounting or financial matters and all financial statements to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP; (including principles of consolidation where appropriate), and all accounting or financial terms shall have the meanings ascribed to such terms by GAAP; provided, however, that all accounting terms used in Section 7.2 (and all defined terms used in the definition of any accounting term used in Section 7.2 shall have the meaning given to such terms (and defined terms) under GAAP as in effect on the date hereof applied on a basis consistent with those used in preparing the Annual Statements referred to in Section 5.1.9(i) . In the event of any change after the date hereof in GAAP, and if such change would result in the inability to determine compliance with the financial covenants set forth in Section 7.2 based upon the Borrower’s regularly prepared financial statements by reason of the preceding sentence, then the parties hereto agree to endeavor, in good faith, to agree upon an amendment to this Agreement that would adjust such financial covenants in a manner that would not affect the substance thereof, but would allow compliance therewith to be determined in accordance with the Borrower’s financial statements at that time.

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2. REVOLVING CREDIT COMMITMENT

2.1 Revolving Credit Commitment.

          Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, UBI hereby agrees to lend to Borrower the maximum sum of Ten Million and No/100 Dollars ($10,000,000.00) (the “Revolving Credit Commitment”). Such Revolving Credit Commitment shall be available to borrower, subject to the limitations herein, in whole or in part and from time to time until the Maturity Date, when the entire outstanding principal balance of the Revolving Credit Commitment, together with all accrued but unpaid interest thereon, shall become immediately due and payable. Interest on the principal balance of the Revolving Credit Commitment from time to time outstanding shall be due and payable in accordance with Section 3, below.

2.2 Revolving Credit Note.

          Borrower shall execute and deliver to UBI a promissory note in the form of Exhibit 1.1(T) attached hereto (the “Revolving Credit Note”). All disbursements on the Revolving Credit Note shall be Revolving Loans and, unless otherwise provided, shall be in amounts of not less than One Hundred Thousand Dollars ($100,000.00). Amounts borrowed by Borrower under the Revolving Credit Commitment may, subject to the limitations set forth in Section 3.2.1 be repaid and may, subject to the limitations set forth in this Agreement, until the Maturity Date, be reborrowed; provided, however, that at no time may the principal balance outstanding under the Revolving Credit Note exceed the amount of the Revolving Credit Commitment, and Borrower shall make principal payments at such times and in such amounts necessary to comply with this provision.

2.3 [This section intentionally omitted]

2.4 Disbursement of Funds.

          UBI shall make the proceeds of Revolving Loans available to Borrower on such Funding Date by causing an amount of same day funds equal to the proceeds of all such Revolving Loans for which notices of borrowing were received by UBI to be credited to the account of Borrower at UBI.

2.5 Manner and Time of Payment.

          All payments of principal, interest, and fees hereunder and under the Revolving Credit Note shall be made by Borrower without defense, setoff, or counterclaim and in same day funds delivered to UBI not later than 2:00 p.m. (West Virginia time) on the date due at its office located at 2889 Third Avenue, Huntington, West Virginia,, for the account of UBI. Funds received by UBI after that time shall be deemed to have been paid by Borrower on the next succeeding Business Day.

2.6 Use of Proceeds.

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          The proceeds of the Revolving Credit Note shall be used for the purpose of financing acquisitions, capital expenditures and general working capital requirements.

2.7 Facility Fee.

          As consideration for the Revolving Credit Commitment hereby extended, Borrower shall pay UBI a facility fee on the total amount of Revolving Credit Commitment at a rate per annum equal to 0.125%, payable annually in advance commencing on the Closing Date and on each anniversary of the Closing Date. Borrower shall be entitled to cancel the Revolving Credit Commitment in whole or in part at any time prior to the Maturity Date, and such cancellation shall be irrevocable.

2.8 Setoff.

          Upon the occurrence and during the continuation of any Event of Default, UBI shall have the right to set off against all obligations of Borrower to UBI hereunder and under the Revolving Credit Note, whether matured or unmatured, all funds of Borrower on deposit in accounts with UBI or its affiliates, except for funds deposited or accounts maintained for the payment of taxes, payroll, and employee contributions and any other funds or accounts in which Borrower does not have a beneficial interest.

3. INTEREST

3.1 Interest on the Revolving Loans.

3.1.1 RATE OF INTEREST.

     The Revolving Loans shall bear interest on the unpaid principal amount thereof from the date made through Maturity (whether by acceleration or otherwise) at a rate determined by reference to the Prime Rate.

3.1.2 [This section intentionally omitted]

3.1.3 [This section intentionally omitted]

          Subject to Section 3.1.5, interest shall be payable on the Revolving Loans as follows:

               (i) Interest on each Prime Rate Loan shall be payable in arrears on the tenth (10th) day of each month, commencing May 10, 2003, upon any prepayment of any such Loan (to the extent accrued on the amount being prepaid), upon any conversion/continuation, and at Maturity.

3.1.4 [This section intentionally omitted]

3.1.5 POST-MATURITY INTEREST.

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          Any principal payments on the Loans not paid within ten (10) days after the date when due and, to the extent permitted by applicable law, any interest payments on the Loans not paid within ten (10) days after the date when due, in each case whether at stated Maturity, by notice of prepayment, by acceleration, or otherwise, shall thereafter bear interest payable upon demand at a rate equal to the sum of the Prime Rate plus three percentage points (3%) per annum. UBI shall have the right to assess a late payment processing fee in the amount of the greater of Twenty and No/100 Dollars ($20.00) or five percent (5%) of the scheduled payment in the event of a default in payment that remains uncured for a period of at least ten (10) days.

3.1.6 COMPUTATION OF INTEREST.

          Interest on the Loans shall be computed on the basis of a three hundred sixty (360) day year and the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the date of the making of the Loan or the first day of an Interest Period, as the case may be, shall be included, and the date of payment or the expiration date of an Interest Period, as the case may be, shall be excluded; provided that, if a Loan is repaid on the same day on which it is made, one day’s interest shall be paid on that Loan.

3.2 Prepayments

3.2.1 VOLUNTARY PREPAYMENTS.

          Borrower may, upon prior written or telephone notice to UBI, which notice, if telephonic, shall be promptly confirmed in writing to UBI, at any time and from time to time prepay any Revolving Loan made to Borrower in whole or in part in an aggregate minimum amount of Fifty Thousand Dollars ($50,000.00) and integral multiples of Ten Thousand Dollars ($10,000.00) in excess of that amount. All such prepayments may be made without premium or penalty. If Borrower does not specify the Loan to which a prepayment is to be applied, such prepayment shall be applied to such Loans as UBI, in its sole discretion, shall select. Notice of prepayment having been given as aforesaid, principle payments in the aggregate amount specified in such notice shall become due and payable on the prepayment date.

3.2.2 MANDATORY PREPAYMENTS.

          Borrower shall make prepayments of Revolving Loans to the extent necessary so that the outstanding principal amounts of the Revolving Loans at any time do not exceed the Revolving Credit Commitment then in effect.

4. [THIS SECTION INTENTIONALLY OMITTED.]

5. REPRESENTATIONS AND WARRANTES

5.1 Representations and Warranties.

          The Borrower represents and warrants to UBI on the date of this Agreement as follows:

5.1.1 ORGANIZATION AND QUALIFICATION.

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          The Borrower is a corporation, duly organized, validly existing and in good standing under the laws of the State of West Virginia. The Borrower has the lawful power to own or lease its properties and to engage in the business it presently conducts or proposes to conduct. The Borrower is duly licensed or qualified and in good standing in all other jurisdictions where the property owned or leased by it or the nature of the business transacted by it or both makes such licensing or qualification necessary.

5.1.2 CAPITALIZATION AND OWNERSHIP.

          The authorized capital stock of the Borrower consists of 20,000,000 shares of Common Stock, $1 par value, of which 9,713, 913 shares (referred to herein as the “Shares”) are issued and outstanding. All of the Shares have been validly issued and are fully paid and nonassessable. There are no options, warrants or other rights outstanding to purchase any such shares except as indicated on Schedule 5.1.2.

5.1.3 SUBSIDIARIES

          Schedule 5.1.3 states the name of each of the Borrower’s Subsidiaries, its jurisdiction of incorporation, its authorized capital stock, the issued and outstanding shares (referred to herein as the “Subsidiary Shares”) and the owners thereof if it is a corporation, its outstanding partnership interests (the Partnership Interests”) if it is a partnership and its outstanding limited liability company interests, interests assigned to managers thereof and the voting rights associated therewith (the “LLC”) if it is a limited liability company. The Borrower and each Subsidiary of the Borrower has good and marketable title to all, of the Subsidiary Shares, Partnership Interests and LLC Interests it purports to own free and clear in each case of any Lien. All Subsidiary Shares, Partnership Interests and LLC Interests have been validly issued, and all Subsidiary Shares are fully paid and nonassessable. All capital contributions and other consideration required to be made or paid in connection with the issuance of the Partnership Interests and LLC Interests have been made or paid, as the case may be. There are no options, warrants or other rights outstanding to purchase any such Subsidiary Shares, Partnership Interests or LLC Interests except as indicated on Schedule 5.1.3.

5.1.4 POWER AND AUTHORITY.

          The Borrower has full power to enter into, execute, deliver and carry out this Agreement and the other Loan Documents to which it is a party, to incur the Indebtedness contemplated by the Loan Documents and to perform its Obligations under the Loan Documents to which it is a party, and all such actions have been duly authorized by all necessary proceedings on its part.

5.1.5 VALIDITY AND BINDING EFFECT.

          This Agreement has been duly and validly executed and delivered by the Borrower, and each other Loan Document which the Borrower is required to execute and deliver on or after the date hereof will have been duly executed and delivered by the Borrower on the required date of delivery of such Loan Document. This Agreement and each other Loan Document constitutes, or will constitute, legal, valid and binding obligations of the Borrower which is or will be a party thereto on and after its date of delivery thereof, enforceable against

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the Borrower in accordance with its terms, except to the extent that enforceability of any of such Loan Document may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforceability of creditors’ rights generally or general equitable principles.

5.1.6 NO CONFLICT.

          Neither the execution and delivery of this Agreement or the other Loan Documents by the Borrower nor the consummation of the transactions herein or therein contemplated or compliance with the terms and provisions hereof or thereof by any of them will conflict with, constitute a default under or result in any breach of (i) the terms and conditions of the certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents of the Borrower or (ii) any Law or any material agreement or instrument or order, writ, judgment, injunction or decree to which the Borrower or any of its Subsidiaries is a party or by which the Borrower or any of its Subsidiaries is bound or to which it is subject, or result in the creation or enforcement of any Lien, charge or encumbrance whatsoever upon any property (now or hereafter acquired) of the Borrower or any of its Subsidiaries.

5.1.7 LITIGATION.

          There are no actions, suits, proceedings or investigations pending or, to the knowledge of the Borrower, threatened against the Borrower or any Subsidiary of the Borrower at law or equity before any Official Body which individually or in the aggregate may result in any Material Adverse Change, except as set forth on Schedule 5.1.7. Neither the Borrower nor any of its Subsidiaries is in material violation of any order, writ, injunction or any decree of any Official Body which may result in any Material Adverse Change, except as set forth on Schedule 5.1.7.

5.1.8 TITLE TO PROPERTIES.

          The Borrower and each of its Subsidiaries has good and marketable title to or valid leasehold interest in all properties, assets and other rights which it purports to own or lease or which are reflected as owned or leased on, its books and records, free and clear of all Liens and encumbrances except Permitted Liens, and subject to the terms and conditions of the applicable leases. All leases of property are in full force and effect without the necessity for any consent which has not previously been obtained upon consummation of the transactions contemplated hereby.

5.1.9 FINANCIAL STATEMENTS.

               (i) Annual Statements. The Borrower has delivered to UBI copies of its audited consolidated year-end financial statements for and as of the end of the three fiscal years ended October 31, 2002 (the “Annual Statements”) . The Annual Statements were prepared from the books and records maintained by the Borrower’s management, are correct and complete and fairly represent the consolidated, financial condition of the Borrower and, its Subsidiaries as of their dates and the results of operations for the fiscal periods then ended and have been

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prepared in accordance with GAAP consistently applied, subject to normal year-end audit adjustments.

               (ii) [This Section Intentionally Omitted.]

               (iii) Accuracy of Financial Statements. Neither the Borrower nor any Subsidiary of the Borrower has any material liabilities, contingent or otherwise, or forward or long-term commitments that are not disclosed in the Annual Statements or in the notes thereto and which under GAAP were required to be disclosed therein, and except as disclosed therein there are no unrealized or anticipated losses from any commitments of the Borrower or any of its Subsidiaries which are reasonably likely to cause a Material Adverse Change since October 31, 2002, no Material Adverse Change has occurred.

5.1.10 USE OF PROCEEDS, MARGIN STOCK.

          The Borrower intends to use the proceeds of the Loans in accordance with Section 2.4 hereof. Neither the Borrower nor any of its Subsidiaries engages or intends to engage principally, or as one of its important activities, in the business of extending credit for the purpose, immediately, incidentally or ultimately, of purchasing or carrying margin stock (within the meaning of Regulation U). No part of the proceeds of the Revolving Loan has been or will be used, immediately, incidentally or ultimately, to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock or to refund Indebtedness originally incurred for such purpose, or for any purpose which entails a violation of or which is inconsistent with the provisions of the regulations of the Board of Governors of the Federal Reserve System. Neither the Borrower nor any of its Subsidiaries holds or intends to hold margin stock in such amounts that more than 25% of the reasonable value of the assets of the Borrower or Subsidiary of the Borrower are or will be represented by margin stock.

5.1.11 FULL DISCLOSURE.

          Neither this Agreement nor any other Loan Document, nor any certificate, statement, agreement or other documents furnished to UBI in connection herewith or therewith, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein, in light of the circumstances under which they were made, not misleading.

5.1.12 TAXES.

          All federal and other tax returns required to have been filed with respect to the Borrower and each Subsidiary of the Borrower have been filed, and payment or adequate provision has been made for the payment of all taxes, fees, assessments and other governmental charges which have or may become due pursuant to said returns or to assessments received, except to the extent that such taxes, fees, assessments and other charges are not material and are being contested in good faith by appropriate proceedings diligently conducted and. for which such reserves or other appropriate provisions if any, as shall be required by GAAP shall have been made There are no agreements or waivers extending the statutory period of limitations applicable to any federal income tax return of the Borrower or any Subsidiary of the Borrower for any period.

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          5.1.13 CONSENTS AND APPROVALS.

          No consent, approval, exemption, order or authorization of or a registration or filing with, any Official Body or any other Person is required by any Law or any agreement in connection with the execution, delivery and carrying out of this Agreement and the other Loan Documents by the Borrower.

5.1.14 NO EVENT OF DEFAULT, COMPLIANCE WITH INSTRUMENTS.

          No event has occurred and is continuing and no condition exists or will exist after giving effect to the borrowings or other extensions of credit to be made on the Closing Date under or pursuant to the Loan Documents which constitutes an Event of Default or Potential Default. Neither the Borrower nor any Subsidiaries of the Borrower is in material violation of (i) any term of its certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents or (ii) any material agreement or instrument to which it is a party or by which it or any of its properties may be subject or bound.

5.1.15 PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES, ETC.

          The Borrower and, each Subsidiary of the Borrower owns or possesses all the material patents, trademarks, service marks, trade names, copyrights, licenses, registrations, franchises, permits and rights necessary to own and. operate its properties and to carry on its business as presently conducted and planned to be conducted by such Borrower or Subsidiary, without known possible, alleged or actual conflict with the rights of others.

5.1.16 INSURANCE.

          The Borrower maintains policies and bonds provide adequate coverage from reputable and financially sound insurers in amounts sufficient to insure the assets and risks of the Borrower and each Subsidiary of the Borrower in accordance with prudent business practice in the industries of the Borrower and its subsidiaries. No notice has been given or claim made and no grounds exist to cancel or avoid any such policy or bonds or to reduce the coverage provided hereby.

5.1.17 COMPLIANCE WITH LAWS.

          The Borrower and its Subsidiaries are in compliance in all material respects with all applicable Laws (other than Environmental Laws which are specifically addressed in Section 5.1.22) in all jurisdictions in which the Borrower or any of its Subsidiaries is presently or will be doing business.

5.1.18 MATERIAL CONTRACTS; BURDENSOME RESTRICTIONS.

          All material agreements relating to the business operations of the Borrower and its Subsidiaries, including all employee benefit plans and Labor Contracts are valid, binding and enforceable upon such Borrower or Subsidiary and each of the other parties thereto in accordance with their respective terms, and there is no default thereunder, to the Borrower’s

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knowledge, with respect to parties other than such Borrower or Subsidiary. Neither the Borrower nor any of its Subsidiaries is bound by any contractual obligation, or subject to any restriction in any organization document, or any requirement of Law which is reasonably likely to result in a Material Adverse Change.

5.1.19 INVESTMENT COMPANIES; REGULATED ENTITIES.

          Neither the Borrower nor any of its Subsidiaries is an “investment company” registered or required to be registered under the Investment Company Act of 1940 or under the “control of and “investment company” as such terms are defined in the Investment Company Act of 1940 and shall not become such an “investment company” or under such “control.” Neither the Borrower nor any of its Subsidiaries is subject to any other Federal or state statute or regulation limiting its ability to incur Indebtedness for borrowed money,

5.1.20 PLANS AND BENEFIT ARRANGEMENTS.

          Except as set forth on Schedule 5.1.20:

               (i) The Borrower and each other member of the ERISA Group are in compliance in all material respects with any applicable provisions of ERISA with respect to all Benefit Arrangements, Plans and Multiemployer Plans. There has been no Prohibited Transaction with respect to any Benefit Arrangement or any Plan or, to the best knowledge of the Borrower, with respect to any Multiemployer Plan or Multiple Employer Plan, which is material. The Borrower and all other members of the ERISA Group have made when due any and all payments required to be made- under any agreement relating to a Multiemployer Plan or a Multiple Employer Plan or any Law pertaining thereto. With respect to each Plan and Multiemployer Plan, the Borrower and each other member of the ERISA Group (i) have fulfilled in all material respects their obligations under the minimum funding standards of ERISA, (ii) have not incurred any liability to the PBGC, and (iii) have not had asserted against them any penalty for failure to fulfill the minimum funding requirements of ERISA.

               (ii) To the best of the Borrower’s knowledge, each Multiemployer Plan and Multiple Employer Plan is able to pay benefits thereunder when due.

               (iii) Neither the Borrower nor or any other member of the ERISA Group has instituted or intends to institute proceedings to terminate any Plan.

               (iv) No event requiring notice to the PBGC under Section 3O2(f) (4) (A) of ERISA has occurred or is reasonably expected to occur with respect to any Plan, and no amendment with respect to which security is required under Section 307 of ERISA has been made or is reasonably expected to be made to any Plan.

               (v) The aggregate actuarial present value of all benefit liabilities (whether or not vested) under each Plan, determined on a plan termination basis, as disclosed in, and as of the date of, the most recent actuarial report for such Plan, does not exceed the aggregate fair market value of the assets of such Plan.

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               (vi) Neither the Borrower nor any other member of the ERISA Group has incurred or reasonably expects to incur any material withdrawal liability under ERISA to any Multiemployer Plan or Multiple Employer Plan. Neither the Borrower nor any other member of the ERISA Group has been notified by any Multiemployer Plan or Multiple Employer Plan that such Multiemployer Plan or Multiple Employer Plan has been terminated within the meaning of Title IV of ERISA and, to the best knowledge of the Borrower, no Multiemployer Plan or Multiple Employer Plan is reasonably expected to be reorganized or terminated, within the meaning of Title IV of ERISA.

               (vii) To the extent that any Benefit Arrangement is insured, the Borrower and all other members of the ERISA Group have paid when due all premiums required to be paid for all periods through the Closing Date. To the extent that any Benefit Arrangement is funded other than with insurance, the Borrower and all other members of the ERISA Group have made when due all contributions required to be paid for all periods through the Closing Date.

               (viii) All Plans, Benefit Arrangements and Multiemployer Plans have been administered in accordance with their terms and applicable Law.

5.1.21 EMPLOYMENT MATTERS.

          The Borrower and each of its Subsidiaries is in compliance with the Labor Contracts and all applicable federal, state and local labor and employment Laws including those related to equal employment opportunity and affirmative action, labor relations, minimum wage, overtime, child labor, medical insurance continuation, worker adjustment and relocation notices, immigration controls and worker and unemployment compensation, where the failure to comply would constitute a Material Adverse Change. There are no outstanding grievances, arbitration awards or appeals therefrom arising out of the Labor Contracts or current or threatened strikes, picketing, handbilling or other work stoppages or slowdowns at facilities of the Borrower or any of its Subsidiaries which in any case would constitute a Material Adverse Change.

5.1.22 ENVIRONMENTAL MATTERS.

          Except as disclosed on Schedule 5.1.22:

               (i) Neither the Borrower nor any of its Subsidiaries has received any material Environmental Complaint from any Official Body or private Person alleging that such Borrower or Subsidiary or any prior or subsequent owner of any of the Property is a potentially responsible party under the Comprehensive Environmental Response, Cleanup and Liability Act, 42 U.S.C. Section 9601, et seq., and the Borrower has no reason to believe that such an Environmental Complaint might be received. There are no pending or, to the Borrower’s knowledge, threatened Environmental Complaints relating to the Borrower or Subsidiary of the Borrower or, to the Borrower’s knowledge, any prior or subsequent owner of any of the Property pertaining to, or arising out of, any material Environmental Conditions.

               (ii) There are no circumstances at, on or under any of the Property that constitute a breach of or non-compliance with any of the Environmental Laws, and there are no past or present Environmental Conditions at, on or under any of the Property or, to the

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Borrower’s knowledge, at, on or under adjacent property, that prevent compliance with the Environmental Laws at any of the Property.

          (iii) Neither any of the Property nor any structures, improvements, equipment, fixtures, activities or facilities thereon or thereunder contain or use Regulated Substances except in substantial compliance with Environmental Laws. There are no processes, facilities, operations, equipment or other activities at, on or under any of the Property, or, to the Borrower’s knowledge, at, on or under adjacent property, that currently result in the release or threatened release of Regulated Substances onto any of the Property, except to the extent that such releases or threatened releases are not a substantial breach of or otherwise not a violation of the Environmental Laws.

          (iv) There are no aboveground storage tanks, underground storage tanks or underground piping associated with such tanks, used for the management of Regulated Substances at, on or under any of the Property that (a) do not have, to the extent required by Environmental Laws, a full operational secondary containment system in place, and (b) are not otherwise in compliance with all Environmental Laws. There are no abandoned underground storage tanks or underground piping associated with such tanks, previously used. for the management of Regulated Substances at, on or under any of the Property that have not either been closed in place in accordance with Environmental Laws or removed in compliance with all applicable Environmental Laws and no contamination associated with the use of such tanks exists on any of the Property that is not in compliance with Environmental Laws.

          (v) The Borrower and each of its Subsidiaries has all material permits, licenses, authorizations, plans and approvals necessary under the Environmental Laws for the conduct of the business of such Borrower or Subsidiary as presently conducted. The Borrower and each of its Subsidiaries has submitted all material notices, reports and other filings required by the Environmental Laws to be submitted to an Official Body which pertain to past and current operations on any of the Property.

          (vi) All past and present on-site generation, storage, processing, treatment, recycling, reclamation, disposal or other use or management of Regulated Substances at, on, or under any of the Property and all off-site transportation, storage, processing, treatment, recycling, reclamation, disposal or other use or management of Regulated Substances have been done materially in accordance with the Environmental Laws.

5.1.23 SENIOR DEBT STATUS.

          (i) The Obligations of the Borrower under this Agreement, the Revolving Note and each of the other Loan Documents to which it is a party do rank and will rank at least pari passu in priority of payment with all other Indebtedness of the Borrower except Indebtedness of the Borrower to the extent secured by Permitted Liens. There is no Lien upon or with respect to any of the properties or income of the Borrower or any of its Subsidiaries which secures indebtedness or other obligations of any Person except for Permitted Liens.

5.2 Updates to Schedules.

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     Should any of the information or disclosures provided on any of the Schedules attached hereto become outdated or incorrect in any material respect, the Borrower shall promptly provide UBI in writing with such revisions or updates to such Schedule as may be necessary or appropriate to update or correct same; provided, however, that no Schedule shall be deemed to have been amended, modified or superseded by any such correction or update, nor shall any breach of warranty or representation resulting from the inaccuracy or incompleteness of any such Schedule be deemed to have been cured thereby, unless and until UBI, in its reasonable discretion, shall have accepted in writing such revisions or updates to such Schedule.

6. CONDITIONS OF LENDING

     The obligation of UBI to make each Revolving Loan hereunder is subject to the performance by the Borrower of its Obligations to be performed hereunder at or prior to the making of each such Revolving Loan and to the satisfaction of the following further conditions:

6.1 Officer’s Certificate

     The representations and warranties of the Borrower contained in Section 5 and in each of the other Loan Documents shall be true and accurate on and as of the Closing Date and each subsequent date when a Revolving Loan is made with the same effect as though such representations and warranties had been made on and as of such date (except representations and warranties which relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or times referred to therein and except changes in representations and warranties that, in the determination of UBI are not reasonably likely to result in a Material Adverse Change), and the Borrower shall have performed and complied with all covenants and conditions hereof and thereof, no Event of Default or Potential Default shall have occurred and be continuing or shall exist; and there shall be delivered to UBI a certificate of the Borrower, dated the Closing Date, and dated the first day of each succeeding fiscal quarter of the Borrower, to be delivered within five (5) Business Days thereafter, to each such effect and signed by one of the following officers: the Chief Executive Officer, President, Chief Financial Officer, Secretary or Assistant Secretary of the Borrower.

6.2 Secretary’s Certificate.

     There shall be delivered to UBI a certificate dated the Closing Date UBI and signed by the Secretary or an Assistant Secretary of the Borrower, certifying as appropriate as to:

          (i) all action taken by the Borrower in connection with this Agreement and the other Loan Documents;

          (ii) the names of the officer or officers authorized to sign this Agreement and the other Loan Documents and the true signatures of such officer or officers and specifying the Authorized Officers permitted to act on behalf of the Borrower for purposes of this Agreement and the true signatures of such officers, on which UBI may conclusively rely; and

          (iii) copies of its organizational documents, including its certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of

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formation, and limited liability company agreement as in effect on the Closing Date certified by the appropriate state official where such documents are filed in a state office together with certificates from the appropriate state officials as to the continued existence and good standing (or subsistence) of the Borrower in each state where organized or qualified to do business and a bring-down certificate by facsimile dated the Closing Date.

6.3 Subsidiaries Guaranty.

     There shall be delivered to UBI, a Subsidiaries Guaranty in the form attached hereto as Exhibit 6.3.

6.4 Opinion of Counsel.

     There shall be delivered to UBI a written opinion of Huddleston, Bolen, Beatty, Porter & Copen LLP, counsel for the Borrower, dated the Closing Date and in form and substance satisfactory to UBI and its counsel as to such other matters incident to the transactions contemplated herein as UBI may reasonably request.

6.5 Legal Details.

     All legal details and proceedings in connection with the transactions contemplated by this Agreement and the other Loan Documents shall be in form and substance satisfactory to UBI and counsel for UBI, and UBI shall have received all such other counterpart originals or certified or other copies of such documents and proceedings in connection with such transactions, in form and substance satisfactory to UBI and said counsel, as UBI or said counsel may reasonably request.

6.6 Payment of Fees.

     The Borrower shall have paid or caused to be paid to UBI, counsel fees, and all other fees, costs and expenses accrued through the Closing Date for which UBI is entitled to be reimbursed.

6.7 Officer’s Certificate Regarding MACs.

     Since October 31, 2002, no Material Adverse Change shall have occurred; prior to the Closing Date, there shall have been no material change in the management of the Borrower or any Subsidiary of the Borrower, and there shall have been delivered to UBI a certificate of the Borrower dated the Closing Date and dated the first day of each succeeding fiscal quarter, to be delivered within five (5) Business Days thereafter, to each such effect, signed behalf of the Borrower by any one of the Chief Executive Officer, President., Chief Financial Officer, Secretary or Assistant Secretary of the Borrower.

6.8 No Violation of Laws.

     The making of the Revolving Loan shall not contravene any Law applicable to the Borrower or to UBI.

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6.9 No Actions or Proceedings.

     No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or legislative body to enjoin, restrain or prohibit, or to obtain damages in respect of, this Agreement, the other Loan Documents or the consummation of the transactions contemplated hereby or thereby or which, in UBI’s reasonable judgment, would make it inadvisable to consummate the transactions contemplated by this Agreement or any of the other Loan Documents.

7. COVENANTS

7.1 Affirmative Covenants.

     The Borrower, covenants and agrees that until payment in full of the Revolving Loan, and interest thereon, and satisfaction of all of the Borrower’s other Obligations under the Loan Documents, the Borrower shall comply at all times with the following affirmative covenants:

7.1.1 PRESERVATION OF EXISTENCE, ETC.

     The Borrower shall, and shall cause each of its Subsidiaries to, maintain its legal existence as a corporation, limited partnership or limited liability company and its license or qualification and good standing in each jurisdiction in which its ownership or lease of property or the nature of its business makes such license or qualification necessary, except as otherwise expressly permitted in Section 7.2.5.

7.1.2 PAYMENT OF LIABILITIES, INCLUDING TAXES, ETC.

     The Borrower shall, and shall cause each of its Subsidiaries to, duly pay and discharge all liabilities to which it is subject or which are asserted against it, promptly as and when the same shall become due and payable, including all taxes, assessments and governmental charges upon it or any of its properties, assets, income or profits, prior to the date on which penalties attach thereto, except to the extent that such liabilities, including taxes, assessments or charges, are being contested in good faith and by appropriate and lawful proceedings diligently conducted and for which such reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made, but only to the extent that failure to discharge any such liabilities would not result in any additional liability which would adversely affect to a material extent the financial condition of the Borrower or Subsidiary of the Borrower.

7.1.3 MAINTENANCE OF INSURANCE.

     The Borrower shall, and shall cause each of its Subsidiaries to, insure its properties and, assets against loss or damage by fire and such other insurable hazards as such assets are commonly insured (including fire, extended coverage, property damage, workers’ compensation, public liability and business interruption insurance) and against other risks (including errors and omissions) in such amounts as similar properties and assets are insured by prudent companies in similar circumstances carrying on similar businesses, and with reputable

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and financially sound insurers, including self-insurance to the extent customary, all as reasonably determined by UBI.

7.1.4 MAINTENANCE OF PROPERTIES AND LEASES.

     The Borrower shall, and shall cause each of its Subsidiaries to, maintain in good repair, working order and condition (ordinary wear and tear excepted) in accordance with the general practice of other businesses of similar character and size, all of those properties useful or necessary to its business, and from time to time, the Borrower will make or cause to be made all appropriate repairs, renewals or replacements thereof.

7.1.5 MAINTENANCE OF PATENTS, TRADEMARKS, ETC.

     The Borrower shall, and shall cause each of its Subsidiaries to, maintain in full force and effect all patents, trademarks, service marks, trade names, copyrights, licenses, franchises, permits and other authorizations necessary for the ownership and operation of its properties and business if the failure so to maintain the same would constitute a Material Adverse Change.

7.1.6 VISITATION RIGHTS.

     The Borrower shall, and shall cause each of its Subsidiaries to, permit any of the officers or authorized employees or representatives of UBI to visit and inspect any of its properties and to examine and make excerpts from its books and records and discuss its business affairs, finances and accounts with its officers, all in such detail and at such times and as often as UBI may reasonably request, provided that UBI shall provide the Borrower with reasonable notice prior to any visit or inspection.

7.1.7 KEEPING OF RECORDS AND BOOKS OF ACCOUNT.

     The Borrower shall, and shall cause each Subsidiary of the Borrower to, maintain and keep proper books of record and account which enable the Borrower and its Subsidiaries to issue financial statements in accordance with GAAP and as otherwise required by applicable Laws of any Official Body having jurisdiction over the Borrower or any Subsidiary of the Borrower, and in which full, true and correct entries shall be made in all material respects of all its dealings and business and financial affairs.

7.1.8 PLANS AND BENEFIT ARRANGEMENTS.

     The Borrower shall, and shall cause each member of the ERISA Group to, comply with ERISA, the Internal Revenue Code and other applicable Laws applicable to Plans and Benefit Arrangements except where any such failure would not result in a Material Adverse Change. without limiting the generality of the foregoing, the Borrower shall cause all of its Plans and all Plans maintained by any member of the ERISA Group to be funded in accordance with the minimum funding requirements of ERISA and shall make, and cause each member of the ERISA Group to make, in a timely manner, all contributions due to plans, benefit Arrangements and Multiemployer Plans except where such failure would not result in a Material Adverse Change.

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7.1.9 COMPLIANCE WITH LAWS.

     The Borrower shall, and shall cause each of its Subsidiaries to, comply with all applicable Laws including all Environmental Laws, in all respects, provided that it shall not be deemed to be a violation of this Section 7.1.9 if any failure to comply with any Law would not result in fines, penalties, remediation costs, other similar liabilities or injunctive relief any of which would constitute a Material Adverse Change.

7.1.10 USE OF PROCEEDS.

7.1.10.1 General.

     The Borrower will use the proceeds of the Revolving Loan only to provide for financing acquisitions, capital expenditures and general working capital requirements.

7.1.10.2 Margin Stock.

     The Borrower shall not use the proceeds of the Revolving Loan to purchase or carry margin stock as mere fully provided in Section 5.1.10.

7.1.10.3 Section 20 Subsidiaries.

     The Borrower will not, directly or indirectly, use any portion of the proceeds of the Revolving Loan (i) knowingly to purchase any Ineligible Securities from a Section 20 Subsidiary during any period in which such Section 20 Subsidiary makes a market in such Ineligible Securities,(ii) knowingly to purchase during the underwriting or placement period Ineligible Securities being underwritten or privately placed by a Section 20 Subsidiary, or (iii) to make payment of principal or interest on Ineligible Securities underwritten or privately placed by as Section 20 Subsidiary and issued by or for the benefit of Borrower or any Affiliate of the Borrower.

7.2 Negative Covenants.

     The Borrower covenants and agrees that until payment in full of the Revolving Loan, and interest thereon and satisfaction of all of the Borrower’s other Obligations hereunder, the Borrower shall comply with the following negative covenants:

7.2.1 INDEBTEDNESS.

     The Borrower shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Indebtedness, except:

          (i) Indebtedness under the Loan Documents;

          (ii) Existing Indebtedness as set forth on Schedule 7.2.1 (including any extensions, renewals or refinancings thereof), provided there is no increase in the amount thereof or other significant change in the terms thereof unless otherwise specified on Schedule 7.2.1;

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          (iii) Capitalized and operating leases as and to the extent permitted under Section 7.2.13;

          (iv) Indebtedness secured by Purchase Money Security Interests not exceeding $10,000,000;

          (v) the existing $12,500,000 unsecured term loan facility with PNC and the Banks pursuant to the Term Loan Agreement; and any substitute facility with another lender or lenders on substantially the same terms;

          (vi) the existing $1,000,000 unsecured revolving credit facility with First Sentry Bank Huntington, West Virginia; and

          (vii) the existing $10,000,000 unsecured revolving credit facility with National City Bank Columbus, Ohio.

7.2.2 LIENS.

     The Borrower shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Lien on any of its property or assets, tangible or intangible, now owned or hereafter acquired, or agree or become liable to do so, except Permitted Liens.

7.2.3 GUARANTIES.

     Except for the Term Loan Agreement the Borrower shall not, and shall not permit any of its Subsidiaries to, at any time, directly or indirectly, become or be liable in respect of any Guaranty, or assume, guarantee, become surety for, endorse or otherwise agree, become or remain directly or contingently liable upon or with respect to any obligation or liability of any other Person, except for the Guaranty of the Obligations of Borrower provided by each Subsidiary of the Borrower pursuant to the Subsidiaries Guaranty.

7.2.4 LOANS AND INVESTMENTS.

     The Borrower shall not, and shall not permit any of its Subsidiaries to, at any time make or suffer to remain outstanding any loan or advance to, or purchase, acquire or own any stock, bonds, notes or securities of, or any partnership interest (whether general or limited) or limited liability company interest is, or any other investment or interest in, or make any capital contribution to, any other Person, or agree, become or remain liable to do any of the foregoing, except:

          (i) trade credit extended on usual and customary terms in the ordinary course of business

          (ii) advances to employees to meet expenses incurred by such employees in the ordinary course of business;

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          (iii) Permitted Investments;

          (iv) loans, advances and investments in Affiliates of the Borrower.

7.2.5 LIQUIDATIONS, MERGERS, CONSOLIDATIONS AND ACQUISITIONS.

     The Borrower shall not, and shall not permit any of its Subsidiaries to, dissolve, liquidate or wind-up its affairs, or become a party to any merger or consolidation, or acquire by purchase, lease or otherwise all or substantially all of the assets or capital stock of any other Person, provided that:

     (1)  any Affiliate of the Borrower may consolidate or merge into another Affiliate of the Borrower which is wholly-owned by the Borrower and

     (2)  the Borrower may acquire, whether by purchase or by merger, (A) all of the ownership interests and voting rights of another Person or (B) substantially all of assets of another Person or of a business or division of another Person (each a “Permitted Acquisition”), provided that each of the following requirements is met:

          (i) the board of directors or other equivalent governing body of such Person shall have approved such Permitted Acquisition and the Loan Parties shall have delivered to the Bank written evidence of such approval prior to such Permitted Acquisition,

          (ii) the Borrower is acquiring the ownership interests in such Person, such Person shall execute a Subsidiaries Guaranty in favor of UBI and the Banks in the form attached hereto as Exhibit 1. 1 (G) on or before the date of such Permitted Acquisition,

          (iii) The business acquired, or the business conducted by the Person whose ownership interests are being acquired, as applicable, shall be substantially the same as one or more line or lines of business conducted by the Borrower and shall comply with Section 7.2.8,

          (iv) immediately prior to and after giving effect to such Permitted Acquisition, (A) no payment default exists, (B) no violation of Section 7.2 exists, (C) UBI has not sent a notice of a violation of Section 7.1 which has not been cured and (D) no Event of Default exists,

          (v) the Borrower shall provide the most recent available balance sheet and annual income statement for the acquired company at least five (5) Business Days prior to the Permitted Acquisition. Additionally, if the acquired company, or if the total of all acquired companies acquired within any fiscal year if treated as a single acquisition would constitute a “Significant Subsidiary” as that term is defined in Reg. Section 210,1-02(w) of Regulation S-X (17 CFR Part 210), Borrower shall provide a proforma consolidating balance sheet as of the most recent fiscal quarter and consolidating income statement for the most recent fiscal quarter and consolidating income statement for the most recent year-to-date period and for the prior year to include the acquired company and demonstrate on a proforma basis that it shall be in compliance with all the covenants contained in this Agreement after giving effect to such Permitted Acquisition by delivering at least five (5) Business Days prior to such Permitted Acquisition a

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certificate evidencing such compliance. Subject to the above limitations, Permitted Acquisitions may include any merger or acquisition, regardless of whether the value of the Consideration paid or received is comprised of cash, common stock, preferred stock, assets or partnership interests, estimated value of earn-outs or other means,

7.2.6 DISPOSITIONS OF ASSETS OR SUBSIDIARIES.

     The Borrower shall not, and shall not permit any of its Subsidiaries to, sell, convey, assign, sell and leaseback, abandon or otherwise transfer or dispose of, voluntarily or involuntarily, any of its properties or assets, tangible or intangible (including sale, assignment, discount or other disposition of accounts, contract rights, chattel paper, equipment or general tangibles with or without recourse or of capital stock, shares of beneficial interest, partnership interests or limited liability company interests of a Subsidiary of the Borrower), except:

          (i) transactions involving the sale of inventory in the ordinary course of business;

          (ii) any sale, transfer or lease of assets in the ordinary course of business which are no longer necessary or required in the conduct of the Borrower’s or such Subsidiary’s business;

          (iii) any sale, transfer or lease of assets by any Subsidiary of the Borrower to the Borrower; or

          (iv) any sale, transfer or lease of assets in the ordinary course of business which are replaced by substitute assets acquired. or leased within the parameters of Section 7.2.13.

7.2.7 AFFILIATE TRANSACTIONS.

     The Borrower shall not, and shall not permit any of its Subsidiaries to, enter into or carry out any transaction (including purchasing property or services from or selling property or services to any Affiliate of the Borrower or other Person) unless such transaction is not otherwise prohibited by this Agreement, is entered into in the ordinary course of business upon fair and reasonable arm’s-length terms and conditions which are fully disclosed to UBI and is in accordance with all applicable Law.

7.2.8 CONTINUATION OF OR CHANGE IN BUSINESS.

     The Borrower shall not, and shall not permit any of its Subsidiaries to, engage in any business other than commercial printing, and certain leasing businesses in support thereof, and the supplying of office products and office furniture, substantially as conducted and operated by such Borrower or Subsidiary during the present fiscal year, and such Borrower or Subsidiary shall not permit any material change in such business.

7.2.9 PLANS AND BENEFIT ARRANGEMENTS.

     The Borrower shall not, and shall not permit any of its Subsidiaries to:

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          (i) fail to satisfy the minimum funding requirements of ERISA and the Internal Revenue Code with respect to any Plan where such failure is likely to result in a Material Adverse Change;

          (ii) request a minimum funding waiver from the Internal Revenue Service with respect to any Plan;

          (iii) engage in a Prohibited Transaction with any plan, Benefit Arrangement or Multiemployer Plan which would constitute a Material Adverse Change;

          (iv) permit the aggregate actuarial present value of all benefit liabilities (whether or not vested) under each Plan, determined on a plan termination basis, as disclosed in the most recent actuarial report completed with respect to such Plan, to exceed, as of any actuarial valuation date, the fair market value of the assets of such Plan;

          (v) fail to make when due any contribution to any Multiemployer Plan that any Borrower or any member of the ERISA Group may be required to make under any agreement relating to such Multiemployer Plan, or any Law pertaining thereto, where such failure is likely to result in a Material Adverse Change;

          (vi) withdraw (completely or partially) from any Multiemployer Plan or withdraw (or be deemed under Section 4062(e) of ERISA to withdraw) from any Multiple Employer Plan, where any such withdrawal is likely to result in a Material Adverse Change;

          (vii) terminate, or institute proceedings to terminate, any Plan, where such termination is likely to result in a Material Adverse Change;

          (viii) make any amendment to any Plan with respect to which security is required under Section 307 of ERISA; or

          (ix) fail to give any and all notices and make all disclosures and governmental filings required under ERISA or the Internal Revenue Code, where such failure is likely to result in a Material Adverse Change.

7.2.10 FISCAL YEAR.

     The Borrower shall not, and shall not permit any of its Subsidiaries to, change its fiscal year from the twelve-month period beginning November 1 and ending October 31.

7.2.11 ISSUANCE OF STOCK.

     The Borrower shall not, and shall not permit any of its Subsidiaries to, issue any additional shares of its capital stock or any options, warrants or other rights in respect thereof except that the Borrower may issue stock: (a) as all or part of the Consideration for a Permitted Acquisition; (b) pursuant to the provisions of Borrower’s 1993 Stock Option Plan or any successor plan providing for employee stock options; or ( c) incident to any stock split or dividend.

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7.2.12 CHANGES IN ORGANIZATIONAL DOCUMENTS.

     The Borrower shall not, and. shall not permit any of its Subsidiaries to, amend in any respect its certificate of incorporation (including any provisions or resolutions relating to capital stock), by-laws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents in the event such change would be adverse to UBI as determined by UBI in its sole discretion, without obtaining the prior written consent of UBI. The Borrower will provide true and correct copies of all amendments to organizational documents to UBI at the time annual financial statements are delivered.

7.2.13 CAPITAL EXPENDITURES AND LEASES.

     Borrower shall not, and shall not permit any of its Subsidiaries to, make any capital expenditures, as defined by GAAP, including the purchase or lease of any assets which if purchased would constitute fixed assets or which if leased would constitute a capitalized lease, other than capital expenditures in the aggregate not to exceed 15% per annum, (excluding real property), of Borrower’s total shareholder equity (as defined by GAAP) for the previous fiscal year ended, and all such capital expenditures and leases shall be made under usual and customary terms and in the ordinary course of business.

7.2.14 MINIMUM FIXED CHARGE COVERAGE RATIO

     The Borrower shall not permit the ratio of Consolidated Cash Flow from Operations divided by Fixed Charges, calculated as of the end of each fiscal quarter for the previous four fiscal quarters then ended, to be less than 1.05 to 1.0.

7.2.15 LEVERAGE RATIO

     The Borrower shall not at any time permit the ratio of Total Senior Indebtedness divided by EBITDA to be greater than the Maximum Leverage Ratio (2.0 to 1.0) as of October 31 of each year commencing with October 31, 2003.

7.2.16 MINIMUM TANGIBLE NET WORTH.

     The Borrower shall not at any time permit Consolidated Tangible Net Worth to be less than the sum of (i) 90% of Tangible Net Worth as of October 31, 2002, (ii) an amount equal to 50% of the Consolidated Net Income and (iii) 100% of the proceeds of all stock issued by the Borrower or any of its Subsidiaries,

7.3 Reporting Requirements.

     The Borrower covenants and agrees that until payment in full of the Revolving Loan and interest thereon and satisfaction of all of the Borrower’s other Obligations hereunder and under the other Loan Documents the Borrower will furnish or cause to be furnished to UBI.

7.3.1 QUARTERLY FINANCIAL STATEMENTS.

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     As soon as available and in any event within forty-five (45) calendar days after the end of each of the first three fiscal quarters in each fiscal year, financial statements of the Borrower, consisting of a consolidated balance sheet as of the end of such fiscal quarter and related consolidated statements of income and cash flows for the fiscal quarter then ended and the fiscal year through that date, all in reasonable detail and, certified (subject to normal year-end audit adjustments) by the Chief Executive Officer, President or Chief Financial Officer of the Borrower as having been prepared in accordance with GAAP, consistently applied and setting forth in comparative form the respective financial statements for the corresponding date and period in the previous fiscal year.

7.3.2 ANNUAL FINANCIAL STATEMENTS.

     As soon as available and in any event within ninety (90) days after the end of each fiscal year of the Borrower, financial statements of the Borrower consisting of a consolidated and a consolidating balance sheet as of the end of such fiscal year, and related consolidated and consolidating statements of income, retained earnings and cash flows for the fiscal year then ended, all in reasonable detail and, setting forth in comparative form the financial statements as of the end of and for the preceding fiscal year, and certified by independent certified public accountants of nationally recognized standing. The certificate or report of accountants shall be free of qualifications (other than any consistency qualification that may result from a change in the method used to prepare the financial statements as to which such accountants concur). In addition, the certified shall certify that it is in full compliance with all applicable provisions of the Sarbanes Oxley Act of 2002 and all rules and regulations Promulgated thereunder.

7.3.3 CERTIFICATE OF THE BORROWER

     Concurrently with the financial statements of the Borrower furnished to UBI pursuant to Sections 7.3.1 and 7.3.2, a certificate of the Borrower signed by the Chief Executive Officer , President or Chief Financial Officer of the Borrower, in the form of Exhibit 7.3.3, to the effect that, except as described pursuant to Section 7.3.4, (i) the representations and warranties of the Borrower contained in Section 5 and in the other Loan Documents are true on and as of the date of such certificate with the same effect as though such representations and. warranties had been made on and as of such date (except representations and warranties which expressly relate solely to an earlier date or time) and the Borrower has performed and complied with all covenants and conditions hereof, (ii) no Event of Default or Potential Default exists and is continuing on the date of such certificate and (iii) containing calculations in sufficient detail to demonstrate compliance as of the date of such financial statements with all financial covenants contained in Section 7.2. In addition, the Borrower shall certify that it is in full compliance with all applicable provisions of the Sarbanes Oxley Act of 2002 and all rules and regulations promulgated thereunder.

7.3.4 NOTICE OF DEFAULT.

     Promptly after any executive officer of the Borrower has learned of the occurrence of an Event of Default or Potential Default, a certificate signed on behalf of the Loan parties by an executive officer of the Borrower setting forth the details of such Event of Default or Potential Default and the action which the Borrower proposes to take with respect thereto.

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7.3.5 NOTICE OF LITIGATION.

     Promptly after the commencement thereof, notice of all actions, suits, proceedings or investigations before or by any Official Body or any other Person against the Borrower or any of its Subsidiaries which involve a claim or series of claims in excess of $1,000,000 or which if adversely determined would constitute a Material Adverse Change.

7.3.6 CERTAIN EVENTS.

     Written notice to UBI:

          (i) at least ten (10) calendar days after closing, with respect to any proposed sale or transfer of assets pursuant to Section 7.2.6(iv), and

          (ii) within the restrictions set forth in Section 7.2.12, any amendments to the organizational documents of the Borrower,

7.3.7 BUDGETS, FORECASTS, OTHER REPORTS AND INFORMATION.

     Promptly upon their becoming available to the Borrower:

          (i) the annual budget and any forecasts of the Borrower,

          (ii) any reports including reports on the internal control structure the Borrower based upon any audit of the Borrower,

          (iii) any reports, notices or proxy statements generally distributed by the Borrower to its stockholders on a date no later than the date supplied to such stockholders,

          (iv) regular or periodic reports, including Forms 10-K, 10-Q and 8-K, registration statements and prospectuses, filed by the Borrower with the Securities and Exchange Commission,

          (v) upon UBI’s reasonable request, a copy of any order in any proceeding to which the Borrower or any of its Subsidiaries is a party issued by any Official Body, and

          (vi) such other reports and information as any of UBI may from time to time reasonably request. The Borrower shall also notify UBI promptly of the enactment or adoption of any Law which may result in a Material Adverse Change.

7.3.8 NOTICES REGARDING PLANS AND BENEFIT ARRANGEMENTS.

7.3.8.1 Certain Events.

     Promptly upon becoming aware of the occurrence thereof, notice (including the nature of the event and, when known, any action taken or threatened by the Internal Revenue Service or the PBGC with respect thereto) of

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          (i) any Reportable Event with respect to the Borrower or any other member of the ERISA Group (regardless of whether the obligation to report said Reportable Event to the PBGC has been waived),

          (ii) any Prohibited Transaction which could subject the Borrower or any other member of the ERISA Group to a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Internal Revenue Code in connection with any Plan, any Benefit Arrangement or any trust created thereunder where such civil penalty or tax is likely to result in a Material Adverse Change,

          (iii) any assertion of material withdrawal liability with respect to any Multiemployer Plan,

          (iv) any partial or complete withdrawal from a Multiemployer Plan by the Borrower or any other member of the ERSA Group under Title IV of ERISA (or assertion thereof), where such withdrawal is likely to result in material withdrawal liability,

          (v) any cessation of operations (by the Borrower or any other member of the ERISA Group) at a facility in the circumstances described in Section 4062(e) of ERISA,

          (vi) withdrawal by the Borrower or any other member or any other member of the ERISA Group from a Multiple Employer Plan,

          (vii) a failure by the Borrower or any other member of the ERISA Group to make a payment to a Plan required to avoid imposition of a Lien under Section 302(f) of ERISA,

          (viii) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA, or

          (ix) any change in the actuarial assumptions or funding methods used for any Plan, where the effect of such change is to materially increase or materially reduce the unfounded benefit liability or obligation to make periodic contributions.

7.3.8.2 Notices of Involuntary Termination and Annual Reports.

     Promptly after receipt thereof, copies of (a) all notices received by the Borrower or any other member of the ERISA Group of the PBGC’s intent to terminate any Plan administered or maintained by the Borrower or any member of the ERISA Group, or to have a trustee appointed to administer any such Plan; and (b) at the request of UBI each annual report (IRS Form 5500 series) and all accompanying schedules, the most recent actuarial reports, the most recent financial information concerning the financial status of each Plan administered or maintained by the Borrower or any other member of the ERISA Group, and schedules showing the amounts contributed to each such Plan by or on behalf of the Borrower or any other member of the ERISA Group in which any of their personnel participate or from which such personnel may derive a benefit, and each Schedule B (Actuarial Information) to the annual report filed by the Borrower or any other member of the ERISA Group with the Internal Revenue Service with respect to each such Plan.

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7.3.8.3 Notice of Voluntary Termination.

     Promptly upon the filing thereof, copies of any Form 5310, or any successor or equivalent form to Form 5310, filed with the PBGC in connection with the termination of any Plan.

8. DEFAULT

8.1 Events of Default.

     An Event of Default shall mean the occurrence or existence of any one or more of the following events or conditions (whatever the reason therefor and whether voluntary, involuntary or effected by operation of Law):

8.1.1 PAYMENTS UNDER LOAN DOCUMENTS.

     The Borrower shall fail to pay any principal of the Revolving Loan (including mandatory prepayments or the payment due at maturity), or shall fail to pay any interest on the Revolving Loan after such principal or interest becomes due in accordance with the terms hereof or thereof, or the Borrower fails to pay any other amount owing hereunder or under the other Loan Documents after the date provided in an invoice or other notice of payment due.

8.1.2 BREACH OF WARRANTY.

     Any representation or warranty made at any time by any of the Borrowers herein or in any other Loan Document, or in any certificate, other instrument or statement furnished pursuant to the provisions hereof or thereof, shall prove to have been false or misleading in any material respect as of the time it was made or furnished;

8.1.3 BREACH OF NEGATIVE COVENANTS OR VISITATION RIGHTS.

     A default shall occur in the observance or performance of any covenant contained in Section 7.1.6 or Section 7.2.

8.1.4 BREACH OF OTHER COVENANTS.

     Any of the Loan Parties shall default in the observance or performance of any other covenant, condition or provision hereof or of any other Loan Document and such default shall continue unremedied for a period of thirty (30) Business Days after the Chief Executive Officer, President, Chief Financial Officer or Corporate Secretary of the Borrower becomes aware of the occurrence thereof (such grace period to be applicable only in the event such default can be remedied by corrective action of the Borrower as determined by UBI in its sole discretion).

8.1.5 DEFAULTS IN OTHER AGREEMENTS OR INDEBTEDNESS.

     A default or event of default shall occur at any time under the terms of any other agreement involving borrowed money or the extension of credit or any other Indebtedness under

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which the Borrower or Subsidiary of the Borrower may be obligated as a borrower or guarantor in excess of $750,000 in the aggregate, and such breach, default or event of default consists of the failure to pay (beyond any period of grace permitted with respect thereto, whether waived or not) any indebtedness when due (whether at stated maturity, by acceleration or otherwise) or if such breach or default permits (because of nonpayment) or causes the acceleration of any indebtedness (whether or not such right shall have been waived) or the termination of any commitment to lend.

8.1.6 FINAL JUDGMENTS OR ORDERS.

     Any final judgments or orders for the payment of money in excess of $500,000 in the aggregate shall be entered against the Borrower or any of its Subsidiaries by a court having jurisdiction in the premises, which judgment is not discharged, vacated, bonded or stayed pending appeal within a period of thirty (30) days from the date of entry.

8.1.7 LOAN DOCUMENT UNENFORCEABLE.

     Any of the Loan Documents shall cease to be legal, valid and binding agreements enforceable against the party executing the same or such party’s successors and assigns (as permitted under the Loan Documents) in accordance with the respective terms thereof or shall in any way be terminated (except in accordance with its terms) or become or be declared ineffective or inoperative or shall in any way be challenged or contested or cease to give or provide the respective Liens, security interests, rights, titles, interests, remedies, powers or privileges intended to be created thereby.

8.1.8 UNINSURED LOSSES; PROCEEDINGS AGAINST ASSETS.

     Any assets of the Borrower or its Subsidiaries are attached, seized, levied upon or subjected to a writ or distress warrant; or such come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors and the same is not cured within thirty (30) days thereafter.

8.1.9 NOTICE OF LIEN OR ASSESSMENT.

     A notice of Lien or assessment, other than a Permitted Lien, is filed of record with respect to all or any part of the assets of the Borrower or any of its Subsidiaries by the United States, or any department, agency or instrumentality thereof, or by any state, county, municipal or other governmental agency, including the PBGC, or any taxes or debts owing at any time or times hereafter to any one of these becomes payable and the same is not paid within thirty (30) days after the same becomes payable.

8.1.10 INSOLVENCY.

     The Borrower or any Subsidiary of the Borrower ceases to be solvent or admits in writing its inability to pay its debts as they mature.

8.1.11 EVENTS RELATING TO PLANS AND BENEFIT ARRANGEMENTS.

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     Any of the following occurs: (i) any Reportable Event, which UBI determines in good faith constitutes grounds for the termination of any Plan by the PBGC or the appointment of a trustee to administer or liquidate any Plan, shall have occurred and be continuing; (ii) proceedings shall have been instituted or other action taken to terminate any Plan, or a termination notice shall have bean filed with respect to any Plan; (iii) a trustee shall. be appointed to administer or liquidate any Plan; (iv) the PBGC shall give notice of its intent to institute proceedings to terminate any Plan or Plans or to appoint a trustee to administer or liquidate any Plan; and, in the case of the occurrence of (i), (ii), (iii) or (iv) above, UBI determines in good faith that the amount of the Borrower’s liability is likely to exceed 10% of its Consolidated Net Worth; (v) the Borrower or any member of the ERISA Group shall fail to make any contributions when due to a Plan or a Multiemployer Plan; (vi) the Borrower or any other member of the ERISA Group shall make any amendment to a Plan with respect to which security is required under Section 307 of ERISA; (vii) the Borrower or any other member of the ERISA Group shall withdraw completely or partially from a Multiemployer Plan; (viii) the Borrower or any other member of the ERISA Group shall withdraw (or shall be deemed under Section 4062(e) of ERISA to withdraw) from a Multiple Employer Plan; or (ix) any applicable Law is adopted, changed or interpreted by any Official Body with respect to or otherwise affecting one or more Plans, Multiemployer Plans or Benefit Arrangements and, with respect to any of the events specified in (v), (vi), (vii), (viii) or (ix), UBI determines in good faith that any such occurrence would be reasonably likely to materially and adversely affect the total enterprise represented by the Borrower and the other members of the ERISA Group.

8.1.12 CESSATION OF BUSINESS.

     The Borrower or Subsidiary of the Borrower ceases to conduct its business as contemplated, except as expressly permitted under Section 7.2.5 or 7.2.6, or the Borrower or Subsidiary of the Borrower is enjoined, restrained or in any way prevented by court order from conducting all or any material part of its business and such injunction, restraint or other preventive order is not dismissed within thirty (30) days after the entry thereof.

8.1.13 CHANGE OF CONTROL.

          (i) Any person or group of persons (within the meaning of Sections 13 (a) or 14 (a) of the Securities Exchange Act of 1934, as amended) shall have acquired beneficial ownership of (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under said Act) 33% or more of the voting capital stock of the Borrower; or (ii) Marshall T. Reynolds shall cease to have beneficial ownership of at least 40% of the voting capital stock of the Borrower.

8.1.14 INVOLUNTARY PROCEEDINGS.

     A proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of the Borrower or Subsidiary of the Borrower in an involuntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of the Borrower or Subsidiary of the Borrower for any substantial part of its property, or for the winding-up or

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liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect for a period of thirty (30) consecutive days or such court shall enter a decree or order granting any of the relief sought in such proceeding; or

8.1.15 VOLUNTARY PROCEEDINGS.

     The Borrower or Subsidiary of the Borrower shall commence a voluntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or other similar official) of itself or for any substantial part of its property or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any action in furtherance of any of the foregoing.

8.2 Consequences of Event of Default.

8.2.1 EVENTS OF DEFAULT OTHER THAN BANKRUPTCY, INSOLVENCY OR REORGANIZATION PROCEEDINGS.

     If an Event of Default specified under Sections 8.1.1 through 8.1.13 shall occur and be continuing, UBI shall be under no further obligation to make Loans hereunder and UBI, may by written notice to the Borrower, declare the unpaid principal amount of the Revolving Note then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrower to the Banks hereunder and thereunder to be forthwith due and payable, and the same shall thereupon become and be immediately due and payable to UBI without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, and

8.2.2 BANKRUPTCY, INSOLVENCY OR ORGANIZATION PROCEEDINGS.

     If an Event of Default specified under Section 8.1.14 or 8.1.15 shall occur, UBI shall be under no further obligation to make Revolving Loans hereunder and the unpaid principal amount of the Revolving Note then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrower to UBI hereunder and thereunder shall be immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived; and

8.2.3 SET-OFF.

     If an Event of Default shall occur and be continuing, UBI, any participant of UBI which has agreed in writing to be bound by the provisions of Section 9.13 and any branch, Subsidiary or Affiliate of UBI or any such participant anywhere in the world shall have the right, in addition to all other rights and remedies available to it, without notice to such Loan Party, to set-off against and apply to the then unpaid balance of all the Revolving Loans and all other Obligations of the Borrower hereunder or under any other Loan Document any debt owing to, and any other funds held in any manner for the account of, the Borrower by such Bank or participant or by such branch, Subsidiary or Affiliate, including all funds in all deposit accounts

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(whether time or demand, general or special, provisionally credited or finally credited, or otherwise) now or hereafter maintained by the Borrower for its own respective account (but not including funds held in custodian or trust accounts) with UBI or participant or such branch, Subsidiary or Affiliates. Such right shall exist whether or not UBI shall have made any demand under this Agreement or any other Loan Document, whether or not such debt owing to or funds held for the account of such Loan Party is or are matured or unmatured and regardless of the existence or adequacy of any Guaranty or any other security, right or remedy available to UBI; and

8.2.4 SUITS, ACTIONS, PROCEEDINGS.

     If an Event of Default shall occur and be continuing, UBI, if owed any amount with respect to the Revolving Note, may proceed to protect and enforce its rights by suit in equity, action at law and/or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in this Agreement or the Revolving Note, including as permitted by applicable Law the obtaining of the ex parte appointment of a receiver, and, if such amount shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right of UBI; and

8.2.5 APPLICATION OF PROCEEDS.

     From and after the date on which UBI has taken any action pursuant to this Section 8.2 and until all Obligations of the Borrower have been paid in full, any and all proceeds received by UBI from the exercise of any other remedy by UBI, shall be applied as follows:

          (i) first, to reimburse UBI for out-of pocket costs, expenses and disbursements, including reasonable attorneys’ and paralegals’ fees and legal expenses, incurred by UBI in connection with realizing on the Collateral or collection of any Obligations of any of the Borrower under any of the Loan Documents;

          (ii) second, to the repayment of all Indebtedness then due and unpaid of the Borrower to the Banks incurred under this Agreement or any of the other Loan Documents, whether of principal, interest, fees, expenses or otherwise, in such manner as UBI may determine in its discretion; and

          (iii) the balance, if any, as required by Law.

9. [This section intentionally omitted]

10. MISCELLANEOUS.

10.1 [This Section Intentionally Omitted]

10.2 No Implied Waivers, Cumulative Remedies, Writing Required.

     No course of dealing and no delay or failure of UBI in exercising any right, power, remedy or privilege under this Agreement or any other Loan Document shall affect any other or future exercise thereof or operate as a waiver thereof, nor shall any single or partial

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exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power, remedy or privilege preclude any further exercise thereof or of any other right, power, remedy or privilege. The rights and remedies of UBI under this Agreement and any other Loan Documents are cumulative and not exclusive of any rights or remedies which they would otherwise have. Any waiver, permit, consent or approval of any kind or character on the part of UBI of any breach or default under this Agreement or any such waiver of any provision or condition of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing.

10.3 Reimbursement and Indemnification of UBI by the Borrower; Taxes;

     The Borrower unconditionally agrees to pay or reimburse UBI and hold UBI harmless against (a) liability for the payment of all reasonable out-of-pocket costs, expenses and disbursements, including fees and expenses of counsel (including the allocated costs of staff counsel), appraisers and environmental consultants, incurred by UBI (i) in connection with the development, negotiation, preparation, printing, execution, syndication, interpretation and performance of this Agreement and the other Loan Documents, (ii) relating to any requested amendments, waivers or consents pursuant to the provisions hereof, (iii) in connection with the enforcement of this Agreement or any other Loan Document or collection of amounts due hereunder or thereunder or the proof and allowability of any claim arising under this Agreement or any other Loan Document, whether in bankruptcy or receivership proceedings or otherwise, and (iv) in any workout or restructuring or in connection with the protection, preservation, exercise or enforcement of any of the terms hereof or of any rights hereunder or under any other Loan Document or in connection with any foreclosure, collection or bankruptcy proceedings, and (b) all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against UBI, in any way relating to or arising out of this Agreement or any other Loan Documents or any action taken or omitted by UBI hereunder or thereunder, provided that the Borrower shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements it the same results from UBI’s gross negligence or willful misconduct, or if the Borrower was not given notice of the subject claim and the opportunity to participate in the defense thereof, at its expense (except that the Borrower shall remain liable to the extent such failure to give notice does not result in a loss to the Borrower), or if the same results from a compromise or settlement agreement entered into without the consent of the Borrower, which shall not be unreasonably withheld. At the Borrower’s reasonable request, an officer of the Borrower may discuss initial budgets developed by counsel for UBI (as long as such counsel determines that no privilege will be waived as a result of such discussions). Nothing in this Section 10.3 prevents the Borrower from obtaining its own counsel and controlling its own defense in any action.

     The Borrower agrees unconditionally to pay all stamp, document, transfer, recording or filing taxes or fees and similar impositions now or hereafter determined by UBI to be payable in connection with this Agreement or any other Loan Document, and the Borrower agrees unconditionally to save UBI harmless from and against any and all present or future claims, liabilities or losses with respect to or resulting from any omission to pay or delay in paying any such taxes, fees or impositions.

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10.4 Holidays.

     Whenever payment of the Revolving Loan to be made or taken hereunder shall be due on a day which is not a Business Day such payment shall be due on the next Business Day and such extension of time shall be included in computing interest and fee, except that the Revolving Loan shall be due on the Business Day preceding the Maturity Date if the Maturity Date is not a Business Day. Whenever any payment or action to be made or taken hereunder (other than payment of the Loans) shall be stated to be due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day (except as provided in Section 3.1.2 with respect to Interest Periods), and such extension of time shall not be included in computing interest or fees, if any, in connection with such payment or action.

10.5 Notices.

     All notices, requests, demands, directions and other communications (as used in this Section 10.5, collectively referred to as “notices”) given to or made upon any party hereto under the provisions of this Agreement shall be by telephone or in writing (including telex or facsimile communication) unless otherwise expressly permitted hereunder and shall be delivered or sent by telex or facsimile to the respective parties at the addresses and numbers set forth under their respective names on Schedule 1. 1 (B) hereof or in accordance with any subsequent unrevoked written direction from any party to the others. All notices shall, except as otherwise expressly herein provided, be effective (a) in the case of telex or facsimile, when received, (b) in the case of hand-delivered notice, when hand-delivered, (c) in the case of telephone, when telephoned, provided, however, that in order to be effective, telephonic notices must be confirmed in writing no later than the next day by letter, facsimile or telex, (d) if given by mail, four (4) days after such communication is deposited in the mail with first-class postage prepaid, return receipt requested, and (e) if given by any other means (including by air courier), when delivered; provided, that notices to UBI shall not be effective until received and provided, further, that any notices of a Potential Default or an Event of Default shall be sent by facsimile or overnight delivery service.

10.6 Severability.

     The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or an part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.

10.7 Governing Law.

     This Agreement shall be deemed to be a contract under the Laws of the State of West Virginia and for all purposes shall be governed by and construed and enforced in accordance with the internal laws of the State of West Virginia without regard to its conflict of laws principles.

10.8 Prior understanding.

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     This Agreement and the other Loan Documents supersede all prior understandings and agreements, whether written or oral, between the parties hereto and thereto relating to the transactions provided for herein and therein, including any prior confidentiality agreements and commitments.

10.9 Duration, Survival.

     All representations and warranties of the Borrower contained herein or made in connection herewith shall survive the making of the Revolving Loan and shall not be waived by the execution and delivery of this Agreement, any investigation by UBI, the making of the Revolving Loan, or payment in full of the Revolving Loan. All covenants and agreements of the Borrower contained in Sections 7.1, 7.2 and 7.3 herein shall continue in full force and effect from and after the date hereof until payment in full of the Revolving Loan. All covenants and agreements of the Borrower contained herein relating to the payment of principal, interest, premiums, additional compensation or expenses and indemnification, including those set forth in the Revolving Note, and Sections 2, 3 and 10.3, shall survive payment in full of the Revolving Loan.

10.10 Successors and Assigns.

     This Agreement shall be binding upon and shall inure to the benefit of UBI and the Borrower and their respective successors and assigns, except that (i) the Borrower may not assign or transfer any of its rights and Obligations hereunder.

10.11 Confidentiality.

     UBI agrees to keep confidential all information obtained from the Borrower or its Subsidiaries which is nonpublic and confidential or proprietary in nature (including any information the Borrower specifically designate as confidential), except as provided below, and to use such information only in connection with this Agreement and for the purposes contemplated hereby. UBI shall be permitted to disclose such information (i) to outside legal counsel, accountants and other professional advisors who need to know such information in connection with the administration and enforcement of this Agreement, subject to agreement of such Persons to maintain the confidentiality, (ii) to assignees and participants as contemplated by section 10.10 provided that they shall execute an agreement in favor of the Borrower covering the matters set forth in this Section 10.12, (iii) to the extent requested by any bank regulatory authority or, with notice to the Borrower, as otherwise required by applicable Law or by any subpoena or similar legal process, or in connection with any investigation or proceeding arising out of the transactions contemplated by this Agreement, (iv) if it becomes publicly available other than as a result of a breach of this Agreement or becomes available from a source not bound by confidentiality restrictions, or (v) if the Borrower shall have consented to such disclosure.

10.12 Counterparts.

     This Agreement may be executed by different parties hereto on any number of separate counterparts, each of which, when so executed and delivered, shall be an original, and all such counterparts shall together constitute one and the same instrument.

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10.13 UBI’s Consent.

     Except as otherwise provided in the Loan Documents, whenever UBI’s consent is required to be obtained under this Agreement or any of the other Loan Documents as a condition to any action, inaction, condition or event, UBI shall be authorized to give or withhold such consent in its reasonable discretion.

10.14 Exceptions.

     The representations, warranties and covenants contained herein shall be independent of each other, and no exception to any representation, warranty or covenant shall be deemed to be an exception to any other representation, warranty or covenant contained herein unless expressly provided, nor shall any such exceptions be deemed to permit any action or omission that would be in contravention of applicable Law.

10.15 CONSENT TO FORUM; WAIVER OF JURY TRIAL.

THE BORROWER HEREBY IRREVOCABLY FURTHER CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE CIRCUIT COURT OF CABELL COUNTY AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO THE BORROWER AT THE ADDRESS PROVIDED FOR IN SECTION 10.5 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. THE BORROWER WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE. THE BORROWER, UBI AND THE BANK HEREBY WAIVE TRIAL BY JURY IN AN ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.

     IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Agreement as of the day and year first above written.

CHAMPION INDUSTRIES, INC. a West Virginia corporation
By:
	Todd R. Fry
	Vice President and Chief Financial Officer
UNITED BANK, INC. a West Virginia state banking corporation
By:
	Linda J. Pleasants
	Vice President

44

SCHEDULE 1.1 (B)
REVOLVING CREDIT COMMITMENT OF UBI AND ADDRESSES FOR NOTICES

PART 1 – COMMITMENT OF UBI AND ADDRESSES FOR NOTICES TO UBI

BANK		COMMITMENT
Name:	United Bank, Inc.	$	10,000,000.00
Address:	2889 Third Avenue
	Huntington, West Virginia 25702
Attention:	Linda J. Pleasants, Vice President
Telephone:	(304) 781-2352
Telecopy:	(304) 781-2360
With a copy to : United Bank, Inc.,
	United Square
	501 Avery Street
	Parkersburg, West Virginia 26101
Attention:
Telephone:
Telecopy:
With a copy to:
Edward D. McDevitt
Bowles Rice McDavid Graff & Love PLLC
600 Quarrier Street
Charleston, West Virginia 25301
Telephone:	(304) 347-1711
Telecopy:	(304) 343-3058
PART 2 – ADDRESSES FOR NOTICES TO BORROWER:
Borrower:
Champion Industries, Inc.
2450 First Avenue
Huntington, West Virginia 25703
Attention: Todd R. Fry, Vice President and Chief Financial Officer
Telephone:	(304) 528-2700
Telecopy:	(304) 528-2765
With a copy to:
Thomas J. Murray
Huddleston, Bolen, Beatty, Porter, & Copen LLP
611 3rd Ave
Huntington, West Virginia 25703
Telephone: (304) 529-6181

45

LIST OF SCHEDULES and EXHIBITS
SCHEDULES

SCHEDULE 1.1(P)
PERMITTED LIENS

SCHEDULE 5.1.2
CAPITALIZATION

SCHEDULE 5.1.3
SUBSIDIARIES, PARTNERSHIPS AND LLC INTERESTS

SCHEDULE 5.1.7
MATERIAL LITIGATION

SCHEDULE 7.2.1
PERMITTED INDEBTEDNESS

EXHIBITS

EXHIBIT 1.1(G)
SUBSIDIARIES GUARANTY

EXHIBIT 1.1(T)
REVOLVING CREDIT NOTE

EXHIBIT 7.3.3

QUARTERLY COMPLIANCE CERTIFICATE

46

Schedule 1.1 (P)
PERMITTED LIENS

Huntington

		6/30/03
Lender	Collateral	Balance
Bank One	Equipment	$	154,680.00
Interform Corporation
US Bancorp	Equipment		136,470.38
Community Trust	Equipment		178,834.00
Bourque Printing
Hibernia National	Bourque Building		1,422,948.04
Donihe
Bank One	Equipment		160,417.09
Upton Printing
Leasing One	Equipment		211,351.31
Merten Co.
Firstar	Equipment		214,298.07
Parkersburg
Community Trust	Equipment		106,388.14
First Century	Equipment		436,562.44

47

		6/30/03
Lender	Collateral	Balance
CHMP Leasing
First Sentry Bank	Vehicles		219,377.46
	TOTAL	$	3,241,326.93

48

SCHEDULE 5.1.2.

     1) Pursuant to Borrower’s 1993 Stock Option Plan, 762,939 shares of Borrower’s Common Stock have been reserved for issuance to employees. As of the date of this Agreement, options covering 327,000 of such shares are outstanding.

49

SCHEDULE 5.1.3.
BORROWER’S SUBSIDIARIES
ALL WHOLLY OWNED BY BORROWER

	Jurisdiction of	Authorized	Issued and
	Incorporation	Capital Stock	Outstanding Shares
The Chapman Printing Company, Inc.	West Virginia	500 shares common stock, par value $100.00		100
Stationers, Inc.	West Virginia	1,000 shares common stock, par value $100.00		584
Bourque Printing, Inc.	Louisiana	9 shares common stock, par value $1,000.00		3
Dallas Printing Company, Inc.	Mississippi	40,000 shares common stock, par value $1.00		40,000
Carolina Cut Sheets, Inc.	West Virginia	5,000 shares common stock, par value $1.00		100
U. S. Tag & Ticket Company, Inc.	Maryland	20,000 shares common stock, par value $10.00		8,990
Donihe Graphics, Inc.	Tennessee	1,000 shares common stock, no par value		100
Smith & Butterfield Co., Inc.	Indiana	1,000 shares common stock, no par value;		500 common, - -0- preferred
		500 shares preferred stock, par value $10.00
The Merten Company	Ohio	850 shares common stock, no par value		100 shares

50

	Jurisdiction of	Authorized	Issued and
	Incorporation	Capital Stock	Outstanding Shares
Interform Corporation	Pennsylvania	20,000 shares common stock, par value $10.00;		10,000 shares common stock
		3,386.5 shares Class B nonvoting stock, par value $1.00		-0- shares Class B nonvoting stock
CHMP Leasing, Inc.	West Virginia	5,000 shares common stock, par value $1.00		100 shares
Blue Ridge Printing Co., Inc.	North Carolina	10,000 shares common stock, $10.00 par value		550 shares
Rose City Press	West Virginia	1,000 shares voting common stock, $100.00 par value		566 shares voting common stock
		6,000 shares non-voting common stock, $400.00 par value		3,174 shares non-voting common stock
Capitol Business Equipment, Inc.	West Virginia	2,000 shares common stock, $25.00 par value		1,275 shares
Thompson’s of Morgantown, Inc.	West Virginia	250 shares common stock, $100.00 par value		200 shares
Independent Printing Service, Inc.	Indiana	1,000 shares common stock, no par value		100 shares
Diez Business Machines, Inc.	Louisiana	100 shares common stock, no par value		100 shares
Transdata Systems, Inc.	Louisiana	10,000 shares common stock, no par value		600 shares

51

SCHEDULE 5.1.7.

LEGAL PROCEEDINGS

     On February 16, 2002, a jury verdict was rendered against the Borrower in a civil action brought against the Borrower in state court in Jackson, Mississippi. The civil action is styled National Forms & Systems Group, Inc. v. Timothy V. Ross; Todd Ross and Champion Industries, Inc.; and Timothy V. Ross v. National Forms & Systems Group, Inc. and Mickey McCardle; Circuit Court of the First Judicial District of Hinds County, Mississippi; Case No. 251-11-942-CIV.

     The plaintiffs in this civil action asserted that the Borrower and its Dallas Printing Company, Inc. subsidiary had engaged in unfair competition and other wrongful acts in hiring certain of its employees. The jury awarded the plaintiffs $1,745,000 in actual damages and $750,000 in punitive damages.

     On March 1, 2002, the plaintiffs in the civil action filed a motion for attorney’s fees and costs in the amount of $889,401. On July 16, 2002, the court entered an order granting plaintiff $645,119 in attorney fees and expenses, and ordered that interest on the amount of the jury award accrue from February 22, 2002.

     On July 17, 2002, the Borrower filed a notice of appeal from the jury verdict. The appeal involves both the jury award and the attorney’s fee and expense award. If the Borrower is not successful on appeal, Mississippi law provides that it is liable for an additional 15% of the total award.

     The Borrower has been advised that it has no insurance coverage for this award. The Borrower under Mississippi law has a guaranteed right to appeal. The Borrower has been advised by counsel that it has multiple grounds for an appeal and a reasonable basis for believing that an appeal would be successful in eliminating the jury award. However, there can be no assurance that the jury award will be overturned upon appeal. If the verdict is not overturned, the impact on the operating results of the Borrower could be material.

52

Schedule 7.2.1
PERMITTED INDEBTEDNESS

Champion Industries, Inc.

		6/30/2003
Lender	Collateral	Balance
PNC - (part of $12.5 million loan)	Unsecured		1,488,257.87
Huntington
Bank One	Equipment	$	154,680.00
Interform Corporation
US Bancorp	Equipment		136,470.38
Community Trust	Equipment		178,834.00
PNC - (part of $12.5 million loan)	Unsecured
Bourque Printing
Hibernia National	Bourque Building		1,422,948.04
Donihe
Bank One	Equipment		160,417.09
Upton Printing
Leasing One	Equipment		211,351.31
Merten Co.
Firstar	Equipment		214,298.07

53

		6/30/2003
Lender	Collateral	Balance
Parkersburg
Community Trust	Equipment		106,388.14
First Century	Equipment		436,562.44
CHMP Leasing
First Sentry Bank	Vehicles		219,377.46
	TOTAL	$	4,729,584.80

54 EX-10.5 7 w93425exv10w5.htm EXHIBIT 10.5

10.5

Agreement Amending and Extending term of lease dated May 9, 2003 between Champion Industries, inc. DBA, Upton Printing and AMB Property, L.P.

AMENDMENT #1 TO LEASE AGREEMENT

     This Amendment to Lease dated May 9, 2003 by and between AMB PROPERTY LP, a DELEWARE limited partnership, (hereafter “Landlord”), and, Champion Industries, Inc d/b/a Upton Printing, (hereafter “Tennant”),

WITNESSETH:

     WHEREAS, on October 31, 2000, the parties hereto executed a Lease Agreement for the premises at Elmwood Distribution Center described as approximately 11,250 sq.ft. of office/warehouse space, 5600 Jefferson Highway, Building W-2, Suite 278-282, Elmwood, Louisiana 70123; to include all parking and loading area used exclusively by Tenant;

     WHEREAS, Landlord and Tenant agree to the following:

1.

Term. The term is renewed for (1) one year, commencing November 1, 2003 and expiring October 31, 2004.

2.

Rental. Effective November 1, 2003, the monthly base rental is $ 4,546.88 per month (“Base Rent”). Tenant’s Estimated Monthly Rent Payment: Tenant shall pay to Landlord on the first day of each month during the term hereof, in addition to the Base Rent, Tenant’s share of all operating expenses. Following is the estimated monthly Rent payment to Landlord. This estimate is made at the inception of the Lease and is subject to adjustment pursuant to the provisions of the Lease:

(a) Base Rent	$	4,546.88
(b) Operating Expenses (excludes Real Property Taxes, Landlord Insurance, Roof and HVAC)	$	396.10
(c) Landlord Insurance	$	62.81
(d) Real Property Taxes	$	396.56
(e) HVAC Maintenance	$	35.00
Estimated Monthly Payment			$	5,437.35

3.	Addenda and Exhibits. Attached hereto are the following Exhibits, all of which constitute a part of this Lease: Exhibit A: Diagram of Premises
4.	It is understood and agreed that this Amendment to Lease Agreement shall not be binding until and unless all parties have signed it.
5.	All other terms and conditions of the original Lease Agreement dated October 31, 2000 shall remain in full force and effect.

Landlord:	Tenant:
AMB Property, L.P.	Champion Industries, Inc. d/b/a
a Delaware limited partnership	Upton Printing

By:	AMB Property Corporation,
	a Maryland corporation

By:	/s/ Douglas P. McGregor	By:	/s/ Marshall T. Reynolds
	Douglas P. McGregor		Marshall T. Reynolds

Title: Vice President	Title: Chairman & CEO
Telephone: (415) 394-9000	Contact Telephone: (                        )
Facsimile: (415) 394-9001	Contact Facsimile: (                        )

Executed at:	San Francisco, CA	Executed at:
on:	May, 2003	on:	May     , 2003

Landlord’s Legal Notice Address:	Tenant’s Legal Notice Address:
5612 Jefferson Highway	c/o Tony D. Adkins, V.P. & Controller,
New Orleans, LA 70123	2450 First Avenue, Huntington, WV 25703

Exhibit “A” – Diagram of Premises

Approximately 11,2505 sq.ft. of office/warehouse, 5600 Jefferson Highway, Building W-2, Suites 278-282, Elmwood, Louisiana 70123; to include all parking and loading area used exclusively by Tenant as indicated below:

Tenant Initials Landlord Initials

(INSERT SITE MAP HERE)

EX-10.6 8 w93425exv10w6.htm EXHIBIT 10.6

10.6

Agreement Amending and Extending term of Lease dated October 1, 2003 between Bourque Printing DBA, Upton Printing and M. Field Gomila Et. Al..

COMMERCIAL GROSS LEASE

Standard Form of Leo Fellman & Co.

Parties:1. M. Feild Gomila Et Al________________________________ (hereinafter referred to, whether one or more, as “Lessor”) hereby leases to Bourque Printing DBA, Upton Printing
____________________________________________________________ (hereinafter referred to, whether one or more, as “Lessee”), the following described property:

Leased Premises: The two, one-story buildings known as 740 and 746 Carondelet Street between Girod and Julia Streets, New Orleans, Louisiana 70130

In Solido Liability: 2. If the above described property is leased to more than one party, the obligations of all such parties hereunder, as Lessee, shall be in solido.

Term 3. This lease is for a term of Sixty (60) Months commencing on October 1, 2003, and ending on September 30, 2008.

Rental and Place of Payment 4. The monthly rental under this lease shall be $5,825.00 a month for the period of October 1, 2003 thru September 30, 2004 and then adjusted annually in accordance with Consumer Price Index for October 1, 2003 being the base year ($5,825.00 )

payable in advance. Rent for the first full calendar month of the term of this lease, plus the rent for any fractional month preceding such first calendar month, shall be payable on the signing of this Lease by Lessee and rent for subsequent months shall be payable on the first day of October 1, 2003 and on the first day of each calendar month thereafter; except that if this is a renewal lease, rent shall be payable on the date of the beginning of this lease on the same day of each month thereafter. All payments of rent shall be made to Leo Fellman & Co. at 720 Carondelet Street, New Orleans, Louisiana 70130, but Lessor may from time to time, with the written consent of Leo Fellman & Co, designate other persons and places for payment of rent by notice to lessee. If Lessee fails to pay the monthly rent provided above within seven (7) days after it is due, Lessee shall pay to Leo Fellman & Co. a late charge equal to 2% of such monthly rent, which shall be retained by Leo Fellman & Co. as part of its compensation, and shall be considered a form of rent.

Utility Charges 5. Lessee shall promptly pay all charges for gas, electricity, water and other utilities consumed on or furnished to the leased premises, including those used for air conditioning and heating purposes, and shall pay for water sprinkler service charge, if any. If lessee fails to pay any charges contemplated in this section, lessor may, at its sole option, pay same, which shall be considered a form of rent.

Use of Premises 6. The leased premises shall be used only for the following purposes: Printing. The leased premises shall not be used for any unlawful purpose or in any manner that may damage or depreciate the same.

Repairs 7. The leased premises and all appurtenances contained therein, including, but not limited to, locks, keys, glass, elevator (if any), plumbing, automatic sprinkler system (if any), heating equipment and air conditioning equipment (if any), are accepted by Lessee in their present condition, including any vices or defects, latent or otherwise, that may now exist or hereafter arise in the leased premises, except as to such repairs or improvements as this lease requires Lessor to make. Lessor shall maintain the roof of the leased premises in good order and repair, but shall not be required to make any other repairs or replacements whatsoever to the leased premises, except those rendered necessary by fire or other perils which would be covered by fire and extended coverage insurance. Lessee shall, at Lessee’s expense and within a reasonable period of time, make any and all repairs and replacements of whatsoever nature or character that may become necessary to the leased premises during the term of this lease other than those hereinabove required to be made by Lessor. At the termination of this lease, Lessee shall return the leased premises to Lessor, in like order and condition as received, broom clean and free from trash, ordinary decay, wear and tear excepted, and shall deliver the keys to the leased premises to Lessor or Leo Fellman & Co.

Responsibility for Damages, Injuries or Losses 8. Lessor shall not be responsible for damage to property or injury to person or other losses or damages caused by or resulting from leaks in the roof of the leased premises, unless Lessor fails to take steps toward repairing such leaks, within a reasonable period of time after being notified thereof by Lessee. Should Lessee fail to so notify Lessor promptly, Lessee shall be responsible for damages or losses resulting to Lessor or third parties. Nor shall Lessor be responsible for or Losses damage to property or injury to person or other losses or damages caused by or resulting from vices or defects, latent or otherwise, that may now exist or hereafter arise in the leased premises, or caused by or resulting from disrepair damage or conditions necessitating repairs or replacements required herein to be made by Lessee.

Delayed 9. Should Lessor be delayed in delivering possession of the leased premises to Lessee on the commencement date Possession of this lease, because of any delay of existing occupants to vacate or because of the construction of improvements or the making of repairs required by this lease to be made by Lessor not having been completed or because of any other reason, not due to the design of Lessor, this lease shall not be affected thereby and Lessee shall not be entitled to any damages for such delay, except that Lessee shall be allowed a remission of rent for the period prior to delivery of possession, in which case the termination date of this lease shall remain unchanged.

Delay in Making Repairs 10. If this lease requires Lessor to make improvements or repairs to the leased premises and Lessor deems it impracticable to do so prior to the commencement date of this lease, Lessee agrees that Lessor may make such improvements or repairs after possession is delivered to Lessee, in a manner such as not to unreasonably interfere with the operation of Lessee’s business, in which case there shall be no reduction or remission of tent.

Alterations or Additions by Lessee 11. Lessee shall not make any alterations or additions to the leased premises without obtaining Lessor’s prior written additions consent, but any and all alterations, additions or other improvements made by Lessee, with or without the consent of Lessee Lessor, regardless of how attached (except movable trade fixtures), shall immediately become and remain the property of Lessor, without compensation therefore to Lessee, provided Lessor shall have the right to require that Lessee, prior to the termination of this lease, remove any or all such alteration, additions or improvements and

restore the leased premises to their condition at the time of the commencement of this lease.

Switch Tracks 12. If any switchtracks serve the leased premises, any and all costs for the care, repair and maintenance thereof and franchise charges therefore shall be paid by N/A

13.     Lessee shall comply with all requirements of State, Municipal, Federal and other public authorities, relating to the leased premises and the use and occupancy thereof.

14.     Lessee assumes full responsibility for the condition of the leased premises and agrees to hold Lessor harmless from any and all liability for injury to persons or damage to property or other losses or damages caused by or resulting from any accident or other occurrence in, on or about the leased premises.

Liability and Plate Glass Insurance 15. Lessee shall provide and maintain, for the mutual benefit of Lessee and Lessor, liability insurance against claims and Plate (1) for bodily injury, or death resulting therefrom, occurring on the leased premises, in the amount of $300,000.00 as to Glass any one occurrence, and (2) for property damage in the amount of $50,000.00 as to any one occurrence on the leased premises. Leo Fellrnan & Co. shall be named as an insured in the policies evidencing such insurance and a certificate of insurance shall be delivered to Leo Fellman & Co. promptly upon the execution of this lease. Lessee shall also provide and maintain plate glass insurance in an amount adequate to cover any and all plate glass forming a part of the leased premises. All of said insurance shall be carried with responsible insurance companies authorized to transact business in the State of Louisiana and Lessee shall deliver to Lessor evidence of such insurance, upon request. Said insurance shall not be cancelled or materially altered by Lessee, without thirty (30) days’ prior written notice to Lessor and Leo Fellman & Co.

Acts of Lessee Affecting Insurance 16. If the rate of fire or other casualty insurance covering the leased premises is increased due to acts of Lessee, Lessee shall pay to Lessor the increased cost of such insurance. Lessee will not do or cause or suffer to be done any act Affecting or thing whereby the policy or policies of fire or other casualty insurance covering the leased premises shall become void or suspended. Should Lessee’s occupancy cause Lessor to be unable to obtain fire or other casualty insurance covering the leased premises, Lessor shall have the right to terminate this lease upon giving Lessee not less than ten (10) days prior written notice. Lessee agrees to notify Lessor at any time the leased premises will become unoccupied, so that Lessor may obtain necessary vacancy permits from Lessor’s insurers.

Signs by Lessee 17. Lessee shall have the right to erect and maintain signs advertising Lessee’s business on the interior and exterior Lessee of the leased premises, provided that the exterior signs shall be approved in writing by Lessor as to size, design and location and shall be erected and maintained in accordance with the rules and regulations of the properly constituted authorities. Lessee shall remove all signs placed on the interior and exterior of the leased premises at the expiration of this lease and shall repair any damage to the leased premises caused by the erection, maintenance or removal of such signs.

Right of Entry by Lessor For Sale and For Rent Signs; Inspection by Prospect 18. Lessor shall have the right to enter the leased premises at all reasonable times

for the purpose of inspecting the same and for the purpose of making repairs required to be made by Lessor or which Lessor may desire to make.

19.     Lessor shall have the right to place the usual “For Sale” and “By Auction” signs on the leased premises at any and For time during the entire term of this lease and the usual “For Rent” signs on the leased premises during the last six (6) Rent Signs; months of the term of this lease. Lessee agrees to allow persons authorized by Lessor to inspect the leased premises during the entire term of this lease with the view of purchasing the same and during the last six (6) months of the term of by this lease with the view of renting the same, such inspections to be at reasonable hours. If Lessee is absent from the leased premises, Lessor shall be notified prior thereto where the keys may be obtained so that the leased premises may be shown to prospective purchasers of tenants in accordance with the foregoing. In the event of failure of Lessee to comply with any of the provisions of this paragraph, Lessor shall have the option either to consider this lease automatically extended for a period of one year, upon giving notice to that effect to Lessee, or to hold Lessee responsible for any losses suffered by such failure.

Surrender of Possession 20. Upon expiration or termination of this lease, Lessee shall surrender possession of the leased premises of immediately to Lessor and if Lessee fails to do so, Lessee shall be liable for any and all losses or damages suffered by Lessor, who shall have the right, but shall not required, to claim as such losses or damages an amount equal to five (5) times the rent per day for each day during which Lessee fails to so surrender possession of the leased premises. If Lessor allows Lessee to remain in the leased premises after expiration or termination of this lease, doing so shall not be construed as a reconduction of this lease.

Subleasing or Assignment 21. Lessee shall not have the right to sublease the leased premises, in whole or in part, or to assign this lease or of grant use of the leased premises to others, without the prior written consent of Lessor and any such sublease shall contain all the provisions of this lease to the extent applicable. Any such subleasing or assignment shall be handled by Leo Fellman & Co. and Lessee shall pay to Leo Fellman & Co. for such handling, at Lessee’s options, either (a) a cash commission in the amount of 6% of the gross tents payable during the entire term of such sublease or the remaining term of such assigned lease on tents up to $100,000.00 and 4% on rents in excess of $100,000.00, which commission shall be paid in full upon execution of such sublease or assignment, plus a commission of like amount on any percentage rents due under such sublease or assigned lease (such figure of $100,000.00 to apply to the aggregate of all rents), to be paid when such percentage rents become due, or (b) a commission of 8% of the gross rents payable during the entire term of such a sublease or the remaining term of such assigned lease, including any percentage, rents payable thereunder, such commission to be paid if, as and when such rents are actually collected, in which case such rents shall be collected by Leo Fellman & Co.

22.     No auction sales, or other sales not in the ordinary course of Lessee’s business, shall be conducted on the leased premises, without the prior written consent of Lessor.

Damage by Fire, etc. 23. If the leased premises are destroyed, or damaged to an extent so as to render them wholly unfit for the purposes for which they are leased, by fire or other perils which would be covered by fire and extended coverage insurance, this lease shall automatically terminate, provide such destruction or damage is not caused by the neglect or design of Lessee. If,

however, the leased premises are damaged by fire or such other perils and can be repaired within one hundred twenty (120) days after the date of such fire or other casualty caused by such other perils, this lease shall not terminate and Lessor shall give notice to Lessee, within thirty (30) days after such fire or such other casualty, that Lessor will repair such damage, at Lessor’s cost, within said one hundred and twenty (120) day period, in which case Lessee shall be entitled to a reduction or remission of rent such as shall be just and proportionate, but shall not be entitled to any other damages; provided that if Lessor fails to complete such repairs within said one hundred and twenty (120) day period, because of causes not due to the fault or design of Lessor, this lease shall not terminate and Lessee shall not be entitled to damages, but shall be entitled only to a further just and proportionate reduction or remission of rent.

Default 24. If Lessee shall fail to pay any installment of rent or shall fail to comply with any other provision of this lease, within ten (10) days after notice by Lessor or Leo Fellman & Co. to Lessee, provided that notice need not be given with regard to nonpayment of rent after such notice has been given twice during the period of this lease, or should Lessee abandon the leased premises or discontinue the use of the leased premises for the purposes for which rented or remove any property on which lessor enjoys a Lessor’s lien or should Lessee make an assignment for the benefit of creditors or file a voluntary petition in bankruptcy or be adjudicated a bankrupt in an involuntary proceeding or apply for any other relief under the laws of the United States relating to bankruptcy or State laws relating to insolvency or should a receiver or other custodian be appointed for any of Lessee’s property, then, in any of such events, Lessor shall have the right, at Lessor’s option, without putting Lessee in default and without notice of default, (1) to cancel this lease effective immediately or effective as of any date Lessor may select or (2) to proceed one or more times for past due installments of rent only, without prejudicing the right to proceed later for additional installments or to exercise any other remedy, or (3) to declare the unpaid rent for the whole unexpired term of this lease immediately due and eligible and at once demand and receive payment of the same or (4) to have recourse to any other remedy or mode of redress to which Lessor may be entitled by law. in the event Lessor exercises the right to cancel this lease, then (a) Lessor shall have the right, as soon as said cancellation is effective, to re-enter the leased premises and re-let the same for such price and on such terms as may be immediately available, without notice or court proceedings, Lessee hereby assenting thereto and expressly waiving any notice to vacate, and (b) Lessee shall be and remain liable not only for all rent payable to the date such cancellation becomes effective, but also for all damage or loss suffered by lessor for the remaining term of this lease resulting from such cancellation. Failure of Lessor to exercise the rights granted herein shall not be construed as a waiver of such rights and no indulgence by Lessor shall be construed as a waiver of any rights herein granted.

Attorney’s Fees 25. Should an attorney be engaged by Lessor to enforce payment of the rent due under this lease or to protect any of the interests of Lessor hereunder, with or without judicial proceedings. Lessee agrees to pay Lessor the reasonable fee of such attorney, which fee is hereby fixed, if the collection of money is involved, at 25% of the amount of such money, such fee in no event to be less than $100.00, and Lessee also agrees to pay all court costs and other expenses incurred by Lessor.

Purchase of Lessor on Sale 26. If Lessor sells or otherwise disposes of the leased premises and the purchaser or transferee expressly covenants, conditions on and agrees to assume all of the covenants, conditions and stipulations of

this lease and to comply with and be bound thereby, Lessor shall thereupon be released from all liability thereafter arising under this lease and thereafter all liability hereunder shall rest upon such purchaser or transferee.

Notices 27. Any notice to be given under this lease by Lessor or Leo Fellman & Co. to Lessee shall be considered as duly given, whether received or not, if made in writing, addressed to Lessee and mailed by registered or certified mail to Lessee at the leased premises. Any notice to be given under this lease by Lessee to Lessor shall be considered as duly given, whether received or not, if made in writing, addressed to Lessor and mailed by registered or certified mail to Lessor at the place where rent is required to be paid under this lease as above provided. Either Lessor or Lessee may change the designated place to which written notice may be sent, by so advising the other, in writing, by registered or certified mail, at the place designated in this lease or such place as may have been subsequently designated in accordance with this paragraph.

Commission 28. Lessor agrees to pay to Leo Fellman & Co. for negotiating this lease, at Lessor’s option, either (a) a cash commission of 6% of the gross rents due under this lease up to $100,000.00 and 4% of such rents in excess of $100,000.00, such commission to be paid in full upon execution of this lease, plus a commission of like amount on any percentage rents payable under this lease (such figure of $100,000.00 to apply to the aggregate of all rents), to be paid when such percentage rents become due, or (b) a commission of 8% of the gross rents due under this lease, including any percentage rents payable hereunder, such commission to be paid if, as and when rents are actually collected, in which case such rents shall be collected by Leo Fellman& Co.; provided that if this lease is cancelled or terminated, by mutual agreement of Lessor and Lessee, without the written consent of Leo Fellman & Go. and the commission on rents payable during the unexpired term thereof has not been paid in full, Lessor shall immediately upon such cancellation or termination, pay to Leo Fellman & Co., a commission of 6% of such rents up to $100,000 and 4% of such rents in excess of $100,000.00. Lessor further agrees to pay Leo Fellman & Co. a commission of like amount and payable in like manner and under like conditions, on the gross rents, including any percentage rents’ due under any and all renewals or extensions of this lease and any and all new leases hereafter made with Lessee or any affiliate, nominee or representative of Lessee, covering the leased premises or any part thereof.

Management 29. If the property covered by this lease is to be managed by Leo Fellman& Co., a management agreement on the form of Management Agreement currently in use by Leo Fellman & Co. shall be executed. If such management agreement is executed, the provisions of the immediately preceding paragraph hereof shall not apply.

Payment of Commissions If Property Is Sold 30. Lessor agrees that if the property covered by this lease is sold or transferred during the term hereof or during the Commissions term of any renewal or extension hereof or during the term of any new lease hereafter entered into as above mentioned, If Property Lessor will either pay any and all unpaid rental commissions to which Leo Fellman & Co. is entitled as hereinabove. Is Sold provided or will have the purchaser on transferee assume the payment thereof. If the purchaser or transferee does not assume payment of all of said unpaid commissions, Lessor (a) will, upon the sale or transfer of said property, pay to Leo Fellman& Co. a commission of 6% of the rents payable during the remaining term of this lease or any renewal or extension thereof or such new lease, as the case may be, up to rents totaling $100,000.00 and 4% of such rents in excess of $100,000.00 and (b) will, upon execution of any renewal or extension of this lease subsequent to

said sale or transfer, pay to Leo Fellman & Co. a commission of 6% of the rents payable under such extension or renewal up to $100,000.00 and 4% of such rents in excess of $100,000.00 and (c) will, upon execution of any new lease with Lessee or affiliate, nominee or representative of Lessee, subsequent to said sale or transfer, covering the leased premises or any part thereof, pay to Leo Fellman & Co. a commission of 6% of the rents payable under such new lease up to $100,000.00 and 4% of such rents in excess of $100,000.00 provided that as to (a), (b) and (c), the commission on any percentage rents shall be paid when such percentage rents become due.

Commission on Sale of Leased premises to Lessee, Sublessee or Assignee 31. If the property covered by this lease is at any time sold to Lessee or any sublessee or assignee of this lease, or of any affiliate, nominee or representative of any of them (including a sale pursuant to an option or agreement contained in this lease), Lessor shall pay to Leo Fellman & Co a commission of 6% of the sale price up to $100,000.00 and 4% of the premisesto sale price in excess of $100,000.00. Leo Fellman & Co. shall receive in full such commission and there shall be no Lessee, participation with regard thereto with any other real estate agent or broker. The provisions of this paragraph shall also lessee or apply to any exchange of properties made with Lessee or any sublessee or assignee of this lease, or any affiliate, Assignee nominee or representative of any of them, involving the property covered by this lease and said commission shall be based on the then value of said property.

Security Deposit 32. Lessee has deposited with Leo Fellman & Co., as agent of Lessor, the sum of $ N /A which is pledged to secure the faithful performance of all obligations of Lessee under this lease. Said deposit shall be non-interest bearing. Said deposit shall not be released until this lease has terminated and it has been determined by Leo Fellman & Co. that Lessee has complied with all of Lessee’s obligations under this lease.

33.     Failure of Lessor to require strict performance by Lessee of any of the covenants, provisions or conditions of this lease, on one or more occasions, shall not constitute a waiver by Lessor of the right thereafter to require strict compliance with said covenants, provisions and conditions.

34.     Leo Fellman & Co. shall not be obligated to record this lease.

35.     This lease shall be deemed to be a contract made under the laws of the State of Louisiana and shall be construed in accordance with and governed by the laws of the State of Louisiana and ordinances of the municipality and parish where the leased premises are situated and the rules and regulations of their duly constituted authorities.

36.     If there is a conflict between the printed portions and the typewritten portions of this lease the typewritten or handwritten portion shall prevail.

37.     All of the provisions contained herein shall be binding upon and shall inure to the benefit of Lessor and Lessee, their heirs executors, administrators, successors and assigns (as the case may be), and all of the provisions contained herein granting rights to Leo Fellman & Co. shall inure to the benefit of any may be enforced by Leo Fellman & Co., its successors or assigns.

38.     The whole agreement between the parties hereto is set forth in this instrument and they shall not be bound by any agreements, conditions, understandings or representations otherwise than are expressly stipulated and set forth herein or in any amendments hereto.

Dated 12/15/03

/s/ Todd R. Fry

Todd Fry Lessee

/s/ M Field Gomila

M. FIELD GOMILA ET AL

IN SOLIDO OBLIGATION AND GUARANTY

For value received and to induce the lessor or lessors (hereinafter referred to as “Lessor”) to enter into the foregoing lease, the undersigned hereby makes himself or itself a party to said lease and binds himself or itself in solido with the lessee or lessees under said lease (hereinafter referred to as “Lessee”) for the faithful performance and fulfillment by Lessee of all of Lessee’s agreements and obligations contained in said lease and guarantees to Lessor and Lessor’s heirs executors, administrators, successors and assigns (as the case may be), the punctual payment of all rents due unde; said lease and the performance of all other agreements and obligations of Lessee contained in said lease, the undersigned consenting to extensions of payment of rent by Lessor and other indulgences by Lessor to Lessee and amendments and modifications of said lease entered into between Lessor and Lessee and waiving any and all requirements of notice of non-payment, demand, non-performance or dishonor and all other requirements of law.

Dated

                                    , 19                                                            
                                          In Solido Obligar and Guarantor

“RIDER”

To pay punctually all City, State and Federal Taxes, or any other taxes except income and inheritance taxes, which may be levied or assessed against the property, and to deliver to Lessor all tax receipts for same.

To maintain during the term of this lease, at Lessee’s expense, insurance in solvent companies, doing business in the State of Louisiana, in the joint names of Lessor and Lessee against:

Fire and extended coverage to the full insurable replacement value of the building,

0. L. & T. liability in the among of not less than $1,000,000.00

Sprinkler insurance in the amount of as required.

Privilege is hereby granted to Lessee to sub-lease the premises in whole or in part to party or parties subject to the approval of Lessor or Lessor’s agent, which approval shall not be unreasonably withheld.

Lessee, at Lessee’s own cost and expense, is hereby granted the right or privilege to make repairs, alterations and or improvements to the herein leased premises necessary for the proper conduct of Lessee’s business, however, no structural changes are to be made without the written consent of Lessor. Said repairs, alterations and or improvements are to be done in a thoroughly workmanlike manner and in accordance with the City Building Code and the rules and regulations of the Louisiana Rating & Fire Prevention Bureau and similar bureaus that may be in existence at the time.

It is understood and agreed that Lessee is to remain responsible for any and all damages caused to the roofs of the buildings known as Nos. 740 and 746 Carondelet Street occasioned by the installation and maintenance of the air conditioning water towers.

This is an extension or renewal of a lease, covering a prior period, bearing on the same premises and it is agreed and understood by the parties hereto that any default or violation by Lessee in any obligation or condition of the lease, covering the prior period, shall constitute a default or violation under the within lease. And, further it is agreed and understood that any default, violation, condition or, circumstance that would terminate or annul the lease, covering such prior period, bearing on the same premises would likewise terminate or annul this lease.

Attached to and forming part of lease made by and between M. Feild Gomila et al, and E. S. Upton Printing Co.

Dated: Bourque Printing DBA Upton Printing

By: /s/ Todd R. Fry, VP and CFO

Todd R. Fry, VP and CFO

By: /s/ M. Field Gomila

M. Field Gomila, President
Leo Fellman & Co. Agents for M. Field Gomila et al

RIDER ADDENDUM NO. 2 TO
COMMERCIAL GROSS LEASE BY AND BETWEEN
M. Field GOMILA, ET AL (LESSOR) AND BOURQUE PRINTING D/B/A
UPTON PRINTING (LESSEE)

This updates and supercedes Rider Addendum No.1.

     Lessor agrees to install an entirely new roof on 740 and 746 Carondelet Street (the “Work”) within six (6) months of the effective date of the Lease. The specifications for the Work and the general contractor selected to perform the Work shall be subject to the approval of the Lessee, which shall not be unreasonably withheld or delayed. Prior to commencement of the Work, Lessor shall deliver to Lessee photocopies of the executed contract for the performance of the Work, showing the full contract price and all specifications for the Work.

     On the effective date of the Lease, Lessee shall advance, as a Loan to Lessor, an amount equal to the estimated cost of the Work, to-wit, the sum of $75,000.00 (the “Loan”), on the date of execution of the Lease. Lessor’s repayment of the Loan shall be effected by allowance of a credit to Lessee in partial satisfaction of its obligation for payment of the monthly rentals coming due under the Lease, of an amount equal to the monthly installment necessary to amortize the amount of the Loan over the term of the Lease in equal, monthly installments of principal and interest at an interest rate of five (5%)percent per annum.

     If the Work is not completed within six (6) months of the effective date of Lease, Lessee may, at its option, demand payment of the entire outstanding of the Loan within thirty(30)days following notice to the Lessor of its election to demand such payment. If payment of the entire outstanding balance of the Loan is not made within the time permitted, Lessee may offset all succeeding installments of rent coming due until the full amount due, together, with interest accruing during the period of such payment, is satisfied in full.

     If, at any time during the term of the Lease, the Lessee shall terminate the Lease, the Lessee shall terminate the Lease on account of a default by Lessor in the performance of his obligations thereunder, the entire amount of the Loan then outstanding shall be due and payable upon demand. If ant any time during the term of the Lease, Lessor shall terminate the Lease on account of a default by Lessee, Lessee shall have no further right to receive or collect from Lessor any amount then outstanding on the Loan. Any such amount of the Loan deemed forgiven by virtue of these provisions shall not offset or reduce any other amount to which Lessor may be entitled under the Lease, by virtue of Lessee’s default.

     Upon completion of the Work, Lessor shall deliver to Lessee a sworn statement setting forth the full and complete cost of performance of the Work. To the extent that the actual cost of the Work is less than $75,000, Lessee shall be entitled to recover the excess of $75,000.00 over the actual cost of the Work by offset against the next accruing payment of monthly rent under the Lease.

Dated:	Bourque Printing DBA Upton Printing
	By: /s/ Todd R. Fry
	Todd R. Fry, VP and CFO
	By: /s/ M. Field Gomila, President
	M. Field Gomila, President
	Leo Fellman & Co, Agents for
	M. Field Gomila Et AL

EX-10.7 9 w93425exv10w7.htm EXHIBIT 10.7

10.7

Promissory Note, $122,500 between Champion Industries, Inc. and Community Trust Bank dated as of January 9, 2003.

PROMISSORY NOTE

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		Main Office
	Huntington, WV 25728-2968		346 North Mayo Trail
			P.O. Box 2947
			Pikeville, KY 41502-2947

Principal Amount: $122,500.00 Initial Rate: 4.250% Date of Note: January 9, 2003

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 Hundred Twenty-two Thousand Five Hundred & 00/100 Dollars ($122,500.00), together with interest on the unpaid principal balance from January 9, 2003, until paid in full.

PAYMENT. Subject to any payment changes resulting from changes in the Index, Borrower will pay this loan in 36 payments of $3,633.48 each payment. Borrower’s first payment is due February 9, 2003, and all subsequent payments are due on the same day of each month after that. Borrower’s final payment will be due on January 9, 2006, 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 accrued unpaid interest, then to principal, and any remaining amount to any unpaid collection costs and late charges. The annual interest rate for this Note is computed on a 365/360 basis; that is, by applying the ratio of the 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 notice to 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 4.250% 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 4.250% per annum. NOTICE: Under no circumstances will the 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 payments 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 a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments under the payment schedule. 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 in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Community Trust Bank, Inc., P.O. Box 2947 Pikeville, KY 41502-2947.

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

INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, Lender, at its option, may, if permitted under applicable law, increase the variable interest rate on this Note to 2.000 percentage points over the Index. The interest rate will not exceed the maximum rate permitted by applicable law.

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

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

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

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

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

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

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture

proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note. 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 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 cured (and no event of default will have occurred) 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 reasonably 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 reasonable attorneys’ fees and Lender’s legal expenses whether or not there is a lawsuit, including reasonable attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.

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, construed and enforced in accordance with federal law and the laws of the Commonwealth of Kentucky. This Note 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 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 a right of setoff in all Borrower’s accounts with Lender (whether checking, savings, or some other account). This includes an 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 (2) Digital Imaging Groups.

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. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lander may renew or extend (repeatedly and for any length of the) this loan or release any party u guarantee or collateral; or impair, fail to realize upon or perfect Lender’s security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several.

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

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

BORROWER:

CHAMPION INDUSTRIES, INC.

By : TONEY ADKINS, Vice President at CHAMPION INDUSTRIES, INC.

LENDER:

COMMUNITY TRUST BANK, INC.

X

Authorized Signer

EX-14.1 10 w93425exv14w1.htm EXHIBIT 14.1

14.1

Code of Ethics for the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Chief Accounting Officer.

CHAMPION INDUSTRIES, INC.

CODE OF ETHICS FOR THE CHIEF EXECUTIVE OFFICER,
CHIEF OPERATING OFFICER, CHIEF FINANCIAL OFFICER
AND CHIEF ACCOUNTING OFFICER

     In my role as Chief Executive Officer (“CEO”), Chief Operating Officer (“COO”), Chief Financial Officer (“CFO”) or Chief Accounting Officer (“CAO”) of Champion Industries, Inc. (the “Company”), I have adhered to and advocated to the best of my knowledge and ability the following principles and responsibilities governing professional conduct and ethics:

1.	Act with honesty and integrity, avoiding actual or apparent conflicts of interest in personal and professional relationships. A “conflict of interest” exists when an individual’s private interests interfere or conflict in any way (or even appear to interfere or conflict) with the interests of the Company.
2.	Provide constituents with information that is accurate, complete, objective, relevant, timely and understandable. If I am the CEO, COO or CFO I shall review the annual and quarterly reports before certifying and filing them with the SEC.
3.	Comply with all applicable laws, rules and regulations of federal, state and local governments, and other appropriate private and public regulatory agencies.
4.	Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing my independent judgement to be subordinated.
5.	Respect the confidentiality of information acquired in the course of business except when authorized or otherwise legally obligated to disclose the information. I acknowledge that confidential information acquired in the course of business is not to be used for personal advantage.
6.	Proactively promote ethical behavior among employees at the Company and as a responsible partner with industry peers and associates.
7.	Maintain control over and responsibly manage all assets and resources employed or entrusted to me by the Company.
8.	Report illegal or unethical conduct by any director, officer or employee that has occurred, is occurring or may occur, including any potential violations of this Code or the Code of Business Conduct and Ethics. Such report shall be made to the Chairman of the Board of Directors and the Chairman of the Audit Committee of the Board of Directors and shall include conduct of a financial or non-financial nature.
9.	Comply with this Code and the Code of Business Conduct and Ethics. I understand that if I violate any part of this Code, I will be subject to disciplinary action.

     I understand that this Code is subject to all applicable laws, rules and regulations.

     I understand that if there is a conflict between this Code and a Company policy or procedure, or any applicable law, rule or regulation, then I must consult with the Chairman of the Board of Directors or the Chairman of the Audit Committee of the Board of Directors for guidance.

     I understand that there shall be no waiver of, modification of, or change to any part of this Code except by a vote of the Board of Directors or a designated Board committee. In the event that a waiver of, modification of, or a change to this Code is granted, then the notice of the waiver, modification and/or change shall be disclosed as required by applicable law or applicable self regulatory organization or SEC rules.

Chief Executive Officer

Chief Operating Officer

Chief Financial Officer

Chief Accounting Officer

______________________, 2003

EX-14.2 11 w93425exv14w2.htm EXHIBIT 14.2

14.2

Code of Business Conduct and Ethics.

CHAMPION INDUSTRIES, INC.
CODE OF BUSINESS CONDUCT AND ETHICS

I. OVERVIEW

Champion Industries, Inc.’s Code of Business Conduct and Ethics sets forth the guiding principles by which we operate our company and conduct our daily business with our shareholders, customers, vendors and with each other. These principles apply to all of the directors, officers and employees of Champion Industries, Inc. and all of its wholly-owned subsidiaries (referred to in this Code as the “Company” or “Champion”). The Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Chief Accounting Officer also are covered by an additional code of ethics for senior financial officers.

To further the Company’s fundamental principles of honesty, loyalty, fairness and forthrightness, we have established this Code. Our Code strives to deter wrongdoing and promote the following five objectives:

1.	Honest and ethical conduct, including handling of actual or apparent conflicts of interests;
2.	Full, fair, accurate, timely and transparent disclosure;
3.	Compliance with the applicable government and self-regulatory organization laws, rules and regulations;
4.	Prompt internal reporting of Code violations; and
5.	Accountability for compliance with the Code.

Below, we discuss situations that require application of our fundamental principles and promotion of our objectives. If there is a conflict between this Code and a specific procedure you should consult senior management for guidance.

ACCOUNTABILITY FOR COMPLIANCE WITH THE CODE

Each of the Company’s directors, officers and employees is expected to:

Understand. Champion expects you to understand the requirements of your position including Company expectations and governmental rules and regulations that apply to your position.

Comply. Champion expects you to comply with this Code and all applicable laws, rules and regulations.

Report. Champion expects you to report any violation of this Code of which you become aware.

Be Accountable. Champion holds you accountable for complying with the Code.

2

II.     PRINCIPLES

Accounting Policies

Champion and each of our subsidiaries will make and keep books, records and accounts, which in reasonable detail accurately and fairly present the transactions and disposition of the assets of our Company.

All directors, officers, employees and other persons are prohibited from directly or indirectly falsifying or causing to be false or misleading any financial or accounting book, record or account. You and others are expressly prohibited from directly or indirectly manipulating an audit, and from destroying or tampering with any record, document or tangible object with the intent to obstruct a pending or contemplated audit, review or federal investigation. The commission of, or participation in, one of these prohibited activities or other illegal conduct could subject the perpetrator to federal penalties, as well as punishment of up to and including termination of employment.

No director, officer or employee of the Company may directly or indirectly:

- Make or cause to be made a materially false or misleading statement, or

- Omit to state, or cause another person to omit to state, any material fact necessary to make statements made not misleading

in connection with the audit of financial statements by independent accountants, the preparation of any required reports whether by independent or internal accountants, or any other work which involves or relates to the filing of a document with the Securities and Exchange Commission (“SEC”).

All of the Company’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company’s transactions and must conform both to applicable legal and accounting requirements and to the Company’s system of internal controls. Unrecorded or “off the books” funds or assets should not be maintained unless permitted by applicable law or regulation. Records should always be retained or destroyed according to the Company’s record retention policies. In accordance with those policies, in the event of litigation or governmental investigation please consult senior management.

Antitrust and Fair Competition Laws

The purpose of antitrust laws in the United States and most other countries is to provide a level playing field to economic competitors and to promote fair competition. No director, officer or employee, under any circumstances or in any context, may enter into any understanding or agreement, whether express or implied, formal or informal, written or oral, with an actual or potential competitor, which would illegally limit or restrict in any way either party’s actions, including the offers of either party to any third party. This prohibition includes any action relating to prices, costs, profits, products, services, terms or conditions of sale, market share or customer or supplier classification or selection.

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It is our policy to comply with all U.S. antitrust laws. This policy is not to be compromised or qualified by anyone acting for or on behalf of our Company. You must understand and comply with the antitrust laws as they may bear upon your activities and decisions. Anti-competitive behavior in violation of antitrust laws can result in criminal penalties, both for the individual involved and for the Company. Accordingly, any question regarding compliance with antitrust laws or your responsibilities under this policy should be directed to the President. Any director, officer or employee found to have knowingly participated in violating the antitrust laws will be subject to disciplinary action, up to and including termination of employment.

Below are some scenarios that are prohibited and scenarios that could be prohibited for antitrust reasons. These scenarios are not an exhaustive list of all prohibited and possibly prohibited antitrust conduct. When in doubt about any situation, whether it is discussed below or not, you should consult with the President.

The following scenarios are prohibited for antitrust or anti-competition reasons:

- Proposals or execution of any agreements or understanding — express or implied, formal or informal, written or oral — with any competitor regarding any aspect of competition between Champion and the competitor for sales to third parties.

- Proposals or execution of any agreements or understanding with customers which restrict the price or other terms at which the customer may resell or lease any product to a third party.

- Proposals or execution of any agreements or understanding with suppliers which restrict the price or other terms at which Champion may resell or lease any product or service to a third party.

     The following business arrangements could raise anti-competition or antitrust law issues. Before entering into them, you must consult with the President:

- Exclusive arrangements for the purchase or sale of products or services.

- Bundling of goods and services.

- Technology licensing agreements that restrict the freedom of the licensee or licensor.

- Agreements to add a Champion employee to another entity’s Board of Directors.

Bribery

You are strictly forbidden from offering, promising, or giving money, gifts, loans, rewards, favors or anything of value to any customer, governmental official, employee, agent or other intermediary (either inside or outside the United States) which is prohibited by law. Those paying a bribe may subject the Company and themselves to civil and criminal penalties. When dealing with government customers or officials, no improper payments will be tolerated. If you receive any offer of

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money or gifts that is intended to influence a business decision, then it should be reported to your supervisor and the President immediately.

The Company prohibits improper payments in all of its activities, whether these activities are with governments or in the private sector.

The U.S. government has a number of laws and regulations regarding business gratuities which may be accepted by U.S. government personnel. The promise, offer or delivery to an official or employee of the U.S. government of a gift, favor or other gratuity in violation of these rules would not only violate Company policy but could also be a criminal offense. State and local governments, as well as foreign governments, may have similar rules. The Company’s Chief Financial Officer can provide guidance to you in this area.

Complying With Laws, Regulations, Policies And Procedures

All directors, officers and employees of Champion are expected to understand, respect and comply with all of the laws, regulations, policies and procedures that apply to them in their position with Champion. Employees are responsible for talking to their manager or compliance officer to determine which laws, regulations and Champion policies apply to their position and what training is necessary to understand and comply with them.

Computer and Information Systems

For business purposes, officers and employees are provided telephones and computer workstations and software, including network access to computing systems such as the Internet and e-mail, to improve personal productivity and to efficiently manage proprietary information in a secure and reliable manner. You must obtain permission from the accounting department to install any software on any Company computer or connect any personal laptop to the Company network. As with other equipment and assets of the Company, we are each responsible for the appropriate use of these assets. Except for limited personal use of the Company’s telephones and computer/e-mail, such equipment may be used only for business purposes. Officers and employees should not expect a right to privacy of their e-mail. All e-mails on Company equipment are subject to monitoring by the Company.

Conflicts Of Interest

All directors, officers and employees of Champion should be scrupulous in avoiding any action or interest that conflicts or gives the appearance of a conflict with Champion’s interests. A “conflict of interest” exists whenever an individual’s private interests interfere or conflict in any way (or even appear to interfere or conflict) with the interests of Champion. A conflict situation can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her work for Champion objectively and effectively. Conflicts of interest may also arise when a director, officer or employee or a member of his or her family receives improper personal benefits as a result of his or her position with Champion, whether from a third party or from Champion. Conflicts of interest are prohibited as a matter of Champion policy. Conflicts of interest may not always be clear-cut, so if a question arises, an officer or employee should consult with higher levels of management. Any employee, officer or director who becomes aware of a conflict or

5

potential conflict should bring it to the attention of a supervisor, manager or other appropriate personnel or consult the procedures described in this Code.

Here are some examples of conflicts of interest:

Family Members. Actions of family members may create a conflict of interest. For example, gifts to family members by a customer or supplier of the Company are considered gifts to you and must be reported. Doing business for the Company with organizations where your family members are employed or which are partially or fully owned by your family members or close friends may create a conflict or the appearance of a conflict of interest. For purposes of the Code “family members” includes any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, and adoptive relationships.

Gifts, Entertainment, Loans, or Other Favors. Directors, officers and employees shall not seek or accept personal gain, directly or indirectly, from anyone soliciting business from, or doing business with the Company, or from any person or entity in competition with us. Examples of such personal gains are gifts, non-business-related trips, gratuities, favors, loans, and guarantees of loans, excessive entertainment or rewards. However, you may accept gifts of a nominal value. Other than common business courtesies, directors, officers, employees and independent contractors must not offer or provide anything to any person or organization for the purpose of influencing the person or organization in their business relationship with us.

Directors, officers and employees are expected to deal with advisors or suppliers who best serve the needs of the Company as to price, quality and service in making decisions concerning the use or purchase of materials, equipment, property or services. Directors, officers and employees who use Champion advisors, suppliers or contractors in a personal capacity are expected to pay market value for materials and services provided.

Outside Employment. Officers and employees may not participate in outside employment, self-employment, or serve as officers, directors, partners or consultants for outside organizations, if such activity:

1.	reduces work efficiency;
2.	interferes with your ability to act conscientiously in our best interest; or
3.	enables you to utilize our proprietary or confidential procedures, plans or techniques.

You must inform your supervisor of any outside employment, including the employer’s name and expected work hours.

Reporting Conflicts of Interest or Potential Conflicts of Interest. Employees should report any actual or potential conflict of interest involving themselves or others of which they become aware to their supervisor or a member of senior management. Officers should report any actual or potential conflict of interest involving yourself or others of which you become aware to the President or to the Chairman of the Board of Directors or to the Chairman of the Audit Committee of the Board of Directors.

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Directors should report any actual or potential conflict of interest involving yourself or others of which you become aware to the Chairman of the Board of Directors or the Chairman of the Audit Committee of the Board of Directors.

Corporate Opportunity

Directors, officers and employees are prohibited from (a) taking for themselves personally opportunities that properly belong to Champion or are discovered through the use of corporate property, information or position; (b) using corporate property, information or position for personal gain; and (c) competing with the Company. Directors, officers and employees owe a duty to Champion to advance Champion’s legitimate interests when the opportunity to do so arises.

Confidentiality

Directors, officers and employees must maintain the confidentiality of confidential information entrusted to them by Champion or its suppliers or customers, except when disclosure is specifically authorized or required by laws, regulations or legal proceedings. Confidential information includes all non-public information that might be of use to competitors of Champion or harmful to Champion or its customers or employees if disclosed.

Fair Dealing

We seek to outperform our competition fairly and honestly. We seek competitive advantages through superior performance, never through unethical or illegal business practices. Stealing proprietary information, possessing or utilizing trade secret information that was obtained without the owner’s consent or inducing such disclosures by past or present employees of other companies may be illegal, and is prohibited whether legal or not. Each director, officer and employee is expected to deal fairly with Champion’s customers, suppliers, competitors, officers and employees. No one should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing.

Insider Trading or Stock Tipping

Directors, officers and employees who are aware of material, nonpublic information (an “insider”) from or about the Company, are not permitted, directly or through family members or other persons or entities, to:

- Buy or sell securities (or derivatives relating to such securities) of Champion (other than pursuant to a pre-approved trading plan that complies with the SEC Rule 10b5-1), or

- Pass on, tip or disclose material, nonpublic information to others outside the Company including family and friends.

Such buying, selling or trading of securities may be punished by discipline up to and including termination of employment; civil actions, including penalties of up to three times the amount of profit gained or loss avoided by the inside trade or stock tip; or criminal actions, including jail time.

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Examples of information that could be material, non-public information if not publicly disclosed include:

- Annual, quarterly or monthly financial results, a change in earnings or earnings projections, or unexpected or unusual gains or losses in major operations.

- Negotiations and agreements regarding mergers, concessions, joint ventures, acquisitions, divestitures, business combinations or tender offers.

- An increase or decrease in dividends on the Company’s common stock.

- Significant major regulatory changes.

- Significant major management changes.

- A substantial contract award or termination.

- A threatened or recently filed major lawsuit or claim.

- The gain or loss of a significant customer or supplier.

- The filing of a bankruptcy petition by the Company or a significant subsidiary.

- Information that is considered confidential.

- Any other undisclosed information that could affect our stock price.

Another Company’s Securities. The same policy also applies to securities issued by another company if you have acquired material, nonpublic information relating to such company in the course of your employment or affiliation with Champion.

Trades Following Disclosure. When material information has been publicly disclosed, each insider must continue to refrain from buying or selling the securities in question until the third business day after the information has been publicly released to allow the markets time to absorb the information.

Political Contributions

You shall refrain from making any use of Company, personal or other funds or resources on behalf of the Company for political or other purposes which are improper or prohibited by applicable federal, state, local or foreign laws, rules or regulations. Company contributions or expenditures in connection with election campaigns will be permitted where allowed by federal, state, local or foreign election laws, rules and regulations.

You are encouraged to participate actively in the political process. We believe that individual participation is a continuing responsibility of those who live in a free state.

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Prohibited Substances

The Company has policies prohibiting the use of alcohol, illegal drugs or other prohibited items, including legal drugs which affect the ability to perform one’s work duties, while on Company premises. We also prohibit the possession or use of alcoholic beverages, firearms, weapons or explosives on our property unless authorized by an Executive Officer of the Company. In addition, we prohibit you from reporting to work while under the influence of alcohol or illegal drugs.

Protection and Proper Use of Champion Assets

All directors, officers and employees should protect Champion’s assets and ensure their efficient use. All Champion assets should be used for legitimate business purposes.

Public Company Reporting and Public Communications

It is of critical importance that Champion’s filings with the Securities and Exchange Commission and its other public communications contain disclosures that are full, fair, accurate, timely and understandable. Depending on their position with the Company, an employee, officer or director may be called upon to provide necessary information to assure that the Company’s reports and documents filed with or submitted to the SEC and its other public communications meet this standard. Champion expects employees, officers and directors to take this responsibility very seriously and to provide prompt accurate answers to inquiries related to the Champion’s public disclosure requirements.

Record Retention

We have detailed document retention policies to systematically establish retention periods for records created or received in the normal course of business. A record is information, regardless of physical format, which has been created or received in the transaction of the Company’s business. Physical format of a record includes hard copy, electronic, magnetic tape, disk, audio, video, optical image, etc. Each corporate department and office is responsible for the maintenance, retrieval, transfer, and destruction of its records in accordance with the established filing procedures, records retention schedules and procedures.

Before any destruction of any documents or records, you must consult the document retention procedures. You are required to review, follow and abide by the terms of this policy and related procedures. If the policy or procedure is not clear, questions arise, or there is a pending or anticipated official proceeding, then the President must approve any document destruction.

The alteration, destruction or falsification of corporate documents or records may constitute a criminal act. In addition, such destruction or alteration of documents may be punished by discipline up to and including termination of employment. Destruction or alteration of documents with the intent to obstruct a pending or anticipated official government proceeding is a criminal act and could result in large fines and a prison sentence of up to 20 years. Document destruction or falsification in other contexts can result in a violation of the federal securities laws or the obstruction of justice laws.

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III. REPORTING ILLEGAL OR UNETHICAL BEHAVIOR

Reporting Illegal or Unethical Behavior

Employees who suspect or know of violations of this Code or illegal or unethical business or workplace conduct by employees, officers or directors have an obligation to contact either their immediate supervisor or other superiors or an appropriate member of senior management. If the individuals to whom such information is conveyed are not responsive, or if there is reason to believe that reporting to such individuals is inappropriate in particular cases, then the employee, officer or director may contact the President of the Company. Such communications will be kept confidential to the extent feasible. If the employee is still not satisfied with the response, the employee may contact the Audit Committee of the Board of Directors of the Company. If concerns or complaints require confidentiality, then this confidentiality will be protected to the extent feasible, subject to applicable law. Directors and officers should report any potential violations of this Code to the President, the Chairman of the Audit Committee of the Board of Directors or the Chairman of the Board of Directors.

Accounting Complaints

Champion’s policy is to comply with all applicable financial reporting and accounting regulations. If any director, officer or employee of the Company has unresolved concerns or complaints regarding questionable accounting or auditing matters of the Company, then he or she is encouraged to submit those concerns or complaints (anonymously, confidentially or otherwise) to the Audit Committee of the Board of Directors. Subject to its legal duties, the Audit Committee of the Board of Directors and the Board will treat such submissions confidentially. Such submissions may be directed to the attention of the Audit Committee of the Board of Directors, or any director who is a member of the Audit Committee of the Board of Directors, at the principal executive offices of Champion. The Audit Committee has established the following procedures for handling complaints regarding accounting or auditing matters:

          Employee Complaint Procedures for Accounting and Auditing Matters

     Any employee of Champion Industries, Inc. (the “Company”) or its subsidiaries may submit a good faith complaint regarding accounting or auditing matters to the Audit Committee of the Board of Directors (the “Audit Committee”) without fear of dismissal or retaliation of any kind. The Company is committed to achieving compliance with all applicable securities laws and regulations, accounting standards, accounting controls and audit practices. The Company’s Audit Committee will oversee treatment of employee concerns in this area.

     In order to facilitate the reporting of employee complaints, the Company’s Audit Committee has established the following procedures for (1) the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, or auditing matters (“Accounting Matters”) and (2) the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

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	Receipt of Employee Complaints
•	Employees with concerns regarding Accounting Matters may report their concerns to the President and Chief Operating Officer or the Audit Committee of the Company.
•	Employees may forward complaints on a confidential or anonymous basis to the Audit Committee through e- mail or regular mail to:

Philip E. Cline		Kirby J. Taylor
Chairman, Audit Committee		President and Chief
		Operating Officer
Champion Industries, Inc.	or	Champion Industries, Inc.
P.O. Box 2968		P.O. Box 2968
Huntington, WV 25728-2968		Huntington, WV 25728-2968
e-mail:		e-mail:

•	Any employee complaints received by management of the Company shall be promptly forwarded to the Audit Committee.
	Complaint Procedure

     All mailed complaints shall be forwarded in a sealed envelope addressed either to the Chairman of the Audit Committee or the President and Chief Operating Officer, containing another envelope labeled with a legend such as: “To be opened by the Audit Committee only. Being submitted pursuant to the “whistleblower policy” adopted by the Audit Committee.” If an employee would like to discuss any matter with the Audit Committee, the employee should indicate this in the submission and include a telephone number at which he or she might be contacted if the Audit Committee deems it appropriate.

Scope of Matters Covered by These Procedures

These procedures relate to employee complaints relating to any questionable accounting or auditing matters, including, without limitation, the following:

• fraud or deliberate error in the preparation, evaluation, review or audit of any financial statement of the Company;

• fraud or deliberate error in the recording and maintaining of financial records of the Company;

• deficiencies in or noncompliance with the Company’s internal accounting controls;

• misrepresentation or false statement to or by a senior officer or accountant regarding a matter contained in the financial records, financial reports or audit reports of the Company; or

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•	deviation from full and fair reporting of the Company’s financial condition.
	Treatment of Complaints
•	Upon receipt of a complaint, the Audit Committee will (i) determine whether the complaint actually pertains to Accounting Matters and (ii) when possible, acknowledge receipt of the complaint to the sender.
•	Complaints relating to Accounting Matters will be reviewed under Audit Committee direction and oversight by legal counsel, Internal Audit or such other persons as the Audit Committee determines to be appropriate. Confidentiality will be maintained to the fullest extent possible, consistent with the need to conduct an adequate review.
•	Prompt and appropriate corrective action will be taken when and as warranted in the judgment of the Audit Committee.
•	The Company will not discharge, demote, suspend, threaten, harass or in any manner discriminate against any employee in the terms and conditions of employment based upon any lawful actions of such employee with respect to good faith reporting of complaints regarding Accounting Matters or otherwise as specified in Section 806 of the Sarbanes-Oxley Act of 2002.
	Reporting and Retention of Complaints and Investigations
•	The Audit Committee will maintain a log of all complaints, tracking their receipt, investigation and resolution and shall prepare a periodic summary report thereof for the Audit Committee. Copies of complaints and such log will be maintained in accordance with the Company’s document retention policy, but in all events for a period of not less than seven (7) years.

Non-Retaliation

Champion prohibits retaliation of any kind against individuals who have made good faith reports or complaints of violations of this Code or other known or suspected illegal or unethical conduct. However, if a reporting individual was involved in improper activity the individual may be appropriately disciplined even if he or she was the one who disclosed the matter to the Company. In these circumstances, we may consider the conduct of the reporting individual in promptly reporting the information as a mitigating factor in any disciplinary decision.

IV.     AMENDMENT, MODIFICATION AND WAIVER

This Code may be amended or modified by the Board of Directors of Champion. Waivers of this Code may only be granted on the recommendation of the Board of Directors or a committee of the Board with specific delegated authority. Waivers with respect to executive officers or directors will be disclosed to shareholders as required

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by the Securities Exchange Act of 1934 and the rules thereunder and any applicable rules of self regulatory organizations.

V.     NONEXCLUSIVITY

This Code does not constitute a full or complete explanation of the laws applicable to the Company and its employees, nor does it contain all applicable policies and bases for discipline or discharge. This Code does not constitute a contract, of employment, or otherwise.

VI.     CONCLUSION

This Code is an attempt to point all of us at Champion in the right direction, but no document can achieve the level of principled compliance that we are seeking. In reality, each of us must strive every day to maintain our awareness of these issues and to comply with the Code’s principles to the best of our abilities. We must always ask:

Does it feel right?

Is this action ethical in every way?

Is this action in compliance with the law?

Could my actions create an appearance of impropriety?

Am I trying to fool anyone, including myself, about the propriety of this action?

We cannot expect perfection, but we do expect good faith. If you act in bad faith or fail to report illegal or unethical behavior, then you will be subject to disciplinary procedures. We hope that you agree that the best course of action is to be honest, forthright and loyal at all times.

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     The undersigned employee of Champion Industries, Inc. or subsidiary thereof acknowledges receipt, review and an understanding of the Champion Industries, Inc. Code of Business Conduct and Ethics.

Date Signature

14 EX-21 12 w93425exv21.htm EXHIBIT 21

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

     The Registrant, Champion Industries, Inc., a West Virginia corporation, does business under the trade name “Chapman Printing Company”. Its wholly owned subsidiaries are:

1.	The Chapman Printing Company, Inc., a West Virginia corporation.
2.	Stationers, Inc., a West Virginia corporation (doing business in Ohio as “Garrison Brewer”).
3.	Bourque Printing, Inc., a Louisiana corporation.
4.	Dallas Printing Company, Inc., a Mississippi corporation.
5.	Carolina Cut Sheets, Inc., a West Virginia corporation.
6.	U.S. Tag & Ticket Company, Inc., a Maryland corporation.
7.	Donihe Graphics, Inc., a Tennessee corporation.
8.	Smith & Butterfield Co., Inc., an Indiana corporation.
9.	The Merten Company, an Ohio corporation.
10.	Interform Corporation, a Pennsylvania corporation.
11.	CHMP Leasing, Inc., a West Virginia corporation.
12.	Blue Ridge Printing Co., Inc., a North Carolina corporation.
13.	Rose City Press, a West Virginia corporation
14.	Capitol Business Equipment, Inc., a West Virginia corporation
15.	Thompson’s of Morgantown, Inc., a West Virginia corporation
16.	Independent Printing Service, Inc., an Indiana corporation
17.	Diez Business Machines, Inc., a Louisiana corporation
18.	Transdata Systems, Inc., a Louisiana corporation

EX-23 13 w93425exv23.htm EXHIBIT 23

Exhibit 23

Consent of Independent Auditors
Champion Industries, Inc.
October 31, 2003

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement (Form S-8, No. 33-76790) pertaining to the 1993 Stock Option Plan of Champion Industries, Inc. and Subsidiaries of our report dated December 31, 2003, with respect to the consolidated financial statements and schedule of Champion Industries, Inc. and Subsidiaries included in the Annual Report (Form 10-K) for the year ended October 31, 2003.

/s/Ernst & Young LLP

Charleston, West Virginia
January 23, 2004

EX-31.1 14 w93425exv31w1.htm EXHIBIT 31.1

Exhibit 31.1
PRINCIPAL EXECUTIVE OFFICER CERTIFICATION
PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

I, Marshall T. Reynolds, certify that:

1.	I have reviewed this Annual Report on Form 10-K of Champion Industries, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 19, 2004

/s/ Marshall T. Reynolds

Marshall T. Reynolds
Chief Executive Officer

EX-31.2 15 w93425exv31w2.htm EXHIBIT 31.2

Exhibit 31.2
PRINCIPAL FINANCIAL OFFICER CERTIFICATION
PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

I, Todd R. Fry, certify that:

1.	I have reviewed this Annual Report on Form 10-K of Champion Industries, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 19, 2004

/s/ Todd R. Fry

Todd R. Fry
Vice President & Chief Financial Officer

EX-31.3 16 w93425exv31w3.htm EXHIBIT 31.3

Exhibit 31.3
PRINCIPAL OPERATING OFFICER CERTIFICATION
PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

I, Kirby J. Taylor, certify that:

1.	I have reviewed this Annual Report on Form 10-K of Champion Industries, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 19, 2004

/s/ Kirby J. Taylor

Kirby J. Taylor
President & Chief Operating Officer

EX-32 17 w93425exv32.htm EXHIBIT 32

Exhibit 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Champion Industries, Inc. (the “Company”) on Form 10-K for the period ending October 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Marshall T. Reynolds, Todd R. Fry and Kirby J. Taylor, Chief Executive Officer, Chief Financial Officer and President and Chief Operating Officer, respectively, of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

• The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

• The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/Marshall T. Reynolds
	Marshall T. Reynolds
	Chief Executive Officer
By:	/s/ Todd R. Fry
	Todd R. Fry
	Vice President and Chief Financial Officer
By:	/s/ Kirby J. Taylor
	Kirby J. Taylor
	President and Chief Operating Officer

A signed copy of this written statement required by section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request

Date: January 19, 2004

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