CHAMPION INDUSTRIES INC
EXHIBIT 10.3
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<P align="right"><FONT size="2"><b>Exhibit 10.3</b></FONT>


<P><FONT size="2">PROMISSORY NOTE</FONT>

<P><FONT size="2">Principal: 1,000,000.00<BR>
Loan Date: 10/07/2002<BR>
Maturity: 04/07/2004<BR>
Loan No.: 1673921
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<P><FONT size="2">References in the shaded area are for Lender&#146;s use only and do not limit the
applicability of this document to any particular loan or item. Any item above
containing &#147;***&#148; has been omitted due to text length limitations.
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    <TD valign="top"><FONT size="2">Borrower:</FONT></TD>
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Stationers, Inc.
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    <TD align="left" valign="top"><FONT size="2">Lender:
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P.O. Box 2167
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    <TD align="left" valign="top"><FONT size="2">P. O. BOX 2107</FONT></TD>
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Huntington, WV&nbsp;&nbsp;25701
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    <TD align="left" valign="top"><FONT size="2">823 8TH STREET</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">HUNTINGTON, WV&nbsp;&nbsp;25721</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">Principal Amount: $1,000,000.00</FONT></TD>
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Initial Rate: 4.750%</FONT></TD>
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<P><FONT size="2">Date of Note: October&nbsp;7, 2002
</FONT>
<P><FONT size="2">PROMISE TO PAY. Stationers, Inc. (&#147;Borrower&#148;) promises to pay to FIRST SENTRY
BANK (&#147;Lender&#148;), order, In lawful money of the United States of America, the
principal amount of One Million &#038; 00/t00 Dollars ($1,000,000.00) or so much as
may be outstanding, together with interest on the unpaid outstanding principal
balance of each advance. Interest shall be calculated from the date of each
advance until repayment of each advance.
</FONT>
<P><FONT size="2">PAYMENT. Borrower will pay this loan in one payment of all outstanding
principal plus all accrued unpaid interest on April&nbsp;7, 2004. In addition,
Borrower will pay regular monthly payments of all accrued unpaid interest due
as of each payment date, beginning November&nbsp;7, 2002, with all subsequent
interest payments to be due on the same day of each month after that. 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&nbsp;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&#146;s address shown
above or at such other place as Lender may designate in writing.
</FONT>
<P><FONT size="2">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 Prime
Rate as published in the Wall Street Journal (the &#147;Index&#148;). 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&#146;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 4.750% 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 4.750% per
annum. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law.
</FONT>
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<P><FONT size="2">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&#146;s obligation to continue to
make payments of accrued unpaid interest. Rather, early payments will reduce
the principal balance due. Borrower agrees not to send Lender payments marked
&#147;paid in full&#148;, &#147;without recourse&#148;, or similar language. If Borrower sends such
a payment, Lender may accept it without losing any of Lender&#146;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
&#147;payment in full&#148; 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: FIRST SENTRY BANK, P. O. BOX 2107 HUNTINGTON, WV 25721.
</FONT>
<P><FONT size="2">LATE CHARGE. If a payment is 10&nbsp;days or more late, Borrower will be charged
$25.00.
</FONT>
<P><FONT size="2">INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, the total sum due under this Note will bear interest from the date of
acceleration or maturity at the variable interest rate on this Note. The
interest rate will not exceed the maximum rate permitted by applicable law.
</FONT>
<P><FONT size="2">DEFAULT. Each of the following shall constitute an event of default (&#147;Event of
Default&#148;) under this Note:
</FONT>
<P><FONT size="2">Payment Default. Borrower fails to make any payment when due under this Note.
</FONT>
<P><FONT size="2">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.
</FONT>
<P><FONT size="2">False Statements. Any warranty, representation or statement made or furnished
to Lender by Borrower or on Borrower&#146;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.
</FONT>
<P><FONT size="2">Insolvency. The dissolution or termination of Borrower&#146;s existence as a going
business, the insolvency of Borrower, the appointment of a receiver for any
part of Borrower&#146;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.
</FONT>
<P><FONT size="2">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&#146;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.
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<P><FONT size="2">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&#146;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.
</FONT>
<P><FONT size="2">Change In Ownership. Any change in ownership of twenty-five percent (25%) or
more of the common stock of Borrower.
</FONT>
<P><FONT size="2">Adverse Change. A material adverse change occurs in Borrower&#146;s financial
condition, or Lender believes the prospect of payment or performance of this
Note is impaired.
</FONT>
<P><FONT size="2">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)&nbsp;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)&nbsp;cures the default within
ten (10)&nbsp;days; or (2)&nbsp;if the cure requires more than ten (10)&nbsp;days, immediately
initiates steps which Lender deems in Lender&#146;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.
</FONT>
<P><FONT size="2">LENDER&#146;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.
</FONT>
<P><FONT size="2">ATTORNEYS&#146; 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&#146;s attorneys&#146; fees
and Lender&#146;s legal expenses, whether or not there is a lawsuit, including
attorneys&#146; 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.
</FONT>
<P><FONT size="2">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.
</FONT>
<P><FONT size="2">CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender&#146;s request
to submit to the jurisdiction of the courts of CABELL County, State of West
Virginia.
</FONT>
<P><FONT size="2">RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower&#146;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
debt against any and all such accounts.
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<P><FONT size="2">LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested either orally or in writing by Borrower or as
provided in this paragraph. Lender may, but need not, require that all oral
requests be confirmed in writing. All communications, instructions, or
directions by telephone or otherwise to Lender are to be directed to Lender&#146;s
office shown above. The following person currently is authorized to request
advances and authorize payments under the line of credit until Lender receives
from Borrower, at Lender&#146;s address shown above, written notice of revocation of
his or her authority: J. MAC ALDRIDGE, Chairman of the Board of Stationers,
Inc. Borrower agrees to be liable for all sums either: (A)&nbsp;advanced in
accordance with the instructions of an authorized person or (B)&nbsp;credited to any
of Borrower&#146;s accounts with Lender. The unpaid principal balance owing on this
Note at any time may be evidenced by endorsements on this Note or by Lender&#146;s
internal records, including daily computer print-outs. Lender will have no
obligation to advance funds under this Note if: (A)&nbsp;Borrower or any guarantor
is in default under the terms of this Note or any agreement that Borrower or
any guarantor has with Lender, including any agreement made in connection with
the signing of this Note; (B)&nbsp;Borrower or any guarantor ceases doing business
or is insolvent; (C)&nbsp;any guarantor seeks, claims or otherwise attempts to
limit, modify or revoke such guarantor&#146;s guarantee of this Note or any other
loan with Lender; or (D)&nbsp;Borrower has applied funds provided pursuant to this
Note for purposes other than those authorized by Lender.
</FONT>

<P><FONT size="2">PRIOR NOTE. THIS NOTE REPRESENTS THE RENEWAL AND EXTENSION OF THAT CERTAIN
PROMISSORY NOTE DATED 12/06/99. THE NOTE WAS RENEWED AND EXTENDED ON 10/17/00
AND 4/06/01. ALL TERMS AND CONDITIONS OF THE ORIGINAL NOTE, INCLUDING
PROVISIONS FOR COLLATERAL AND PERSONAL GUARANTEES, SHALL REMAIN IN FULL FORCE
AND EFFECT....
</FONT>

<P><FONT size="2">SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower&#146;s heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.
</FONT>

<P><FONT size="2">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: FIRST SENTRY
BANK P. O. BOX 2107 HUNTINGTON, WV 25721
</FONT>
<P><FONT size="2">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&#146;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. |
</FONT>
<P><FONT size="2">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.
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<P><FONT size="2">BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.
</FONT>
<P><FONT size="2">BORROWER:
</FONT>
<P><FONT size="2">STATIONERS, INC.
</FONT>
<P><FONT size="2"><I>By:</I> COPY<br>
J. MAC ALDRIDGE, Chairman of the Board of Stationers, Inc.
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