SEPARATION AND RELEASE AGREEMENT
 
This Separation and Release Agreement ("Agreement") is entered into by and
between HURCO COMPANIES, INC. (the "Company"), and JAMES D. FABRIS ("Fabris”).
 
Recitals
 
A. Fabris has been employed with the Company since July 1, 1988.  Fabris and the
Company are parties to that certain letter agreement dated November 18, 1997
(the "Letter").   The Company and Fabris have agreed that Fabris' employment
with the Company will terminate effective October 31, 2009.
 
B. In recognition of Fabris’ loyal service to the Company and in consideration
of Fabris’ release and waiver of any and all claims he may have against the
Company Released Parties (as defined in Section 4 below) and his compliance with
the other covenants of this Agreement, the Company is willing to provide certain
special severance benefits to Fabris in accordance with the terms of this
Agreement.  In exchange for certain special severance benefits as described in
this Agreement, Fabris is willing to waive, and to release the Company Released
Parties from, any and all rights or claims that he may have, and to abide by the
covenants and provisions contained in this Agreement.
 
C. Fabris is a “specified employee” within the meaning of Section 409A(a)(2)(B)
of the Internal Revenue Code of 1986, as amended (“Code”), such that any
deferred compensation, within the meaning of Code section 409A, that is payable
to Fabris on account of his separation from service with the Company is subject
to the six-month delay requirement of Code Section 409A(a)(2)(B).  Accordingly,
the parties have designed the terms of the special severance benefits payable
under Section 2 of this Agreement such that any amounts payable under that
Section during the 6-month period after Fabris’ separation from service fall
within the exemption from Code Section 409A under Treasury Regulation
§1.409A-1(b)(9) for a separation pay plan providing benefits in the event of an
involuntary separation and not in excess of specified dollar and time limits. 
As such, the amounts payable under Section 2 during the 6-month period following
Fabris’ separation from service were designed not to exceed, and shall not
exceed, the dollar limits specified in Treasury Regulation §1.409A-1(b)(9).  Any
payments under this Agreement that are not so exempt from Code Section 409A are,
under the terms of this Agreement, payable on a date that is more than 6 months
after Fabris’ separation from service date.
 
Agreement
 
In consideration of the covenants and promises hereby provided, the actions
taken pursuant thereto, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and Fabris agree
as follows:
 
1. Separation of Employment.  The Company and Fabris agree that Fabris’
employment with the Company will terminate effective October 31, 2009 (the
"Separation Date").  Fabris hereby resigns, effective as of the Separation Date,
from his positions of President/Chief Operating Officer of the Company and from
any and all other positions he may hold with Company or any of its subsidiaries
or other affiliates.  The Company will pay Fabris his earned but unpaid salary
through the Separation Date and any accrued but unused vacation as of the
Separation Date (such earned salary and accrued but unused vacation being
collectively referred to as the “Final Wages”).  The Company and Fabris
acknowledge that his accrued but unused vacation as of September 24, 2009,
totals twenty-five (25) days.  The Company will pay Fabris the Final Wages on or
before the Company’s first customary payroll date after the Separation
Date.  Fabris acknowledges that, except for the Final Wages, the Company has
paid Fabris all salary, wages and other compensation to which Fabris is entitled
in connection with Fabris’s employment with the Company and that, except as
provided in this Agreement, Fabris is not entitled to any additional
compensation, including, without limitation, salary, wages, vacation or bonuses,
from the Company.  Fabris will be entitled to continue to participate in the
Company’s employee benefit plans through the Separation Date.  The Company’s
obligation to pay Fabris the Final Wages is not contingent on Fabris’s execution
of this Agreement, and the Company will pay Fabris the Final Wages regardless of
whether Fabris enters into this Agreement.
 
 
 

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2. Special Severance Benefits.  Contingent on this Agreement becoming effective,
the Company agrees to provide Fabris with the following severance benefits,
which Fabris would not otherwise be entitled to receive:
 
a. Severance Compensation.  The Company will pay Fabris severance compensation
in the total gross sum of Four Hundred Fifty-Two Thousand Two Hundred Fifty
Dollars ($452,250.00) (the "Severance Compensation"), which sum is equal to
eighteen (18) months of Fabris' current salary, provided Fabris complies with
his non-disclosure and restrictive covenant obligations set forth in Sections 6
and 7 of this Agreement.  The Company will pay such Severance Compensation in
thirty-nine (39) bi-weekly installments of Eleven Thousand Five Hundred
Ninety-Six and 15/100 Dollars ($11,596.15) each, less all applicable payroll tax
withholdings, on the Company's customary payroll dates during the 18-month
period following the Separation Date, with the first such bi-weekly installment
commencing on the Company’s first customary payroll date after the Separation
Date.  If Fabris materially breaches any non-disclosure or restrictive covenant
provisions set forth in Sections 6 or 7 of this Agreement, then in such event
Fabris will have forfeited his right to receive, and the Company will have no
obligation to pay, any unpaid portion of the Severance Compensation.  The
Company and Fabris acknowledge and agree that such forfeiture is in addition to,
and not in lieu of, any and all other legal and/or equitable remedies that may
be available to the Company in connection with Fabris’s material breach of any
non-disclosure or restrictive covenant provision set forth in Sections 6 or 7 of
this Agreement.
 
b. Special Payment.  The Company will pay Fabris a special one-time payment of
Fifty-Two Thousand Two Hundred Sixty Dollars ($52,260.00), less all applicable
payroll tax withholdings (the "Special Payment").  The Company will make this
Special Payment to Fabris on or before November 13, 2009.
 
c. Conditional Additional Severance Compensation.   If Fabris does not obtain
Other Employment/Work at any time during the eighteen (18) months after the
Separation Date, the Company will pay additional severance compensation to
Fabris in the form of bi-weekly severance payments in the amount of Twelve
Thousand Three Hundred Thirty-Four and 61/100 Dollars ($12,334.61) each, less
all applicable payroll withholdings, for a period commencing on May 1, 2011 and
ending on the earlier of (i) the date Fabris begins Other Employment/Work or
(ii) October 31, 2011 (the "Conditional Additional Severance Compensation").  In
no event will the Conditional Additional Severance Compensation exceed the gross
sum of One Hundred Sixty Thousand Three Hundred Forty-Nine and 93/100 Dollars
($160,349.93).  For purposes of this Agreement, "Other Employment/Work" means
when Fabris (A) becomes employed with another employer in any capacity in which
he is expected to work more than thirty-five (35) hours per week on a regular
basis or (B) is engaged as a consultant or independent contractor and is
expected to work more than thirty-five (35) hours per week in connection with
such engagement.  If Employee obtains Other Employment/Work at any time before
October 31, 2011, Employee shall immediately notify the Company of such Other
Employment/Work and the date such Other Employment/Work commenced or is to
commence.  Fabris agrees to actively pursue obtaining Other Employment/Work at
all times during the period he is receiving any severance payments under this
Agreement.
 
 
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3. Termination of Employee Benefits.  Fabris’ eligibility to participate in the
Company’s employee benefits plans, including but not limited to participation in
the Company’s group health insurance plan and other welfare or retirement plans,
will terminate as of the Separation Date.  Except as expressly provided in this
Agreement, Fabris’ eligibility to participate in and/or his receipt of any
employee perquisites will terminate as of the Separation Date.  Effective
immediately after the Separation Date, Fabris will become eligible to continue
health insurance benefits pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”), as amended, at Fabris’ expense.  The
Company will provide Fabris with the applicable COBRA information in a separate
writing.
 
4. General Release of Claims.  To the fullest extent permitted by applicable
laws, Fabris hereby generally, irrevocably and unconditionally releases and
forever discharges and covenants not to sue the Company and all of its parents,
subsidiaries and affiliates and all of its and their current and/or former
employees, officers, directors, shareholders, members, managers,
representatives, agents, attorneys, employee benefit plans and their fiduciaries
and administrators, and all persons acting by, through, or under or in concert
with any of them, both individually and in their representative capacities
(collectively, including without limitation the Company, the “Company Released
Parties”), from any and all complaints, claims, demands, liabilities, damages,
obligations, injuries, actions or rights of action of any nature whatsoever,
(including without limitation claims for damages, attorneys’ fees, interest and
costs), whether known or unknown, disclosed or undisclosed, administrative or
judicial, suspected or unsuspected, that exist in whole or in part as of the
date Fabris signs this Agreement, including, but not limited to, any claims
based upon, arising out of or in any manner connected with Fabris’s employment
with the Company, the separation of Fabris’s employment with the Company, the
Letter and/or any acts, omissions or events occurring on or before the date
Fabris signs this Agreement; provided, however, the Company and Fabris
acknowledge that the foregoing release/covenant not to sue does not release or
affect (a) any rights Fabris may have under any stock option plan or (b) any
rights Fabris may have under that certain Restated Split-Dollar Insurance
Agreement between Fabris and the Company dated as of December 31, 2008 (the
"Restated Split-Dollar Insurance Agreement").  Without limiting the generality
of the foregoing, Fabris acknowledges that the foregoing release/covenant not to
sue is to be construed as broadly as possible and includes, but is not limited
to, and constitutes a complete waiver of, any and all possible claims Fabris has
or may have against the Company Released Parties under or with respect to the
Age Discrimination in Employment Act of 1967, as amended (including the Older
Workers Benefit Protection Act), 29 U.S.C. § 621 et seq., the Civil Rights Act
of 1964 and 1991, as amended, 29 U.S.C. § 2000(e), the Americans With
Disabilities Act of 1990, as amended, 42 U.S.C. § 12,101 et seq., the Employee
Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001 et seq.,
all other federal, state and local laws and statutes, all wrongful discharge or
other state law claims and all contract claims or other theories of recovery as
of the date Fabris signs this Agreement.  This Agreement does not prohibit
Fabris from filing an administrative charge against the Company with the United
States Equal Employment Opportunity Commission (“EEOC”) relating to Fabris’s
employment with the Company; provided, however, Fabris waives and releases, to
the fullest extent permitted by applicable law, any and all entitlement to any
form of personal relief arising from such charge or any legal action relating to
such charge.  If the EEOC or any other administrative agency or person brings a
complaint, charge or legal action on Fabris’s behalf or for Fabris’s benefit
against any of the Company Released Parties based on any acts, omissions or
events occurring on or before the date Fabris signs this Agreement, Fabris
hereby waives any rights to, and will not accept, any remedy obtained through
the efforts of such agency or person.
 
 
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5. Return of Company Property.  Fabris represents and covenants (a) that he will
return on or before the Separation Date, to the Company all property belonging
to the Company, including, but not limited to, keys, access cards, files,
equipment, business plans, financial statements, computer disks or files,
documents and/or any such other Company property in Fabris’ possession or
custody or under Fabris’ control, and (b) that he will not retain copies of any
the Company's files, documents or other property.
 
6. Non-Disclosure of Confidential Information.  Fabris acknowledges his
continuing responsibilities to the Company with respect to confidential and
proprietary information and materials.  Fabris therefore agrees and covenants as
follows:
 
a. Return of Confidential Information.  Fabris has returned, or will return on
or before the Separation Date of this Agreement, to the Company all originals
and all copies (including all computer or other electronically-stored data) of
all materials of any kind whatsoever, constituting or containing any
"Confidential Information" which are or were in Fabris’ possession or custody or
under Fabris’ control during Fabris’ employment up to and including the
Separation Date.  For purposes of this Agreement, the term "Confidential
Information" means any and all of the Company's trade secrets, confidential and
proprietary information and all other non-public information of or about the
Company, including, without limitation, customer data, business methods and
processes, product or service data, pricing data, research and development
information, sales and marketing data, cost data, business plans, financial
information, personnel information, information about prospective products or
customers, and confidential or proprietary information received or acquired from
the Company's customers, joint ventures, contractors, agents, vendors or
suppliers, whether or not reduced to writing or other tangible medium of
expression, including work product created by Fabris in rendering services to or
for the Company.  The Company and Fabris agree that Confidential Information
shall not include any information that becomes generally available to the public
through no act or omission of Fabris.
 
 
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b. Non-Disclosure of Confidential Information.  Subsequent to Fabris’ employment
with the Company, Fabris will not, without the Company's prior written consent,
use or disclose to anyone any of the Confidential Information.  Fabris
acknowledges and agrees that his obligations hereunder are in addition to, and
not in lieu of, any and all confidentiality and/or non-disclosure agreements
executed by Fabris during his employment with the Company.
 
7. Restrictive Covenants.  The Company and Fabris acknowledge and agree that the
following restrictive covenants are reasonably necessary to protect the
legitimate interests of the Company, including the protection of the Company’s
trade secrets and goodwill, and such covenants are an essential part of and
consideration for this Agreement.
 
a. During the Restricted Time Period, Fabris will not solicit, recruit, hire,
employ, attempt to hire or employ, or assist any person or entity in the
recruitment or hiring of, any person who is an employee of the Company (or any
of its subsidiaries or other affiliates), or otherwise urge, induce or seek to
induce any person to terminate his/her employment with the Company (or any of
its subsidiaries or other affiliates).  For purposes of this Agreement, the term
"Restricted Time Period" means the period from the effective date of this
Agreement through October 31, 2011.
 
b. During the Restricted Time Period, Fabris will not urge, induce or seek to
induce any of the Company’s independent contractors, subcontractors,
distributors, dealers, brokers, consultants, sales representatives, vendors,
suppliers or any other person or entity with whom the Company has a business
relationship to terminate their relationship with, or representation of, the
Company or to cancel, withdraw, reduce, limit or in any manner modify any such
person’s or entity’s business with or representation of, the Company.
 
c. During the Restricted Time Period, Fabris will not will not make or publish
any statements or comments that disparage or in any way injure the reputation
and/or goodwill of the Company, including, but not limited to, making or
publishing any comments or statements to the Company’s customers, distributors
or employees that disparage the Company or that otherwise injure or diminish the
Company’s relationship with such customers, distributors or employees; provided,
however, nothing in this section is intended to prohibit Fabris from making any
disclosures as may be required or compelled by law or legal process.  During the
Restricted Time Period, the Company's officers and members of its Board of
Directors will not make or publish any statements or comments that disparage or
in any way injure the reputation of Fabris; provided, however, nothing in this
section is intended to prohibit the Company (or its officers or Board members)
from making any disclosures as may be required or compelled by law or legal
process.
 
d. Fabris acknowledges and agrees that the restrictions imposed upon Fabris
under this Section 7 are reasonable and necessary for the protection of the
Company’s legitimate interests, including without limitation for the protection
of the Company’s trade secrets, confidential information and goodwill,
particularly given that:  (i) the Company is engaged in a highly competitive
business, (ii) Fabris has served a key executive role with the Company,
(iii) Fabris has substantial knowledge of trade secrets and confidential
information relating to the Company’s business and (iv) Fabris has developed
significant relationships with many of the Company's employees, customers and
Dealers.
 
 
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8. Cooperation.  Fabris agrees to cooperate with the Company in any work
transition issues, including without limitation making himself reasonably
available, if requested, to answer questions or otherwise provide information
concerning business transition matters.  Fabris further agrees and covenants
that if the Company desires Fabris to provide any information or testimony
relating to any judicial, administrative or other proceeding involving the
Company (or any of its subsidiaries or other affiliates), Fabris will cooperate
in making himself reasonably available for such purposes and will provide
truthful information and/or testimony.  The Company agrees to reimburse Fabris
for all necessary and reasonable out-of-pocket expenses Fabris incurs in
connection with such matters.  Should Fabris be served with a subpoena in any
legal proceeding relating to the Company (or any of its subsidiaries or other
affiliates), Fabris agrees:  (a) to inform the Company immediately of the
subpoena; (b) to cooperate with the Company and its attorneys in preparing for
any hearings, depositions or other formal process by which evidence is taken or
received; and (c) to provide truthful evidence in response to questions that are
within the scope of proper discovery.  Fabris further agrees to comply with any
reasonable, lawful directions by the Company’s attorneys should any litigation
relating to the Company (or any of its subsidiaries or other affiliates) involve
Fabris as a witness.
 
9. No Other Severance Plan Benefits.  Fabris acknowledges that, except as
expressly provided in this Agreement, he is not entitled to any other severance
payments or other benefits under any other plan or program that may be
maintained by the Company, and Fabris hereby waives any and all rights he may
have under any such plans or programs.
 
10. Restated Split-Dollar Insurance Agreement.  This Agreement does not affect
any of the parties' respective rights and/or obligations under the Restated
Split-Dollar Insurance Agreement.
 
11. Section 409A Compliance.  The parties have designed the terms of the special
severance benefits payable under Section 2 of this Agreement such that any
amounts payable under that Section during the 6-month period after Fabris’
separation from service fall within the exemption from Code Section 409A under
Treasury Regulation §1.409A-1(b)(9) for a separation pay plan providing benefits
in the event of an involuntary separation and not in excess of specified dollar
and time limits.   However, to the extent any payments under this Agreement
constitute deferred compensation as defined in, and subject to, Code Section
409A, any such deferred compensation payments otherwise payable because of a
separation from service will not be paid to Fabris prior to the first day of the
seventh month following the month in which Fabris's last day of employment
occurs.  Further, to the extent that any payments under this Agreement
constitute deferred compensation subject to the requirements of Code Section
409A, the provisions of this Agreement applicable to such payments shall be
interpreted and applied in a manner consistent with the standards for
nonqualified deferred compensation plans established by Code Section 409A and
its interpretive regulations and other regulatory guidance.  To the extent that
any terms of this Agreement would subject Fabris to gross income inclusion,
interest, or additional tax pursuant to Code Section 409A, those terms are to
that extent superseded by, and shall be adjusted to the minimum extent necessary
to satisfy, the applicable Code Section 409A standards.
 
 
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12. Age Act Advisements.  Fabris acknowledges :  (a) that the Company has
advised him that by entering into this Agreement, Fabris is waiving and
releasing all claims against the Company Released Parties under the Age
Discrimination in Employment Act of 1967, as amended (including the Older
Workers Benefit Protection Act), 29 U.S.C. § 621 et seq., as of the date Fabris
signs this Agreement; (b) that the Company has advised him to consult with an
attorney prior to signing this Agreement; (c) that the Company has advised him
that he has up to twenty-one (21) days to consider and accept this Agreement by
signing and returning this Agreement to the Company; (d) that the Company has
advised him that for a period of seven (7) days following Fabris’ signing of
this Agreement, Fabris may revoke this Agreement by written notice to the
Company; and (e) this Agreement will not become binding and enforceable until
the seven-day revocation period has expired without Fabris having exercised his
right of revocation.
 
13. No Admission.  This Agreement and the actions taken pursuant to this
Agreement do not constitute an admission by either party of any wrongdoing or
liability, and each party expressly denies any wrongdoing or liability.
 
14. Successors.  The Company shall have the right to assign this
Agreement.  This Agreement shall inure to the benefit of and may be enforced by
the Company and its successors and assigns, including, without limitation, by
asset assignment, merger consolidation or other corporate
reorganization.  Fabris shall not have the right to assign this Agreement.
 
15. Entire Agreement; Modification.  This Agreement constitutes the entire
agreement of the parties with respect to the subject matter addressed herein and
supersedes any prior agreements, understandings or representations, oral or
written, with respect to the subject matter addressed in this Agreement.  Fabris
acknowledges that he is not relying on any representations, statements, promises
or inducements, whether oral or written, made by the Company or its
representatives except those expressly stated in this Agreement.  This Agreement
may not be amended, supplemented, or modified except by a written agreement
signed by both Fabris and a duly authorized officer of the Company.
 
16. Governing Law.  This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Indiana, without
application of its conflict of law rules.  The Company and Fabris agree that any
legal action relating to this Agreement shall be commenced and maintained
exclusively before any appropriate state court of record in Marion County,
Indiana, or in the United States District Court for the Southern District of
Indiana, Indianapolis Division, and the parties hereby submit to the
jurisdiction and venue of such courts and waive any right to challenge or
otherwise object to personal jurisdiction or venue in any action commenced or
maintained in such courts.  This Agreement is the result of negotiations between
the parties, and no party shall be deemed to be the drafter of this
Agreement.  The language of this Agreement shall in all cases be construed as a
whole, according to its fair meaning, and not strictly for or against either
party.
 
 
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17. Severability; Reformation.  The provisions of this Agreement are separate
and divisible, and to the extent any provision or portion of this Agreement is
determined to be unenforceable or invalid for any reason, such unenforceability
or invalidity shall not affect the enforceability or validity of the remainder
of the Agreement.  If any particular provision or portion of this Agreement is
determined to be invalid or unenforceable for any reason, including, without
limitation, the time period, geographical area and/or scope of activity covered
by any restrictive covenant, provision or clause, such covenant, provision or
portion shall automatically be deemed reformed such that the contested covenant,
provision or portion will have the closes effect permitted by applicable law to
the original form and shall be given effect and enforced as so reformed to
whatever extent would be reasonable and enforceable under applicable law.  The
Company and Fabris agree that any court interpreting any restrictive covenant or
other provision of this Agreement shall, if necessary, reform any such provision
to make it enforceable under applicable law.
 
18. Counterparts.  This Agreement may be executed in one or more counterparts
(or upon separate signature pages bound together into one or more counterparts),
all of which taken together shall constitute but one agreement.  Signatures
transmitted by facsimile or other electronic means are acceptable the same as
original signatures for execution of this Agreement.
 
19. Acknowledgment.  Fabris acknowledges that he has read this Agreement, that
he has had ample time to consider this Agreement, that he has had the
opportunity to consult with his own attorney concerning this Agreement if he so
chooses, and that he is knowingly and voluntarily entering into this Agreement.
 
[Remainder of page intentionally left blank; signature page follows.]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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IN WITNESS WHEREOF, the Company and Fabris have executed this Agreement on the
dates indicated below, intending it to become effective as set forth above.

 

FABRIS  
HURCO COMPANIES, INC.
                    /s/ James D. Fabris  
By:
/s/ Michael Doar
James D. Fabris    
Michael Doar
       
Chairman and CEO
                    Date:
October 1, 2009
 
Date:
October 1, 2009

 

 
 
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