Document:

ex10_2.htm

    
      

    

    Exhibit
10.2

    

    OPTION
AGREEMENT

    

    THE BOARD
OF DIRECTORS of LAPOLLA INDUSTRIES, INC. authorized and approved the Equity
Incentive Plan, as amended ("Plan"). The Plan provides for the grant of common
stock (“Stock”) options (the “Options”) to employees of Company (“Company”).
Unless otherwise provided herein all defined terms shall have the respective
meanings ascribed to them under the Plan.

    

    1.      
      Grant of
Option.  Pursuant to authority granted to it under the Plan,
the Administrator responsible for administering the Plan hereby grants to Neil
P. Burns, as an employee of the Company (“Optionee”) and as of October 28, 2009
("Grant Date"), 20,000 Options.  Each Option permits you to purchase
one share of Lapolla Industries, Inc.’s common stock, $.01 par value per share
("Shares").

    

    2.      
      Character of
Options.  Pursuant to the Plan, Options granted herein may be
Incentive Stock Options or Non-Qualified Stock Options, or both. To the extent
permitted under the Plan and by law, such Options shall first be considered
Incentive Stock Options.

    

    3.          
  Exercise
Price. The Exercise Price for each Non-Qualified Stock Option granted
herein is $.37 per Share, and exercise price for each Incentive Stock Option
granted herein shall be $.37 per Share.

    

    4.      
      Exercisability.  The
exercisability of the Options granted hereby is subject to prior vesting and the
following criteria and restrictions:

    

    4.1           Vesting Criteria. The
Options granted herein will automatically vest if the Company is profitable for
the 2010 calendar year.  Once vested, the Options are immediately
exercisable.

    

    4.2           Vesting
Determination.  The determination of whether or not the Company
was profitable for the 2010 calendar year will be made by the Compensation
Committee based on the annual audited financial results as approved by the Audit
Committee.  If the Company was not profitable, the Options granted
hereunder are forfeited.  For the purposes of this Agreement,
“Profitability” is defined as Net Income (inclusive of any expense relating to
this Option hereunder) before Dividends on Preferred Stock.

    

    5.        
    Term of
Options.  The term of each Option granted herein shall be for a
term of up to five (5) years from the Grant Date, provided, however, that the
term of any Incentive Stock Option granted herein to the Optionee who is at the
time of the grant, a Ten Percent Owner, shall not be exercisable after the
expiration of five (5) years from the Grant Date.

    

    6.         
   Payment of Exercise
Price.  Options represented hereby may be exercised in whole or
in part by delivering to the Company your payment of the Exercise Price of the
Option so exercised (i) in cash, by check or cash equivalent, (ii) by
assignment and tender to the Company of shares of Stock (as defined in the Plan)
owned by the Participant having a Fair Market Value not less than the exercise
price; (iii) by tender to the Company of a written consent to accept a reduction
in the number of shares of Stock to which the Option relates (“Reduced Number of Shares”),
which Reduced Number of Shares, when ascribed a value, such value shall be equal
to the exercise price of the balance of shares of Stock covered by the Option;
(iv) by delivery of a properly executed notice of exercise together with
irrevocable instructions to a broker providing for the assignment to the Company
of the proceeds of a sale or loan with respect to some or all of the shares
being acquired upon the exercise of the Option (including, without limitation,
through an exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of the Federal Reserve
System) (a "Cashless
Exercise"), (v) by such other consideration as may be approved by
the Committee from time to time to the extent permitted by applicable law, or
(vi) by any combination thereof. The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to establish,
decline to approve or terminate any program or procedures for the exercise of
Options by means of a Cashless Exercise.

    

    7.       
     Limits on Transfer of
Options.  The Option granted herein shall not be transferable
by you otherwise than by will or by the laws of descent and distribution, except
for gifts to family members subject to any specific limitation concerning such
gift by the Administrator in its discretion; provided, however, that you may
designate a beneficiary or beneficiaries to exercise your rights and receive any
Shares purchased with respect to any Option upon your death.  Each
Option shall be exercisable during your lifetime only by you or, if permissible
under applicable law, by your legal representative.  No Option herein
granted or Shares underlying any Option shall be pledged, alienated, attached or
otherwise encumbered, and any purported pledge, alienation, attachment or
encumbrance thereof shall be void and unenforceable against the Company.
Notwithstanding the foregoing, to the extent permitted by the Administrator, in
its discretion, an Option shall be assignable or transferable subject to the
applicable limitations, if any, described in the General Instructions to
Form S-8 Registration Statement under the Securities Act of 1933, as
amended.

    

    8.       
     Termination of
Employment.  If your employment is terminated with the Company,
the Option and any unexercised portion shall be subject to the provisions
below:

    

    (a)           Upon
the termination of your employment with the Company, to the extent not
theretofore exercised, your Option shall continue to be valid; provided,
however, that:

    

    (i)           If
the Participant shall die while in the employ of the Company or during the one
(1) year period, whichever is applicable, specified in clause (ii) below and at
a time when such Participant was entitled to exercise an Option as herein
provided, the legal representative of such Participant, or such Person who
acquired such Option by bequest or inheritance or by reason of the death of the
Participant, may, not later than fifteen (15) months from the date of death,
exercise such Option, to the extent not theretofore exercised, in respect of any
or all of such number of Shares specified by the Administrator in such Option;
and

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    (ii)           If
the employment of any Participant to whom such Option shall have been granted
shall terminate by reason of the Participant's retirement (at such age upon such
conditions as shall be specified by the Board of Directors), disability (as
described in Section 22(e) of the Code) or dismissal by the Company other than
for cause (as defined below), and while such Participant is entitled to exercise
such Option as herein provided, such Participant shall have the right to
exercise such Option so granted, to the extent not theretofore exercised, in
respect of any or all of such number of Shares as specified by the Administrator
in such Option, at any time up to one (1) year from the date of termination of
the Optionee's employment by reason of retirement or dismissal other than for
cause or disability, provided, that if the Optionee dies within such twelve (12)
month period, subclause (i) above shall apply.

    

    (b)           If
you voluntarily terminate your employment, or are discharged for cause, any
Options granted hereunder shall forthwith terminate with respect to any
unexercised portion thereof.

    

    (c)           If
any Options granted hereunder shall be exercised by your legal representative if
you should die or become disabled, or by any person who acquired any Options
granted hereunder by bequest or inheritance or by reason of death of any such
person written notice of such exercise shall be accompanied by a certified copy
of letters testamentary or equivalent proof of the right of such legal
representative or other person to exercise such Options.

    

    (d)           For
all purposes of the Plan, the term "for cause" shall mean "cause" as defined in
the Plan or your employment agreement with the Company.

    

    9.          
  Restriction; Securities
Exchange Listing. All certificates for shares delivered upon the exercise
of Options granted herein shall be subject to such stop transfer orders and
other restrictions as the Administrator may deem advisable under the Plan or the
rules, regulations and other requirements of the Securities and Exchange
Commission and any applicable federal or state securities laws, and the
Administrator may cause a legend or legends to be placed on such certificates to
make appropriate reference to such restrictions.

    

    10.           Adjustments. If there
is any change in the capitalization of the Company affecting in any manner the
number or kind of outstanding shares of Common Stock of the Company, whether by
stock dividend, stock split, reclassification or recapitalization of such stock,
or because the Company has merged or consolidated with one or more other
corporations (and provided the Option does not thereby terminate pursuant to
Section 5 hereof), then the number and kind of shares then subject to the Option
and the price to be paid therefor shall be appropriately adjusted by the Board
of Directors; provided, however, that in no event shall any such adjustment
result in the Company's being required to sell or issue any fractional shares.
Any such adjustment shall be made without change in the aggregate purchase price
applicable to the unexercised portion of the option, but with an appropriate
adjustment to the price of each Share or other unit of security covered by this
Option.

    

    11.           Change in
Control.  In the event of a Change in Control (as defined in
the Plan), the surviving, continuing, successor, or purchasing entity or parent
thereof, as the case may be (the "Acquiror"), may, without the
consent of any Participant, either assume the Company's rights and obligations
under outstanding Options or substitute for outstanding Options substantially
equivalent options for the Acquiror's stock. In the event the Acquiror elects
not to assume or substitute for outstanding Options in connection with a Change
in Control, the Committee shall provide that any unexercised and/or unvested
portions of outstanding Options shall be immediately exercisable and vested in
full as of the date thirty (30) days prior to the date of the Change in Control.
The exercise and/or vesting of any Option that was permissible solely by reason
of this Section 11 shall be conditioned upon the consummation of the Change in
Control.  Any Options which are not assumed by the Acquiror in
connection with the Change in Control nor exercised as of the time of
consummation of the Change in Control shall terminate and cease to be
outstanding effective as of the time of consummation of the Change in
Control.

    

    12.           Amendment to Options Herein
Granted.  The Options granted herein may not be amended without
your consent.

    

    13.           Withholding
Taxes.  As provided in the Plan, the Company may withhold from
sums due or to become due to Optionee from the Company an amount necessary to
satisfy its obligation to withhold taxes incurred by reason of the disposition
of the Shares acquired by exercise of the Options in a disqualifying disposition
(within the meaning of Section 421(b) of the Code), or may require you to
reimburse the Company in such amount.

    

    LAPOLLA
INDUSTRIES, INC.

    

    
      	
              /s/  Michael T. Adams,
      Secretary

            	 
      	
              10/28/09

            
	
              Michael
      T. Adams, Secretary

            	 
      	
              Date

            
	 
      	 
      	 
      
	
              OPTIONEE

            	 
      	 
      
	 
      	 
      	 
      
	
              /s/ Neil P. Burns

            	 
      	
              10/28/09

            
	
              Neil
      P. Burns

            	 
      	
              Date

            

    

     

     

    2Unassociated Document

    

      Exhibit
No. 10.1

      

      FIRST AMENDMENT TO CREDIT
AGREEMENT

      

      THIS FIRST AMENDMENT TO CREDIT
AGREEMENT, dated as of October 30, 2009 (this “Amendment”), is by and between
HURCO COMPANIES, INC., an Indiana corporation (the “Borrower”), and JPMORGAN
CHASE BANK, N.A. (the "Bank").

      

      RECITALS

      

      A.           The
Borrower and the Bank have entered into that certain Credit Agreement dated as
of December 7, 2007 (the "Credit Agreement").

      

      B.           The
Borrower and the Bank desire to amend the Credit Agreement as set forth in this
Amendment.

      

      NOW, THEREFORE, in consideration of the
premises and of the mutual agreements herein contained, the parties hereto agree
as follows:

      

      ARTICLE
1.   AMENDMENTS TO CREDIT
AGREEMENT

       

      Subject to Article 2 of this Amendment,
the Credit Agreement hereby is amended as follows:

      

      1.1           The
following definition of the term "Adjusted One Month LIBOR Rate" is added to
Section 1.1 in its alphabetical place:

      

      "Adjusted One Month LIBOR Rate" means,
with respect to any Floating Rate Loan for any day, the sum of (i) 2.50% per
annum plus (ii) the quotient of (a) the interest rate determined by the Bank by
reference to the Page to be the rate at approximately 11:00 a.m. London time, on
such date or, if such date is not a Business Day, on the immediately preceding
Business Day for dollar deposits with a maturity equal to one (1) month, divided
by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to
dollar deposits in the London interbank market with a maturity equal to one (1)
month.

      

      1.2           The
definition of the term "Applicable Margin" set forth in Section 1.1 is amended
and restated as follows:

      

      "Applicable Margin" means, with respect
to the Eurodollar Rate, Floating Rate and Commitment Fees, as set forth in
either subpart (a) or subpart (b) below, as the case may be from time to
time:

      

      (a) when
the Consolidated Net Income of the Borrower and its Subsidiaries for the period
of four consecutive fiscal quarters of the Borrower ending with the last fiscal
quarter for which financial statements have been furnished under Section 6.1(ii)
was equal to or greater than $0 (it being understood that such Consolidated Net
Income is to be determined for the entire period of four consecutive fiscal
quarters taken as one accounting period), the applicable percentage rates per
annum set forth in the table below based upon the Total Funded Debt/EBITDA Ratio
as of the end of such last fiscal quarter:

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      
        
          
            
              
                
                  	
                          Total Funded Debt/

                          EBITDA

                           Ratio

                        	 	
                          Eurodollar

                          Loans

                          (% per annum)

                        	 	 	
                          Floating Rate

                          Loans

                          (% per annum)

                        	 	 	
                          Commitment

                          Fee

                          (% per annum)

                        	 
	
                          Greater
      than or

                           equal
      to 2.00

                        	 	 	1.75	%	 	 	0	%	 	 	.10	%
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Less
      than 2.00

                        	 	 	1.50	%	 	 	0	%	 	 	.075	%

                

              

            

          

        

      

      

      ; or (b)
when the Consolidated Net Income of the Borrower and its Subsidiaries for the
period of four consecutive fiscal quarters of the Borrower ending with the last
fiscal quarter for which financial statements have been furnished under Section
6.1(ii) was less than $0 (it being understood that such Consolidated Net Income
is to be determined for the entire period of four consecutive fiscal quarters
taken as one accounting period), the applicable percentage rates per annum set
forth in the table below based upon the Excess Cash/Annualized Net Loss Ratio as
of the end of such last fiscal quarter:

      

      
        
          
            
              
                	
                        Excess Cash/

                        Annualized Net Loss

                         Ratio

                      	 	
                        Eurodollar

                        Loans

                        (% per annum)

                      	 	 	
                        Floating Rate

                        Loans

                        (% per annum)

                      	 	 	
                        Commitment

                        Fee

                        (% per annum)

                      	 
	
                        Less
      than or

                         equal
      to 1.50

                      	 	 	1.75	%	 	 	0	%	 	 	.10	%
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                        Greater
      than 1.50

                      	 	 	1.50	%	 	 	0	%	 	 	.075	%

              

            

          

        

      

      

      Notwithstanding
anything to the contrary, (i) the Applicable Margin with respect to the
Eurodollar Rate and the Floating Rate shall be adjusted quarterly as necessary
as of the first day of the month following the Bank receiving the financial
statements required pursuant to Section 6.1(ii) allowing the Total Funded
Debt/EBITDA Ratio or Excess Cash/Annualized Net Loss Ratio, as applicable, to be
calculated for the quarterly periods ending on each January 31, April 30, July
31, and October 31, and (ii) upon the First Amendment Date until the next
change, if any, in accordance with this definition, the "Applicable Margin"
shall be based upon the tier above with the lowest pricing levels.

      

      1.3           The
definition of the term "Business Day" set forth in Section 1.1 is amended and
restated as follows:

      

      "Business Day" means (i) with respect
to the Adjusted One Month LIBOR Rate and any borrowing, payment or rate
selection of Eurodollar Rate Loans, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities, interbank wire
transfers can be made on the Fedwire system and dealings in Dollars are carried
on in the London interbank market and (ii) for all other purposes, a day (other
than a Saturday or Sunday) on which banks generally are open in Chicago for the
conduct of substantially all of their commercial lending activities and
interbank wire transfers can be made on the Fedwire system.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      1.4           The
definition of the term "Cash Equivalent Investments" set forth in Section 1.1 is
amended and restated as follows:

      

      "Cash Equivalent Investments" means (i)
short-term obligations of, or fully guaranteed by, the United States of America,
(ii) commercial paper rated A-1 or better by S&P or P-1 or better by
Moody's, (iii) demand deposit accounts maintained in the ordinary course of
business, (iv) certificates of deposit issued by and time deposits with
commercial banks (whether domestic or foreign) having capital and surplus in
excess of $100,000,000.00, and (v) money market funds rated
AAAm or better by S&P or Aaa or better by Moody's; provided in each case that
the same provides for payment of both principal and interest (and not principal
alone or interest alone) and is not subject to any contingency (other than the
passage of time or notice) regarding the payment of principal or
interest.

      

      1.5           The
following definition of the term "CB Floating Rate" is added to Section 1.1 in
its alphabetical place:

      

      "CB Floating Rate" means the Prime
Rate; provided that the CB Floating Rate shall, on any day, not be less than the
Adjusted One Month LIBOR Rate.  The CB Floating Rate is a variable
rate and any change in the CB Floating Rate due to any change in the Prime Rate
or the Adjusted One Month LIBOR Rate is effective from and including the
effective date of such change in the Prime Rate or the Adjusted One Month LIBOR
Rate, respectively

      

      1.6           The
definition of the term "Commitment" set forth in Section 1.1 is amended and
restated as follows:

      

      "Commitment" means, the obligation of
the Bank pursuant to Section 2.1(a) to make Loans to, and issue US Facility LCs
upon the application of, the Borrower in an aggregate amount not exceeding
$15,000,000.00, reduced by the amount as permitted pursuant to Section
2.5(c).

      

      1.7           The
following definition of the term "Excess Cash/Annualized Loss Ratio" is added
to Section 1.1 in its alphabetical place:

      

      "Excess Cash/Annualized Net Loss Ratio"
means, as of the end of any fiscal quarter of the Borrower, the ratio of (a) the
positive remainder, if any, of (i) the aggregate cash and Cash Equivalent
Investments of the Borrower and its Subsidiaries on a consolidated basis as of
such date minus (ii) the Consolidated Total Indebtedness as of such date to (b)
two (2) times the net loss (stated as an absolute value) of the Borrower and its
Subsidiaries calculated on a consolidated basis for the period of two
consecutive fiscal quarters of the Borrower ending as of such fiscal quarter
end.  Notwithstanding anything to the contrary, in the event there is
no net loss of the Borrower and its Subsidiaries on a consolidated basis for
such period of two consecutive fiscal quarters, the amount of the foregoing
clause (b) shall be deemed to be $1.00.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      1.8           The
following definitions of the terms "First Amendment" and "First Amendment Date",
respectively, are added to Section 1.1 in their respective alphabetical
place:

      

      "First Amendment" means the First
Amendment to this Agreement dated as of October 30, 2009.

      

      "First Amendment Date" means the date
of the First Amendment.

      

       1.9           The
definition of the term "Floating Rate" set forth in Section 1.1 is amended and
restated as follows:

      

      "Floating Rate" means the per annum
rate that is equal to the remainder of (a) the CB Floating Rate in effect from
time to time plus (b) the Applicable Margin in effect from time to
time.  If the Bank determines on any day that quotations of interest
rates for the relevant deposits referred to in the definition of Adjusted One
Month LIBOR Rate are not being provided for purposes of determining the interest
rate on any Floating Rate Loan on any day, then each Floating Rate Loan shall
bear interest at the Prime Rate in effect from time to time plus the Applicable
Margin in effect from time to time until the Bank determines that quotations of
interest rates for the relevant deposits referred to in the definition of
Adjusted One Month LIBOR Rate are being provided.

      

      1.10           The
definition of the term "Eurodollar Reference Rate" set forth in Section 1.1 is
amended  and restated as follows:

      

      "Eurodollar Reference Rate" means, with
respect to any Eurodollar Loan for the relevant Interest Period, the interest
rate determined by the Bank by reference to Reuters Screen LIBOR01, formerly
known as Page 3750 of the Moneyline Telerate Service (together with any
successor or substitute, the "Service") or any successor or substitute page of
the Service providing rate quotations comparable to those currently provided on
such page of the Service, as determined by the Bank from time to time for
purposes of providing quotations of interest rates applicable to dollar deposits
in the London interbank market (the "Page"), to be the rate at approximately
11:00 a.m. London time, two Business Days prior to the commencement of such
Interest Period for dollar deposits with a maturity equal to such Interest
Period.  If no Eurodollar Reference Rate is available to the Bank, the
applicable Eurodollar Reference Rate for the relevant Interest Period shall
instead be the rate determined by the Bank to be the rate at which the Bank
offers to place U.S. dollar deposits having a maturity equal to such Interest
Period with first-class banks in the London interbank market at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period.

      

      1.11           The
following definition of the term "Page" is added to Section 1.1 in its
alphabetical place:

      

      "Page" shall have the meaning ascribed
thereto in the definition of the term "Eurodollar Reference Rate"

      

      1.12           The
definition of the term "Reserve Requirement" set forth in Section 1.1 is
amended  and restated as follows:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      "Reserve Requirement" means, for
purposes of the definition of "Adjusted One Month LIBOR Rate" or with respect to
an Interest Period, the maximum aggregate reserve requirement (including all
basic, supplemental, marginal and other reserves) which is imposed under
Regulation D  or any comparable regulation from time to time on
Eurocurrency funding.  Eurodollar Loans shall be deemed to constitute
Eurocurrency funding and to be subject to such reserve requirements, and such
reserve requirements shall be deemed applicable for purposes of the definition
of "Adjusted One Month LIBOR Rate", without the benefit of or credit for
pro-ration, exemption or offset, that may be available under such Regulation D
or any comparable regulation.  The Reserve Requirement shall be
adjusted automatically on and as of the effective date of any change of such
reserve requirement.

      

      1.13           The
definitions of the terms "Alternate Base Rate" and "Federal Funds Effective
Rate" set forth in Section 1.1 are deleted.

      

      1.14           The
second sentence of Section 2.10 is amended and restated as follows:

      

      Changes
in the rate of interest on that portion of any Loan maintained as a Floating
Rate Loan will take effect simultaneously with each change in the CB Floating
Rate.

      

      1.15           Subpart
(a) of Section 2.18.1 is amended and restated as follows:

      

      (a) The Bank agrees, on the terms set
forth in this Agreement, to issue standby and commercial letters of credit (i)
for the Borrower's general corporate purposes (each, a "US Facility LC") and
(ii) for the purpose of providing credit enhancement for the benefit of one or
more Replacement Taiwan Lenders to induce such Replacement Taiwan Lenders to
provide one or more Replacement Taiwan Facilities in an aggregate principal
amount not to exceed the amount of the Taiwan Facility LC Commitment (each, a
"Taiwan Facility LC", and each US Facility LC and Taiwan Facility LC, a
"Facility LC"), and to renew, extend, increase, decrease or otherwise modify
each Facility LC ("Modify" and each such action a "Modification"), from time to
time from and including the date of this Agreement and prior to the Facility
Termination Date upon the request of the Borrower; provided that immediately
after each such Facility LC is issued or Modified, (A) the aggregate amount of
the outstanding LC Obligations with respect to US Facility LCs shall not exceed
$3,000,000.00, (B) the Outstanding Credit Exposure for Loans and US Facility LCs
shall not exceed the Commitment, and (C) the aggregate amount of the outstanding
LC Obligations with respect to Taiwan Facility LCs shall not exceed the Taiwan
Facility LC Commitment.  No Facility LC shall have an expiry date
later than the earlier of (x) the fifth Business Day prior to the Facility
Termination Date and (y) one year after its issuance.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      1.16           Section
6.10 is amended and restated as follows:

      

      6.10           Dividends.  The
Borrower will not, nor will it permit any Subsidiary to, declare or pay any
dividends or make any distributions on its Capital Stock (other than dividends
payable in its own Capital Stock) or redeem, repurchase or otherwise acquire or
retire any of its Capital Stock at any time outstanding; provided that if (i)
the Consolidated Net Income of the Borrower and its Subsidiaries for the period
of four consecutive fiscal quarters of the Borrower ending with the then last
fiscal quarter for which financial statements have been furnished under Section
6.1(ii) was equal to or greater than $0 (it being understood that such
Consolidated Net Income is to be determined for the entire period of four
consecutive fiscal quarters taken as one accounting period), (ii) no Default or
Unmatured Default has occurred and is continuing or would be caused thereby and
(iii) as of the end of the fiscal quarter of the Borrower immediately preceding
the date of declaration, payment, distribution, redemption, repurchase,
acquisition or retirement, as the case may be, the Total Funded Debt/EBITDA
Ratio was less than 3.0, the Borrower may declare and pay such dividends, make
such distributions and make such redemptions, repurchases or other acquisitions
or retirements which in the aggregate do not exceed $5,000,000.00 in any fiscal
year.

      

      1.17           Section
6.11 is amended and restated as follows:

      

      6.11.           Indebtedness.  The
Borrower will not, nor will it permit any Subsidiary to, create, incur or suffer
to exist any Indebtedness, except:

      

      (i)           The
Loans, the other Outstanding Facilities, and the Reimbursement
Obligations.

      

      (ii)           Indebtedness
arising under Rate Management Transactions.

      

      (iii)           The
Hurco GmbH Facility and a guaranty of payment of the Hurco GmbH Facility from
the Borrower or any Subsidiary.

      

      (iv)           Indebtedness
of any Subsidiary owing to the Borrower or to any other Subsidiary and
Indebtedness of the Borrower owing to any Subsidiary.

      

      (v)           The
UK Facility, the Taiwan Facility (or one or more Replacement Taiwan Facilities
in an aggregate principal amount up to the principal amount of the Taiwan
Facility when it was available), the Hurco UK Guaranty and the Hurco Taiwan
Guaranty.

      

      (vi)           Product
warranty obligations incurred in the ordinary course of business.

      

      (vii)           [Reserved]

      

      (viii)           [Reserved]

      

      (ix)           Subordinated
Indebtedness.

      

      (x)           So
long as the Consolidated Net Income of the Borrower and its Subsidiaries for the
period of four consecutive fiscal quarters of the Borrower ending with the then
last fiscal quarter for which financial statements have been furnished under
Section 6.1(ii) was equal to or greater than $0 (it being understood that such
Consolidated Net Income is to be determined for the entire period of four
consecutive fiscal quarters taken as one accounting period), Indebtedness (other
than Indebtedness permitted under subparts (i) through (ix) of this Section
6.11) the aggregate outstanding principal amount of which, together with the
aggregate Contingent Obligations of the Borrower and its Subsidiaries as
guarantors of Indebtedness of customers and other Indebtedness permitted under
subpart (xi) of this Section 6.11, does not at any time exceed
$10,000,000.00.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      (xi)           (A)
Contingent Obligations of the Borrower and its Subsidiaries as guarantors of
Indebtedness of their respective customers and (B) other Indebtedness existing
as of the First Amendment Date or subsequently incurred when permitted under
subpart (x) of this Section 6.11, in an aggregate amount for the foregoing
clauses (A) and (B) not exceeding $10,000,000.00 at any time.

      

      1.18           Subpart
(iv) of Section 6.14 is amended and restated as follows:

      

      
        	
                 
      

              	
                (iv)

              	
                The
      Borrower or any Subsidiary may make any Acquisition so long as (i) the
      Borrower or such Subsidiary, as the case may be, shall be the survivor of
      such Acquisition, (ii) the Acquisition is of or with a Person engaged in a
      line of business similar to the lines of business presently engaged in by
      the Borrower, which include the manufacturing of machine tools,
      development of software for machine tools and distribution of machine
      tools, or a line of business that reasonably would be considered an
      ordinary extension of any such line of business presently engaged in by
      the Borrower, (iii) the Acquisition is consensual and not hostile or
      contested, (iv) both immediately before and after giving effect to such
      Acquisition, no Default or Unmatured Default shall have occurred and be
      continuing or would result therefrom and the representations and
      warranties contained in this Agreement and in the other Loan Documents
      shall be true and correct on and as of the date thereof (both before and
      after such Acquisition is consummated), (v) as soon as available, and in
      any event not later than a date that provides the Bank a reasonable amount
      of time prior to the proposed date of consummation of such Acquisition to
      complete its review, the Borrower shall have furnished to the Bank such
      agreements, documents and information relating to the Acquisition,
      including without limitation pro forma covenant compliance calculations
      taking into account such Acquisition, and evidence of such authorizations
      and consents with respect to the Acquisition and the requirements of the
      Loan Documents and the Bank in connection therewith, as the Bank may
      reasonably request, all in form, substance and detail satisfactory to the
      Bank, (vi) neither the Borrower nor any of its Subsidiaries shall, as a
      result of or in connection with such Acquisition, assume or incur any
      direct or contingent liabilities (whether relating to environmental, tax,
      litigation, or other matters) that could reasonably be expected to have a
      Material Adverse Effect, (vii) immediately before and after the
      consummation of such Acquisition, the sum of the unused amount of the
      Commitment plus the Borrower's cash on hand as demonstrated to the Bank to
      its reasonable satisfaction shall be not less than $5,000,000.00, (viii)
      if the Consolidated Net Income of the Borrower and its Subsidiaries for
      the period of four consecutive fiscal quarters of the Borrower ending with
      the then last fiscal quarter for which financial statements have been
      furnished under Section 6.1(ii) was less than $0 (it being understood that
      such Consolidated Net Income is to be determined for the entire period of
      four consecutive fiscal quarters taken as one accounting period), (A) the
      aggregate consideration, including without limitation cash, indebtedness
      and contingent obligations incurred, and liabilities assumed, which, in
      accordance with Agreement Accounting Principles, in each case would be
      reflected on a consolidated balance sheet of the Borrower and its
      Subsidiaries (collectively, "Consideration"), with respect to the
      Acquisition shall not exceed $750,000.00 and (B) the aggregate
      Consideration with respect to such Acquisition and all other Acquisitions
      permitted under this Section 6.14(iv) since the First Amendment Date shall
      not exceed $2,500,000.00, and (ix) concurrently with the consummation of
      such Acquisition, the Borrower and its Subsidiaries, including without
      limitation each such Subsidiary acquired or created in connection with
      such Acquisition, shall comply with all of the requirements of this
      Agreement and the other Loan Documents, including without limitation
      causing to be executed and/or delivered at such time all agreements and
      other documents of the types required under Sections 4.1, 6.22 and 6.23 of
      this Agreement.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      1.19           Section
6.20 is amended and restated as follows:

      

      6.20.           Financial
Covenants.

      

      6.20.1.           When
the Consolidated Net Income of the Borrower and its Subsidiaries for the period
of four consecutive fiscal quarters of the Borrower ending with the then last
fiscal quarter for which financial statements have been furnished under Section
6.1(ii) was equal to or greater than $0 (it being understood that such
Consolidated Net Income is to be determined for the entire period of four
consecutive fiscal quarters taken as one accounting period):

      

      6.20.1.1.   Maximum Consolidated Total
Indebtedness to Consolidated Total Capitalization.  The
Borrower will not permit the ratio, determined as of the end of each of its
fiscal quarters (including such then last fiscal quarter for which financial
statements have been furnished under Section 6.1(ii)), of (i) Consolidated Total
Indebtedness to (ii) Consolidated Total Capitalization, to be greater than 0.50
to 1.0.

      

      6.20.2.   When the
Consolidated Net Income of the Borrower and its Subsidiaries for the period of
four consecutive fiscal quarters of the Borrower ending with the then last
fiscal quarter for which financial statements have been furnished under Section
6.1(ii) was less than $0 (it being understood that such Consolidated Net Income
is to be determined for the entire period of four consecutive fiscal quarters
taken as one accounting period):

      

      6.20.2.1.   Excess Cash/Annualized Net Loss
Ratio.  The Borrower will not permit the Excess Cash/Annualized
Loss Ratio, determined as of the end of each of its fiscal quarters (including
such then last fiscal quarter for which financial statements have been furnished
under Section 6.1(ii)), to be less than 1.00 to 1.00.

      

      1.20           For
purposes of Section 6.10, 6.11, 6.14 and 6.20 of the Credit Agreement as amended
by this Amendment, it shall be assumed that, as of the date of this Amendment,
the Borrower shall have furnished the financial statements required under
Section 6.1(ii) for the fiscal quarter ending on or about October 31, 2009 and
that the Consolidated Net Income of the Borrower and its Subsidiaries for the
period of four consecutive fiscal quarters of the Borrower ending October 31,
2009 is less than $0.  Nothing herein shall be deemed to relieve the
Borrower of its obligation under Section 6.1(ii) with respect to the fiscal
quarter ending on or about October 31, 2009.

      

      1.21           Exhibit
B attached to the Credit Agreement is replaced with Exhibit B attached to this
Amendment.  (There is no Exhibit A to this
Amendment.)

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      ARTICLE
2.   CONDITIONS
PRECEDENT

       

      As conditions precedent to the
effectiveness of the amendments to the Credit Agreement set forth in Article 1
of this Amendment, the Bank shall receive the following documents and the
following matters shall be completed, all in form and substance satisfactory to
the Bank:

      

      2.1   This
Amendment duly executed on behalf of the Borrower and the Bank, together with
the Reaffirmation and Acknowledgment at the end of this Amendment duly executed
by each Guarantor.

       

      2.2   Copies,
certified by the Secretary or Assistant Secretary of the Borrower and the
Guarantors, of each of their respective Board of Directors' resolutions and of
resolutions or actions of any other body authorizing this Amendment and the
transactions contemplated hereby.

       

      2.3   An
incumbency certificate, executed by the Secretary or Assistant Secretary of the
Borrower and the Guarantors, which shall identify by name and title and bear the
signatures of the Authorized Officers and any other officers of the Borrower and
each Guarantor authorized to sign this Amendment and the other Loan Documents to
which the Borrower and each such Guarantor is a party, upon which certificate
the Bank shall be entitled to rely until informed of any change in writing by
the Borrower or such Guarantor, as the case may be.

       

      2.4   Such
other documents and completion of such other matters as the Bank may reasonably
request.

      

      ARTICLE
3. REPRESENTATIONS AND
WARRANTIES

       

      In order to induce the Bank to enter
into this Amendment, the Borrower represents and warrants that:

      

      3.1   The
execution, delivery and performance by the Borrower of this Amendment are within
its corporate powers, have been duly authorized by all necessary corporate
action and are not in contravention of any law, rule or regulation, or any
judgment, decree, writ, injunction, order or award of any arbitrator, court or
governmental authority, or of the terms of the Borrower's charter or by-laws, or
of any contract or undertaking to which the Borrower is a party or by which the
Borrower or its property is or may be bound or affected.

       

      3.2   This
Amendment is a legal, valid and binding obligation of the Borrower, enforceable
against the Borrower in accordance with its terms, subject to the effect of any
applicable bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and subject also to the availability
of equitable remedies if equitable remedies are sought.

       

      3.3   No
consent, approval or authorization of or declaration, registration or filing
with any governmental or nongovernmental person or entity, including without
limitation any creditor, stockholder or lessor of the Borrower, is required on
the part of the Borrower in connection with the execution, delivery and
performance of this Amendment or the transactions contemplated hereby or as a
condition to the legality, validity or enforceability of this
Amendment.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      3.4   After
giving effect to the amendments contained in Article 1 of this Amendment, the
representations and warranties contained in Article V of the Credit Agreement
and in the other Loan Documents are true on and as of the date hereof with the
same force and effect
as if made on and as of the date hereof.  No Default or Unmatured
Default has occurred and is continuing.

      

       ARTICLE
4.  MISCELLANEOUS

       

      4.1   If
the Borrower shall fail to perform or observe any term, covenant or agreement in
this Amendment, or any representation or warranty made by the Borrower in this
Amendment shall prove to have been incorrect in any material respect when made,
such occurrence shall be deemed to constitute an event of default under the
Credit Agreement.

       

      4.2   All
references to the Credit Agreement in the Note, any other Loan Documents or any
other document, instrument or certificate referred to in the Credit Agreement or
delivered in connection therewith or pursuant thereto, hereafter shall be deemed
references to the Credit Agreement, as amended hereby.

       

      4.3   Except
as amended hereby, the Credit Agreement and the other Loan Documents shall in
all respects continue in full force and effect.

       

      4.4   Capitalized
terms used but not defined herein shall have the respective meanings ascribed
thereto in the Credit Agreement.

       

      4.5   This
Amendment shall be governed by and construed in accordance with the laws of the
State of Indiana.

       

      4.6   The
Borrower agrees to pay the reasonable fees and expenses of Dickinson Wright
PLLC, counsel for the Bank, in connection with the negotiation and preparation
of this Amendment and the documents referred to herein and the consummation of
the transactions contemplated hereby.

       

      4.7   This
Amendment may be executed upon any number of counterparts with the same effect
as if the signatures thereto were upon the same instrument.

       

      4.8   Each
party hereto, after consulting or having had the opportunity to consult with
counsel, knowingly, voluntarily, and intentionally waives any right any of them
may have to a trial by jury in any litigation based upon or arising out of this
Amendment, or any agreement referenced herein or other related instrument or
agreement, or any of the transactions contemplated by this Amendment, or any
course of conduct, dealing, statements (whether oral or written) or actions of
any of them.  None of the parties hereto shall seek to consolidate, by
counterclaim or otherwise, any such action in which a jury trial has been waived
with any other action in which a jury trial cannot be or has not been
waived.  These provisions shall not be deemed to have been modified in
any respect or relinquished by any party hereto except by a written instrument
executed by both of them.

       

      4.9   The
Borrower agrees to execute any and all documents reasonably deemed necessary or
appropriate by the Bank to carry out the intent of, and/or to implement, this
Amendment.

       

      4.10 This
Amendment constitutes the entire understanding of the parties with respect to
the subject matter hereof.  This Amendment is binding on the parties
hereto and their respective successors and assigns, and shall inure to the
benefit of the parties hereto and
their respective successors and assigns.  If any of the provisions of
this Amendment are in conflict with any applicable statute
or rule or law or otherwise
unenforceable, such offending provisions shall be null and void only to the
extent of such conflict or unenforceability, but shall be deemed separate from
and shall not invalidate any other provision of this Amendment.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      4.11   No
course of dealing on the part of the Bank, nor any delay or failure on the part
of the Bank in exercising any right, power or privilege hereunder shall operate
as a waiver of such right, power or privilege or otherwise prejudice the Bank's
rights and remedies hereunder or under any Loan Document or any other agreement
or instrument of the Borrower with or in favor of the Bank; nor shall any single
or partial exercise thereof preclude any further exercise thereof or the
exercise of any other right, power or privilege.  No right or remedy
conferred upon or reserved to the Bank under this Amendment or under any Loan
Document or any other agreement or instrument of the Borrower with or in favor
of the Bank is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every other right or
remedy granted thereunder or now or hereafter existing under any applicable
law.  Every right and remedy granted by this Amendment or under any
Loan Document or any other agreement or instrument of the Borrower with or in
favor of the Bank or by applicable law to the Bank may be exercised from time to
time and as often as may be deemed expedient by the Bank.

       

      [The
remainder of this page intentionally left blank.]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      IN WITNESS WHEREOF, the parties hereto
have caused this Amendment to be duly executed and delivered as of the day and
year first-above written.

      

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      	
                                              HURCO
      COMPANIES, INC.

                                            
	 
      	 
      
	
                                              By:

                                            	/s/  	
                                              John G. Oblazney

                                            
	 
      	 
      
	 
      	
                                                

                                            	
                                              Its: 

                                            	
                                                Vice President – Chief Financial
      Officer

                                            
	 
      	 
      
	
                                              JPMORGAN
      CHASE BANK, N.A.

                                            
	 
      	 
      
	
                                              By:

                                            	/s/
      	
                                              Ryan McKeown

                                            
	 
      	 
      
	 
      	 	
                                              Its: 

                                            	
                                                Vice
  President

                                            

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      GUARANTOR REAFFIRMATION AND
ACKNOWLEDGMENT

      

      Each of the undersigned Guarantors
hereby acknowledges and agrees that it has reviewed and fully consents to the
foregoing First Amendment to Credit Agreement (the "Amendment"), that the
Subsidiary Guaranty made as of December 7, 2007 by the undersigned in favor of
the Bank (the "Guaranty") continues in full force and effect, that the
guaranteed obligations under each Guaranty shall include, among other things and
without limitation, all indebtedness, obligations and liabilities of the
Borrower under the Credit Agreement, as amended by the Amendment and as further
amended or modified from time to time, and that each of the undersigned has no
defenses, counterclaims or offsets with respect thereto.  All
references to the Credit Agreement in the Guaranty hereafter shall be deemed
references to the Credit Agreement, as amended by the
Amendment.  Except as otherwise expressly set forth herein,
capitalized terms used but not defined herein shall have the respective meanings
ascribed thereto in the Amendment or the Credit Agreement, as the case may
be.

      

      
        
          
            
              	
                      HURCO
      INTERNATIONAL, INC.

                    
	 
      	 
      
	
                      By:

                    	/s/  	
                      John G.
    Oblazney

                    
	 
      	 
      
	 
      	
                        

                    	
                      Its: 

                    	
                        Director

                    
	 
      	 
      
	
                      HURCO
      INTERNATIONAL HOLDINGS, INC.

                    
	 
      	 
      
	
                      By:

                    	/s/
      	
                      
                        John
      G. Oblazney

                      

                    
	 
      	 
      
	 
      	 	
                      Its: 

                    	
                       Director

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